The Plan Is To Privatise EVERYTHING. Here’s How | Aaron Bastani meets Brett Christophers

they compared outcomes in Care Homes owned by asset managers with other privately owned Care Homes across the whole of the US and they found that mortality rates were substantively higher in Care Homes owned by asset managers your rent is getting more expensive your bills are getting more expensive everything it seems is getting more expensive why well well a big part of the explanation is financialization people in the financial services making tremendous amounts of money while Ordinary People struggle many get poorer but it turns out the Masters of the Universe those running the financial services aren't necessarily the cliches and stereotypes we often think about they aren't the Gordon gecko of yester year the investment bankers who often come to mind in fact the companies who increasingly control much of the infrastructure we depend on are asset managed funds they control tens of trillions of dollars worth of infrastructure but here's the thing that isn't enough because they broadly want all of it yes when it comes to the public sphere these people want to privatize everything now this may sound complex quite esoteric but I don't want you to worry because today's guest has written a brilliant book and is a fantastic communic Ator when it comes to All Things asset managed funds Asset Management Society related Brett Christophers welcome to Downstream thanks for having me we are talking about a very complicated subject today um and I don't want people to be put off because actually a it's hugely interesting B the insights you've got in this book which we'll be discussing are really important and I actually think I think kind of intriguing um and finally what I think you've achieved in this book in particular is to take a part of a term that I think most of our audience will understand be familiar with financialization and actually explore a big part of that which is asset management yep don't switch off I know it sounds we we will this will be fascinating believe me these are the people who run our lives um in your words our lives and their portfolios and at the end of the day it's not that complicated it's just made to seem complicated I think is a big part of the story yeah so let's start from the top yep what's Asset Management so asset management is I mean to the point of complexity SLS Simplicity is a very very straightforward business asset management is a is a form of financial investment the specific characteristic of which is that the institutions that do it are investing money that for the most part is not theirs so asset management is is literally the business of taking money on behalf of others whether those are individuals or institutions and investing on their behalf um and aiming to deliver a financial profit for those clients basically that's what asset management is comes in lots of shapes and sizes and we'll talk about that but that's basically what it is so capitalism is you know that classical um process of MCM money commodity money you make money from money that's what capital is money that makes money again that's meant to be complicated it's really not and and this is a particular kind of it now we've talked about what asset management is that proceeds through asset funds what are hedge funds what is private Equity okay yeah so I think that's a really good place to start because um terms like hedge funds private Equity will be terms that um viewers will be will typically be much more familiar with than with asset management but asset but hedge funds and private Equity are all creatures of the asset management world so the the way asset managers work um typically is they establish investment vehicles through which they carry out their investment so the the money that they invest on others behalf gets pulled together in these investment vehicles which are typically funds investment funds um and that's how they carry out their investment now those investment funds come in inordinate different of inordinate different kinds and funds are a particular type of investment fund managed by asset managers um so um and and they have particular characteristics so a hedge fund is an investment fund that um for which the investment strategy is often very very different from a typical investment fund so a typical investment fund will aim to buy assets at a particular price in the expectation and hope that the prices of those assets will go up in will go up in value and then you can sell them a high price later hedge funds use different strategies one of which is the aim to try and make profits in a falling Market um which which often is referred to shorting stocks so a hedge fund is simply a type of investment fund managed by an asset manager with a particular investment strategy a private Equity is another type of investment fund so private Equity Funds are funds managed by asset managers that invest in shares that are privately held hence private Equity rather than public Equity so they're not investing in shares that are listed on the foot seal or the New York Stock Exchange or whatever they're investing in shares that are privately owned they're not traded and listed on public stock markets that's all private Equity is so asset Management's been around for a while um and they've had like say had these funds which draw money from multiple sources tiny bits of their own But it includes Pension funds Sovereign wealth funds and they make investments in things historically like corporate bonds sovereign debt uh stock blah blah blah normal stuff what has changed in the last 20 years 25 years again correct me if I'm wrong this is yourth is that asset managers are now increasingly investing trying to find returns from what are called real assets exactly so what does that mean and and how is it different yeah so that that's the way you described that history is ex is exactly right so broadly speaking until the 1980s all of the money that asset managers invested got invested in financial assets as you say bonds and and equities of different of different kinds it was in the 80s they started to invest in real Assets in the beginning that was essentially called commercial property so you know office blocks shopping centers hotel chains that sort of thing um and then from the '90s onwards you added two new types of as you say quote unquote real assets to that so the first was was resid presidential property so housing in different forms whether that's you know apartment blocks single family housing student housing Care Homes even mobile home communities in the US and the other one was infrastructure of various types which can be energy infrastructure is probably the main one so infrastructures of energy generation transmission distribution um transportation infrastructures roads Bridges tunnels parking systems telecommunications infrastructure and also social infrastructure things like hospitals schools prisons and so on um and I guess the main argument I'm one of the main arguments I try to make in the book is that you know when asset managers just invested in financial assets what they did was actually pretty far removed from our daily lives the daily lives of most individuals but once asset managers are owning and controlling the houses in which we live um the roads on which we you know drive to work or pay tolls the hospitals in which we're being treated the schools in which our our children are going to school and so on then they potentially have a far more significant and far more direct impact on the daily lives of um you know large large numbers of people than they did back in the day um and you know one of the examples I site in the book is the is the Australian asset management firm mcari which is which I I think by almost any measure is the biggest asset manager in the world in terms of investment in infrastructure and on its website it it estimates that around 100 million people around the world use infrastructures every day that it that it owns so it's yeah it has a huge in so far as it determines the conditions in which those infrastructures exist it determines the fees that we pay to access and use those infrastructures has huge impact on people's daily lives and 99.9% of those 100 million people would have no idea that those infrastructures that they are using and and relying on every day are owned by this kind of obstru financial institution headquartered in Sydney MCC of course involved with T's water we'll talk about that more but that's exactly the kind of absolutely thing they're involved in if you're wondering why the service is getting poorer your bills are going up here's the reason why and and again why this is an important debate moving away from abstraction is that more and more people are alive to the idea that financialization is taking over the world but asset management is is what it looks like and that's what it means you know that so I think that's the big takeaway from from this conversation for me and and from your book is that people intuitively know that whether you're a football fan and your club's been bought by debt leverage takeover like Manchester United or 101 other clubs or um you don't understand why your water bills go up and yet the service gets worse and you think what it's financialization we don't really know what that means this is a really good explanation as to why and and there's and and I think just to the to the point of kind of ramming home the point about the significance it's you know the the simple reason why they're so important today forget about kind of what it is they're buying what they're investing in is that they have so much Capital at their their disposal right if you look at if you look in recent decades at the the amount of surplus capital in the world available for dis available for investment whether that's held by Pension funds whether that's held by Sovereign wealth funds has increased dramatically and at the same time the proportion of that Surplus Capital that is invested via asset managers rather than directly has also in increased dramatically and so today asset managers control over A1 trillion doar of capital for investment whereas in the 1970s it was considerably less than 1 trillion so it's been one of the most significant changes in the modern history of contemporary capitalism 100 trillion just for you know context what the UK econom is about 2.3 trillion the global economy is 100 trillion or less I think it might even be less yeah it I had I think 80 trillion but that's pretty because I read like you know the economist seven years ago or something things move on yeah but it's a it's a lot of money yeah yeah yeah broadly equivalent to Global GDP um you said that there's been a big change here so again people my age were getting on a bit um who were politicized by the financial crisis we obviously look at the bad guys is the banks yeah you've got to tax the banks one of the insights here is actually a huge amount of power has gone from banks that we might recognize who aren't just obviously operating on the High Street like HSBC or City Bank or whatever a lot of that power and a lot of the things that they're responsible for are going to asset manager can you just explain how that's worked yeah I think that's that's absolutely true and there's lots of there's lots of different dimensions to it um and I I think the the probably the first thing to say is just as one kind of very sort of um in a way trivial but also I think quite telling measure of that shifting influence you know when I was younger and you know people would talk about the influence of the financial sector on political political parties in the US UK and so on you would always think of you know Goldman Sachs JP Morgan so on as having kind of the a of government as being those that were kind of shaping government policy in one way or another that's just not really true anymore so whenever we hear these days about um financial sector lobbying and and and and and governments and governments around the world coming under the influence of the financial sector it's almost invariably Black Stone Black Rock KKR and others like that so that's just one measure of that shifting influence and the financial crisis definitely hastened that and I think one of the reasons for that probably the biggest reason for that was that you know while while a lot of us on the left like to think well you know the financial crisis didn't change anything well it did change a lot of things and one of thing is it changed is that the banks did come under much more significant regulation not least in the US through Dodd Frank after the financial crisis and they were a piece of legislation sorry yeah a a piece of financial uh regulation and and and and they were sort of increasingly constrained in what they could and could do um and asset managers escaped that um and I think in particular the type of asset manager that I that I talk about in the book and we can talk about their specificity and due course escaped that and so while the banks kind of got hobbled a little bit asset managers and and what people will often refer to as with Shadow Banks more generally sort of continued on their merry way um and that's just continued to be the case ever since um and so I think that's absolutely right and you know and again one of the measures of that is that one of the things that the Goldman of this world have tried to do in the last decade is precisely to pump up their own Asset Management divisions to try to keep Pace with the black rocks and the vanguards and and the blackstones of this world how much are people in this industry being paid on average the average person that goes to work for there's the big three in the US Vanguard um State Street um and black rock yeah people working in that game not the top top top level but average earner what are they on I think it I you know I don't know about the the industrywide figures but there was definitely there was a piece in the Ft about a year ago I think it was that found that average salaries at Blackstone which is one of the big players were $2 million now that's I'm guessing a mean and so you know you will have in there people earning 700 million at at the top or whatever but this is a this is a lot of money and and and essentially what my understanding now is that you know 20 years ago if you were coming out of Harvard or a business school or wherever else and you wanted to go in the financial sector and earn a lot of money you'd go to an investment Bank to do that now you might do that but you do that as a stepping stone to go and work for an asset management firm like a private Equity house and in fact and in fact the interesting thing about it is you sign a contract with that private Equity house almost before you sign a contract to go and work for two years at Investment Bank so Investment Banking is not where the money is at now um if you want to work in financial sector it's at Asset Management firms and in particular it's Asset Management firms that specialize in in private equity and hedge funds now the reach of these guys is huge um and this is something actually that the right has been quite alive to because of the whole debate around DG um and we we'll talk about that um important but I think for people on the left probably not as important as the stuff we'll we'll touch on this big three of Black Rock stage tree Vanguard yep how much um Equity do they own in terms of businesses on the S&P 500 in the United States these big corporates in the US what percentage of those businesses have some ownership given over to these these companies yeah so um the the big three as you as you say the distinctive thing of their business model is that for the most part and Ina in the cases of Vanguard and State Street essentially the whole business it is funds that are passively managed funds that excuse me aim to track particular market indices like the S&P 500 or so on so whatever the constituents of that index are it will just the fund will just mirror that okay and in a way this has been really good for indivi individual investors like us who want who have a bit of money to invest because because it's pions just to be clear or whatever yeah because because they're passively managed the fees are really low and that's in a way if there's one good thing about the asset management industry is that it it's made available at very low cost um um Diversified investment opportunities for for for Ordinary People okay now and again because they are index trackers they are Diversified they invest in every stock in that index um and the more the more that all that you know that that pool of surplus Capital out there that I referred to earlier the more of that that gets that it gets funneled through the black rocks and the state streets and the vanguards then concominant the bigger proportion of their Collective shareholdings and so I think the latest data I I saw was that on average between the three of them they would typically own somewhere between 20 and 25% of the shares of of a ma of all major US corporations across every sector and again that that's passively held shareholdings incredible statistic yeah it's a huge statistic so S&P 500 like I think yeah but almost all of them and you're saying between 20 25% of the is held by those three incredible it is incredible um but I guess one of the things I think it's important to remember is first of all that say Black Rock individually has maybe say 8% it's it holds that 8% through a whole range of different funds the individual managers of which probably aren't talking to each other on they may not even know who they who each other are so and so that's one thing the other thing is that um you know Black Rock and Vanguard and State Street May collectively own 22% but I think it's I think it's somewhat farfetched to perceive them in the way that often people do which is this kind of cartel that are kind of you know nefariously getting together and plotting how they're going to manage this is the rightwing sort of critique in the US in particular EXA exactly because I just I just I just don't think that's true at all and actually not just on the right but I think sometimes on the left people people make that mistake um you know they're not that interested actually in getting involved in what those company I mean know they they hold shares in 15 20 ,000 companies not it's not like they're kind of figuring out how to influence management all those different company it's very passive so just to clarify when I said because again people might not have heard of asset management 10 minutes ago now I'm saying well the critique from the right in the US what does that mean basically around ESG and Dei diversity Equity inclusion what's viewed by the right as a woke agenda they say well how come all these companies right across the United States all of a sudden care about Pride LGBT inclusion etc etc where must be because they all have some ownership given over to these exactly major companies like Black Rock who have an agenda exactly that's their critique yeah and so and black you know the the very high-profile head of Black Rock Larry think you know comes back and say you know we're we're not woke capitalists that's that's not what we're doing you know we're just we're just oriented towards Financial returns and it's I mean as you've already hinted that it's kind of it's ridiculous that he even has to say that because of course of course they don't W capitalists they're just trying to maximize the returns for their investors and for the and and and therefore for the M themselves so we just mentioned Larry thinkink who are Black Rock they're one of these big three companies what kind of scale are they operating at so Black Rock um is I think by any measure um you know I haven't looked at the most recent figures but the big the biggest asset manager in the world in terms of the amount of capital they manage on behalf of their clients somewhere in the order of 10 trillion dollar so we're talking about given that the whole industry manages about 100 trillion we're talking about a 10% market share by assets under management and as I said they um predominantly their business is this low fee um business of of of um passive Asset Management where you're where you're tracking particular uh market indices so it's a you know in terms of business models this is a volume business model it's parm you know it's parm high and and they're competing on cost so you know vanguards funds are are charging fees of 0.12% of the amount of capital that investors invest then Black Rock will respond with 0.15% or something like that so it's it's low margin typically high volume business that part of the asset management universe and they are somehow related to Blackstone so two these are same on Blackstone they're they and people get them confused all the time Black Rock emerged out of Blackstone Black Rock was was essential so black stone originated I think it was launched in 1988 in the early '90s Blackstone launched essentially a new division which became Black Rock and it then they then separated in the mid 1990s and actually the chief executive of black stone Steve schwarzman is another person a lot of people have heard of another Larger than Life character says to this day that was like the worst business division decision of his life um selling off that because Black Rock went on to become this kind of Mega giant earning lots of money who went on to employ George Osborne briefly I believe I think that's right yes I'm not sure I think briefly like some consultant yeah yeah but I mean I mean there's there's an important point there which is like which is basically that asset managers these guys have become the place where government people um regulated Central Bankers end up to earn their payday after they've operate so Mark Carney who was governor of the Central Bank of England is now uh the vice chairman of Brookfield Asset Management Tim gner who was the treasury secretary and and and kind of screwed over us homeowners in the Foreclosure crisis he's now I think at warberg Pinkus or one of the other B this so in the old days people ended up at investment Banks after they done their thing and now they end up at Asset Management firms well we'll talk about this in a bit but you know you talk about Blackstone and black rock basically writing us climate policy or being major um influences on quite and quite biomics why they like it we we'll park that for a moment but it's interesting because like you say before 2008 everybody was saying look how many people are coming from Goldman Sachs into the Obama Administration now it's black stone and black rock it's a different part of uh different part of those Industries on housing let's get on this because this is the most substantially important thing I think for people watching this why do these businesses like housing assets why do they like real assets in general but why in particular particular do they like housing so yeah that's a that's a great question um there are lots of reasons um and and and it's super interesting and and I think the first thing to say is that they were historically wary of housing I I think that they you know particular in quote unquote homeowner societies where you know it's everyone's dream to own their home they were wary of investing in housing rental housing owning in then letting it out to people because they didn't want to be seen to be kind of tramping on the home ownership dream of lots of people but I think what and I think again this was another respect in which the financial crisis was really important because um one of the things that um became very clearly and forcefully ugly during the for financial crisis was that the financial crisis was deemed to be kind of evidence that home ownership had hit its natural natural ceiling so we got to about in the US for example 70% home ownership but that was too much because we official Doom Banks had lent money to people who we shouldn't have lent money to subprime borrowers and so on and that was our mistake but the the crisis was there for evidence that we' pushed the home ownership dream too far and that actually the natural ceiling of home ownership is somewhat lower than that so actually there is this rump of 30 40% of people who shouldn't and can't become homeowners and therefore it's entirely natural for there to be a class of corporate professional landlord who can do the job more professionally professionally and efficiently than Mom and Pop small time Mom and Pop landlord and we beneficent landlord be beneficent asset managers will come in and play that role and that's what they did after the financial crisis and they found um you know they'd invested a little bit in housing in the past but they found that these were just fantastic asset classes to own um I think one of the one of the big reasons for that is that they began investing in housing at a time in history when um when there were already um significant shortages of housing in in major metropolises around the world um and the financial crisis only exist exacerbated a kind of secular downturn in construct in construction rates so they've come to to be significant owners of housing at a particular time in history when not enough housing is being is being built and that just has a long-term um um kind of underpinning uh impact upwards impact on rents so they found housing to be a very very attractive asset class they've been very very good at you know if they own um if they own own you know relatively dispers if they happen to own relatively geographically dispersed portfolios they've been very good at using digital Technologies to kind of um render much more efficient their operational management of of those portfolios at very very low cost and so on so housing's been a f a fantastic asset class for them um and they've just and they've just continued to double down in that investment but I think the other the other um thing about the timing of it and this is a really really important point is that if you think about what invest I mean go go back to whose money is being invested right it's it's typically things like Pension funds that are you know probably 50 60% is still pension fund money going through asset managers what are pension fund trustees looking for when they invest our our retirement savings they're looking for two things they're looking for capital gain they want the value of the assets to go up but they're also looking for regular annual yields they want assets that will deliver five or 6% yields year on on year predictably reli reliably uh from year to year now in the past before the financial crisis fixed income security so bonds did that you could invest in cor you know a corporate bond fund and get you a five six% regular annual yield um and and you were happy to do that and you'd find your capital gain elsewhere but obviously what happened in the wake of the financial crisis was that you had a long period of which we're only coming out of now of incredibly low interest rates kept Low by the particular type of monetary policy that was used after the financial crisis and suddenly investors like Pension funds found themselves in a position where the their traditional sources of those regular annual yields were now returning 1% or 0.5% and they were like well where do we find those regular annual yields housing and infrastructure that's that's a big part of the reason why investment by asset managers on behalf of Pension funds and others after the financial crisis exploded loed because they they thought well here is is where we can find those yields the fixed income financial securities are no longer providing for us um and and that has a and and you know this is this is another really important part of the story is is that if you can get those if you can get those rents year on year six s% yields uh through through rental housing if you can then increase those rents why you own that housing when you not only does that provide more income year on year but when you come to sell that housing handing off to another investor six or seven years later you can you can charge much more for that asset that apartment block or whatever it was then you paid for it in the first place they've made huge amounts of money from housing investment in the last decade or so so you know people often talk about where're uh in an economy defined by rism Neo feudalism I mean this is what it means substantially and some of the stuff in here particularly around um these guys have a vested interest in their not being enough housing because this is their model the model is they're not being enough housing oh we wish we could no this is their model to not and I think this is this is one of the key points that's really Mis misunderstood widely and you're you're absolutely right so so you often listen to to governments and now to governments and policy makers when they talk about how we're going to solve the the housing crisis not just in the UK but everywhere everywhere's got housing crisis pretty much at the moment which is not just about shortages of of housing but it insignificant part is about shortages and they say we need investment and you how say who's going to do that investment institutional investors are going to do that investment no they're not they say they're going to but the last thing they want is much more stock coming into the market because that's likely to have a depressive impact on rent and indeed you know if you want don't you don't have to believe me for this but there was a great interview that the Ft did a bunch of years ago I can't remember the year with the man who at the time was the head of real estate at Blackstone and they and and they said and he said that his motto as an investor his his strategic motto was look out for Capital and cranes and what he meant by that was if you have invest if you've got if you're invested in property in a particular neighborhood of a city whether that's commercial or residential property doesn't matter matter if you're invested what are your warning signs that tell you it's time to sell building capital and cranes when capital and cranes start coming into the neighborhood that's when you sell so not only is the argument that we asset managers and institutional investors are interested in building lots of new housing not true it's the diametric opposite of the truth and also with housing it's a great um hedge against High inflation see that's that's exactly right and it's it's actually for various kind of Arcane reasons it's actually a better hedge against inflation than commercial properties rents get reviewed on a more regular basis and so you can reeg them to current price levels more often than you can with commercial property so absolutely um so housing has proven to be a very very um popular and attractive an enduring asset class for asset managers since the financial crisis in particular they were there before the financial crisis but they're there much more actively now before we go any further just to quickly say you know um Rachel Reeves has talked about a sort of Advisory board about how do we you know restore prosperity to Britain and some of the people on this Advisory Board include Asset Management firms yeah and and this is why when people say oh you know we've got a radical economic offer look if abedine um um and and companies like that this is one of these people in the space if they're on The Advisory Board committee it's not going to happen and it also goes to this idea of Labor's um green sort of industrial policy of 27 28 billion pounds a year how much is from the state we don't know realistically this is what it looks like to me the state might put in two three four billion uh drisking allowing these guys privately to make a ton of cash a ton of cash and the role of the taxpayer is drisking their Investments and we are gas lit into being told that's socialism and it blows my mind yeah it's remarkable I mean I mean I think that's absolutely right I mean I think that's that's the basic policy scene at the moment not just in the UK uh but internationally and don't get me wrong at moment I don't think it's the case that that asset managers and their and their institutional investors that they represent are never going to build new housing for the B for the build a rent Market they'll build some but the last thing they're going to do is build substantial quantities because that's goes diametrically against their their business model I think the other thing I'd say I mean I think you know the political class has got itself into kind of a into into a into a bit of a into a bit of a Twist here where where you know if you so put it this way if if you as a government have persuaded yourselves that the public sector is not the answer to a major infrastructural investment needs so we we are at a time in history there where there's no doubt that there is a huge need for infrastructure Investment Housing is one but obviously climate infrastructure for both mitigation and adaptation purposes is another one huge amounts of infrastructure investment required but at the same time the public sector has persuaded itself governments have persuaded itself that that cannot and should not be public money you need to BU Titan belts and you know all all the stuff about you know running running the government budges like a household all that sort of stuff so if you if you if you if you called an off public sector investment for public sector ownership of those assets as a political possibility which is what happened during the New Deal for example I mean that's the big difference between New Deal Roosevelt and contemporary Biden is that yes there's public investment but back then it was public investment for publicly owned infrastructures today it's smaller public investment for privately owned infrastructures drisking that private sector investment if if you persuade yourself that it cannot be big public investment for public ownership then private investment is your only answer right well if private investment is your only answer you pretty soon end up with asset managers because that it's asset managers that have under their management the vast bulk of surplus private capital in contemporary capitalism so it's not surprising it's it's in fact there's almost an inevitability that the likes of Reeves and so on end up with asset managers as being the answer because the only other credible answer has been has been politically foreclosed before even beginning the conversation if you even say the alternative then you you're not being serious you're not being grown up you're not being pragmatic okay yeah so they so they essentially they they they have um presented as the answer a set of Institutions whose interests are not aligned with resolving those crisises and also going back to this idea of stewardship so it's not just housing it's you know water infrastructure it's the PFI contracts we'll talk about that more in a minute you want long-term stewardship of this kind of infrastructure and look plausibly you could you could see a world maybe where there's private investment that does that absolutely but it would have to be a rate of return which is fer than what we have and that wouldn't please these people and what we have instead is private investment which is more like a trade so buy cheap sell High um no capital investment which of course is the exact opposite of how you should treat infrastructure absolutely I mean this should seem so obvious and yet and yet not I mean you you also talk in the book about for instance where where people and this is we'll finish with the housing um aspect of this conversation here you talk about I can't remember who it is they buy rental units and they say well you know what actually this is underpriced because we can jack up rents that's the definition of it why it's underpriced we can jack up rents we can also cut costs y oh and also we don't have to actually invest in the capital investment required to maintain the building and we can jack up rents more and we can cut cost and jack up R more that's them as success the people living in the building that's catastrophe and and you know and and as absolutely right and this this has been I mean particularly in the US this has been a big big story and I think the one thing I I think the one thing I would say about this which I think is very important is that there is lots of anecdotal evidence out there lots of investigative journalists have done uh reports where they've gone and talked to tenants of housing owned by uh big asset managers Blackstone and and others but not just Blackstone in the US and and coming back with horror stories about you know infestations and mold on the walls and so that's fine but you would you could you could find dissatisfied tenants in any part of that of the landlord economy right for me what's much more compelling is actually there's now a growing set of evidence which is not an doal which is much more uh which which provides I think much more structural evidence of worse outcomes for tenants in housing owned by asset managers than in other than in housing owned by other types of private sector actors particularly around eviction so there's lots of academic studies now in different Metropolitan regions of the US where researchers have studied eviction rates in um in housing owned by asset managers and and and studied eviction rate in housing owned by other types of private sector actors and controlling and and controlling for the differences between the rental stock they find substantially higher levels of of eviction in housing owned by asset manager so it's not just anecdotal evidence there actually much more compelling evidence of of substantively worse outcomes for tenants in this type of Housing and again Care Homes which is another asset they love yeah we have a huge crisis in terms of Elderly Care in this country in the US and whatnot they don't get a great service the work are paid very poorly you know you have this kind of Quasi xenophobic I mean it's also very real criticism which is many of the care workers can't speak English or adequate English so there was one person who recently died um in a care home in this country the the one of the Care staff had called emergency services and they couldn't adequately explain what had happened to this person and and of course the right says look this is because of too many immigrants I obviously disagree with that I would say well no it's because of how ownership Works around these organizations they want to extract the maximum possible money from the people using the service pay the least possible not invest in the infrastructure add infinitum and then sell it off yeah I mean care you know Care Homes have been a very very as you say Care Homes have been a very very um um active area of investment for asset managers both in the UK and in the US and and and there was a study done by I think it was I'm not for sure it was Warton but a bus some business school professors a year or two ago where they looked at Care Homes across the US and again they did one of these studies when they compared outcomes in Care Homes owned by asset managers with other privately owned Care Homes across the whole of the US and they found that mortality rates were substantively higher in Care Homes owned by asset managers than in other CS now they couldn't provide causal evidence as to why that was but their suspicion was that the reason for that was uh was less Frontline nursing in Care Home own biet manag so they're cutting back on the most important type of cost employee cost um so they found evidence of of lower investment in Frontline nursing in those asset manager owned her homes and their principal hypothesis is that was probably the reason for the high mortality outcomes crazy yeah do they have any of this okay so we're talking principle about the oecd the West there are obviously some countries out there who are doing incredibly well when it comes to infrastructure investment building lots of stuff y namely China yep absolutely what role do asset funds and asset managers have in China with regards to infrastructure very little um is my understanding certainly um the the major Western asset managers who who are the focus of the book have a very limited presence they have some presence you know so Brook Brookfield owns you know Brookfield Asset Management one of the big infrastructure asset managers uh based in Canada uh has some uh renewable Assets in China but it's it's it's it's there a spec on a landscape that is dominated in every respect by state-owned entities so if you're think about infrastructure investment in China you were talking about um you're talking about state owned entities at every level both in terms of the entities that build develop and then own those assets whether that's wind and solar Farms or whatever else it might be and in terms of the banks that are lending the capital lending the capital to do that um you know I think one of the really really interesting things about this is in terms of that you know major long-term structural investment challenge that I was mentioning earlier you know in many ways you know you can say what you like about China's political economy um but at the same time you know there's a there's a there's there's to my mind at least there's no doubt that China is better positioned to meet that in investment challenge um strategically and rapidly than any country in the west precisely because of the ongoing very very deeply ingrained role of the state in the economy whereas the West has essentially outsourced those investment challenges to the private sector and to markets and if the private sector and markets decide that it's not in their financial interest at a particular point in time to meet that investment challenge then they don't meet that investment challenge they're not forced to so we can't allocate resources as effectively as somewhere like China or no I mean Viet you know an example that many people in the UK might be might be aware of recently so that in the UK the way in which a lot of uh new Renewables capacity gets built is through the provision of contracts by the government for for things like offshore wind and and they will auction contracts where um developers will bid to take those contracts which means like a 15-year contract to sell at electricity what is effectively a fixed price for the next 15 years but the government caps that price and then biders bid prices down so one will bid so if the government caps the price at say 50 e 50 pound per megawatt hour for the next 15 years some someone will bid the first bidder will say well we'll take a contract at £49 and the next will say well we'll go to 48 or we'll go to 47 and because the government caps it um what happened at the most recent auction was the developers were like well given uh given our materials cost and given our financing costs if we can only sell electricity for the next 15 years at 50 EUR per 50 pound per megawatt hour we're not going to be make any money there were no bids that's very different from how things work in China which I think this year in 2023 I I might be wrong I think this year it's built twice as much solar as there is the whole other capacity in the United States yeah I mean it's i m crazy this is just and this is not marketing this is what my next book is about is about Renewables and and and I think on average for The Last 5 Years China has has represented about 50% of Global's Renewables investment on average over over the last five years and I think and my guess is that this year in 2023 it will be well above 50% because those that political economy that governs investment um in Renewables around the rest of the world is very very different in China so returning to the UK yep we've mentioned mcor this Australian based uh fund they were involved in T's water yes which is a a water company in the UK can you tell me a little bit about what happened when mcari bought T's water yeah so mcor invested in T's water in I think it was 2006 or 2008 one of those years not sure um now I mean just back stepping back as second so what happened as as as many viewers will know is that the privatization of the water industry occurred right at the end of the 80 the 80s um early 90s that period initially all of those companies were um became publicly listed entities but over time that the ownership of a lot of them has changed and the water sector uh specifically but actually kind of UK utility infrastructures more generally have been like a honey pot for for Global asset managers over the last few decades um not least the water and the electricity sector and and so T's ownership changed many times over the last couple of decades but in you probably the most significant moment of change was when mccy came in it wasn't the only own but it was the controlling shareholder it came in in a Consortium of which it was the lead investor again 2006 2008 um and it invested through one of its main European infrastructure funds um it was in rested I think for about 10 years in TS water it was the it was the leading the lead shareholder before exiting five or six years ago um during that period um lots of things happened uh but to cut a very long and complicated story short and nothing I'm going to say here is I think any in any way controversial you could actually read the same story in the Ft ft's been great at covering TS there's some very good infrastructure journalists there um they put loads of debt into the into the business when the water companies were privatized they were privatized debt free now collectively they I know something in the order of 50 billion of debt uh attached to them so mcari put lots of debt into the business at the same time it was putting debt into the business it took a lot of money out of the business uh through through various mechanisms not least dividends and shareholder loans with a with a principal mechanism and by any Reckoning it it woefully underinvested in the physical infrastructure um and so TS was repeatedly During the period of mcor's ownership repeatedly um chastised by the regulator by the industry regulator ofwat um and by and by you know in any number of campaign groups and activist groups and so on um and and pol and politicians for underinvestment and for um the the you know the problems that come out of underinvestment in infrastructure which is things like leaks and and and and and uh and uh raw uh sewage being um released into River into rivers and around around the uh the region of of T's control and so it was kind of a it was kind of a case study I think in the broader um set of problems which I try to describe describe in the book which which is which is basically consumers getting a raw deal because they're paying more and more for services that are getting worse and worse because the steward in this case mcy is really not interested at heart in careful custodianship of that asset it's interested in minimizing the costs that it incurs while that infrastructure is under its ownership and maximizing the revenues in this case the that it can charge consumers during that period And so and so they you know mcy got slapped on the wrist a couple of times a couple of very you know minor fines um and actually the biggest fine that t was received I think it was maybe maybe 100 120 million pound I think it was got levied ironically a year or so after mcari had sold out its its main shareholding and so my argument you know we off you know TS is much in the news these days um and it's and its current shareholders get a lot of flack and I kind of understand that but personally I feel a degree of Sympathy for the today's shareholders CU on my reading T's got turned into a Basket Case by mcquarry and and the current shareholders are the ones that are kind of being left left kind of holding the bag and they should have done better du diligence I think when they undertook the investment you know I think they got they bought a dog at at the end of the day but it had been turned into a dog by by mccy I mean the UK water industry since privatization in the early 1990s is just an incredible story so like you say they've been they've been saddled with tens of billions of of pounds worth of debt debt which was used to BU them and then put on them again a bit like Manchester United Football Club if people are sort of not familiar with that you know the glazers by United by getting debt they then place on the club debt which was guaranteed against the club's assets you know I think for most normal people I mean it works in exactly the same way yeah most that how is that possible that's how lots of these deals work um that's how you know clever people make lots of money it is um and the price of water bills is double relative to um just the sort of Base rate I think it's RPI inflation since 1990 so the bills have gone up extraordinary you know far more than the basic rate of inflation they've got all this debt they've also paid tens of billions of pounds to shareholders over the last 25 years whatever it is um they've made huge amounts of executive pay and then you have the sort of government saying well we would need about 200 billion pounds to actually build the kind of infrastructure we need so that we aren't dumping crap into rivers and coasts uh we can't afford to do that obviously that's just far too much money well we know exactly where the money's gone actually it's very it's a very clear transfer of money it's gone it has gone it's gone you can't get it back and and I and I think you know my I would say that you know one of the remarkable things I think is that even the Ft I think would argue that privatization of the utilities in the UK as it's been done in the UK has been a disaster it's been a complete failure I think telecoms is probably the only case where maybe that's not true um if if you look at how con if you look specifically the measure of if you look at how consumers have done con consumers in terms of telecom's prices have done reasonably well in the period since privatization but actually that's only really because mobile came along and and and provided significant competition to fix line during that period that's the main part and and telecoms not only is it the one where consumers have done okay it's the only one where if you invested in those telecoms companies and have remained invested you would have done badly in every other sector investors have done well and consumers have done I mean I would also perhaps that tacoms is quite unique in so much as obviously it's a digital technology and that's been subject to what we would call deflationary Trends because obviously it's much cheaper to make a phone call now than it was 25 years ago that's not because of privatization it's because of Technology whereas you know a pipe that carries water is a pipe that carries water exactly so a little bit and and and and I I guess the point I try to make in this book is that so privatization of of infrastructure in the UK but also many other places being a disaster but one of the reasons and I think this is the point I would would want to stress is that one of the reasons it's been particularly bad in the UK is precisely because the of the disproportionate involvement of asset management firms so there's there's privatization in general and there and then there's privatization asset manager style which is and one of the and one of so one of the arguments I make in the book and and it's an argument I I I hold to very firmly is that is that asset managers are not only let me get this right asset managers in terms of how they typically carry out this investment are not only in appropriate owners of infrastructures on which we all rely on in our daily lives but they are about the most inappropriate owners imaginable and and and the reason for that is is it goes back to something you mentioned earlier which is the fact that the business model for the most part is not buying assets for holding them in the long term it is for for the most part buying assets knowing when you buy them that not only are you likely to but you have to sell those assets within a relatively short space of time and if you know that you have to sell the asset whether it's temps water or an apartment block or whatever else is in six or seven years time you have no interest in carrying out investment that might provide benefits in any meaningful shape or form beyond that 7-year time Horizon so do you are do you have an interest in providing real good repair work for sewage leakages no you have an interest in providing kind of Band-Aid solutions that might just about last for the next six or seven years and then you've sail off into the sunset after that seven-year period so there's this inherent short-termism in the asset management industry that makes the ownership of assets like housing and infrastructure which are long-term assets by their very nature completely inappropriate and and this is because and I don't want to get too sort of esoteric but it's an important point this is because historically the bulk of investment by asset manages in housing and infrastructure has been has been has been done through investment funds that are fixed term funds so they set up these investment vehicles an infrastructure fund or a real estate fund that that is that is scheduled to wind up 9 or 10 years later and the money and the money that has been given to them to invest by Pension funds and Sovereign wealth funds to get returned to them after that N9 or 10 year period so not only not only do they often want to but they have to sell those assets they have to sell them before the fund is wound up in order to be able to return um that money to the investors and something like 90% of um commitment of capital to these um infrastructure funds managed by asset managers over the last 20 or 30 years years have been to funds of this short-term type you will often hear asset managers say oh we're long-term investors we run these so-call Perpetual or permanent funds that invest for the long term they do run them but historically they've been in a minority yeah so this is open and closed funds you said it's sort it's a hugely important point which is you know some are open and most are closed and they'll be getting a contract for say like okay we're running all the parking in Chicago we'll talk about that great story 70E contract well the fund closes in 10 years exactly and again it's one of those it's one of those brilliant things where you could talk to you could talk to my dad's Iranian you could talk to an Iranian villager with no education past 14 they would say that's a really dumb idea yeah but you can you can get some you know MBA or some Harvard educated politician Oxford educated politician in this country the United States go no this is just how it works it's very clever this is progress this is smart this is pragmatic and and you know the older I get the more I realize actually sort of B B Elementary Common Sense is so at odds with you know the smart people running our societies absolutely yeah no that's absolutely right so should we just ban those kinds of funds being able to buy infrastructure is that sort of an easy win yeah I mean I mean this that's a very good that's a very good point I in my argument um it is that I think that um if we are going to have asset managers um investing in in in in these types of assets that I talk about in the book and that we've been talking about uh to today then then certainly it should come with certain um constraints that in the past have typically not existed and and I think that um allowing them to invest through in long-term infrastructures that that for which long-term capital investment is is a lifeblood through these inherently short-term Vehicles just strikes me as completely in congruous and and should not happen I mean this is not maybe we can talk about this later this is not the only way in which um one might want to clamp down on this type of phenomenon but it's definitely one um and um and and you know and I think that there are some governments around the world that have made you know relatively positive noises mcari owned was it Copenhagen airport or Brussels Airport one of these airports I talk about it in the book but I can't remember which one it was and did it typical thing which was like made really good noises about being a long-term custodian and then and then you know ran with the money after a few years later and and and you pretty sure it was the Danish government was not impressed and and put through some reviews about you know how this can happen and why this can happen and what we should do about it in the future but for the most part most governments have not done much about this at all and it comes back precisely to what we were talking about earlier which is that you can't do much about it if you've got yourself in a position of being reliant on these actors if you've persuaded yourself that the private sector of the answer asset managers become the answer so the last thing you're going to do is clamp down on them because they're the answer and and and not surprisingly what asset manag this is this is classic stuff when governments like in the UK and Regulators start making noises about clamping down on these things the very same day the asset managers come out with press releases say well we're going to stop investing in the UK see how you like it then and the politicians their pants exactly I mean I mean that's just it's that simple well you can imagine a sort of a left populist politician in this country and they would say I think quite reasonably we're not going to allow certain people to invest in certain industries we not that's just we're not going to it's not going to happen nothing personal guys you know if if nvar media was running the government I think we probably have consensus on that not much else something like that it seems quite common sense but then of course like you say um you would see a flood of press releases and people that even slightly disagree with because that's how modern politics Works would say well look we're not going to have any investment in the country even though they might agree on the substance of it that they shouldn't be investing you saw this brexit right people who claim so many things politically if it meant you could bash the other side then you would you would use it um and that that's absolutely right and it what's interesting to me this is a bit of a tangent what's interesting to me is I honestly think the right will come after this the populist right will come probably in Europe because we're seeing this Rising tide of rightwing sentiment across Europe right now with Britain being something of an exception I think they will come after this before the left does which to me is terrifying I can see a right-wing popul saying we do not want American asset funds operating in Italy France absolutely Spain I can see it and what does the left do does left go no no no we do asset funds are progressive and that's and that is the situation not to that extent we found oursel in that position time after time for the last 20 years defending liberal progressive global capitalism when it's the one thing that's screwing us the most and that doesn't mean you side with the far right but it means hm maybe we should try and lead the conversation exactly no I mean I think that's I think that's absolutely what will happen and I and I I you know it was interesting to me when I started doing work on um on Blackstone and housing in the US context and I've published a couple of articles in you know obscure academic journals about this the first people in the in the kind of public realm to approach me about it from the US was the right um I think it was Senator Josh Holly's team got in touch with me because they see they see this as an easy as an easy win for them there's a great line I can't remember who said this but they it summed up so much with Trump trump was an uprising of family Capital against Global Capital um which is you know Petty bouris historically we had this conversation with Dan Evans yeah you know that this was the big class behind the rise of Hitler and and fascism I'm not suggesting that everybody who owns a small business is a fascist of course not uh sometimes they've been involved in leftwing you know politics too but it's that you know it's the family business versus Black Rock black stone they're buying the assets they're destroying the community etc etc which has the kernel of something really positive yep but you know the left not of the races quickly before we finish yes Chicago yes we talked about MCC and TS water tell me about Chicago and its experience with asset funds yeah so this is this is the the this is a great case uh and I um I Rely heavily on the work there's a there's a great um Chicago uh scholar journalist called Stephanie farmer who's done this great work which I'll rely on in the book about this where she looked at so Morgan Stanley its Asset Management arm um Morgan Stanley infrastructure Partners in again about 105 years ago close to 15 I think carried out two it led two major investments in parking infrastructure uh in Chicago one of which was the city's parking meter system so the meters around around the whole city um and the other one was parking garages um around the city so what what happened was that the city of Chicago they put out um these 70 70 or 99 year uh contracts where the the bidder would would would take on the job of managing those infrastructures the parking infrastructures but also earning the money paid by the The Parkers um and so more so more Stein he B these on lo and behold Chicago within the space of a few years went from being one of the cheapest places in America to park to being the most expensive place in the country to park the not s not surprising um given that that's the pure interest of of these asset managers so that was that was interesting um but what and but and and but not necessarily unique but the thing that that was particularly interesting that farmer found was that the the way that um the contracts were written between the city and Morgan Stanley um were very very restrictive on on the city in terms of what it could or could not do in the future so for example um if if um the city because it wanted to have have a street festival or something wanted to um if if running a street festival meant um that two or three parking meters or however many it was couldn't be used used for a few days it had to provide compensation of a particular amount that was written into into the contract to Morgan Stanley for those parking meters being taken out of commission and what farmer shows in in his really clever way is that basically the way in which the city of Chicago came to plan its Urban fabric over the next decade or so was massively shaped and constrained by this ridiculous contract that he got into didn't allow itself to do certain things like things that were beneficial to cyclists like opening up cycling Lanes around the city because it would end up may having to make these payments to Morgan Stanley that were written into this contract so Not only was this really bad in the kind of direct sense of parking fees going up uh uh massively but it had this really constraining influence on the future evolution of of the city of Chicago in terms of its friendliness to things like cyclist and other things like that so it's a it's a really it's a really interesting case and and and I think that um the reason I the reason I like that case and find it particularly interesting is it does make this really important point that when you're when you're buying infrastructure when you're owning infrastructure you are owning an asset that shapes the life of a city that shapes the life of of a community um and if and if if governments enter into contracts with asset manager or other private sector investors for that for that matter that that that constrain the way in which those assets can be managed built out and so on going forward then that's a re that's a really really significant thing and I don't know what phrase you actually use but this idea of you're fragmenting the urban environment what's the word you use yeah so it's uh splintering splintering the splintering yeah again it's a book by some geographers or Architects uh Marvin and Graham yeah and and so this this is this is an important point so what governments have found of course is that if if you have take electricity as the best example of this if if if you have like historically electricity was owned and managed in a completely integrated way so entities had Regional monopolies or even National monopolies over generation transmission distribution and everything what they found is that they couldn't readily sell assets on this kind of integrated basis that it was much easier to sell assets if they kind of unbundled them or splined them both vertically by which I mean generation transmission distribution and geographically um so so if you can disaggregate assets take them apart and sell bits and sell them on a bits and pieces basis that's much more attractive to the private sector but of course the private sector only wants to buy the ones that look attractive so you get these kind of you get these other assets that are completely unattractive and historically if it was all owned and controlled on an integrated basis you had this inherent cross subsidization within the public sector which doesn't work anymore if you disaggregate it or and sell off the juicy bits to the private sector the public sector just gets left with and housing's housing is a good example of that right housing becomes residualized Council housing the only bits to the left that haven't gone under right to buy are the ones that no one wants to buy yeah and this idea as well of um splintering you know you can't build a functional efficient effective cityscape because you know the bus lanes and the buses belong to that company and the parking spaces belong to that company okay how do we build an efficient design that works for people we can't yeah because you have eight or nine different interests or with it runs their on their own Chicago and exactly right Chicago is the great is the best example of that in in Farmers work it you know that that type of financialization of the city for one of a better for one of a better word runs counter to the traditional idea of joined up urban planning so I suppose somebody watching all of this might be very receptive to the criticism is Ms and so that's all well and good it's very easy to um pick apart something what's the alternative yeah um and like you say right now asset management is increasingly what defines private sector investment infrastructure so what is the alternative I suppose that starts with the question how did we used to build infrastructure before all of this yeah I mean again there there's no there's no uniform answer to that but in general historically um I in infrastructures that are that provide essential Services of the types we've been talking about were generally much more under the ownership and control of the public sector historically than they are today um ironically you know a lots of people think about the us as the kind of the home of of the private sector and of small government and of neoliberalism ironically essential infrastructures are much more still under public ownership in the US than is the case in the UK I mean U the UK has gone much further than the us or indeed anywhere down the kind of selling off anything you can sell off um but in general um the public sector was was much more um the custodian an owner of these types of Assets Now the last thing I am is someone who who looks at the kind of public sector through Rose tinted spectacles and and kind of pretends that everything was hunky thory when the public sector owned I mean the public sector can be just as ropey an owner and custodian of these types of assets as the private sector can let's not kid ourselves about that so just as you know just as we shouldn't you know uncritically chastise the private sector we shouldn't uncritically romanticize the public sector but I do think that at least with the public sector you have the possibility of different types of outcomes than you do with the types of private sector ownership in general and asset manager ownership more particularly not the ne not the inevitability but at least the possibility of different types of outcomes so so the the public sector M used to be much more centrally involved and and that didn't mean that the public sector built these assets but it meant that the public sector funded the assets and funded the development of them own them and then received any revenues that were earned from um from the the use of those assets uh whether it was water infrastructures or or Transportation infrastructure or anything else and I think this is the this is one of the things that frustrates me about the argument you know the public sector can't put this on the public balance sheet you know uh we can't take on that extra debt you know that there's a big difference between the public sector borrowing for say the provision of services or borrowing to fund transfer payments than borrowing to develop Revenue generating assets I mean there's a and and that just kind of gets completely lost there's a fundamental distinction there it's not like you would be um you know borrowing and then and no no money coming back this is a completely different and so that's the way it it worked much more commonly historically and so I I think I would I personally would agree with the arguments that were um you know very very Central for example to early arguments about the green New Deal five six years ago which was that which was that we need an emboldened public sector in terms of the financing and the ownership of of of critical infrastructures not least in energy but not not only in energy um and and and as you know again I go I keep going back to the Ft but as a lot of people in the Ft would would argue that you know the public sector can Finance these things typically more cheaply than the private sector can um and especially given given the rents that the private sector um typically siphons off in addition um it's not just cheaper but M but much cheaper it it can do these things the very last thing we should be encouraging is ownership by asset managers through these inherently short-term vehicles I mean Canada is an interest I think Canada is an interesting an interesting case right which is that so um in the industry in the infrastructure investment industry it's often referred to as as the Canadian model because what big Canadian pension funds do um in a way that's different from Big us or UK public Pension funds is they do a lot of direct infrastructure investment where they where they buy and own these assets directly rather than by relying on asset managers and their short-term um Vehicles now that doesn't mean that the Canadian Pion public Pension Plan investment board is always a great custodian of these types types of assets but I think when it says it's in it for the long term that's much more likely to be true than when mcy says it's in it for the long term which it typically is not so I I I think that there are different ways of doing things I guess the I guess the way I would generalize this is to say is to say look if if if if if you think my argument in the book is broadly right which is that the phenomenon that I've kind of diagnosed is a broadly negative phenomenon there are essentially two ways of um limiting what asset managers do okay so asset going right back to the first question you asked about what what are asset managers asset managers are entities that take money from others and invest it so there's two choke points right there's there's the raising of investment and there's the opportunities to invest so there's there's two things you can do broadly speaking you can try to limit the amount of capital that they have at their disposal and you can try and limit their ability to invest in certain types of things so we've talked about the latter of those already so as you said one thing you one thing you can potentially do is no we're going to have certain types of things that we just don't want certain types of actors owning and buying we just think it's wrong we just don't think it that should happen and you can do that governments are a million miles from I think thinking about doing that the other thing you can say is you know I think if you so if you if you are a fireman working in Pennsylvania and you were to find out that you're retirement savings are invested in a fund that owns rental H the rental housing of your neighbors and is r and is jacking up the rents on that housing you probably wouldn't be particularly happy you might not be particularly happy about it so I think the other possibility is for the entities that give them the Monies to invest to be much more proactive about shaping what can and cannot happen with that money you know the big public pension plans could say we're not going to put money into um investment funds that are buying up and jacking up rent and Rental housing and and I think that is another that's an area of kind of political intervention that is entire seems to me entirely possible um but again I think part of the problem here is that you know most people who have their retirement savings invested through their public P have no idea where that money is is going they have no idea what the trustee of their P of their pension fund is doing in terms of allocation to different investment funds managed by Blackstone or I mean they have no idea but I think that you know I've been in conversations with uh with with certain unions in the US who are actively trying to do precisely these types of things they're trying to politicize the investment um of those of the of the retirement Savings of those unions by talking to to the pension fund trustees and trying to make them aware of exactly these types of issues I mean that's as well another sort of counter argument be well people have to have pensions and what else would they invest in well there's literally a million and one maybe not literally there's figuratively a million and one things they can invest in Commodities sovereign debt well they just put it in an index they just put it in an index track well precisely 101 maybe not many 101 things they they can invest and they don't need to do this no they don't and here's the thing right which is that the is which is the the the industry comes back and says well if they don't then they're missing out missing out on Superior returns but that's actually again I'm no expert on this particular question but there's a there's a there's a great academic Ludovic fipo I think his name is in Oxford and he's done lots of research showing that over the long term private Equity Funds infrastructure funds real estate funds do not generate Superior returns than simple index tracking funds but equally even even if they did even if your pension was 5% better if your water bills are twice as high your energy is twice as high your neighbor's being evicted everything's outsourced your kids can't buy a house yeah I mean and and and absolutely but the problem right is that drawing those connections is hard for people I mean it it took me a you know a long amount of time to pull all that together and and and and for and you know most people's cases drawing those connections between kind of what's happening to their pension and what's happening to renters who are in living house they feel like a million miles away from each other but of course they're not a million miles away from each other well I'm very glad you've condensed it all in the book so it won't take our listeners and our viewers years to work that all out thank you so much Brett this has been a fascinating conversation yeah I've enjoyed it a lot and I'm grateful that you had me on I [Music] pleasure

Channel: Novara Media

Views: 225,047

Keywords: socialism, politics, Novara Media, Novara, current affairs

Id: 0jxL9Cktsao

Length: 78min 56sec (4736 seconds)

Published: Sun Dec 17 2023