Embargoed till 6PM
Check Against Delivery
Disruption goes Mainstream
Report from America
Hon Joe Hockey
Australian Ambassador to the
United States of America
The Sydney Institute
6pm, March 30, 2017
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In the first days after his inauguration, it was widely reported that Donald Trump had chosen to redecorate the
Oval Office – as is the right of every incoming President of
the United States.
As part of putting his own stamp on the most famous office in the world, President Trump chose to hang a portrait of the seventh President of the United States, Andrew Jackson, who was elected in 1828 at the conclusion
of one of the most bitter and divisive presidential campaigns in United States history.
In his quest for the presidency, Jackson unashamedly
campaigned as a populist conservative. He was a fearless,
disruptive individual who was inclined to resolve significant differences with his opponents by engaging in actual
gunfights - that is, duels at twenty paces, with real guns.
In Jackson’s mind you were either on his side or you were
the enemy.
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In particular, Jackson campaigned heavily on his deep disdain for the Washington elite, and he sought to capitalize
on the perception that the US Federal Government was
not “for the people”….
Rather, it was bloated and held its own people in contempt.
Almost 200 years after Jackson served as President, the
United States has once again embraced the campaign of a
disruptive outsider. Americans rejected the status quo
and yearned for someone to put their interests ahead of
all other concerns.
In twenty first century politics, tradition, precedent and
custom mean little to the vast bulk of voters. Respect for
most community institutions in the western world is low
or falling.
The scars of the Global Financial Crisis are deep and painful. The cost of modern terrorism is high. Citizens across
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the western world feel that their governments have failed
to provide them with the personal and economic security
that has been promised for generations.
The combination of the Brexit vote and the US presidential election result shocked commentators, pundits and
pollsters. But it didn't shock millions of voters.
The Seeds of Victory for Donald Trump
On the 2nd of November last year, just 6 days before the
presidential election, I delivered a speech in Sydney in
which – being as diplomatic as a former politician can
hope to be! – I stated that the presidential election in the
United States was too close to call.
Given this had been no ordinary American election campaign, I simply could not shake the feeling that the signs
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were pointing to an outcome that was also in no way ordinary.
In the time since November 8, I have met with a number
of analysts who specialize in assessing the mood of the
American people – not their voting intentions mind you! –
but how they really feel about a range of issues to do with
their lives, their country and the world in which they live.
I have found these interactions to be incredibly insightful
and therefore have chosen to incorporate the primary
work of a number of these experts in my address to you
tonight.
I would like to thank Glen Bolger of Public Opinion Strategies, and also Bruce Mehlman and David Castagnetti of
Mehlman Castagnetti Rosen & Thomas for their graciousness in allowing me to cite some of their excellent analysis
in my address.
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As you will see, their work paints a far more vivid and effective picture than any words could hope to do alone.
Using this analysis, I wanted to quickly recap some of the
key drivers for President Trump’s victory.
SLIDE TWO (SLIDE ONE IS COVER PAGE)
This first slide clearly illustrates that Trump attracted significant support from four traditional Republican constituencies, and importantly, in far greater numbers than Mitt
Romney did in 2012.
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Firstly, non-college educated white voters;
Secondly, those drawn from small cities and/or rural areas;
Thirdly, evangelical Christians; and
Finally, men. According to CNN, Donald Trump secured
53 percent of all votes cast by men.
In a voluntary voting system, all four groups turned out in
large numbers for Donald Trump on November 8. And as
we know, getting out the vote on Election Day in the
United States is a crucial factor for a positive result that
matters.
In focusing on these four key constituencies however,
what should not be lost is the strength of Donald Trump’s
support among groups that so-called experts presumed to
be less receptive to his message.
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Two pertinent examples:
Firstly, Trump secured 29 percent of the votes cast by Hispanic Americans on November 8. That was more than
Mitt Romney secured (27 percent) four years earlier. And
given the hysteria around the Mexican Wall it was a pretty
remarkable vote!
Secondly and perhaps even more striking: Donald Trump
won the votes of a majority of white women – 53 percent
of their total votes cast according to CNN – in an election
where he was running against the first female nominee
for president in the history of the United States of America.
So, while many Australians – and it has to be said many
Americans! – are still scratching their heads at the support
Trump garnered from constituencies such as women and
Hispanic voters, the key takeaway is that there were
much bigger issues driving the votes in the minds of most
Americans.
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Unquestionably, in a nation that celebrates innovation
and success, there has been a cost associated with the advent of digital technology.
Factories have closed, towns have been gutted, wealth
has rarely been more conspicuous and poverty more obvious.
With the emergence of business and job disruptors like
Google, Amazon, Ebay, Uber, tesla and Apple, and with
the comparatively rapid emergence of a truly global trading platform beyond capital markets, people see and feel
a divide in the community.
Crucially, they identify themselves as being on the wrong
side of the line.
This plays out in the daily news.
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For example every conversation about an innovation like
driverless cars and trucks translates into a feeling of job
insecurity for millions of taxi drivers, hire car drivers and
truck drivers.
According to the US Census Bureau the logistics industry is
the single biggest employer of working class white men in
America.
Of course automation and globalization have different impacts on different industries.
Many traditional working class American voters who live
in communities that are dramatically affected by that
modern change, such as coal mining and manufacturing
towns, feel disenfranchised and left behind.
And this is best illustrated by the emergence of a pretty
amazing political divide based on education.
SLIDE THREE
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This slide drills down on a specific – and increasingly critical – aspect of electoral support in the United States: educational attainment.
While significant public commentary since the 2016 election has focused on the role of race, gender and geography, this slide reveals that education is without doubt the
most crucial factor when predicting electoral support – in
fact this data proves it to be the new electoral divide in
the United States.
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Rather than a “Democrat Blue wall” or a “Republican Red
wall” – there actually exists a wall between voting preferences based on differences in the level of educational attainment.
The data is clear: states, like Massachusetts, New York
and California, with the highest percentage of residents
with professional degrees – such as medicine, law and engineering – are much more likely to vote for blue
Democratic candidates.
Conversely, states where there are fewer residents in possession of professional degrees, like Arkansas, Texas and
Iowa, well, they tend to vote red Republican.
I am sure people can think of some parallels here in Australia!
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SLIDE FOUR
So with an increasing education and security divide in the
community, Americans emphatically rejected the concept
of maintaining the same policies Barack Obama had pursued over the last eight years.
Even though President Obama had good poll numbers for
a retiring president, most Americans wanted “change”.
They rejected another Bush and they rejected another
Clinton. They didn't want Republicans or Democrats.
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This quest for change was the single biggest driver of a
vote for a majority of American voters in 2016. And this
slide reveals that the thirst for such change was even
more evident in 2016 than in the historic election of
Barack Obama in 2008, supposedly the high water mark of
change politics.
The early warning signs of the power of change were
most evident in the Republican and Democratic primaries.
Both Donald Trump and Bernie Sanders drew huge
crowds of new energetic supporters to their campaigns.
In truth those new supporters were not wedded to the
old political parties, they were highly motivated advocates
for disrupting the mainstream of politics.
The desire to lash out at the “establishment” was there
for all to see on both sides of politics and it has been
building for years.
For anyone involved deeply in politics this graph is known
as a “government killer” .
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SLIDE FIVE
This slide illustrates that this thirst for change is not a new
phenomenon.
The red line is the percentage of Americans that believe
the country is heading in the wrong direction. They have
felt that way for at least the last twelve years.
They have been given messages of “hope” before. But in
the minds of many voters hope never became a reality.
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If 65 percent of people think the country is heading in the
wrong direction and have done so for more than a decade, when a candidate asks for your vote and implores
you with the rhetorical question…. “what have you got to
lose?”….it has powerful cut through.
That’s what candidate Trump did.
Naturally, if people think the country is heading in the
wrong direction, and they have an opportunity to change
that direction, they will take the risk.
So it is very difficult for an incumbent political candidate
to win based on their track record.
As a result the incumbent can only win if they destroy
their opponent. They have to make the transaction cost of
change so high that voters default to the devil they know
who is better than the devil they don’t know.
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Regrettably this is the most orthodox political play in 21st
century politics. The Clinton Campaign knew this to be
true.
That’s why 100 percent of Hillary Clinton’s advertising dollars featured Donald Trump.
Because Hillary Clinton was labelled an “incumbent”, only
10 percent of Donald Trump’s advertising needed to feature Mrs Clinton.
As a result 95 percent of all political advertising during the
campaign featured Donald Trump – whether it was for
him, or against him.
The more the media, past presidents, Hollywood celebrities and the elites campaigned for Hillary Clinton, the
more it reminded voters that she was the establishment
candidate.
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And when establishment Republicans started campaigning for her, the deal was done. Donald Trump truly became the outsider who would stand up against the “establishment”.
“Drain the swamp” became a devastating cut-through political line.
Of course this was not enough on its own. Even though
Donald Trump had assumed the Jacksonian mantle, it
meant little if he failed to focus on the issues that mattered most to everyday Americans, in particular jobs and
security.
So, ironically, the nominated candidate for America’s
“Grand Old Party” of American politics had to deliver policy disruption that, in places, broke with Republican orthodoxy.
He railed against established Republican policies on free
trade, immigration and religious tolerance.
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And, with Teddy Roosevelt-like enthusiasm, he challenged
big business and sidled up to a military that felt under resourced and over exposed.
SLIDE SIX
This slide helps to reveal part of the answer as to why the
strongman change maker, Donald Trump, was so attractive to many Americans.
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These figures need neither introduction nor context. They
tell the tale of the “hollowing out” of mainstream America
after the Global Financial Crisis – and it is devastating.
For an average American family, their assets nearly halved
in value in the first seven years after the global Financial
Crisis.
The median net worth of many Americans effectively
wound back 33 years to 1983.
Add job insecurity and an aging population to that equation and you have a pretty disgruntled constituency.
For some people in the world, the Global Financial Crisis
has now been reduced to just a bad memory or perhaps a
catchy acronym – G-F-C – but for many Americans, it remains an economic cataclysm from which they, and their
families and communities, have still not recovered almost
a decade later.
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Surely you can see and understand the narrative going
through the minds of these voters…
“My family and my community are going backwards, yet
the elites are ok.
They lecture us on technology, climate change, who we
can marry and whether we can carry a gun. They make billions on Wall Street and in Silicon Valley doing things that
only the smart ones can do ….and I end up paying.
Meanwhile they call us deplorable. They seem to think it’s
a good thing that our factories and coal mines are closing.
When we are threatened with violence in our community
or against our country, we don’t see them going in there
and fighting for us. When did you last see someone from
Wall Street or Silicon Valley join the Marines or join the
Police Force?
We have to fight for ourselves. We need someone to stand
up for our interests”
The American people no longer have confidence that their
traditional institutions are protecting their interests.
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For a nation that has a reputation for always respecting
and admiring their institutions, this graph is the most telling.
SLIDE SEVEN
As you can see there has been a dramatic loss of confidence over the last thirty years in many of America’s most
revered institutions.
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Institutions that are local to a community, or involve protecting a community, are most revered. So small business,
local doctors and local police are respected.
The military is revered because not only is it keeping
Americans safe but there are military bases in virtually
every US state.
For example, Australia has military personnel located in
thirty one US states.
The institutions that have clearly lost the support of the
American people are more removed from their everyday
life.
Big business, big banks, big government and Big Washington, in the form of the Presidency and Congress, have lost
the confidence of vast numbers of Americans.
The Trump campaign didn’t miss this opportunity.
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The candidate railed against the things everyday Americans felt they did not control such as trade deals, immigration policy, big media and, of course, Washington DC.
He lauded the military, police and offered huge tax cuts to
small business.
Since coming to office, the President has not let up on his
attacks.
This has helped to inoculate his support base with the
lines that his supporters can use against his never waning
critics.
For example any claims he does not like that are made by
some media organizations are labeled “fake news”.
His war against the media has popular support.
In his battle with Congress he has popular support.
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SLIDE EIGHT
Channeling this anger at Washington proved highly effective for Donald Trump, as he was seen as the only candidate that was willing to say what many Americans had
been thinking for generations:
That is, that the “establishment” – personified by the federal government in Washington – no longer worked in the
interests of the American people.
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As this research reveals, in 1958, 73 percent of Americans
surveyed agreed that they trusted the US federal government always or most of the time.
By 2015, this figure stood at just 19 percent.
The overwhelming majority of Americans have lost faith in
their government…no matter which party is in power.
As a result, the presidential election held on November 8,
2016, heralded the arrival of disruption into the mainstream of American politics.
SLIDE NINE
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When Donald Trump labeled newspapers, such as the
New York Times and Washington Post as “failing” enterprises, staffed by “fools”, promulgating “fake news”, he
was motivated by some pretty strong anti-Trump opinions.
This slide clearly highlights that less than 5 percent of
newspapers in the United States that made an endorsement, chose to endorse the red Republican candidate in
the presidential election of 2016.
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It is further evidence of the disconnect that exists between the “establishment” in America – including many
sections of the mass media – and the tens of millions of
Americans that chose to vote for Donald Trump.
Rejection of the Establishment: A Global Phenomenon
Beyond the United States, many people throughout the
world are united by their disappointment and anger at institutions and political leaders – the “Establishment” –
that they feel have betrayed and abandoned them.
A closer look at the state of the world reveals that anti-establishment and populist sentiment is widespread in
many regions, although it certainly takes different forms
depending on local conditions.
SLIDE TEN
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This graph illustrates the elusiveness of political stability
and certainty. All the areas colored in have experienced
some form of political disruption over the last five years.
Where there is democracy, then there has tended to be
changes in leadership or government. Where democracy
is weak, there may be a form of authoritarian leadership
that smothers dissent. Alternately, armed insurrection
emerges that challenges the existing governance structures.
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The Centralization of Power & Civil Impotence
Over recent decades the United States – and the world
beyond its borders – has witnessed an incredible centralization of power, especially in the realm of business and
political governance.
The creation and expansion of multilateral institutions –
including the United Nations, the European Union and the
World Trade Organization – have been seen by many as
undermining the once sacrosanct doctrine of Westphalian
sovereignty, and in turn, the belief of regular citizens that
they have the power to speak their mind and influence
the direction of their own communities.
Unlike Australians, who tend to focus on the services provided by government rather than political philosophy underpinning government itself, generally, Americans are opposed to the concept of “big government”. Instead they
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prefer to focus on the Government’s role in protecting and
facilitating the rights and responsibilities of the individual.
While this can be clearly divined from even a casual review
of American history, it continues to be a strong and consistent theme running through modern American society
and culture. One of my favorite examples being the official
slogan of the great state of New Hampshire which is:
“Live free or die”!
While Australians generally seek to defend their rights, I
can’t see any states rushing to embrace such an official
slogan here!
If we are to truly understand the real mainstream of the
United States and the deep disruption it is currently experiencing, it is critical to remember that Americans have a
very different outlook on politics and government based
on their unique history and culture.
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America suffered more casualties in the US Civil War than
it suffered in every other war combined.
So a nation that has the capacity to turn on itself should
celebrate the safety valve of democracy that allows all
corners of the nation to be heard.
Whether it be the United States of America or other parts
of the world, it is clear that there is a connection between
the centralization of political power and the disaffection
and impotence felt by many citizens where this is occurring.
As political and economic power has been increasingly
consolidated in far-away cities – whether it be a capital
city such as Washington or a supra-city such as Brussels –
regular citizens have become increasingly distant from
their own governments, both geographically and often
ideologically.
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They don’t trust institutions that they can’t directly influence.
In an age where power has rapidly been devolved to individuals in their capacity as consumers, either through the
mobility of capital, through global commerce or through
social media, it is time for governments to play catch up
with their citizens.
Without more control over the direction of their countries
and therefore their own future, many citizens in the mainstream of United States society and beyond will continue
to use the ballot box or, God forbid, other means, to
achieve the disruption that they feel is necessary for their
voices to be heard.
Disruption as the new norm?
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So, what does the mainstreaming of disruption mean for
Australia’s relationship with the United States?
In my view we need to avoid the temptation to become
constant critics of the new US Administration because it is
not a carbon copy of the previous Administrations.
The new Trump Administration is very focused on practical policy outcomes.
It is not beholden to ideology or tradition.
It is not in the DNA of the administration to procrastinate
or give undue deference to process.
Whilst the necessary skill sets vary from policy area to policy area, President Trump has clearly chosen a very credible Cabinet.
SLIDE ELEVEN
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In keeping with the quest for a break with the past sought
by many Trump voters, this slide perfectly captures how
this mood has affected the composition of the President
cabinet, specifically:
 There is a reduced number of cabinet appointees
with prior Government experience – a dramatic decrease from the Administrations of both George W
Bush and Barack Obama which rings true with the
stated intention to “drain the swamp”;
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 Further, one in four cabinet appointees have served
as a CEO in their prior career, which is again in keeping with an Administration which focused on deal
making; and
 Lastly, there is not a single cabinet member that currently holds a PhD. A different kind of “Education
wall” to be sure, but as the slide reveals, an obvious
break from past practice.
SLIDE TWELVE
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The new Administration has very little experience in office. It is also going to be challenged by a strident Congress where 72 percent of Republicans have never worked
with a Republican President.
For years many of them have campaigned against the
White House, now they have to work out how to side with
the White House.
We are seeing the complex repercussions of this on a
daily basis in Washington from engagement with the Congress on Intelligence matters to the rollout of an ambitious legislative timetable.
We are only at the very Beginning
At this stage, it is critical for us all to remember that we
are only at the very beginning of the Trump Administration. While pundits will seek to endlessly speculate and
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make definitive statements each and every day about a
range of issues concerning the Trump Administration, it is
wise to avoid such speculation and instead rely on the
facts.
SLIDE THIRTEEN
As of today, we are 69 days into the four-year tenure of
the Trump Administration.
Which means there are 1,392 days to go…or over 95 percent of the term of the Trump Administration still to run.
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If this was a five day international test cricket match, we
would still be in the first session on the first day.
Even more pertinent: as at the 22nd of March, of the 553
key Trump Administration positions requiring confirmation by the Senate:
 495 are still awaiting even the first step in the process - nomination by the President;
 38 are awaiting actual confirmation by the Senate;
and
 A mere 20 have been confirmed to date.
This means that less than 3 percent of nominees are actually in position.
Rather than optimistic or pessimistic, be realistic
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Therefore, I believe it is incumbent upon all of us –
whether we are in Australia or the United States – to focus on the reality of the big picture.
In my view the election of Donald Trump has given keen
observers around the world a unique opportunity to appreciate the United States as it actually is – in all of its immense complexity and diversity.
Like many people and their governments, Australians
have a tendency to view our interactions with the United
States through a narrow prism of our own interests. That
is pretty understandable.
If November 8 reminded us of anything, it is that all politics is local.
And ultimately, it is domestic politics that drives foreign
policy – not the other way around, as some may wish it to
be.
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This formula works for Donald Trump.
SLIDE FOURTEEN
This slide reveals that Republican voters rated President
Trump’s performance at the conclusion of his first two
months in office more highly than that of President
George H.W. Bush, George W. Bush and also amazingly,
Ronald Reagan, at the same point in their own first year in
office.
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At the end of February, 76 percent of Republicans approved of Donald Trump’s performance as President according to the nonpartisan and well-regarded Pew Research Center.
Those people that voted for change are pretty happy with
his performance. So far, they accept that he is delivering
on his promises. He is their President and they are forgiving of his sins. They will continue to cut him more slack as
he tries to shake up the system of Government.
I suspect the failure to repeal the US Affordable Care Act
or “Obamacare” as it is known, will have little negative
impact on Donald Trump’s standing with his own voters.
It will be seen as a failure of the system and will reflect
poorly on the already poorly regarded Congress.
Repeated failure does have a cost.
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The goodwill and tolerance of your voter base can be patient for only so long.
Even though Donald Trump won over Abraham Lincoln’s
log cabin voter, he is clearly not a log cabin kind of guy.
Andrew Jackson had humble beginnings as have many
successful political disrupters over time. So whilst Joe the
Plumber voted for Donald Trump, if things go really bad
for the President, then he will have to fight harder than
ever to convince his heartland voters that he is “one of
them”.
Conclusion
Only two months in, President Trump already has a fair
claim to being a 21st century Andrew Jackson. But it is
early days.
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Donald Trump’s election reflected all the frustrations of a
huge number of Americans that have experienced change
they did not want.
The question for the international community is: will the
frustrations felt by the American people be exported to
the rest of the world during President Trump’s term in office?
Whatever the answer, rest assured, the days of “business
as usual” have come to an end.
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