Mandatory superannuation, introduced by Paul Keating, remains the greatest legacy-defining triumph of his Prime Ministerial term. I still remember the Coalition led hysteria; businesses would fail because they had to pay their employees super, Mabo meant that none of us would own our homes and the sky would fall in. The Undertaker dressed in Zegna won the unwinnable election in 1993 and Australians now have $4.1 trillion dollars to secure our retirement.
While the $4.1 trillion may sound like a lot, it still won’t be enough for most of us to retire as we are living longer and basic housing has become unaffordable across the country. The lack of superannuation savings will impact women disproportionately more than men as the lifelong wage inequality is magnified later in life. Australians need more secured superannuation or we will saddle our kids with more than just catastrophic climate.
Which is why the recent announcement that Australian Super funds will increase their investment in the USA by $1.44 trillion by 2035 is truly concerning.
Have diplomats, business leaders and the media not been watching the news lately? Really?
The USA is not a country we ought to be investing in; not in the past, not now and definitely not in the future. It has caused every single global financial crisis in the last 100 years; from the Great Depression through to the Black Monday in 1987 and the Global Financial Crisis of 2008.
In 1929, the USA triggered the Great Depression by rampant speculation on the stock market, overinflated stock market prices and weak underlying economic growth. The lack of regulation of American companies and margin buying exposed the global economy to American excesses.
The same happened on 19 October 1987; with Dow Jones fell by 22.6% wiping $500B from the stock market. While there wasn’t a single factor leading to the downturn, programmatic trading and panic selling meant that the USA followed Hong Kong and took down the whole world.
The Global Financial Crisis (GFC) was triggered by the American housing bubble, where Americans were allowed to borrow insane amounts of money at low rates which created toxic assets that American banks sold to each other. Cheap rates, lax regulations and a sustainable housing boom took the entire world down the drain.
Yes – Australia skirted the edges of the GFC but that was because the Australian economy had liquidity of capital through our superannuation funds. We didn’t need to look overseas for money to refinance debt or fuel growth. We already had money.
If nothing makes us want to be protective of our superannuation savings; the GFC should.
The USA is not a market we should be investing our precious superannuation in because the American economy is a basket case held to ransom by neoconservative capitalist extremists pumped up on whatever drug of the day. In the last 12 months, many leading global economists have warned that the USA was not a place to invest because it is fundamentally an unstable country.
In July of this year, the Trump Administration rolled back key functions of the American Environmental Protection Agency. They repealed the recognition of climate change, ended Greenhouse Gas Reporting and cut key data collection and research agencies. Defunding research and innovation is a death knell; it is a sign that ideology has trumped sense and reason.
American banks are still woefully poorly regulated, in fact, unlike many G10 countries, they do not have a single banking regulator; they have five – the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation and more state-based organisations. And the US lags furthermore when it comes to banking transparency, which makes it a haven for money laundering.
Other economic indicators also point to a decline; corporate bankruptcies have hit the highest levels since the Great Depression, consumer confidence is lowest level for a while and Americans are worried about losing jobs, leading to a gap between overinflated stock prices compared to consumer sentiment.
Notwithstanding, the perilous state of the US healthcare system ought to put handbrakes on any potential investment in that country. Dogged by profiteering, inefficiency and administrative waste; the U.S has a lower life expectancy, more preventable deaths and chronic disease than any other comparable country. The social safety net in most OECD countries is there for a reason; healthy people are productive people.
Why are we investing in the USA again?
American companies also have a history of going bust and leaving victims high and dry. So if we think our superannuation will be safe in the USA, I want to leave you the story of Ed Bambas.
Bambas is an 88-year-old army veteran living in Michigan. He was spotted by TikTok influencer Samuel Weidenhofer, at a grocery store, who did a story about him.
Bambas had retired from General Motors as a salaried worker in 1999 but lost his pension due to the company’s bankruptcy measures in 2012. His wife fell ill, and the medical bills piled up. They took what was left of his pension and he paid the rest of his debt by selling his modest home once his wife died. Without a safety net, the Bambas was forced to work full-time to keep a roof over his head and food on the table. At 88.
A viral TikTok campaign has now raised $1.7USD so that he can finally retire in peace.
The issue here isn’t about charity or life circumstances, but the failure of the US government. No one should lose their house because they could not afford to pay their bills in a country with the most billionaires.
Do we really want to invest superannuation into American companies that will have no compunction of leaving us high and dry like they did with Ed Bambas?