In the IPA Review’s 2025 Winter Edition, Australian economist (and one of my PhD supervisors) Sinclair Davidson wrote an article entitled, A State of Dependants. In this article, he delivers a scathing critique of build-to-rent developments in the state of Victoria. These developments are high-density apartment complexes built to be rent out, with none of the apartments ever sold to buyers.

Unsurprisingly, given the reality that the Australian Labor Party are essentially Peronists (don’t even get me started on the Treasurer, who can be described as possessing Juan Peron’s policy positions whilst lacking Eva’s sex appeal), this is outright economic fascism.

These developments are enabled by ALP-favoured policy changes (such as tax perks unavailable to other kinds of housing developments) and will likely be owned by ALP-aligned industry super funds (into which most Australian workers invest). To quote Sinclair:

‘Our institutional framework creates a situation where Australians are being asked to fund, through their wages, a housing model that they may never own, governed by institutions they do not elect, and operated by funds whose governance is shaped by political and industrial interests. The result is not a market-led solution, it is the institutionalisation of dependency under the appearance of policy modernisation.’

I don’t need to repeat Sinclair’s critique of how this policy is a form of economic fascism that will centralise control of wealth and undermine social mobility. I’ve linked to that critique so readers may explore for themselves.

The fact that this policy is being pushed by ALP – the party that claims to dislike big businesses and claims to support the interests of the poor – is the kind of hysterical hypocrisy that one can only find in politics. I write to note a different hypocrisy embedded in this policy – one which Sinclair didn’t touch on.

To be specific, the ALP claims to be deeply opposed to racism. They are, after all, the party of many performative Indigenous land acknowledgments. Yet build-to-rent is actually, by the definition used by Critical Race Theorists, an institutionally racist phenomenon and has a deeply racist history. In particular, this is one of the policies that undermined and demolished the social mobility of the African American community during the ‘Great Society’ era. The economic stature of the African American community has not since recovered.

The American implementation of this policy was via directly-government-owned housing projects. Extensive ‘urban renewal’ efforts, part of the Great Society, tore down African American neighbourhoods (including the ‘Black Wall Street’ financial centre in North Carolina), and many of those displaced by said efforts were re-accommodated in those housing projects.

However, those apartments remained property of the government and were rented out to their residents. In other words, African Americans were en masse removed from the homeowner class and instead were demoted to renters.

This resulted in making it much harder for African Americans as a whole to access capital markets and get business loans (as they lacked ownership of an asset they could offer as collateral). The result was that huge swathes of African Americans had their social mobility crushed. There is no more ‘Black Wall Street’ these days and the racial wealth gap cemented by this policy still lingers, despite all the improvements in Civil Rights.

Australia’s proposed implementation includes private ownership by partisan-aligned corporations, but the effect of the policy will be the same – convert a large swathe of the population from owners to renters and thus greatly curtail their access to capital markets and, consequently, social mobility.

True, the Australian variant won’t have that impact in the same racially-disparate manner, but so what?

We’ve already seen this exact kind of policy be deployed on a specific ethnic group and there’s no reason to think that a multi-ethnic constituency would not experience the same impacts – European, Asian, African, and Middle-Eastern Australians would still be removed from access to capital markets and thus experience diminished social mobility.

In addition, as Critical Race Theorists have made very clear, they regard the historical implementation of any policy in an institutionally racist fashion as forever tainting any future implementation of that policy. Why would a policy with a known, historically documented impact that greatly increased a racial disparity suddenly become acceptable when applied to Australia?

(Yes, I’m aware the reason is because 95 per cent of accusations of ‘racism’ are nothing more than tactically useful abuse, that the establishment left holds itself to no consistent standards.)

In the final analysis, the Victorian Labor government is engaging in more than just cronyism – they are quite literally pushing for a government-backed housing model that has been historically proven to impoverish. Labor plans to do to all Australian renters what LBJ’s Great Society did to the African American community – Victoria is just the start. Sure, this time around the policy may create a more ethnically diverse underclass than in its previous implementation, but that’s hardly a redeeming feature

Dr Andrew Russell is an economist, philosopher and musician based in Brisbane, Australia. He specialises in Austrian, Evolutionary, Institutional and Public Choice economics. His PhD at RMIT in Melbourne was a dissertation on the economics of casino gambling. His substack can be found here.