It’s systems, baby! There’s a flowchart and everything.
So your stock portfolio, your fun little ETF and whatever else has elevated asset managers like Vanguard to king. And those asset managers make money no matter what the stock does, which is making market competition, corporate governance, and monetary policy a lot weirder.
A subsequent study from one of the same researchers found that, on net, the rise of BlackRock, Vanguard, and State Street has actually reduced prices across the economy. This makes theoretical sense. If an entity owns every firm within a single industry — and none outside it — then it is in their interest to promote collusion and price gouging. But if an entity owns every firm in every industry, the calculus changes: High prices in the airline industry reduce the profit margins of every corporation that needs to pay for business travel. The airline tycoon has an interest in collusion, but the universal owner has an interest in efficiency.
[Intelligencer]
