| Shareholder primacy is in an interesting place. With the rise of index funds also comes the rise of the idea of a 'universal owner' solving the tragedy of the commons.[0] If you own a piece of every company, like Vanguard or BlackRock, your funds benefit when the whole economy does well. Your incentive is to advance society, not to promote any one company at the expense of the others. In that way, you internalize externalities -- like climate change. Or in this case, getting industry-wide action on privacy/security. That said, this idea hasn't sunk in with fund managers yet. They're beginning to talk about caring about 'social purpose'[1] but still voting against it[2]. So the retail investors will have to demonstrate they care in order for anything to change, and they don't even get a vote through mutual funds. I built this website to organize verified retail investors around petitions, in order to do that. You can support petitions like this https://www.yourstake.org/ask/vanguard-demand-companies-disc... or this https://www.yourstake.org/ask/amazoncom-inc-facial-recogniti... ---- [0] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3014952 [1] https://www.blackrock.com/corporate/investor-relations/larry... [2] https://www.cnbc.com/2019/03/18/large-fund-firms-support-for... |
Index funds only target top companies. Externalities tend to b eenefit those top companies while harming little companies as well as poor people, often not even in the same country.