My latest in The East Asia Forum

The May 2025 federal election campaign was characterised by a studious avoidance of the main issues facing Australia, most notably the country’s future relationships with the United States and China. Canberra should confront the quandaries redefining the US relationship, initiated by President Donald Trump’s second term. Washington’s radical reorientation shows no sign of reversing even after 2028, when Trump is due to leave office.

The major parties’ avoidance of this issue is unsurprising given the complex attitudes of the Australian public, particularly towards the United States. On the one hand, Australians’ views of US President Donald Trump are overwhelmingly negative, a fact that contributed to the scale of the conservative Liberal–National Coalition’s defeat. On the other hand, there has been no genuine challenge to the general belief of policymakers, and the majority of the public, that Australia’s alliance with the United States is both necessary and beneficial.

During Trump’s first term in office, these seemingly contradictory perceptions could be reconciled. Trump’s election was seen as an aberration, driven by dislike of the Democratic candidate Hillary Clinton and the vagaries of the Electoral College system. His bellicose rhetoric could be dismissed as theatrical bravado. The phrase ‘take him seriously, but not literally’ was coined by writer Salena Zito to describe the attitudes of Trump supporters in 2016. The adage became conventional wisdom. Trump’s conventional Republican choices for Cabinet appointments meant that his policy choices were supposedly constrained by ‘the adults in the room’.

Joe Biden endorsed the view of Trump as an aberration after his narrow victory in the 2020 election. After Biden proclaimed that ‘America is back’ and the strong backlash against the storming of the Capitol on 6 January 2025, it seemed that Trump and Trumpism would be driven from public life.

The situation in 2025 is radically different. Having been vindicated by a plurality of voters in the 2024 election, Trump has governed as a radical extremist, with appointees to key positions who are, if anything, even more extreme than he is. Both domestically and internationally, he has shown a clear preference for dictatorship over democracy. And there is no reason to suppose that things will return to pre-Trump normality even assuming he leaves office as scheduled

The May 2025 federal election campaign was characterised by a studious avoidance of the main issues facing Australia, most notably the country’s future relationships with the United States and China. Canberra should confront the quandaries redefining the US relationship, initiated by President Donald Trump’s second term. Washington’s radical reorientation shows no sign of reversing even after 2028, when Trump is due to leave office.

The major parties’ avoidance of this issue is unsurprising given the complex attitudes of the Australian public, particularly towards the United States. On the one hand, Australians’ views of US President Donald Trump are overwhelmingly negative, a fact that contributed to the scale of the conservative Liberal–National Coalition’s defeat. On the other hand, there has been no genuine challenge to the general belief of policymakers, and the majority of the public, that Australia’s alliance with the United States is both necessary and beneficial.

During Trump’s first term in office, these seemingly contradictory perceptions could be reconciled. Trump’s election was seen as an aberration, driven by dislike of the Democratic candidate Hillary Clinton and the vagaries of the Electoral College system. His bellicose rhetoric could be dismissed as theatrical bravado. The phrase ‘take him seriously, but not literally’ was coined by writer Salena Zito to describe the attitudes of Trump supporters in 2016. The adage became conventional wisdom. Trump’s conventional Republican choices for Cabinet appointments meant that his policy choices were supposedly constrained by ‘the adults in the room’.

Joe Biden endorsed the view of Trump as an aberration after his narrow victory in the 2020 election. After Biden proclaimed that ‘America is back’ and the strong backlash against the storming of the Capitol on 6 January 2025, it seemed that Trump and Trumpism would be driven from public life.

The situation in 2025 is radically different. Having been vindicated by a plurality of voters in the 2024 election, Trump has governed as a radical extremist, with appointees to key positions who are, if anything, even more extreme than he is. Both domestically and internationally, he has shown a clear preference for dictatorship over democracy. And there is no reason to suppose that things will return to pre-Trump normality even assuming he leaves office as scheduled

As far as Australia is concerned, Trump has made it clear that the United States will not be bound by treaties — even those he negotiated in his first term. Further, he believes that all US allies, including Australia, have cheated the United States in the past and deserve punishment. His 10 per cent tariff on Australian exports, while lower than those announced and then suspended for countries with which the United States runs a trade deficit, represents a clear breach of the US–Australia Free Trade Agreement.

In these circumstances, it would be foolish to expect that the United States would come to Australia’s aid in the — fortunately remote — event of a conflict with a regional neighbour. This realisation has coincided with a historical reassessment that the United States has always viewed its Australian alliance as more transactional than Australians themselves imagined.

Then Australian prime minister John Curtin’s famous turn to Washington in the Second World War was negatively received in the United States, which viewed Australia more as a geographically convenient base for fighting Japan than as a natural ally. The United States declined to militarily assist Australia during the Indonesian Confrontation and the Malayan Emergency — Commonwealth operations against Southeast Asian insurgents in the 20th century. They gave only grudging and limited support for the liberation of East Timor.

But even this relatively limited support is far more than Australia could expect from the Trump administration or its possible ideological successors.

The US alliance is also seen as offering Australia domestic and regional security through the ‘Five Eyes’ intelligence sharing arrangement and access to high-tech defence equipment. But Trump has already compromised the potential of both benefits, reportedly planning massive cuts to the Central Intelligence Agency and threatening to expel Canada from the Five Eyes agreement.

As the politicisation of all aspects of the US government continues, there can be no guarantee that intelligence sharing would not be manipulated to benefit the United States at Australia’s expense. Similar issues arise with military equipment. Trump’s threat to restrict alliance partners to functionally limited versions of the new F-47 fighter aircraft have led many potential buyers to consider alternatives such as the French Dassault Rafale fighter aircraft.

The re-elected Albanese government needs to accept the fact that the United States, as Australians have imagined it since Curtin’s famous speech, is gone for good. In the new world, the United States no longer has allies, only clients who can be discarded whenever it becomes convenient to do so. Meanwhile China, which was attempting to use trade coercion against Australia until recently, continues to assert its own claims.

In protecting itself against the hegemonic pretensions of the great powers of the United States and China, Australia must find a balance between the two that preserves its independence.

The re-elected Albanese should pursue closer relations with Asian neighbours who face the strategic predicament.

As far as Australia is concerned, Trump has made it clear that the United States will not be bound by treaties — even those he negotiated in his first term. Further, he believes that all US allies, including Australia, have cheated the United States in the past and deserve punishment. His 10 per cent tariff on Australian exports, while lower than those announced and then suspended for countries with which the United States runs a trade deficit, represents a clear breach of the US–Australia Free Trade Agreement.

In these circumstances, it would be foolish to expect that the United States would come to Australia’s aid in the — fortunately remote — event of a conflict with a regional neighbour. This realisation has coincided with a historical reassessment that the United States has always viewed its Australian alliance as more transactional than Australians themselves imagined.

Then Australian prime minister John Curtin’s famous turn to Washington in the Second World War was negatively received in the United States, which viewed Australia more as a geographically convenient base for fighting Japan than as a natural ally. The United States declined to militarily assist Australia during the Indonesian Confrontation and the Malayan Emergency — Commonwealth operations against Southeast Asian insurgents in the 20th century. They gave only grudging and limited support for the liberation of East Timor.

But even this relatively limited support is far more than Australia could expect from the Trump administration or its possible ideological successors.

The US alliance is also seen as offering Australia domestic and regional security through the ‘Five Eyes’ intelligence sharing arrangement and access to high-tech defence equipment. But Trump has already compromised the potential of both benefits, reportedly planning massive cuts to the Central Intelligence Agency and threatening to expel Canada from the Five Eyes agreement.

As the politicisation of all aspects of the US government continues, there can be no guarantee that intelligence sharing would not be manipulated to benefit the United States at Australia’s expense. Similar issues arise with military equipment. Trump’s threat to restrict alliance partners to functionally limited versions of the new F-47 fighter aircraft have led many potential buyers to consider alternatives such as the French Dassault Rafale fighter aircraft.

The re-elected Albanese government needs to accept the fact that the United States, as Australians have imagined it since Curtin’s famous speech, is gone for good. In the new world, the United States no longer has allies, only clients who can be discarded whenever it becomes convenient to do so. Meanwhile China, which was attempting to use trade coercion against Australia until recently, continues to assert its own claims.

In protecting itself against the hegemonic pretensions of the great powers of the United States and China, Australia must find a balance between the two that preserves its independence.

The re-elected Albanese should pursue closer relations with Asian neighbours who face the same strategic predicament.

Nationals’ leader David Littleproud has singled out nuclear energy as a key reason for his party’s spectacular split from the Liberals, as both parties seek to rebuild following the Coalition’s devastating election loss.

Speaking to the media on Tuesday, Littleproud said:

our party room has got to a position where we will not be re-entering a Coalition agreement with the Liberal Party […] Those positions that we couldn’t get comfort around [include] nuclear being a part of an energy grid into the future.

The junior partner had long held strong sway over the Coalition’s climate and energy stance, including the plan to build nuclear reactors at seven sites across Australia using taxpayer funds. 

After public sentiment appeared to go against nuclear power during the election, the Nationals had reportedly been weighing up changes to the policy. It would have involved walking away from the plan to build reactors and instead lifting a federal ban on nuclear power.

But some quarters of the Nationals remained deeply wedded to the original nuclear plan. Meanwhile, Nationals senator Matt Canavan had called for the net-zero emissions target to be scrapped, and Nationals senator Bridget McKenzie insisted renewable energy was harming regional communities. 

Now, with the Nationals unshackled from the binds of the Coalition agreement, the future of its energy policy will be keenly watched.

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A graceful way out of nuclear

Littleproud on Tuesday did not confirm where exactly he expected the Nationals to land on energy policy. But he rejected suggestions his party was unwise to stick with the nuclear policy after the Coalition’s poor election result, saying public opinion had been swayed by a “scare campaign”.

Even if the Coalition had won the election, however, the policy was running out of time.

CSIRO analysis showed, contrary to the Coalition’s claims, a nuclear program that began this year was unlikely to deliver power by 2037. But up to 90% of coal-fired power stations in the national electricity market are projected to retire before 2035, and the entire fleet is due to shut down before 2040.

Now, the earliest possible start date for nuclear is after the 2028 election. This means plugging nuclear plants into the grid as coal-fired power stations retire becomes virtually impossible.

This very impossibility provided the National Party with a graceful way out of the policy. It could have regretfully accepted the moment had passed.

With nuclear out of the picture, and coal-fired power almost certain to be phased out, that would have left two choices for the Coalition: a grid dominated by gas, or one dominated by renewables.

However, expanding gas supply frequently requires the controversial process of fracking, which is deservedly unpopular in many regions where it’s undertaken. 

What’s more, gas is an expensive energy source which can only be a marginal add-on in the electricity mix, used alongside batteries to secure the system during peak times.

Logically, that would have left renewable energy as the only feasible energy policy option for the Nationals – but it wasn’t to be.

‘Technology agnostic’?

Littleproud claims the party is technology agnostic about energy policy. In practice, that would mean choosing the technology that can reduce emissions most rapidly and cheaply, rather than being bound by ideology or political expediency. 

In principle, this approach is the right one. Many energy sources can reduce carbon emissions, including solar and wind (backed up by energy storage), nuclear, hydro-electricity, and even gas and coal if emissions can be captured and stored. 

But the Nationals’ claim to agnosticism is not reflected in its actual policies which, in recent years, have been characterised by dogmatic faith in nuclear and so-called “clean” coal, and an equally dogmatic rejection of solar, wind and battery storage. 

The Nationals’ hostility to renewables may in part be driven by pressure from anti-renewable activist groups.

The Institute of Public Affairs, for example, has sought to promote rural opposition to renewables and emissions reduction and focused its efforts on Nationals-held seats

And the now-defunct Waubra Foundation, named after the small town in northwest Victoria, opposed wind farms and claimed they caused health problems. The group was created by an oil and gas executive with no apparent links to the town. 

What about net-zero?

Elements of the Nationals had been calling for the Coalition to abandon support for Australia’s target of net-zero emissions by 2050.

This would mostly have been a symbolic measure, since the target does not require, or prohibit, any particular policy in the short run. It may, however, have exposed Australia’s agricultural exports to tariffs on carbon-intensive goods.

The move would have been disastrous for the Liberals’ chances of regaining urban seats, and for investment in renewable energy. So it was never likely to be accepted as part of a Coalition agreement.

The Nationals could have chosen to accept the target in return for concessions elsewhere. Or it might have sought an agreement with the Liberals where the parties agreed to differ. 

It’s not clear what role, if any, net-zero played in the dissolution of the Coalition agreement. But in the end, the Nationals decided to walk away from it altogether.

Renewables can be good for the bush

Nationals Senate leader Bridget McKenzie last week said her party was concerned that renewable energy targets are “impacting rural and regional communities”. The party has long voiced concern about the impact of large-scale wind and solar projects in the bush.

However, many farmers and other rural landowners benefit financially from hosting solar and wind farms, which, in many cases, do not prevent the land from also being used for farming. 

Concerns that wind farms and solar panels might slash the value of neighbouring properties have been shown to be ill-founded.

And importantly, the increasing frequency of extreme climate events is already a challenge to Australia’s agriculture sector and will become more difficult. Tackling the problem is in regional Australia’s interests. 

The Nationals’ hostility to renewable energy comes at a cost to rural and regional Australians. But Littleproud clearly could not balance competing views within the Nationals on energy policy while inking a deal with the Liberals. Instead, the party will now go it alone.

My latest in The Guardian 

series of ABC 7.30 reports tells a familiar story of failure in human services. Inadequate staffing, dangerous incidents brushed under the carpet, ineffective regulation and, at the back of it all, for-profit businesses, either ASX-listed or financed by private equity.

This time it’s childcare but the same problems have emerged in vocational education, aged care, prisons, hospitals and many other services. Every time the answer we get is the same. More and better regulation, we are told, will make the market work better, allowing competition and consumer choice to work their magic.

The reason for this record of failure has been pointed out many times, and ignored just as often by policymakers. Businesses providing publicly funded or subsidised services can increase their profits in one of two ways. The hard way is to make technical or organisational innovations that provide a better service at lower cost. The easy way is to avoid meaningful improvements and approach rules with a “tick a box” attitude.

It would appear the easiest way of all, however, as claimed in the reports on childcare, is to cut corners on service quality, particularly in areas that are hard to check. Another favoured strategy is “cream-skimming” – providing services where the regulatory setup yields high margins while leaving the public or non-profit sector to deal with the intractable problems.

All of these strategies were employed on a huge scale to exploit VET Fee-Help, the vocational education and training scheme that represented the first big push towards for-profit provision of human services, beginning in 2009. Fee-Help was a disaster. Before it was scrapped in 2017 it swallowed billions of dollars of public money. The scheme left students with worthless qualifications and massive debts, which were eventually wiped by the Morrison government in 2019.

The central statement of the ideology driving public policy in this area is the Productivity Commission’s 2016 report on competition in human services. The report presented market competition as the desired model for a wide range of human services, including social housing, services at public hospitals, specialist palliative care, public dental services, services in remote Indigenous communities and grant-based family and community services.

After being presented with ample evidence of the problems of for-profit provision, the PC responded with a single, evidence-free sentence: “The Commission considers that maximising community welfare from the provision of human services does not depend on adopting one type of model or favouring one type of service provider.”

Although the PC had previously hailed competition in VET as a model of well-regulated competition, the undeniable failure of Fee-Help was now blamed on the regulator, the Australian Skills Quality Authority. But the only solution offered was more and better “safeguards”, a term which usually means Band-Aid solutions to fundamental design problems.

Since then we have seen catastrophic failures in aged care, the reversal of the move to private prisons and the exclusion of acute care hospitals from so-called “public-private partnerships”.

Even the PC is backing away from the for-profit model. Its latest report on childcare noted the growing dominance of the for-profit sector and observed that a much larger proportion of for-profit providers failed to meet standards. The chair of the inquiry, Prof Deborah Brennan, provided a supplementary statement urging action to reduce the share of for-profit businesses. Brennan observed that aspects of Australia’s “highly marketized approach” to childcare will “work against equitable, high quality provision unless moderated”.

“Accordingly, I suggest measures to strengthen and expand not for-profit provision, attention to the financial strategies of large investor-backed and private equity companies, and regulatory strategies to discourage providers whose business models and labour practices do not align well with the National Cabinet vision,” she wrote.

This expert judgment was a bridge too far for the PC ideologues, who ducked the issue for the most part. An exception was the idea of a tendering scheme for “persistent ‘thin’ markets”, where the commission proposed to “strongly prefer not-for-profit providers where a service is completely or substantially directly funded by government”. It was unclear why this preference did not extend to the much larger part of the sector that relies on indirect government funding through subsidies to parents.

To its credit, the Albanese government has done a good deal to repair the damage done to the public Tafe system, with increased funding and fee-free places. For-profit providers are complaining about the “complete annihilation” of the private sector, even as yet more dodgy practices are revealed.

But we need more than a sector-by-sector response. Rather than repeating the cycle of for-profit booms, failures, exposés and re-regulation, it’s time to admit that that the ideology of market competition has failed. For-profit corporations have no place, or at most a peripheral place, in the provision of basic human services, including health, education and childcare. “People before profit” might seem like a simplistic slogan but it is much close to the truth than “competition and choice”.

Back in 2022, after my first encounter with ChatGPT, I suggested that it was likely to wipe out large categories of “bullshit jobs”, but unlikely to create mass unemployment. In retrospect, that was probably an overestimate of the likely impact. But three years later, it seems as if an update might be appropriate.

Source: Wikipedia

In the last three years, I have found a few uses for LLM technology. First, I use a product called Rewind, which transcribes the content of Zoom meetings and produces a summary (you may want to check local law on this). Also, I have replaced Google with Kagi, a search engine which will, if presented with a question, produced a detailed answer with links to references, most of which are similar to those I would have found on an extensive Google search, avoiding ads and promotions. Except in the sense that anything on the Internet may be wrong, the results aren’t subject to the hallucinations for which ChatGPT is infamous.

Put high-quality search and accurate summarization together and you have the technology for a literature survey. And that’s what OpenAI now offers as DeepResearch I’ve tried it a few times, and it’s as good as I would expect from a competent research assistant or a standard consultant’s report. If I were asked to do a report on a topic with which I had limited familiarity, I would certainly check out what DeepResearch had to say.

Read More »

Anzac Day again, and war still ravages the world. Someday, peace will come.

Having finished off the Easter eggs (or bunnies/bilbies) and Hot Cross Buns (though these are a year-round thing now), I ought to be turning attention back to what’s happening in the world. But that’s too depressing to look at, a view our aspiring leaders have endorsed by resolutely ignoring anything more geopolitical than the price of petrol.

So, I’m going to turn my attention to the various absurdities created by having a four-day holiday that floats all over the calendar, from March 22 to April 25, depending on arcane calculations about the full moon. These in turn can be traced to the calendar used by one subgroup of a religion now practised by only a small minority of the population (according to this survey, only 17 per cent of Australians attended an Easter services in the three years to 2023)

Easter is late this year, meaning that we have only three days between Easter Monday (a holiday of no religious significance whatsoever) and Anzac Day, (a date genuinely held as sacred by many Australians). The gap is long enough that most of us will have to go back to work, but leaves a long interval in February and March with no holidays at all in most states.

The fluctuating date of Easter makes a mess of school calendars, in particular making it difficult for Christmas holidays as well.

As it happens, the UK has a law on its books, passed in 1928 but never brought into effect, setting Easter as the first Sunday after the first Saturday in April. It would be a great idea to adopt this timing. A further improvement would be to shift Australia Day to 3 March, the anniversary of the Australia Act which established our independence from the UK once and for all.

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.