The writer does have some street cred.*
From the University of Chicago' Booth School of Business' ProMarket, August 15:
The following is a chapter excerpt from The Problem of Twelve: When a Few Financial Institutions Control Everything, written by John Coates and published today by Columbia Global Reports.
Public companies were a core part of the economy and government in the middle part of the twentieth century. They were legitimated by war, securities law, progressive taxation, labor unions, and regulation. But from 1970 on, they changed and were changed by politics and economics.
Corporate leaders invested in their own political capital, and applied the resulting power to reduce the constraints of antitrust law, taxation, and regulation, and, most importantly, to lay low what had been one of their most powerful political rivals—private sector labor unions. In the same period, however, public companies’ economic freedom dramatically shrank. Indeed, they faced an existential crisis—in the form of globalization, inflation, automation, hostile takeovers, and buyouts. Since 1990, they have also faced an ongoing challenge in the form of a shareholder rights movement, in which institutional investors—first public pension funds and hedge funds, and lately index funds, organized politically to reduce their autonomy. Meanwhile, the private equity industry, which seemed to diminish in the recession of 1989–91, has more than recovered and has been growing much faster than the public equity markets, displacing public companies in both the economy and the political system.
Today, index funds and private equity funds are themselves politically active and influential, and other political actors—civil society organizations, social activists, and political parties and politicians themselves—have responded to these funds’ growing economic clout and political power. Index funds have become increasingly politically influential on issues such as diversity, treatment of workers, and climate change, drawing charges of socialism from the right, and of antitrust harm and of dragging their feet on other issues, such as corporate political disclosure, from the left. Private equity funds, by contrast, are drawing a veil over more sectors of the economy, partly by leveraging politically controversial tax breaks, partly by continuing the suppression of labor and increasing wealth disparities, and partly by simply doing an excellent job at whatever private for-profit business can do—whether it’s satisfying or defrauding consumers, increasing productivity and innovation, or imposing negative consequences on unwitting third parties....
John Coates is the John F. Cogan, Jr. Professor of Law and Economics at Harvard Law School, where he also serves as Deputy Dean and Research Director of the Center on the Legal Profession. Professor Coates served as General Counsel and as Acting Director for the Division of Corporation Finance for the SEC. Before joining Harvard, he was a partner at Wachtell, Lipton, Rosen & Katz, specializing in financial institutions and M&A. At HLS and at HBS, he teaches corporate governance, M&A, finance, and related topics. He has testified before Congress, advised the U.S. Department of Justice (DOJ), the U.S. Department of Treasury, and the New York Stock Exchange, and served as the Chair of the Investor-as-Owner Subcommittee of the Investor Advisory Committee of the SEC.
Or, as we said in the intro to 2022's ""Three ongoing mega-trends are reshaping corporate governance" (or How Larry Fink and 11 Other Individuals Will Have Power Over the Majority of Public Companies)":
Dean/Professor Coates knows some stuff. He is sort of an adjunct professor with tenure.
And that post:
From John Coates at Harvard Law School:
The Future of Corporate Governance Part I:
The Problem of Twelve
First Draft: June 24, 2018This Draft: September 20, 2018Three ongoing mega-trends are reshaping corporate governance: indexing, private equity, and globalization. These trends threaten to permanently entangle business with the state and create organizations controlled by a small number of individuals with unsurpassed power.
The essay focuses on indexation. After providing background, the essay describes the rise of and reasons for indexation, noting that “passive” indexed investing takes a variety of forms. Data on indexation are presented -- with the bottom line that indexation has progressed farther than most realize, because foreign ownership, institutional indexation, and “closet” indexation are often neglected by observers. Index providers’ incentives, resources, and methods are reviewed, with an emphasis on the how such providers have greater practical importance than simpler analytical approaches might suggest. The essay ends with an outline of policy options, and preliminary analyses of which seem likely to address the “ Problem of Twelve” – the likelihood that in the near future roughly twelve individuals will have practical power over the majority of U.S. public companies
....MUCH MORE
Earlier today:BlackRock And Larry Fink's Power (BLK)
