Facebook’s Supreme Court Takes a Case

We talk occasionally about the theory that BlackRock Inc. rules the world. Not BlackRock per se, exactly,1 but there is a small group of gigantic investment managers who are the biggest shareholders in most public companies, and who, at some level, get to tell those companies what to do. The people who run those investment managers—people like Larry Fink of BlackRock—have disproportionate power over the world. If they decide that corporations should not have staggered boards, corporations will not have staggered boards. If they decided that climate change is a pressing problem and companies need to address it, companies have to at least consider addressing it.

It is weird to have most of the companies in the world run by a small group of people. When you put it that way, it sounds like an obvious antitrust problem, and there is a popular argument that in fact antitrust law does or should restrict big index funds from owning all the stocks in an industry. But its weirdness goes beyond the antitrust issue, the issue of whether companies will raise prices because they all have the same owners. There are all sorts of reasons to be uncomfortable that a handful of people have somewhat accidentally accrued so much power. “I didn’t know that Larry Fink had been made God,” Sam Zell once said. At some level it seems like a political problem, and we have talked a few times about efforts by the actual political system (Congress, regulators) to rein in the power of the unelected heads of the giant asset managers, particularly when it comes to questions—about the environment, about guns—that are more traditionally handled by the political system.