OPINION: Whatever the positives and the negatives of the 2016 Budget, one thing is certain. It will do nothing to stop the drift toward economic division in New Zealand society.

Left alone this drift will lead to the kind of political upheaval and instability we are already seeing in the United States, Australia, Europe and Britain.

The reason for this is clear. Western democracies like New Zealand agreed some decades ago to deregulate their economies accepting privatisation, globalisation, flexible labour markets, cutting welfare services and the elimination of budget deficits as the new way forward.

Unfortunately, most nations failed to understand that deregulating their economies required them to adopt a range of other policies to ensure that everyone gained from the new approach. International rules should have been drawn up to govern the behaviour of business and promote a fair deal for all. In addition, domestic policy should have ensured everyone got a job with a decent wage.

Investment should have been made in education, lifelong learning and retraining, health care, child care, support for business start-ups, information technology, higher minimum wages – policies that would provide people with the environment they needed to thrive.

In practice many nations, including New Zealand, can point to some investment in such policies. Yet the problems mount. Targeted measures are introduced but things just get worse.

After some four decades of following the deregulation agenda and coping with one economic or financial crisis after another, a majority of voters in many countries have begun to wonder when they are going to get the share of the pie they were promised.

Disappointment has turned to anger and the results can be seen on both the Left and Right of politics. This is where United States presidential hopefuls Donald Trump and Bernie Sanders have come from. Trump champions a dangerous line in nationalism while Sanders asks supporters to believe that they can return to the 1950s.

There are many politicians lining up to peddle the same messages.

I believe that the past is the past. There is no going back. Trump and Sanders represent positions that rest on a world that no longer exists. Trying to resurrect it in whatever form is going to end in tears.

This is why those who understand the disaster that is slowly taking shape in western democracies have to put forward clear workable convincing arguments about how to run a country in the 21st century.

This begins by acknowledging the serious mistakes made during the deregulation era. People were promised that their lives would improve. For the majority this has not happened. The rich have gotten richer and the poor have gotten poorer.

Meanwhile, the middle has struggled to stay afloat. This was predictable and should have been understood by Governments. The rich got richer because they earned their living in the global economy where returns are inevitably higher. Meanwhile those who earned their living in the domestic economy were not going to be able to access these bigger rewards.

In fact, many people found their income stagnating and falling because they were being asked to help make the economy "competitive" by accepting the lower living standards of other countries. In these circumstances Governments needed to convince the winners from the new approach that they would have to share their growing wealth with the wider society. In practice this meant paying enough tax to enable the Government to make the investments needed to ensure the rising tide did indeed lift all boats.

This has not been done. Instead, Governments have sought to cut tax wherever they can in the name of rewarding the winners even more. This has left them with too little money to make a difference. This can only go on for so long before the societal rivets begin to pop and new voices offering a way forward are listened too. The United States is often said to be the trendsetter. Everything that is going to happen in the world happens there first.

If that is true get set for trade wars, protectionism, banning migrants on the basis of their religion, building walls, militarism, racism, sexism, bullying and everything else Trump has succeeded in letting loose. It is to New Zealand's credit that as most Western democracies find themselves with growing constituencies that favour Trump like policies (Le Pen in France, Austria, UKIP in Britain) or with ongoing instability (Australia, Japan) stability and optimism can still be found.

But it would be naive to assume New Zealand can remain immune from what we see elsewhere when we have followed the same policy mix. Urgently, Governments need to start implementing a new social contract. It should say that we continue to support an approach that favours an open trading economy (one that has to operate within globally agreed rules) but we will ensure that the resources are made available through proper and fair taxation to invest in what is needed to move all of us further into the 21st century together.

This will not be easy. It will require political courage and a great deal of skill. But our future depends on it happening. Otherwise, get ready for Trump.

Steve Maharey is the Vice-Chancellor of Massey University, a sociologist and former politician.