The Problem of Twelve

“Power without accountability, Coates argues, is always dangerous. And he is right.” —New York Times

“A fascinating insight into a paradox at the heart of liberal democracies.” —Financial Times

“A powerful argument for thoroughly revising how the chief players in the financial world are regulated.” —Kirkus Reviews

“Capitalism is determined by who controls capital. John Coates draws on a lifetime of experience and study to make a compelling case that American capitalism part way into the twenty-first century is dominated by a dozen insufficiently accountable institutions. His pathbreaking analysis and recommendations deserve the attention of all who care about our economic future.” —Lawrence H. Summers, Frank and Denie Weil Director of the Mossavar-Rahmani Center for Business and Government, Charles W. Eliot University Professor, Harvard Kennedy School

“The political dangers arising from concentrated economic power are a recurrent theme in American history. Coates’ book provides an essential tutorial on the influence of a small number of private financial institutions, and the answers needed for our own reckoning with concentrated financial power.” —Tim Wu, author of The Curse of Bigness, and former special assistant to President Biden for technology and competition policy

“The problem of concentrated power in a few hands is one that we should all be deeply worried about. John Coates provides a compelling account of how the growing influence of index funds and private equity is making this problem much worse in ways that most of us do not even realize, not least because the activities of the key players are shrouded in mystery. The book is a wake-up call for all who are concerned about the future of American capitalism.” —Oliver D. Hart, Lewis P. and Linda L. Geyser University Professor, Harvard University, winner of the Nobel Memorial Prize in Economic Sciences

“In this concise but broad-ranging exposition of how index funds and private equity funds are changing the nature of American capitalism, John Coates unpacks the complex economic and political effects of these financial intermediaries. He offers some sensible first steps in what he explains will be the long-term challenge of containing their negative effects without losing the substantial benefits that index funds, in particular, have produced for American households.” —Daniel K. Tarullo, Nomura Professor of International Financial Regulatory Practice at Harvard Law School, and former member of the Federal Reserve Board

“This is a must-read for policy makers and policy influencers on both sides of the aisle. Coates lays out—with deeply informed, thoughtful, and near-forensic precision—the complicated balance of financial and political power in America, as well as ways to address the increasing concentration of wealth and the problems that presents for a thriving economy and democracy.” —Allison Herren Lee, former SEC Acting Chair and Commissioner, now Senior Research Fellow, NYU School of Law

“The Problem of Twelve provides a beautifully crisp and clear framing of both the economic issues and policy options surrounding two of the giants of the modern financial landscape—index funds and private equity funds. Whatever your own leanings are in this area, you will find much here to challenge and inform your thinking.” —Jeremy Stein, Moise Y. Safra Professor of Economics at Harvard University, former member of the Board of Governors of the Federal Reserve