From the newsrooms of the Sydney Morning Herald and The Age. This is the morning edition. I'm Samantha Salinger Morris. It's Thursday, March 20th. From the relative comfort of our distant homes, it's easy to look at the United States and the grotesque inequality its people suffer and wonder, how did that happen? But it's no accident. It's by choice. Today, international and political editor Peter Hartcher on the historical decisions made by American leaders that have led to this moment and the perfect storm that President Donald Trump has created to supercharge the inequality. So, Peter, I want to start off by asking you what Joseph Stiglitz, the former world Bank chief economist, said last year about the United States and why its citizens suffer so much in comparison to other countries from inequality, because you quote him in your latest column and frankly, it is breathtaking in the literal sense.

From the newsrooms of the Sydney Morning Herald and The Age. This is the morning edition. I'm Samantha Salinger Morris. It's Thursday, March 20th. From the relative comfort of our distant homes, it's easy to look at the United States and the grotesque inequality its people suffer and wonder, how did that happen? But it's no accident. It's by choice. Today, international and political editor Peter Hartcher on the historical decisions made by American leaders that have led to this moment and the perfect storm that President Donald Trump has created to supercharge the inequality. So, Peter, I want to start off by asking you what Joseph Stiglitz, the former world Bank chief economist, said last year about the United States and why its citizens suffer so much in comparison to other countries from inequality, because you quote him in your latest column and frankly, it is breathtaking in the literal sense.

Well, Joe Stiglitz, who got the Nobel Prize for economics, among other credits, the two key points he made were, first, that America has shocking problems of inequality. He said that when you have the incomes of 90% of the population and that is the lowest income, 90% of the population stagnant or falling for a third of a century, you get severe problems. And one that he pointed to was the fact that average life expectancy in America was falling before the pandemic hit. So nothing to do with the pandemic. It's got to do with falling living standards, savage inequality, the difficulty of getting quality healthcare if you don't have money, and all of the other attendant problems.

Well, Joe Stiglitz, who got the Nobel Prize for economics, among other credits, the two key points he made were, first, that America has shocking problems of inequality. He said that when you have the incomes of 90% of the population and that is the lowest income, 90% of the population stagnant or falling for a third of a century, you get severe problems. And one that he pointed to was the fact that average life expectancy in America was falling before the pandemic hit. So nothing to do with the pandemic. It's got to do with falling living standards, savage inequality, the difficulty of getting quality healthcare if you don't have money, and all of the other attendant problems.

The United States is the country in the world with the highest level of inequality, and it's getting worse.

The United States is the country in the world with the highest level of inequality, and it's getting worse.

The highest level.

The highest level.

Of the advanced industrial countries. The highest level of the advanced industrial countries. And to me, what's even more disturbing is we've become the country with the least equality of opportunity.

Of the advanced industrial countries. The highest level of the advanced industrial countries. And to me, what's even more disturbing is we've become the country with the least equality of opportunity.

But the second big point he made. So that's the first one. The second big point he made is that this is by choice, he said. America has a bigger problem with inequality than other developed countries because we've chosen it. This is a policy choice. This is not some natural outcome or, you know, the way things are meant to be. It's a choice made by the American political system to design a country that produces this persistent and savage inequality. That's what Joe Stiglitz said.

But the second big point he made. So that's the first one. The second big point he made is that this is by choice, he said. America has a bigger problem with inequality than other developed countries because we've chosen it. This is a policy choice. This is not some natural outcome or, you know, the way things are meant to be. It's a choice made by the American political system to design a country that produces this persistent and savage inequality. That's what Joe Stiglitz said.

Okay. And this is where it does get really interesting for me, because you've pointed out that free trade is partly to blame for this. So how so?

Okay. And this is where it does get really interesting for me, because you've pointed out that free trade is partly to blame for this. So how so?

Yeah, it is. And it's in the nature of international trade. It's inherent in the system. And as Edmund Burke, the great philosopher of, of conservatism, said in the 18th century, he said, great trade is always attended by great abuses, and inequality is one of those abuses. It's simply because the people who conduct the trading get the profits, not the rest of the country. Right. So here's a good example. If if we, for example, had our iron ore industry, which is our biggest exporter. So 2324 they exported $138 billion worth of iron ore. Now imagine that they paid no tax on that. That would be $138 billion going entirely to their shareholders, a very narrow slice of the population. But because they paid $10 billion in state tax royalties and tens of billions more in federal corporate taxes, that money goes to governments, which then gets to redistribute it to pay for the services that we all enjoy universal health care, the NDIS, the fact that when you get on an airplane, you can have confidence that, you know, air safety, air traffic control is on the job when you dial 000. Somebody's going to answer the phone. You know, this is how redistribution works. The less redistribution of trade profits there is, the more narrowly concentrated are the benefits. And that's exactly what America has done. It's a case study in what happens if you don't redistribute the benefits of free trade. And it is uniquely bad among the developed countries at redistributing the benefits of free trade.

Yeah, it is. And it's in the nature of international trade. It's inherent in the system. And as Edmund Burke, the great philosopher of, of conservatism, said in the 18th century, he said, great trade is always attended by great abuses, and inequality is one of those abuses. It's simply because the people who conduct the trading get the profits, not the rest of the country. Right. So here's a good example. If if we, for example, had our iron ore industry, which is our biggest exporter. So 2324 they exported $138 billion worth of iron ore. Now imagine that they paid no tax on that. That would be $138 billion going entirely to their shareholders, a very narrow slice of the population. But because they paid $10 billion in state tax royalties and tens of billions more in federal corporate taxes, that money goes to governments, which then gets to redistribute it to pay for the services that we all enjoy universal health care, the NDIS, the fact that when you get on an airplane, you can have confidence that, you know, air safety, air traffic control is on the job when you dial 000. Somebody's going to answer the phone. You know, this is how redistribution works. The less redistribution of trade profits there is, the more narrowly concentrated are the benefits. And that's exactly what America has done. It's a case study in what happens if you don't redistribute the benefits of free trade. And it is uniquely bad among the developed countries at redistributing the benefits of free trade.

Okay. So tell us about this. So Trump is cracking down on free trade. He's forcing Americans to pay higher prices for their goods. And then at the same time, he's gone wild on cutting back on the government. He's not redistributing. So what sort of programs is he cutting and how are they actually predicted to impact Americans in need?

Okay. So tell us about this. So Trump is cracking down on free trade. He's forcing Americans to pay higher prices for their goods. And then at the same time, he's gone wild on cutting back on the government. He's not redistributing. So what sort of programs is he cutting and how are they actually predicted to impact Americans in need?

Well, he's said that he's going to cut $2 trillion from federal government outlays, which is very ambitious, how you do that without shutting down one of the biggest expenditures. So Social Security being the biggest or the defense budget doesn't seem, according to federal budget experts in the US, to be possible, but he's trying to do it without savaging any of those. So far, it's been a comedy of errors. And then there are Americans getting hurt across a whole swathe of places.

Well, he's said that he's going to cut $2 trillion from federal government outlays, which is very ambitious, how you do that without shutting down one of the biggest expenditures. So Social Security being the biggest or the defense budget doesn't seem, according to federal budget experts in the US, to be possible, but he's trying to do it without savaging any of those. So far, it's been a comedy of errors. And then there are Americans getting hurt across a whole swathe of places.

At a gathering of conservatives yesterday, Elon Musk brandished a chainsaw gifted to him on stage and said that more cuts are on the way.

At a gathering of conservatives yesterday, Elon Musk brandished a chainsaw gifted to him on stage and said that more cuts are on the way.

This is the chainsaw for bureaucracy. Chainsaw.

This is the chainsaw for bureaucracy. Chainsaw.

It's the employees getting sacked. Okay, we know about that, but it's the unintentional damage. I mean, this guy has been given. Elon Musk has been given the keys to the Treasury, a chainsaw and a presidential license to kill. And that's what he's doing.

It's the employees getting sacked. Okay, we know about that, but it's the unintentional damage. I mean, this guy has been given. Elon Musk has been given the keys to the Treasury, a chainsaw and a presidential license to kill. And that's what he's doing.

You ask, like, how can you find waste in, like, in DC? I'm like, look, it's like being in a room, you know? And there's the wall. The roofs and the floor are all targets. So it's like you're going to close your eyes and go shoot in any direction because you can't miss.

You ask, like, how can you find waste in, like, in DC? I'm like, look, it's like being in a room, you know? And there's the wall. The roofs and the floor are all targets. So it's like you're going to close your eyes and go shoot in any direction because you can't miss.

So summarily, you've got the world's richest man cutting off welfare payments to some of the poorest people in America. It's just an obscene thing to do. But then there's the really dangerous bungle. So, for example, they were cutting staff at the agency that keeps us nuclear weapons and nuclear stockpiles safe. When complaints about this reached the Congress, Congress raised it with the white House, and they quickly reversed those sackings, that sort of unintentional bungle by people who don't understand government systems and have no expertise in it. That's what's going on. And and across the board cut that Musk thought would be genius was to suspend or to limit government agency credit cards to $1 spending limit, which instantly cut into dozens and dozens of important services. For example, Defense Department research on how to protect troops right the way down to picking up garbage from national parks. Suddenly, all these services, which were routinely paid for with government credit cards, had to just cease to exist. And it's affected millions of people, thousands of functions. And the full extent of this chaos will only become clear when the exercise is finished. But a lot of people are hurting and most of that hurt is unintentional.

So summarily, you've got the world's richest man cutting off welfare payments to some of the poorest people in America. It's just an obscene thing to do. But then there's the really dangerous bungle. So, for example, they were cutting staff at the agency that keeps us nuclear weapons and nuclear stockpiles safe. When complaints about this reached the Congress, Congress raised it with the white House, and they quickly reversed those sackings, that sort of unintentional bungle by people who don't understand government systems and have no expertise in it. That's what's going on. And and across the board cut that Musk thought would be genius was to suspend or to limit government agency credit cards to $1 spending limit, which instantly cut into dozens and dozens of important services. For example, Defense Department research on how to protect troops right the way down to picking up garbage from national parks. Suddenly, all these services, which were routinely paid for with government credit cards, had to just cease to exist. And it's affected millions of people, thousands of functions. And the full extent of this chaos will only become clear when the exercise is finished. But a lot of people are hurting and most of that hurt is unintentional.

We'll be right back. And it's interesting, though, because you take us through in your column how the Republican Party does have a very long history of, as you put it, propagandizing against government as something fundamentally undesirable, harmful, illegitimate. But of course, Trump is taking this to new extremes. And you dropped another quote that you have to give it to us because it's what Elon Musk, he put on social media before deleting it. So tell us what he wrote, because I think it kind of goes to what their agenda is I guess.

We'll be right back. And it's interesting, though, because you take us through in your column how the Republican Party does have a very long history of, as you put it, propagandizing against government as something fundamentally undesirable, harmful, illegitimate. But of course, Trump is taking this to new extremes. And you dropped another quote that you have to give it to us because it's what Elon Musk, he put on social media before deleting it. So tell us what he wrote, because I think it kind of goes to what their agenda is I guess.

Yeah, absolutely. Well, I'll just quickly trace the evolution of the Republican rhetoric on this subject, because it's been a relentless campaign against the very existence of government. Not government, you know, abuse or bungling the concept of government as an inherent evil. Ronald Reagan, famously in his inaugural in 1981, said the government is not the solution to our problems. The government is the problem. And then the next threshold was crossed by Grover Norquist, who's a very famous American campaigner against government. And he still heads a body called Americans for Tax Reform, he said. It's not that I want to abolish government. I just want to shrink it down to a size where I can drag it into the bathroom and drown it in the bathtub. And then that was 2001, and now we come to 2025, where in the last few days, Elon Musk posted this genius comment, brilliant insight into the nature of government, where he said Hitler, Stalin and Mao did not kill tens of millions of people. Their public sector employees did.

Yeah, absolutely. Well, I'll just quickly trace the evolution of the Republican rhetoric on this subject, because it's been a relentless campaign against the very existence of government. Not government, you know, abuse or bungling the concept of government as an inherent evil. Ronald Reagan, famously in his inaugural in 1981, said the government is not the solution to our problems. The government is the problem. And then the next threshold was crossed by Grover Norquist, who's a very famous American campaigner against government. And he still heads a body called Americans for Tax Reform, he said. It's not that I want to abolish government. I just want to shrink it down to a size where I can drag it into the bathroom and drown it in the bathtub. And then that was 2001, and now we come to 2025, where in the last few days, Elon Musk posted this genius comment, brilliant insight into the nature of government, where he said Hitler, Stalin and Mao did not kill tens of millions of people. Their public sector employees did.

I mean, that is a bomb drop if ever I've heard one.

I mean, that is a bomb drop if ever I've heard one.

Yeah, and it's a stupid thing to say for many, many reasons. And that's why he then he soon deleted it. But for the purposes of this conversation about the campaign against government and the existence of government, it inherently implies that, uh, public sector employees in those cases were all genocidally evil because they were public sector employees. Just an absurd thing to say. And American public sector unions rushed to defend their members, saying, you know, our, our nurses, firefighters, librarians and others take care of communities and make them healthier and stronger. They're not just all genocidal maniacs. So that's what Musk said. That reveals the sort of madness that's taken hold in his brain, and the way that the relentless campaigning against government, starting from Reagan onwards, over the last 44 years, has built up a real head of steam to the point where you've now got Musk going around with his chainsaw, with presidential license, doing all sorts of horrible things to find enough savings to pay for the tax cuts that Donald Trump has promised to give out, to extend and to give out, which are mainly to rich people and corporations. That's the agenda.

Yeah, and it's a stupid thing to say for many, many reasons. And that's why he then he soon deleted it. But for the purposes of this conversation about the campaign against government and the existence of government, it inherently implies that, uh, public sector employees in those cases were all genocidally evil because they were public sector employees. Just an absurd thing to say. And American public sector unions rushed to defend their members, saying, you know, our, our nurses, firefighters, librarians and others take care of communities and make them healthier and stronger. They're not just all genocidal maniacs. So that's what Musk said. That reveals the sort of madness that's taken hold in his brain, and the way that the relentless campaigning against government, starting from Reagan onwards, over the last 44 years, has built up a real head of steam to the point where you've now got Musk going around with his chainsaw, with presidential license, doing all sorts of horrible things to find enough savings to pay for the tax cuts that Donald Trump has promised to give out, to extend and to give out, which are mainly to rich people and corporations. That's the agenda.

So then, Peter, I guess just to sum up, you know, it sounds like Trump's got this pincer strategy. You know, he's cutting back on free trade and he's slashing the government. And I guess it's something of a perfect storm for just turbocharging this inequality in the US. So our country such as ours just aiding this process then by trying to placate Trump, because you've quoted Australian Trade Minister Don Farrell as saying, you know, he's working on offering Trump an offer he can't refuse. Yes. So I guess just tell us what Don Farrell was talking about. And yeah, if this is something of an opportunity, I guess, for countries like ours to stand up to Trump.

So then, Peter, I guess just to sum up, you know, it sounds like Trump's got this pincer strategy. You know, he's cutting back on free trade and he's slashing the government. And I guess it's something of a perfect storm for just turbocharging this inequality in the US. So our country such as ours just aiding this process then by trying to placate Trump, because you've quoted Australian Trade Minister Don Farrell as saying, you know, he's working on offering Trump an offer he can't refuse. Yes. So I guess just tell us what Don Farrell was talking about. And yeah, if this is something of an opportunity, I guess, for countries like ours to stand up to Trump.

I think what governments like the Australian government and others are doing is just putting a Band-Aid on the most immediate symptoms and the ones that they think they can control. So in Australia's case, it's the tariffs that the US is putting on steel and aluminium and is planning to put on other products as well. So Farrell just wants that problem to go away. So he's looking at what menu of things can I offer the Trump administration in exchange for getting them to remove the tariffs? Because governments recognise they can't persuade the US Trump to change his mind on either governments in the nature of government and government spending or free trade. So, you know, if you put those two ideas together, the campaign against government is obviously a right wing campaign. The campaign against free trade is essentially, for most of the last half century, been a left wing campaign driven by the US trade union movement, and they've come together. They're both taking full shape in the form of the Trump administration and their bad ideas. You need international trade to generate wealth for your country, and you need government to redistribute it in the form of whether it's income support, welfare support, health services, the NDIS, universal healthcare, Medicare, whatever it is to redistribute those profits to the public. But instead of fixing the problems of inherently unfair free trade and the concept, you know, just making government more efficient and run better instead of fixing the problem and making the system work better. He's pairing these two ideas, one from the left, one from the right, in a uniquely bad combination, which means that the net effect will be America will have less wealth and it will be more unfair. Where's the upside in this?

I think what governments like the Australian government and others are doing is just putting a Band-Aid on the most immediate symptoms and the ones that they think they can control. So in Australia's case, it's the tariffs that the US is putting on steel and aluminium and is planning to put on other products as well. So Farrell just wants that problem to go away. So he's looking at what menu of things can I offer the Trump administration in exchange for getting them to remove the tariffs? Because governments recognise they can't persuade the US Trump to change his mind on either governments in the nature of government and government spending or free trade. So, you know, if you put those two ideas together, the campaign against government is obviously a right wing campaign. The campaign against free trade is essentially, for most of the last half century, been a left wing campaign driven by the US trade union movement, and they've come together. They're both taking full shape in the form of the Trump administration and their bad ideas. You need international trade to generate wealth for your country, and you need government to redistribute it in the form of whether it's income support, welfare support, health services, the NDIS, universal healthcare, Medicare, whatever it is to redistribute those profits to the public. But instead of fixing the problems of inherently unfair free trade and the concept, you know, just making government more efficient and run better instead of fixing the problem and making the system work better. He's pairing these two ideas, one from the left, one from the right, in a uniquely bad combination, which means that the net effect will be America will have less wealth and it will be more unfair. Where's the upside in this?

Exactly. And then so I guess governments around the world, including ours, are trying training for these band aids. And will this get even worse? Because I was reading that. At the same time, Donald Trump's also rolling back regulations that will make it easier to extract and produce fossil fuels. And now companies from around the world are sort of lining up, it seems like, to buy American liquefied natural gas as a way of placating Trump. So is that going to be the next, I guess, stage of just horror to come out of this uniquely use of bad ideas by the Trump administration?

Exactly. And then so I guess governments around the world, including ours, are trying training for these band aids. And will this get even worse? Because I was reading that. At the same time, Donald Trump's also rolling back regulations that will make it easier to extract and produce fossil fuels. And now companies from around the world are sort of lining up, it seems like, to buy American liquefied natural gas as a way of placating Trump. So is that going to be the next, I guess, stage of just horror to come out of this uniquely use of bad ideas by the Trump administration?

Well, other countries have retaliated to the Trump tariffs, and that makes the whole situation worse. Australia has kept its head. Other countries to the Brits, the Japanese, they're not retaliating, but the Canadians, the most importantly, the EU are putting retaliatory tariffs on the US. And Trump is responding by escalating and putting extra tariffs on their tariff on top of their tariffs. And this generates a loss of income worldwide and generates inflation because a part of the tariffs go into the end cost of consumer goods. And in turn that will eventually, at some point force central banks if they persist, if this trade war goes on for central banks to raise interest rates, and that slows economies and the whole economy suffers. And that's going to become a global problem if this trade war continues and continues to escalate. So within that, there are thousands, millions of individual problems. And by severing government programs from which the US has benefited, but also the world has benefited, there's a whole series of other problems and a very pressing, strategic and serious one for Australia is that US aid has cancelled all its aid projects to the Pacific island states. Well, guess who's going to take advantage of that? Our Chinese Communist Party friends are going to walk in and effortlessly win local support and approval by replacing an absent us. So the problems that will multiply out of this attack of unmitigated and unmanaged bungling are enormous, and we can only hope that they're recognised and that Trump can somehow correct.

Well, other countries have retaliated to the Trump tariffs, and that makes the whole situation worse. Australia has kept its head. Other countries to the Brits, the Japanese, they're not retaliating, but the Canadians, the most importantly, the EU are putting retaliatory tariffs on the US. And Trump is responding by escalating and putting extra tariffs on their tariff on top of their tariffs. And this generates a loss of income worldwide and generates inflation because a part of the tariffs go into the end cost of consumer goods. And in turn that will eventually, at some point force central banks if they persist, if this trade war goes on for central banks to raise interest rates, and that slows economies and the whole economy suffers. And that's going to become a global problem if this trade war continues and continues to escalate. So within that, there are thousands, millions of individual problems. And by severing government programs from which the US has benefited, but also the world has benefited, there's a whole series of other problems and a very pressing, strategic and serious one for Australia is that US aid has cancelled all its aid projects to the Pacific island states. Well, guess who's going to take advantage of that? Our Chinese Communist Party friends are going to walk in and effortlessly win local support and approval by replacing an absent us. So the problems that will multiply out of this attack of unmitigated and unmanaged bungling are enormous, and we can only hope that they're recognised and that Trump can somehow correct.

Well, it's quite a note to end on hartcher, but it gives us lots to think about. So as always, I have to thank you for your time.

Well, it's quite a note to end on hartcher, but it gives us lots to think about. So as always, I have to thank you for your time.

Always a pleasure talking about the things that are going wrong in the world.

Always a pleasure talking about the things that are going wrong in the world.

Exactly. Well, like you always say, we've got to face them front on.

Exactly. Well, like you always say, we've got to face them front on.

Absolutely. Thanks, Samantha.

Absolutely. Thanks, Samantha.

Today's episode of The Morning Edition was produced by myself and Josh towers. Our executive producer is Tammy Mills. Tom McKendrick is our head of audio. The Morning Edition is a production of The Age and The Sydney Morning Herald. To support our journalism, subscribe to us by visiting The Age or smh.com.au. Forward slash, subscribe and sign up for our Morning Edition newsletter to receive a comprehensive summary of the day's most important news, analysis and insights in your inbox every day. Links are in the show. Notes. I'm Samantha Selinger. Morris. This is the morning edition. Thanks for listening.

Today's episode of The Morning Edition was produced by myself and Josh towers. Our executive producer is Tammy Mills. Tom McKendrick is our head of audio. The Morning Edition is a production of The Age and The Sydney Morning Herald. To support our journalism, subscribe to us by visiting The Age or smh.com.au. Forward slash, subscribe and sign up for our Morning Edition newsletter to receive a comprehensive summary of the day's most important news, analysis and insights in your inbox every day. Links are in the show. Notes. I'm Samantha Selinger. Morris. This is the morning edition. Thanks for listening.