John Maynard Keynes - the founder of macroeconomics - had a clear warning after World War I: economic extremes will lead to political extremes.
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His warning - published in his essay The Economic Consequences of the Peace - was prophetic, to say the least.
He warned that the German economy was in tatters at the end of World War I and that the reparations being forced on Germany by the war's victors would cause so much economic hardship that extreme political leaders would emerge in Germany, possibly causing another war.
The rest, as they say, is history.
The world, thankfully, is nowhere near those extremes today. But we are on a dangerous path.
Around the world, we are seeing economic extremes fuelling political extremes, and it would be dangerously complacent and naive to think it isn't happening in Australia.
Trump #1 and Brexit were both fueled by social groups suffering from economic extremes: stagnating or declining living standards, the opioid epidemic, declining life expectancies in key demographics, rising inequality, the urban-rural divide, job insecurity - take your pick.
Trump #2 was no different. The worst inflation and cost-of-living crisis since the 1970s saw support for Trump deepen among his base and broaden across almost every demographic.
Continued economic hardship in the UK has seen a massive increase in support for Nigel Farage. Cost-of-living pressures are fueling the far right in France, Germany, Italy and across the EU.
Developing countries are no different. Corruption, job insecurity and inequality saw massive riots across Indonesia in recent weeks. Nepal is burning.
This is already happening in Australia.
Our economic extremes are big and growing. Prices are more than 20 per cent higher than they were just four years ago.
Households lost 14 years' worth of real wage growth over the same period. It will be close to 2040 before households get back to where they were.
Home prices have more than doubled compared to the average annual wage over the last 20 years.
The Productivity Commission warns that the next generation might be the first generation in modern history to have a worse standard of living than their parents.
The political extremes being fueled by these economic extremes are plain for all to see: massive protests against immigration across our capital cities, neo-Nazis marching through Melbourne and accosting the premier in live press conferences.
For the first time, attitudes towards women are worse among young men than older men.
We see it in the polls, too. The primary vote of the Coalition is at the lowest it has ever been as conservative voters flock to One Nation.
Labor's primary vote used to be in the 40s or 50s. These days they celebrate if they aren't in the 20s.
Albo won lots of seats in the last election, but this masks the awkward reality that more than two-thirds of Australians didn't put a one next to his party.
Many Australians argue that what's happening in America couldn't happen here. Australia's electoral system and independent institutions, they argue, protects us.
This is naive.
Consider this: if an Australian political party managed to win both houses of Parliament, a simple Act of Parliament is all it would take to abolish the Australian Electoral Commission, abolish the Reserve Bank, abolish ASIC, the ACCC, the AFP, Treasury, Prime Minister & Cabinet, the Department of Finance and any other government institution that was politically inconvenient.
Few institutions in Australia are constitutionally protected.
The only thing that has stopped this from happening in Australia is luck: luck that parties rarely win both houses of Parliament and luck that, when it does happen, the Prime Minister and their cabinet have no desire to burn the place down.
The US shows what happens when this luck runs out, and it shows that institutions like the Federal Reserve, the FBI, even Congress and the Supreme Court can't do much to stop them.
The warning for all of us is simple: if we let our economic challenges fester, our politics will become even more extreme.
This is a warning for politicians, but it's not only a warning for them. It's a warning for big businesses, small businesses, unions, universities and civil society.
Opposing a reform that will help reduce economic extremes in Australia just because it's not the ideal reform from your perspective is reckless.
READ MORE ADAM TRIGGS:
Beggars can't be choosers, as they say, and the state of the world shows that we are all beggars when it comes to fixing our economic problems.
With the benefit of hindsight, Republicans and Democrats were dangerously complacent in the Bush-Obama years.
They allowed gridlock to persist in Congress over petty bipartisan disagreements, allowing economic extremes - worsened by the global financial crisis - to fester.
This caused enormous pressure in the US political system. This pressure didn't dissipate over time. It just built up until, eventually, it exploded in the form of Trump.
Australia would be wise to learn from their mistakes and fix economic extremes before it's too late.
- Adam Triggs is a partner at the economics advisory firm, Mandala, and a visiting fellow at the ANU Crawford School and a non-resident fellow at the Brookings Institution.
