Weekend Edition: A new world reorder, with FT’s Martin Wolf
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Is the world heading into a new order under a second Trump term?
So are we heading into a new world order? One where Donald Trump is gonna grow the US economy, presumably at the expense of all others? Is that gonna work for him? And where does that leave the rest? With China and Europe both struggling to grow as it is, do they even have a plan about how they're gonna fix their problems? At least Donald Trump has a plan. Whether it works or not, well that is a completely different question. That's this week. The morning call from NAB with Phil Dobby, the weekend edition. So to look at all of that, I'm joined by Martin Wolfe. He's the Chief Economics Commentator at the Financial Times in London. Very glad to have you with us today, Martin. So I wonder what Donald Trump is actually trying to achieve.
Uh the US it's got the the highest GDP per capita, it's got very low unemployment. Uh they've got cheaper manufactured goods made overseas, which is Sort of the idea behind Ricardo's comparative advantage, isn't it really? Here it is working. Uh 'cause you you know, they're they're able to employ themselves in other sectors like the services sector. I mean, you wrote about this in your last FT piece. Uh more and more people are getting moving to the services sector, which is where there is demand, where pay is generally higher. So why does he want to go backwards?
Yes, I agree. Uh very much so. Uh I mean your the premise of your question is that there's some sort of coherent plan here, uh which has been worked out in a way that professionals in economics or finance or business more broadly would understand. But there hasn't been. There isn't. And that's not the way to think about Donald Trump. He has instincts and emotions and prejudices. prejudices. He has absolutely no model in his head of how the economy works and fits together and how he adds up. I mean it is rem important to remember he was an extremely unsuccessful businessman. He has had one failed venture after another. He uh he got himself into a situation in which basically no reputable Financial institution in America would fund him.
And that was already uh 30 years ago. So the important thing to understand about him is he's a terrific demagogue. And he sold this view of the world, his view of the world that people have been cheated, people have been maltreated by illegal. Demo the sort of people who vote d democratic, uh vote for the Democrats. And but of course, by foreigners, he sold them this. This is the core of it. A set of emotions about the world, which is the basis of his m MAGA base, make America great again. Which means, as far as I can see, sort of make it like it was back in the fifties and sixties when women weren't any trouble and black people People weren't any trouble, and there were wonderful industrial jobs which are quite secure, and you were relatively highly paid people uh of the sort who were voting for him.
And uh I will bring that back. That's the problem. Now he's gonna have a dry and
Yeah, well and he's convinced half Amer America of that. But also, I mean, you know, you talk about sensible thinking people. People with money are putting it into America. I mean, we've seen this strengthen the US dollar, we've seen the share market skyrocketing uh since uh since Donald Trump's uh you know, the news of his presidency uh w emerged. Uh so money is flowing into the United States, so obviously there's a lot of belief behind what he he intends to do.
Well I think this is I mean this is always interesting. I I I mean I have a couple of views about this. I think money is very, very bad at predicting politics. And it's very, very bad at predicting catastrophe.
What does Martin Wolf say about Trump’s lack of an economic plan?
I mean y look at the stock markets before the financial crisis. Look at the valuation of banks before the financial crisis. So I actually don't tend to the view that this sort of that money is in aggregate that smart, but it's very good at seeing short term opportunities. And and the the the the point is, first the US, as you pointed out, is the strongest economy in the world by far. Second, if there is a trade war, it will probably damage everybody else more than the US.
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Chapters
8 chapters
1
Is the world heading into a new order under a second Trump term?
0:01–3:48
2
What does Martin Wolf say about Trump’s lack of an economic plan?
3:48–8:04
3
How will Trump’s tax cuts and higher interest rates affect the US economy?
8:04–13:00
4
Will a US‑China trade war force manufacturers to relocate production to America?
13:00–17:47
5
What structural problems are limiting China’s future growth?
17:47–22:09
6
How might Europe respond to US protectionism and a fragmented global market?
22:09–28:24
7
What are the long‑term consequences of a fragmented, less‑competitive world?
28:24–33:12
8
What does this new world order mean for Australia’s role in the global economy?
33:12–37:37