A fund to fund a fund - this reflects the financialised nature of our economic thinking i.e. that apparently you fix problems not by actually doing something but instead by some 'innovative' financial method such as printing more money, speculating on bond yeilds (as in this case), 'hedging', 'better risk management' (just hiding or buck-passing risk).
I've started following you to gain from all your expertise on this issue ... however I think your argument could be refined as I don't think this statement is unambiguously correct: 'On the funding side of the ledger, every billion dollars put in a fund for housing is a billion dollars that can’t be spent elsewhere.' The difference government makes is in initiating economic activity - by investing money government gets activity happening that acts as a money accelerator throughout the economy. This sentence reflects a closed-economy/crowding out theory view that is not correct. Governments can spend money, reap the returns and then spend more - this is the limitation of the 'opportunity cost' approach. The MMT or similar approaches have pointed out that what matters is how real resources are used, which is basically what you're saying.
Noting the above I obviously agree with the conclusion, don't try to find a 'magic' financial solution - just build more houses. That said, I think the 'more supply' option is a very capitalist-friendly and non-offensive option. We need to start penalising housing speculation (another magic financialisation solution like a get-rich-quick scheme for punters), which is the REAL cost of housing increases.
You seem to be saying we should think the logic through completely - "why not have a 20 billion fund" "why only spend on housing"
My view is we absolutely should have a very large fund at least as big as Aus GDP. For the purpose of socializing investment returns. The returns can be used - in conjunction with our existing tax system more or less - to provide all the services a modern society needs. We clearly need more funds for the NDIS aged care. Free meals for school children can be a good investment. There are lots of public goods that benefit everyone.
The policy suggested by the ALP is not very coherent. But the idea of socialized wealth funds is a great one. A lot of the pushback seems to have come from hedge fund managers whos position seems to be 'get of my turf'. They should be worried because the government can easily do just as good a job as them of managing investment capital.
A fund to fund a fund has all the smell of appealing to the bush economist vote. There is no shortage of funds for investment, but investors can get better, more hassle-free returns by avoiding providing housing generally and especially social housing. But who is volunteering to pay for improving the returns and removing the hassle?
Part of the problem seems to be government accounting on a cash rather than an accrual basis.
It does seem strange to privatise things like infrastructure and then buy it back on the stock market, except most got bought by Private Equity and delisted, gov can still be buying back commbank and Telstra. + mining and software lol
Do people “like” the existing social housing though? What about stigma, exclusion and breaking inter generational cycles? I always thought it would be best for gov to buy 1 random apartment on every street for social housing (in normal times… not now, as it will exacerbate the housing supply shortage)
This is just daft neo-liberal logic trying to "fund" social housing out of leveraged non-housing assets rather than the leveraging on the land itself. I suspect it has something to do with an obsession for cashflow rather than paper returns you could get from simply owning the land.
The irony is this sort of moves towards the old Labor objective of nationalising all industries. Like how the Bank of Japan owns a huge portion of their stock market, we are now seeing proposals to "buy non-housing assets", which will most likely take the form of stocks in publicly listed companies and bonds. Effectively government will start nationalising portions of the stock market and financing corporate bondings in the bond market. Bizarre really
A fund to fund a fund - this reflects the financialised nature of our economic thinking i.e. that apparently you fix problems not by actually doing something but instead by some 'innovative' financial method such as printing more money, speculating on bond yeilds (as in this case), 'hedging', 'better risk management' (just hiding or buck-passing risk).
I've started following you to gain from all your expertise on this issue ... however I think your argument could be refined as I don't think this statement is unambiguously correct: 'On the funding side of the ledger, every billion dollars put in a fund for housing is a billion dollars that can’t be spent elsewhere.' The difference government makes is in initiating economic activity - by investing money government gets activity happening that acts as a money accelerator throughout the economy. This sentence reflects a closed-economy/crowding out theory view that is not correct. Governments can spend money, reap the returns and then spend more - this is the limitation of the 'opportunity cost' approach. The MMT or similar approaches have pointed out that what matters is how real resources are used, which is basically what you're saying.
Noting the above I obviously agree with the conclusion, don't try to find a 'magic' financial solution - just build more houses. That said, I think the 'more supply' option is a very capitalist-friendly and non-offensive option. We need to start penalising housing speculation (another magic financialisation solution like a get-rich-quick scheme for punters), which is the REAL cost of housing increases.
You seem to be saying we should think the logic through completely - "why not have a 20 billion fund" "why only spend on housing"
My view is we absolutely should have a very large fund at least as big as Aus GDP. For the purpose of socializing investment returns. The returns can be used - in conjunction with our existing tax system more or less - to provide all the services a modern society needs. We clearly need more funds for the NDIS aged care. Free meals for school children can be a good investment. There are lots of public goods that benefit everyone.
The policy suggested by the ALP is not very coherent. But the idea of socialized wealth funds is a great one. A lot of the pushback seems to have come from hedge fund managers whos position seems to be 'get of my turf'. They should be worried because the government can easily do just as good a job as them of managing investment capital.
A fund to fund a fund has all the smell of appealing to the bush economist vote. There is no shortage of funds for investment, but investors can get better, more hassle-free returns by avoiding providing housing generally and especially social housing. But who is volunteering to pay for improving the returns and removing the hassle?
Part of the problem seems to be government accounting on a cash rather than an accrual basis.
A fund to fund a fund! 😃😃😃😃 you are the best explainer.
It does seem strange to privatise things like infrastructure and then buy it back on the stock market, except most got bought by Private Equity and delisted, gov can still be buying back commbank and Telstra. + mining and software lol
Do people “like” the existing social housing though? What about stigma, exclusion and breaking inter generational cycles? I always thought it would be best for gov to buy 1 random apartment on every street for social housing (in normal times… not now, as it will exacerbate the housing supply shortage)
This is just daft neo-liberal logic trying to "fund" social housing out of leveraged non-housing assets rather than the leveraging on the land itself. I suspect it has something to do with an obsession for cashflow rather than paper returns you could get from simply owning the land.
The irony is this sort of moves towards the old Labor objective of nationalising all industries. Like how the Bank of Japan owns a huge portion of their stock market, we are now seeing proposals to "buy non-housing assets", which will most likely take the form of stocks in publicly listed companies and bonds. Effectively government will start nationalising portions of the stock market and financing corporate bondings in the bond market. Bizarre really