This post is based on the video about privatization, it’s effects and flaws.
First off the term asset management should be defined. Asset management is a practice of increasing total wealth over time by acquiring, maintaining and trading investments that have the potential to grow in value.
Financialization, the process of making money in the financial services sector while ordinary people struggle, plays a big role in the increasing costs of living. The companies that control much of the infrastructure we depend on, such as asset management funds, want to privatize everything in the public sphere.
Through time asset managers mainly changed their investments from stock as their main assets to more “real” assets, such as infrastructure, social infrastructure, commercial real estate, and so on. It’s basically owning homes, roads, hospitals, schools. These assets affect much more people than the non-existent online assets ever could. By owning so many, previously public, objects asset management affects people who work in those establishments and provide basic services.
Asset managements firms like BlackRock and Vanguard have a significant stake in major US corporations, collectively owning between 20 and 25% of the shares. They are usually thought to work together to amplify their influence, but the reality is that their holdings are passively managed, and individual managers may not even be aware of each other.
Historically housing assets were thought to be bad as it was complicated to satisfy home owners, however, the financial crisis changed this perception, as it was seen as evidence that home ownership had reached its limit, leading to increased interest in housing assets by asset management firms. After the financial crisis significant owners of housing became professional corporate landlords. They can do the job of providing housing more efficiently than small private landlords. Because of these housing assets being more and more invested in, there have been major shortages of housing in bigger cities. Furthermore, the financial crisis and low interest rates have led pension funds and other investors to seek assets that can deliver regular annual yields, such as rental housing.
Asset managers and housing investors don’t want more housing stock. They want it less and less, so that they can increase the price of what they already have. The demand dictates the price after all. The less of a something there is, and the more the people want it, the more expensive it will be.
The consequence of relying on private investment for infrastructure and housing is that private investment often prioritizes profit over the well-being of individuals and communities. Housing owned by asset managers have high eviction rates and bad living conditions and they usually lack investment for maintaining infrastructures. The current approach to privatization and private investment doesn’t address the needs of the public. A good example of asset managers not seeing people and the care they need in housing investment but only number and money is care homes. A study in the US showed that care homes that are owned by asset managers have a higher mortality rate than those owned privately. That is of course because the asset managers don’t invest nearly enough in nursing.
The comparison of the US and China shows the contrast capitalism and communism. In the video they state that China is better positioned to meet long-term structural investments because of the state’s deep involvement in the economy. In contrast, the West has outsourced investments to the private sector and markets, which may not always prioritize investments that are not financially beneficial. This outsourced approach can lead to less effective resource allocation compared to countries like China. An example is given of how developers in the UK, faced with capped prices set by the government, decided not to bid in an auction for renewable energy contracts because they would not make enough profit. They also state that China has built twice as much solar capacity compared to the United States, emphasizing the contrast in investment approaches between the West and China.
Capitalism, as we have already seen, is based on privatization, which goes so far, by privatizing basic human rights, such as healthcare in the US and the water industry in the UK. The privatization attracts asset managers, which leads to underinvestment and deteriorating services. Asset managers focus more on minimizing costs and maximizing revenues, rather than the quality. Significant amount of money in the privatized water industry goes to the shareholders instead of investing. Asset management firms prioritize short-term profit and the quick sale of assets, there are no long-term investments which better the industry, which only worsens the problem for the privatized industry. Asset managers are inappropriate owners of critical, essential infrastructure. Unfortunately governments have not taken much action on this issue, partly because they have become reliant on these actors as the supposed solution. When governments and regulators do try to clamp down on them, asset managers often threaten to withdraw investments, which puts politicians in a difficult position.
One example of how privatized infrastructure can shape and constrain the development of a city is in Chicago where Morgan Stanley’s investment in parking infrastructure lead to the rising of parking fees and limitation to the city’s ability to implement cyclist-friendly infrastructure. It is common that assets are split and sold separately, firstly selling to the private sector, leaving the public sector with unattractive and less desirable assets. That practice is known as “splintering”.
Both the public and private sectors can have issues as owners of assets, however, the public sector offers the possibility of different outcomes compared to private sector ownership, particularly in terms of asset management. One key difference is the role of the public sector in funding and owning critical infrastructure assets. In this case, the public sector is able to generate revenues from the use of these assets, such as toll roads or public utilities. This income can then be reinvested into the maintenance and development of the assets.
Currently it seems that the negative effects of privatization far outweigh the positive. Higher water and energy bills, evictions, and limited housing opportunities are currently big problems, that are ever so increasing, so how big will they even be for the future generations?
The way I see it is that the only people who will be making more and more money are those in the financial services sector, while the rest will only be losing money. That is because while their pays are increasing, they aren’t increasing nearly enough to keep up with the insane price rises that we see today. A worker’s pay may increase 10%, but what is that going to help him when the housing prices increase by 60%. With the privatization of housing, the social system is more and more reminding me of feudalism. The rich keep getting richer while exploiting the poor who keep getting poorer. The rich control that system, so of course they’re not going to let it change and risk losing their wealth. The only way to change this system is to make changes at it’s core, which is hardly possible.
The movie “Arrival”, directed by 
Although you can’t really see the full body of the aliens because they are mostly shown as the picture above, and the one time you can see them they’re not very visible, because they are covered in smoke, I still love the ominous feeling they give off. Below is the picture of how the aliens really look. ![Arrival Explained [Video Essay]⏤ Villeneuve's Balance of Fear & Intrigue](https://s.studiobinder.com/wp-content/uploads/2020/03/Arrival-Directors-Playbook-Heptapod-Concept-Art-StudioBinder.jpg.webp?resolution=2294,1.2000000476837158)
One bad thing I want to mention is that the movie shows the situation from only one point of view, America’s. It’s very subjective instead of taking the true scientist route and being more objective. I think showing how the entire situation was unveiling in different cultures could have been more interesting and that they wasted that opportunity to make an even better film./capitalism-final-3e15ac5398a3464faf9b745e5282b885.png)
The Boston tea party
