Terry McCrann: BHP chief a Donald Trump ‘disbeliever’
BHP CEO Andrew Mackenzie has “outed himself” as one of those business “Trump disbelievers” — publicly joining prime minister Malcolm Turnbull in acting as if Hillary Clinton had won the US presidential election, writes Terry McCrann.
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WELL, it only took one day: BHP CEO Andrew Mackenzie has “outed himself” as one of those business “Trump disbelievers” I referred to on Monday — publicly joining prime minister Malcolm Turnbull in acting as if Hillary Clinton had won the US presidential election 16 months ago.
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I recommend Mackenzie have a chat — a long chat — to Visy’s Anthony Pratt, who not only has vividly demonstrated he knows that the guy in the White House is not “Hillary with a Trump mask and a comb-over”, but has completely refocused his business not merely just to accept the Trump reality, but to profit from it.
Such a chat might save Mackenzie from uttering utterly fatuous remarks like he did yesterday, when he described Trump’s steel and aluminium tariffs as a “black day for the world and business”.
Quite apart from the fatuous lament that President Trump wasn’t behaving like a “conventional president”, like a President Clinton, would have — following all the usual (and usually, pointless) geopolitical pieties and processes.
Quite apart from that, he really should know that the practical direct impact of the tariffs will be four-fifths of five-eighths of, well, very little.
No, of course they are not going to instantly “solve” the US’s massive trade deficit, mostly with China; and yes the textbooks — and all those post-war geopolitical and geo-economic pieties about free trade are half-right.
But it’s the “half” part of half-right that is the important part and the part a CEO like Mackenzie should know. That it’s a fantasy to believe we have anything remotely like “free trade”.
Yes, “we” can and do play it by the textbook and eliminate tariffs. But we are babes in the wood against especially the Europeans, the Chinese, the Japanese, and a host of others who all mouth “free trade pieties” while using non-tariff barriers to protect their industries, their profits and their jobs.
The aluminium industry is a most telling example. Both BHP and Rio Tinto put their shareholder money where their naive and, frankly, inept free-trade beliefs were.
BHP bought Billiton and its aluminium business; Rio even more ineptly bought Alcan — both, in the quaint belief that China would cut back its inefficient local aluminium production which was flooding the global market.
There was another even more inept flavour to Rio’s purchase: it believed that countries would rapidly cut back on coal-fired power, in the great cause of fighting — no less than, the greatest moral challenge of our time — global warming. Alcan’s aluminium was mostly powered from hydro.
Well, China did not cut back on its inefficient aluminium production — mostly fed by coal-fired power. And the world, apart from Australia, has kept building coal fired power stations.
BHP threw away maybe $US20 billion of value on its aluminium stupidities and naiveties; Rio threw away even more — over $US30 billion.
If Mackenzie wants a real black day for the world and for business, I’ll give him the way business leaders like him have signed up to all the global warming hysteria and “key under the street-light” solutions that are embraced to “solve it”.
It sort of makes you want the Chinese, say, to start putting their money where Mackenzie & Co’s mouths are.
Mackenzie & Co keep intoning their religious beliefs in the evils of carbon dioxide. Right, I’d like to see the Chinese respond: well, we’ll stop buying coal — both energy and met — and iron ore from you.
We’d hate to be the ones luring you into doing something that’s killing Gaia.
Ahead of that “saving Gaia day”, I’d advise Mackenzie — and his board — to take a crash course in what might be termed the “Trump reality”.
First off, repeat 40 times to yourself each night: Hillary Clinton did not win the election. Donald Trump did.
And then make a big, big effort to try to understand that no, he has not and will not, allow himself to be persuaded by all the “right thinking people” to nevertheless behave in exactly the same way a President Clinton would have.
Like a conventional president, doing the conventional things.
Although true, maybe narrowly it’s not that important for Mackenzie, for the same reason that the PM can remain blissfully ignorant.
Trump is certainly going to outlast Turnbull; he probably will outlast Mackenzie as well.
RBA SITS PAT AGAIN: GREAT
THE Reserve Bank used to take a punt — making an interest rate decision the day before official figures on the economy surface could leave it with egg on its collective face.
Contrary to what you might expect, the RBA does not know what the ABS’s official GDP figures will show on Wednesday. It can make a pretty good estimate, but the ABS does not give it a “heads-up”.
The RBA made Tuesday’s rate decision in the “GDP dark”, so to speak. Except these days, “being in the dark” is no longer such a big deal.
The RBA is pretty much locked into a “no-rate change future” just as it’s been locked into a “no-rate change past”, going all the way back to the last meeting under Glenn Stevens in September 2016.
There’s nothing in the quarterly GDP figures which could cause the RBA to slash rates to try to head-off a recession. Just as there’s nothing in the quarterly CPI figures that could cause it to hike rates to fight inflation.
Inflation is under lock and key just below 2 per cent. While the combination of President Trump’s contemporary reality and the Fed’s promiscuous monetary past is underwriting solid and sustained world growth. Plus, for us, still solid China.
Repeat after me: we live in a world made by presidents Trump and Xi. At least, the RBA knows that.
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