The fact that a single entity acts on behalf of tens of millions of ordinary people does not detract from the fact that it is a single entity that can exert that kind of influence. If that single entity abuses that power, then smaller entities loose money and the (extra) earnings largely end up in the pockets of the entity itself.
Interesting how so much money/power/responsibility is diluted and reconcentrated over and over in mutual funds, pensions, insurance companies, governments, etc. -- much like those subprime mortgage tranches. And we call this capitalism?!
Everyone is passing the buck... what's the connection between your investment and a productive enterprise somewhere? A long chain of financial games. Decisions are based on statistics and third-hand information, not on the merits of the end investment. Result: a crapload of bad investments and an unstable economy.
[Edit:] "Capitalism" gets blamed for this mess caused by the dilution of responsibility, which sounds pretty socialistic to me. You might call it "emergent socialism".
The connection between my investment and productive enterprise is very simple. Vanguard (the people who manage my money) transfer my investment to an enterprise they believe is productive but undervalued.
a single entity that can exert that kind of influence
In the US such an entity has a legal obligation to act in the best interests of his clients, and can be held liable for failing to act properly. Bernie Madoff is a prime example.
Regrettably, The Authorities often look the other way. Ken Lewis decided (well, was pushed) to go ahead and buy Merrill Lynch even though he knew he was screwing his Bank Of America shareholders. Still, it was a violation of the law and he should have been prosecuted. So while it's wrong to screw clients for personal benefit, evidently it's not wrong to screw clients for the government's benefit. (I don't know what that's called, but it's not "capitalism".)
He was "pushed" ( http://www.washingtonpost.com/wp-dyn/content/article/2009/04... ) by the US government, the same one that upholds the law that he has now violated. Damned if he did (prosecuted for violating the law), damned if he didn't (forcibly removed from his company by the US Government).
