Power Play: How Just 12 People Control America’s Economic Destiny

Twenty-five percent of the S&P 500, which represents the 500 largest companies in the US, is controlled by just four index funds. Add to this the dominance of the Big Four private equity firms and the handful of American banks officially deemed “too big to fail” and you have a scenario where a group of individuals who could comfortably gather around a conference table exert control over a major portion of the US economy.

This alarming concentration of power is the crux of The Problem of Twelve: When a Few Financial Institutions Control Everything, a new book by our guest on this week’s WhoWhatWhy podcast, John Coates. A professor of law and economics at Harvard Law School, he has held high-ranking positions at the Securities and Exchange Commission and consulted with the Department of Justice, the Department of Treasury, and the New York Stock Exchange.

In our discussion, Coates demystifies much of the jargon and buzzwords surrounding index funds and private equity, while highlighting the genuine risks stemming from the limited transparency in which these powerful institutions operate. 

He details connections between America’s financial powerhouses and their outsized political influence, and he discusses proposed legislation aimed at curtailing their reach. 

Unless we address this issue now, he argues, such extreme concentration of power poses an existential threat not only to corporate America and the wider economy, but to the future of US democracy itself.