Back in November, when I concluded that Trump’s dictatorship was a fait accompli lots of readers thought I was going over the top. In retrospect, and with one exception, I was hopelessly over-optimistic. I imagined a trajectory similar to Orban’s Hungary, with a gradual squeeze on political opposition and civil society, playing out over years and multiple terms in office,.

The reality has been massively worse, both in terms of speed and scope. Threats of conquest against friendly countries, masked thugs abducting people from the street, shakedowns of property from enemies of the state, concentration camps outside the reach of the legal system, all happening at a pace more comparable to Germany in 1933 than to the examples I had in mind.

The one exception is that I expected Trump to invoke the Insurrection Act on Day 1. Instead, perhaps to preserve a veneer of legality, he has commissioned a report from the Secretary of Defense (Hegseth) and the Secretary of Homeland Security (Noem), due by 20 April. Unless he faces massive political blowback in the next few days, he will doubtless order these flunkies to recommend invoking the Act, effectively the equivalent of Hitler’s Enabling Act.

Meanwhile, two other crucial issues are coming to a head. First, Trump is openly defying the courts over the illegal deportation and imprisonment in a concentration camp of legal migrant Abrego Garcia and others and is now threatening the same even for native-born US citizens. Second, elements of civil society (notably universities and law firms) that have previously engaged in shameful capitulation are now standing up.

If Trump is defeated on all three fronts, there is a good chance that US democracy could survive his onslaughts, though it will take many years to recover. But a Trump victory on even one of them will spell the end. Defeating the courts would render any legal constraints on his power irrelevant. The Insurrection Act would permit him to use troops to suppress protest and to arrest his political opponents. A victory over civil society would turn the US into a totalitarian state, in which all organisations are controled by the Leader and his followers.

I haven’t given up hope, but I don’t expect that Trump will be stopped. The vast majority of Republican voters support everything Trump is doing, even though he has signally failed to deliver on the economic prosperity he promised. And while it would only take a handful of Republicans in Congress to change sides and stop him, there is no sign that this will happen.

Once Trump’s dictatorship is established there is no way back within the current US system. When his regime finally collapses the models for reform will be those of post-war reconstruction of a defeated and discredited state, a process which is sometimes successful, sometimes not, but always painful

Thanks to James Wimberley for prompting me to write this, and alerting me to the data on China’s emissions

Most of the news these days is bad, and that’s true of the climate. Even as climatic disasters worsen, the Trump regime is doing its best to dismantle US and global efforts to decarbonize our energy systems. But there is still some surprisingly good news.

First, China’s emissions from coal-fired electricity appear to have peaked. Thermal power generation fell 5.8 per cent in January and February this year, relative to 2024. The only times this has happened previously were during the Covid lockdowns and in the aftermath of the GFC. On this occasion, total power demand fell by 1.5 per cent due to a warm winter, but the big decline in coal was due to increased solar generation. 

And China’s solar industry keeps on growing on all fronts. China added another 277 GW of PV last year, more than all the capacity installed in the world up to 2015. Recorded exports were 236GW, another record. Since production was estimated at more than 600 GW, it seems likely there are some unrecorded installations.

All this is happening even though new coal-fired power stations are still being built, largely for political rather than economic reasons. It seems likely that these plants will see limited operation as solar power (augmented with storage) meets more and more demand.

Second, the great AI boom in electricity demand has turned out to be a mirage, at least so far. This isn’t always obvious from the breathless tone of coverage. For example, this story leads with the claim that “Electricity consumption by data centers will more than double by 2030”, but leaves the reader to calculate that this implies an increase of just 1.5% in global demand. 

Notably, Microsoft which was one of the leading promoters of claims about electricity demand is now scaling back its investments. And large numbers of data centres in China are apparently idle

Even Trump is helping in perverse ways. His policies are already reducing projections of US economic growth, which will accelerate the decline of coal-fired power in particular. His attempts to defy economic reality by keeping coal plants open are unlikely to have much effect in this context.

And coal is on the way out in many other countries. Finland just closed its last coal-fired powerand even laggards like Poland are making progress

The picture is less promising with the transition to electric vehicles, which has slowed in most places. But once we complete the transition to solar, wind and storage, electricity will be massively cheaper. And once again, China is a bright sport, with electrics taking 25 per cent of the market in 2024, and new vehicles becoming cheaper and cheaper. BYD is now offering an electric car in Australia for less than $A30 000 (a bit under $20 000 US).

As I argued a year ago, the irresistible force of ultra-cheap solar PV will overcome the seemingly immovable barriers in its way.

My latest in The Guardian

Donald Trump’s announcement of a “Liberation Day”, involving the imposition of tariffs on almost every country in the world, is one of a series of measures which call for an urgent reorientation of Australia’s economic and foreign policy. It is, in effect, a commitment to remove the United States from the global economy, which is seen by Trump as unfair and exploitative of Americans.

The 10% tariff imposed on Australian exports is not of great concern in itself. The US is only our fifth-largest export market and would be ranked even lower by measures that aggregated the EU and Asean trading blocs. Moreover, the inevitable retaliation by other countries against US exports, particularly in agriculture, will remove a major competitor for Australian exports.

There will be much bigger effects from further rounds of escalation. In Trump’s first term, when his presidency was seen as an aberration, EU retaliation was limited to symbolic measures directed at Trump supporters, such as tariffs on Kentucky bourbon. These have been threatened again. But now it is America rather than Trump alone that is seen as an enemy by Europeans, a sentiment increasingly reciprocated by Trump’s Republican supporters.

And with Trump now announcing plans for a third term (and implicitly a presidency for life), the idea of waiting him out has ceased to be meaningful. Instead, the EU is looking at invoking its anti-coercion mechanism, initially developed in response to China’s ill-fated experiment in “wolf warrior” trade policy. That would hit the US where it hurts, in digital and financial services, leading to yet further retaliation.

American withdrawal from the global economy goes far beyond tariff policy. The US has withdrawn from a wide range of international organisations and treaties, abandoned international development aid and cancelled scientific research funding for joint projects in Australia and other countries. The World Bank, the International Monetary Fund and even the United Nations could meet the same fate. In any case, the continued location of these bodies in the US seems increasingly untenable, as the country slides from semi-democracy into autocracy.

Meanwhile, the Trump administration’s domestic policies, including the assault on universities and the rejection of medical science, are setting a course for long-term economic decline. Whereas the US has traditionally attracted the best and brightest researchers from around the world, the direction is now reversing. Although the idea of emigration is an illusion for most Americans, scientists fleeing the regime will find a warm welcome in many places, just as the US welcomed a similar wave of scientific émigrés from Germany in the 1930s.

But there is no sign that any of this is deterring Trump, or his supporters. Although Republicans have suffered some modest electoral reverses recently, Trump’s approval ratings are still higher than those of his departing predecessor, Joe Biden. The idea that America should stand alone, while dictating terms to “lesser breeds without the law”, seems to have strong appeal.

The closest recent parallel to Trump’s liberation day rhetoric is the North Korean Juche ideology. Although hard to translate, it is often rendered in English as “self-reliance”, “autonomy” and “independence”. Economists use the term “autarky”. Unlike in North Korea, a shift to autarky will not reduce the US to miserable poverty. A withdrawal from the global economy will produce a short-run recession and long-run stagnation in the US, but not necessarily an economic collapse.

How should Australia respond to these developments? Unsurprisingly, the initial response has been denial, followed by (notably unsuccessful) bargaining. We are now beginning to see anger and depression, as the reality of the situation sinks in.

Acceptance will come with the recognition that the US is no longer part of our economic and geopolitical future. This creates an opportunity to finally engage fully with our region and become, politically and economically as well as geographically, an Asian nation. The crucial steps here are to seek membership of the Association of Southeast Asian Nations (Asean) and to find a balance between the would-be hegemons of our region, the US and China. This can’t be done until we abandon both the idea that the US is a friend, and the alliances inherited from the era when this was true.

Breaking with the US will be painful in all sorts of ways. But the break is coming whether we like it or not. Rather than pretending that the return of US democracy is just around the corner, we should welcome the opportunities of becoming a full participant in the most dynamic region in the global economy.

My latest piece in The Conversation is one of six looking at changes in various aspects of Australian life since the turn of the century. Most of it is a recounting of the history, but I have a few things to say at the end about the information economy

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The most striking feature of the Australian economy in the 21st century has been the exceptionally long period of fairly steady, though not rapid, economic growth.

The deep recession of 1989–91, and the painfully slow recovery that followed, led most observers to assume another recession was inevitable sooner or later.

And nearly everywhere in the developed world, the Global Financial Crisis of 2007–08 did lead to recessions comparable in length and severity to the Great Depression of the 1930s.

Through a combination of good luck and good management, Australia avoided recession, at least as measured by the commonly used criterion of two successive quarters of negative GDP growth.

Recessions cause unemployment to rise in the short run. Even after recessions end, the economy often remains on a permanently lower growth path.

Good management – and good luck

The crucial example of good management was the use of expansionary fiscal policy in response to both the financial crisis and the COVID pandemic. Governments supported households with cash payments as well as increasing their own spending.

The most important piece of good luck was the rise of China and its appetite for Australian mineral exports, most notably iron ore.

This demand removed the concerns about trade deficits that had driven policy in the 1990s, and has continued to provide an important source of export income. Mining is also an important source of government revenue, though this is often overstated.

Still more fortunately, the Chinese response to the Global Financial Crisis, like that in Australia, was one of massive fiscal stimulus. The result was that both domestic demand and export demand were sustained through the crisis.

The shift to an information economy

The other big change, shared with other developed countries, has been the replacement of the 20th century industrial economy with an economy dominated by information and information-intensive services.

The change in the industrial makeup of the economy can be seen in occupational data.

In the 20th century, professional and managerial workers were a rarefied elite. Now they are the largest single occupational group at nearly 40% of all workers. Clerical, sales and other service workers account for 33% and manual workers (trades, labourers, drivers and so on) for only 28%.

The results are evident in the labour market. First, the decline in the relative share of the male-dominated manual occupations has been reflected in a gradual convergence in the labour force participation rates of men (declining) and women (increasing).

Suddenly, work from home was possible

Much more striking than this gradual trend was the (literally) overnight shift to remote work that took place with the arrival of COVID lockdowns.

Despite the absence of any preparation, it turned out the great majority of information work could be done anywhere workers could find a desk and an internet connection.

The result was a massive benefit to workers. They were freed from their daily commute, which has been estimated as equivalent to an 8–10% increase in wages, and better able to juggle work and family commitments.

Despite strenuous efforts by managers, remote or hybrid work has remained common among information workers.

CEOs regularly demand a return to full-time office work. But few if any have been prepared to pay the wage premium that would be required to retain their most valuable (and mobile) employees without the flexibility of hybrid or remote work.

The employment miracle

The confluence of all these trends has produced an outcome that seemed unimaginable in the year 2000: a sustained period of near-full employment. That is defined by a situation in which almost anyone who wants a job can get one.

The unemployment rate has dropped from 6.8% in 2000 to around 4%. While this is higher than in the post-war boom of the 1950s and 1960s, this is probably inevitable given the greater diversity of both the workforce and the range of jobs available.

Matching workers to jobs was relatively easy in an industrial economy where large factories employed thousands of workers. It’s much harder in an information economy where job categories include “Instagram influencer” and “search engine optimiser”.

As we progress through 2025, it is possible all this may change rapidly, for better or for worse.

The chaos injected into the global economy by the Trump Administration will radically reshape patterns of trade.

Meanwhile the rise of artificial intelligence holds out the promise of greatly increased productivity – but also the threat of massive job destruction. Economists, at least, will be busy for quite a while to come.

It’s been evident since Trump’s inauguration that the US, as we knew it, is over. I’ve been looking at some of the US-centred organisations and economic dependencies that will need to be rebuilt. But I hadn’t given much thought to the university sector, where I work, until I got an urgent email asking everyone at the University of Queensland to advise the uni admin if we had any projects involving US funding.

It turns out that Australian participants in such projects had received demands from the US to respond, at short notice, to a questionnaire asking if anything they were doing violated any of the long list of Trump taboos: contacts with China, transgender issues, persecution of Christians and so on.

This is front-page news in Australia today but I couldn’t find anything else about it except for a brief story in the New York Times a week or so ago. Presumably, though, this is happening everywhere.

Taken in the broader context of the Trump dictatorship, this means the end of international research collaboration involving the US. That will be a huge blow to global research of all kinds. Faced with this prospect, I would have expected our response to start with denial, before working through the other stages of grief.

And that’s exactly what we got from our Education Minister Jason Clare, who put out a waffly statement ending with “We look forward to working with US counterparts to demonstrate the benefits of collaborative research to both US and Australia’s interests.”

But, amazingly, the Group of 8, representing the management of the leading research universities seems to have moved on to acceptance, calling for a turn to Europe saying “Australia must double down on getting a seat at the table to access the world’s largest research fund, Horizon Europe,”

Research funding is only the first stage in the story. As Trump closes off travel from much of the world, holding major conferences in the US will become intellectually indefensible, if not physically impossible. In my own field of economics, the central role in the job market played by American meetings will need to end. The central role of US journals will last a bit longer, but can’t be tolerated indefinitely.

In the longer term. Trump is setting out to destroy US universities as centres of intellectual inquiry. That will take a while, and the US will continue to be central in many fields of research for some time to come. But the axe is already falling on the humanities, biomedical research and climate science among other fields. Work in these topics will have to move elsewhere, as will researchers who value their independence.

As I type this, Trump is threatening tariffs on anyone who challenges the interests of America’s technology oligarchs, all of whom are now paying obeisance at this court. Technology is the US biggest weapon against the free world of which it was formerly part, and the right place to fight back. But what can be done?

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Quick quiz. Suppose you read a headline in the online version of the Wall Street Journal (or NY Times etc) stating that, from now on, US Treasury bonds would be redeemed in crypto. Would your response be

(i) That’s absurd. Either it’s April Fools Day or someone has hacked the website

(ii) That’s unlikely. Surely [1] Wall Street will be able to kill this crazy idea

(iii) That will be tricky. Which cryptocurrencies will be included and what will be the exchange rates?

If your answer was (i) you can stop reading here (and don’t bother commenting to justify your position). This answer assumes that, despite Trump’s bluster, nothing has fundamentally changed. You’re still in the denial stage, with six more to come..

If you’re answer is (ii) or (iii) you are paying at least some attention. I’ll point to some evidence suggesting (iii) is a plausible answer, and look at what that implies for the global financial system.

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This is a follow-up to my previous post on the end of US democracy and its implications. Here I will discuss how what’s left of the democratic world can respond.

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My latest from The Guardian

=With the resumption of parliament this week, and an election only months away, we have seen even more of the usual point-scoring about the cost of living, tax breaks for long lunches and budget deficits. But since the return of Donald Trump to the White House, the assumptions on which Australian economic policy have always been based are obsolete.

We must ditch the illusion that the US will return to normal and instead become more self-reliant

With the resumption of parliament this week, and an election only months away, we have seen even more of the usual point-scoring about the cost of living, tax breaks for long lunches and budget deficits. But since the return of Donald Trump to the White House, the assumptions on which Australian economic policy have always been based are obsolete.

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“The cemeteries are full of indispensable people.” In one form or another, this observation has been made many times over the last century or more.

What is true of people is true of nations. In the past 25 years or so it was often claimed (and , admittedly, often denied) that, in the modern world, the United States was the “indispensable nation”. Whatever the rights and wrong of this claim, it has become obvious that, whether we like it or not, the rest of the world will now have to dispense with the US as a defender of democracy, guarantor of global order, or even (as in Margaret Thatcher’s words about Gorbachev) a state we can do business with.

Anyone whose experience of the US began in the last eleven days would have no trouble recognising an archetypal kleptocracy, like Putin’s Russia or Mobutu’s Zaire (with a touch of Mao madness). The boss rakes off billions in tribute while his cronies scramble to please him, put each other down and collect their share of the loot. Regime supporters commit all sorts of crimes with impunity, while opponents are subject to both legal victimisation and threats of extra-legal terror against which they can expect no protection.

In dealing with such a regime, the only strategy is to buy off the boss, or a powerful underling, and hope that they stay bought long enough to deliver on their side of the bargain This approach is politely described as “transactional”, but without the implication that the transaction will necessarily be honoured. Dealing with kleptocrats can be highly profitable, as long as you get in and out quickly enough, but there’s no possibility of “doing business”, either commercial or political, in the ordinary sense of the word.

The problem is that for nearly everyone who matters, the last eleven days seem like an aberration. For decades, the US has been seen as the central pillar of a “rules-based order”, on which assumptions about the world were largely based. That’as true even for critics who pointed out that the rules were drawn up to favor the US, and that the US often breached them without any real consequences. And it’s true even though you can point to precedents for everything Trump had done.

But all that is over, and can’t be restored.

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