Even in Australia, which escaped the ravages of the global financial crisis, the political center is proving to be fragile ground.

A decade of easy money since the collapse of Lehman Brothers Holdings Inc. fueled a borrowing binge that’s left Australian households among the world’s most indebted. Combined with flat wages, surging home prices and swelling immigration that’s clogged roads in major cities, many voters feel worse off even though the economy just completed its 27th recession-free year.

Those forces have spurred voter discontent with Australia’s major parties and prompted a leakage of support to fringes of the political spectrum. That helps explain how an insurgency, driven by a small group of conservative former ministers, was this week able to bring down political centrist and former Goldman Sachs banker Malcolm Turnbull as prime minister.

Their goal was to install Peter Dutton, a tough-talking ex- policeman who advocated a right-wing populism in the same vein as Brexit and the rise of U.S. President Donald Trump. He pledged to slash immigration and wind back tax reforms in order to cut electricity bills.

Morrison Wins
In the end, they failed by the narrowest of margins. Turnbull, realizing his own support had crumbled, played for time and demanded Dutton show him a signed petition from a majority of his party’s members before he would call a vote.

That gave time for one of his allies, Treasurer Scott Morrison, to work the phones and eventually win the ballot 45 votes to 40.

“Australia is yet another case of anti-establishment sentiments bubbling up politically around the world over the past few years,” said Sean Kenji Starrs, an associate professor in the Department of Asian and International Studies at City University of Hong Kong. “While Australia’s economy has fared better than many others in the OECD, like elsewhere this growth has not lifted all boats.”

Eoin Treacy's view

When in Melbourne last April, apart from the highly enjoyable repartee with subscribers at The Chart Seminar, two encounters stuck with me. The first was with some of my cousins who run a successful property maintenance company. The eldest son has returned from spending some time overseas with his new wife and they are not yet on the property ladder. Even for people who are well to do by any standards the challenge of affording property in anything that approaches a desirable neighbourhood is a source of angst. When it is difficult for local people to afford housing that is unquestionably going to feed into discontent and populism.

The second was with a Somalian Uber driver who spent the entire journey bragging about how he had two wives back in Somalia and another wife in Melbourne. He couldn’t seem to understand why I did not have at least two wives and was happy to offer me help in finding a few more.

There is no doubt that immigration helps to boost economic growth because it provides young people, eager to work and creates new sources of demand for just about everything. However, multiculturalism works best when there is plenty to go around. On the other hand, when opportunities are not as available and living standards are contracting that is when the big society ideal tends to break down.

Extraordinary monetary policy has boosted assets prices, as designed, but the anticipated trickledown effect has not occurred and that has created a gulf between those who have benefitted and those who have not. The rise of populism is a symptom of that problem and lamented the loss middle ground politics does nothing to appease it.

The inability of mainstream parties to grasp that fact virtually ensures the reaction towards political extremes will persist. Since capital is both global and mobile this is a global phenomenon.