What BlackRock, Vanguard and State Street Are Doing to the Economy

[Celerity]

https://www.nytimes.com/2022/05/12/opinion/vanguard-power-blackrock-state-street.html

https://archive.ph/ZNzvS



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The firms manage funds invested by large institutions like pension funds and university endowments as well as those for companies and, in some cases, individual investors like me and perhaps you, too. Their holdings are colossal. BlackRock manages nearly $10 trillion in investments. Vanguard has $8 trillion, and State Street has $4 trillion. Their combined $22 trillion in managed assets is the equivalent of more than half of the combined value of all shares for companies in the S&P 500 (about $38 trillion). Their power is expected to grow. An analysis published in the Boston University Law Review in 2019 estimated that the Big Three could control as much as 40 percent of shareholder votes in the S&P 500 within two decades.

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The real danger posed by the three is economic, not political. The American economy is lumbering under monopoly and oligopoly. In many industries, from airlines to internet advertising to health care to banks to mobile phone providers, Americans can do business with just a handful of companies. As the journalist David Dayen has argued, this increasing market concentration reduces consumer choice, raises prices and most likely harms workers.

BlackRock, Vanguard and State Street have been extraordinarily good for investors — their passive-investing index funds have lowered costs and improved returns for millions of people. But their rise has come at the cost of intense concentration in corporate ownership, potentially supercharging the oligopolistic effects of already oligopolistic industries.

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Indeed, there is some evidence that their concentrated ownership is associated with lower wages and employment and is already leading to price increases in some industries, including in airlines, pharmaceuticals and consumer goods. The firms dispute this. In a 2019 paper, Vanguard’s researchers said that when they studied lots of industries across a long period, they did not “find conclusive evidence” that common ownership led to higher profits. But if the Big Three keep growing, the effects of their concentrated ownership will get only worse. Einer Elhauge, also of Harvard Law School, has written that concentrated ownership “poses the greatest anticompetitive threat of our time, mainly because it is the one anticompetitive problem we are doing nothing about.”

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David Dayen—Monopolized: Life in the Age of Corporate Power

[gab13by13]

1. The author claims the real danger is economic not political,

I agree with the economic part, but I disagree with the political part. Vanguard and BlackRock are the major shareholders of COMCAST (MSNBC) Don't tell me they don't have political influence.

[brooklynite]

2. The don't hold the shares for political influence...

They hold them for the mutual fun investors who are clients.

[Buckeyeblue]

3. I'm not convinced there is a real problem

I think prices have been kept a tad on the low side. With supply chain issues and a disruption of Russia oil prices have increased.

I think we should keep interest rates low and let people, the economy, spend its way out.

And really we need to move away from oil. Higher gas prices might be the motivation we need.