The Problem of Twelve

When a Few Financial Institutions Control Everything

By: John Coates

Narrated by: Sean Patrick Hopkins

The forces behind an economic 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 Three index funds of Vanguard, State Street, and BlackRock control more than twenty percent of the votes of S&P 500 companies—a concentration of power that’s unprecedented in America.

Then there’s the rise 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 removing them from the government’s regulation.

What can be done to check this level of power? Harvard law professor John Coates argues that only politics can fight the problem of twelve.


* This audiobook edition includes a downloadable PDF that contains charts and illustrations from the book.

A sobering insight of what's glaring at us

This book focuses on the rise of index funds and private equity and their hidden domination over the US markets. However, these institutions' structures enable them to circumvent regulations that aim at protecting the markets. In addition to pointing out the problem, the author offers practical solutions.

If you are interested in how investors influence the market, this book is for you. It paints the whole picture with data, history, unexpected (but entirely predictable) changes in nature/governance structures, and potential impacts.

If you want juicy gossip or fun conspiracy theories since the book's subtitle kind of hints at it, this book is cool-headed and sobering. But you will learn something new.

It spells out the nagging feeling at the back of my mind clearly.