The US has definitely gone rogue in the medium term. I'm not sure about the long term (i.e.>4 years.)
I was amazed at how little damage Bush the Lesser did to the reputation of the US. Everybody--individuals, firms, and countries--wants to believe that there is an omnipotent and more-or-less benevolent Daddy somewhere. People are willing to cut the US a lot more slack than it deserves because it fills this psychic role. Hence, Obama got his Nobel for not being Bush.
But what has really changed? What foreign or domestic polices are advisable now that were not already? The only one I can see is maybe to raise the FAIT (US terminology) on the supposition that there will be a higher level of "average" shocks that the economy will be exposed to.
Media platforms? Not my expertise, but a progressive excise tax on advertising aimed at "engagement" looks good to me but it did before, too.
What prospects do you see for international economic cooperation in this new geopolitical environment? Which countries should Australia be targeting in its efforts to strengthen its international relationships, if the US can no longer be trusted to behave like a rational actor?
It's unusual that I disagree with your conclusions as much as I do here.
While I agree we should reduce our reliance on the US and China, this doesn't call for self-reliance, just more careful decisions about who we build relationships with. In metaphorical terms, the only key allies we've ever had have been our high school sweethearts (the UK) and the first person who came along when that lost it's lustre (the US).
We've taken New Zealand and Japan for granted and failed to put any serious work into Indonesia. There may also be opportunities in Europe which have never been properly developed. Similarly, Australia has failed to pull its weight in global aid.
It's also always true that "the government should be preparing plans for fiscal stimulus". Any competent government must be prepared for economic storms, no matter how sunny the weather. But that's a purely academic argument in the current political climate.
Finally, any discussion of interest rates is a bum steer. The material wellbeing of Australians, and many other people, is declining for fundamental economic reasons, not because of monetary policies. The global exception is the United States, which is burning the candle at both ends and I think it's absurd to envy them their growth unless you'd also like deficits of 6%of GDP and soaring inequality.
As regards our dependence on US and Chinese AI (the subject of my proposal for self-reliance), who would you suggest as alternatives to developing our own capacity?
If DeepSeek delivers on its promise of cheap, accessible AI, we could get our AI from anywhere, off the shelf. I guess generalising from AI to cloud services, I can see that we are pretty well positioned to become self-sufficient, being geographically isolated and rich in energy. But even then, we're more likely to use foreign technology than to reinvent the wheel here.
You seem to be framing all this in terms of C20 arguments about free trade in goods. That's not the right way to think about the information economy. The point isn't comparative advantage, it's who has access to information. Information is a non-rival good, so standard trade theory has nothing to tell us ehere
I know this government is on its last legs but IF they did win the upcoming election (I'm speaking here as someone from a non-economics background:) couldn't they give a focus to the Future made in Australia policy and invest in the manufacture of vaccines and medical devices? It would make Australia less dependent on others, lead to us developing more sophisticated research and manufacturing and also assist in providing aid to counties which need it, especially now that the US has abandoned them.
We could, but only at the expense of things we're already good at. That's generally true, but especially so with 4% unemployment, a number which indicates we have no spare capacity for competing with countries that are much better than us at stuff like manufacturing.
I'm not opposed to industrial policy entirely - the green iron idea is an interesting one - it must be thought through.
I was just trying to think of things we're already good at and the first thing was - digging up raw materials and shipping them overseas to be processed.
Historically, things 'Made in Japan/China' were looked down on as being cheap or second rate but their manufacturing and technology are now highly advanced.
Perhaps it comes down to finding a niche where we could excel. In practical terms, with global warming there will be more viruses and diseases advancing further south (and north) of the Equator. Australia does have the research capabilities and possibly more students choosing STEM subjects so manufacturing of vaccines might be a logical next step.
Well said, John. I wish I could be optimistic that this pretty straightforward and obvious advice would be taken, but the complacency and incompetence of our political elites is regrettably well understood.
John, I just wanted to acknowledge that you are one of the very few economists, along with Paul Krugman who recognizes how (potentially) bad things will get.
I listen to a few other economics related podcasts & they seem to think, the rhetoric from Trump is empty threats & that "he won't actually do it" kind of attitude come through in a lot of them. Whilst people are open to their own opinions, I do think holding onto this belief that it will be more or less business as usual will prove to be detrimental for all of us.
The US has definitely gone rogue in the medium term. I'm not sure about the long term (i.e.>4 years.)
I was amazed at how little damage Bush the Lesser did to the reputation of the US. Everybody--individuals, firms, and countries--wants to believe that there is an omnipotent and more-or-less benevolent Daddy somewhere. People are willing to cut the US a lot more slack than it deserves because it fills this psychic role. Hence, Obama got his Nobel for not being Bush.
But what has really changed? What foreign or domestic polices are advisable now that were not already? The only one I can see is maybe to raise the FAIT (US terminology) on the supposition that there will be a higher level of "average" shocks that the economy will be exposed to.
Media platforms? Not my expertise, but a progressive excise tax on advertising aimed at "engagement" looks good to me but it did before, too.
What prospects do you see for international economic cooperation in this new geopolitical environment? Which countries should Australia be targeting in its efforts to strengthen its international relationships, if the US can no longer be trusted to behave like a rational actor?
It's unusual that I disagree with your conclusions as much as I do here.
While I agree we should reduce our reliance on the US and China, this doesn't call for self-reliance, just more careful decisions about who we build relationships with. In metaphorical terms, the only key allies we've ever had have been our high school sweethearts (the UK) and the first person who came along when that lost it's lustre (the US).
We've taken New Zealand and Japan for granted and failed to put any serious work into Indonesia. There may also be opportunities in Europe which have never been properly developed. Similarly, Australia has failed to pull its weight in global aid.
It's also always true that "the government should be preparing plans for fiscal stimulus". Any competent government must be prepared for economic storms, no matter how sunny the weather. But that's a purely academic argument in the current political climate.
Finally, any discussion of interest rates is a bum steer. The material wellbeing of Australians, and many other people, is declining for fundamental economic reasons, not because of monetary policies. The global exception is the United States, which is burning the candle at both ends and I think it's absurd to envy them their growth unless you'd also like deficits of 6%of GDP and soaring inequality.
As regards our dependence on US and Chinese AI (the subject of my proposal for self-reliance), who would you suggest as alternatives to developing our own capacity?
If DeepSeek delivers on its promise of cheap, accessible AI, we could get our AI from anywhere, off the shelf. I guess generalising from AI to cloud services, I can see that we are pretty well positioned to become self-sufficient, being geographically isolated and rich in energy. But even then, we're more likely to use foreign technology than to reinvent the wheel here.
You seem to be framing all this in terms of C20 arguments about free trade in goods. That's not the right way to think about the information economy. The point isn't comparative advantage, it's who has access to information. Information is a non-rival good, so standard trade theory has nothing to tell us ehere
I know this government is on its last legs but IF they did win the upcoming election (I'm speaking here as someone from a non-economics background:) couldn't they give a focus to the Future made in Australia policy and invest in the manufacture of vaccines and medical devices? It would make Australia less dependent on others, lead to us developing more sophisticated research and manufacturing and also assist in providing aid to counties which need it, especially now that the US has abandoned them.
We could, but only at the expense of things we're already good at. That's generally true, but especially so with 4% unemployment, a number which indicates we have no spare capacity for competing with countries that are much better than us at stuff like manufacturing.
I'm not opposed to industrial policy entirely - the green iron idea is an interesting one - it must be thought through.
I was just trying to think of things we're already good at and the first thing was - digging up raw materials and shipping them overseas to be processed.
Historically, things 'Made in Japan/China' were looked down on as being cheap or second rate but their manufacturing and technology are now highly advanced.
Perhaps it comes down to finding a niche where we could excel. In practical terms, with global warming there will be more viruses and diseases advancing further south (and north) of the Equator. Australia does have the research capabilities and possibly more students choosing STEM subjects so manufacturing of vaccines might be a logical next step.
Well said, John. I wish I could be optimistic that this pretty straightforward and obvious advice would be taken, but the complacency and incompetence of our political elites is regrettably well understood.
John, I just wanted to acknowledge that you are one of the very few economists, along with Paul Krugman who recognizes how (potentially) bad things will get.
I listen to a few other economics related podcasts & they seem to think, the rhetoric from Trump is empty threats & that "he won't actually do it" kind of attitude come through in a lot of them. Whilst people are open to their own opinions, I do think holding onto this belief that it will be more or less business as usual will prove to be detrimental for all of us.
Most of the world is taking that attitude.
AFAICT it’s a coping mechanism. The breakdown of the USA is not something most people are remotely equipped to contemplate.