Super Capitalism

Reading "The Asset Class" by Guardian journalist Hettie O'Brien. And its an easy read, with a characteristic personal touch that could just as easily be used in a travel article.

The data is presented through interviews with a variety of people involved in the story that unfolds. Its not academic, its got a broad target audience and that is not a negative. Its taken a quite dry subject and made it available.

It investigates the financial manifestation of neo liberalism through a focus on the use of debt for the acquisition of a range of asset classes. Its a story of the financialisation
(privatisation) of everything that's implausibly entertaining if you step back from contemplating the reality of the outcomes it describes.

I haven't finished it as yet, but it does expose the problem of superannuation funds (pension funds) as a method for attaching ordinary people into a dependence on capitalism, shielding the average worker from the exploitation that is intrinsic to the nature of the system.

The example used is the acquisition of housing in the Danish capital, Copenhagen, by Blackstone, a US private equity firm. Danes were outraged that a US firm was buying up housing cheap, doing minimal renovations and then putting the housing back on the market at substantially increased rents. The Danes acted through legislation to limit rent rises and the housing assets were acquired by Danish pension funds. But that did not essentially alter the dynamic. These same pension funds were doing what Blackstone was doing in a number of other countries to get the returns necessary to ensure the comfortable retirement of Danish pensioners.

After the Blackstone Law came into force, Danish pension funds invested in residential real estate in Belgium, and in Berlin, where one fund became the target of a campaign
launched by the city's tenants' association. The money that such companies invested in housing guaranteed steady returns for their limited partners, but it also increased the likelihood that rents would rise, as these companies sought to create a profit. 'So you have to choose,' Hojte said. 'Do you want higher pensions ... or do you want housing for all?'

The example used can be extrapolated into many different sectors. Most plausible for Australians is the potential for Australian super funds to be drawn into build for rent
schemes. Current operating guidelines for Australian super funds to ensure above inflation returns exposes how the capitalist dynamic would permeate into rent pricing of such projects. Either the super funds accept low return rental performance or they will push rent growth above parity with the CPI.

This could be controlled in the Australian context if governments legislated for rent controls, but there is no barrier to Australian super funds engaging in exploitative investments in other nations. The dynamic would reward such activities.