The Problem of Twelve: When a Few Financial Institutions Control Everything

The forces at the back of an economic and political crisis in the making

A “problem of twelve” arises when a small number of institutions acquire the means to exert outsized influence over the politics and economy of a nation.

The Big Four index funds of Vanguard, State Street, Fidelity, and BlackRock keep an eye on more than twenty percent of the votes of S&P 500 companies—a concentration of power that’s unprecedented in The us. Then there’s the upward push of private equity funds such as the Big Four of Apollo, Blackstone, Carlyle and KKR, which has amassed $2.7 trillion of assets, and are eroding the legitimacy and accountability of American capitalism, not by controlling public companies, but by taking them over entirely, and disposing of them from public discourse and public scrutiny.

This quiet accumulation in the previous few decades represents a dramatic transformation in how the American economy operates—a sea change that few of us have noticed and all of us wish to imagine. Harvard law professor John Coates forcefully calls our attention to what’s sure to be probably the most major political and economic issues of our time.