How BlackRock Controls You

The New Apparatus of Financial Control

BlackRock, State Street, and Vanguard collectively manage $20 TRILLION of assets.

The entire GDP of the U.S. is only $23 trillion.

Now here's how BlackRock, State Street, and Vanguard control you with those assets.

First, we need to understand that owning a stock means you own a portion of the corporation the stock is issued based on.

And with that ownership comes one very important right: the right to vote your shares to determine what the corporation does.

Shareholder voting within a corporation is exactly as it sounds: you vote on certain issues and proposals put forth by the corporation. The more shares you have, the more votes you get — so if you own 30% of all the shares of the company, you get 30% of the votes. Results of votes are generally decided by simple majority.

Pretty straight forward, right?

Now what gets voted on at these shareholder meetings?

The voting determines the major changes to how the corporation will maintain or change the way it interacts with the world around it as well as how the corporation is managed internally.

These votes can determine big things, to name a few:

• diversity, equity and inclusion initiatives

• executive compensation

• board of director's policies

• the political policies of the corporation

However hands down the biggest decision made by the shareholder vote is who sits on the board of directors.

The board of directors decides:

• the objectives and goals of a company

• the management and senior executives of a company

• the company policies (including political policies)

• brand image and advertising

Yes — there is some overlap between what the board of directors does and what the shareholder vote determines. Responsibilities differ from company to company.

Now that we have the basics out of the way, how does voting shares of a corporation play in to BlackRock, State Street, and Vanguard (I'll call them "BSSV" from now on) controlling you?

Let's first look at how each of BSSV's ownerships are structured (all three are basically structured the same).

What BSSV generally does is pretty simple: they buy stock shares of a specific company (Apple, Tesla, etc.) and package those stock shares with similar stock shares in to something called an ETF or a Mutual Fund. Then they sell a piece of resulting pool of those stocks to you so you can own a bunch of stocks without having to buy each of them individually (this is simplified but the basics hold true).

For instance, let's say you want to buy technology companies but don’t know which specific company you want to buy or you can't afford to buy a bunch of different companies. In that case, BSSV would simplify the process for you by buying stocks of a whole bunch of different tech companies that they then package in to an ETF or Mutual Fund which you can then buy shares in allowing you to get ownership to all those companies at a fraction of the cost and effort!

And these bundles can be created with any industry, sector, or with any other group of companies — from tech to oil to the entire S&P 500.

So it seems like a win-win, right? You get to own a bundle of a bunch of different stocks you couldn’t otherwise get access to and BSSV gets a very small fee for helping you get that exposure.

They seem like such nice guys, right? How on earth could this be sinister?

Not so fast — when you buy these stocks through BSSV in ETFs and Mutual funds you give up one very important thing: you give up your right to vote at the shareholder meeting for each of those individual companies.

You give up the right to choose the board of directors who determine the course of actions the company will pursue and you give up the right to vote on those political and policy decisions directions the company will take.

But most importantly: YOU GIVE THAT VOTING RIGHT TO BSSV.

“So what, BSSV can vote a few shares of a company? There must be way more shareholders out there that also vote”.

For this, I'd ask you to do an experiment. Pick any major company. Now google who its largest Shareholders are The largest shareholders will almost always include or be composed of BSSV. Of all the stocks in the S&P 500 at least one of the members of BSSV is the largest shareholder in 88% of the companies.

“But on average they only collectively own around 15% of most of these companies, that's not 50% control”.

True, but a 15% difference in voting for board members or policies where most other shareholders are indifferent or uneducated on the policies (thus their votes are closer to a 50/50 split) is enough to sway almost every item that's voted on.

“Well at least the three of them must have differing views? They all must compete for different shareholder vote outcomes, right?”

Wrong.

The unique thing about BlackRock, State Street, and Vanguard is that their own largest shareholders are:

Each Other.

So they all decide each other's boards of directors and all control each other's shareholder votes. Then once BSSV's own boards are chosen they choose the boards of the companies they control.

Now how is this control actually exerted? What are the manifestations of it that actually impact us?

I'll keep this succinct so this doesn't run too long but corporations exert control over our society in a number of ways.

On the social front this means BSSV can control almost every intersection of our lives with corporations. Our news, our social media, our financial institutions, our cinema and television, our retailers, our clothing stores, and even our food are all subservient to BSSV and the boards of directors they appoint.

In the political landscape this control can be exerted through campaign contributions, lobbying, PACS, issue advocacy, regulatory capture, think tanks, revolving doors, trade associations, policy development, and campaign advertising amongst others (to name a few).

This is also why every corporation appears to be move in lock-step in their support of things like ESG investing, Black Lives Matter, and other social causes: because behind the scenes BSSV purposefully elects boards that champion their values and beget their interests.

The players on each board are different but their ideologies are the same…because their ideologies are BSSV's ideology.

For many years now BlackRock, State Street, and Vanguard have controlled almost every aspect of our lives without us knowing.

Let's break that cycle.