This article is reproduced from Geopolitical Economy, with thanks.
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The billionaire CEO of BlackRock, the world’s largest asset manager, has said it “really doesn’t matter” who wins the USA presidential election, because both Donald Trump and Kamala Harris will be good for Wall Street.
“I’m tired of hearing this is the biggest election in your lifetime. The reality is over time it doesn’t matter”, said BlackRock chief Larry Fink at a 21 October conference hosted by the Securities Industry and Financial Markets Association, according to the Financial Times.
“It really doesn’t matter,” Fink reiterated. He revealed that, at BlackRock, “we work with both administrations and are having conversations with both candidates”. (News updates from October 21: BlackRock’s Larry Fink says US election ‘doesn’t matter’ for financial markets by Madison Darbyshire)
BlackRock has $11.5tn assets under management, making it the biggest investment company on Earth.
BlackRock has a revolving door with the US government. Veterans of the asset manager have held high-level roles in the Joe Biden administration’s treasury. A BlackRock executive has likewise served as a prominent economic advisor for Kamala Harris.
Trump’s treasury, on the other hand, was run by Goldman Sachs’s former chief information officer, Steven Mnuchin, who made a fortune as a hedge fund manager.
Trump and Harris have competed to see who could get more support from Wall Street.
As president, Trump significantly cut taxes on the rich, leading billionaires to pay less than the working class. The richest 400 US families paid an average effective tax rate of 23 percent in 2018, which was lower than the 24.2 percent average paid by the bottom 50 percent of households.
Trump has pledged to further reduce taxes on the rich. An analysis of Trump’s tax proposals by the Institute on Taxation and Economic Policy showed that they would be extremely regressive: the richest five percent of Americans would see a tax cut of at least 1.2 percent, whereas the bottom 95 percent of people will have to pay more, including a 4.8 percent tax increase for the poorest 20 percent of the country.
One of the top financiers of Trump’s presidential campaigns, in 2024 and 2020, is the billionaire CEO of Blackstone, Stephen Schwarzman, who in 2022 was proclaimed the highest-paid chief executive in the USA financial services industry.
Schwarzman is a Republican party mega-donor, and was Wall Street’s number one funder of political campaigns in the 2020 election cycle.
Blackstone is the world’s largest alternative asset manager, and the biggest commercial landlord on Earth. The investment company owns and manages more than 300,000 rental housing units in the United States.
Blackstone has evicted homeowners in numerous states, contributing to a growing crisis of homelessness, which grew by 12 percent in 2023.
The Guardian succinctly encapsulated just how powerful Blackstone has become:
“Blackstone is the largest commercial landlord in history. Over the past two decades, it has quietly taken control of apartment blocks, care homes, student housing, railway arches, film studios, offices, hotels, logistics warehouses and datacentres. Blackstone doesn’t just own real estate, it owns everything – or that’s how it can feel when you start to examine its bewildering array of assets.
If you wear Spanx, have ever matched with someone on Bumble, stayed in a Hilton hotel or a CentreParcs resort, visited Legoland, Madame Tussauds, the London Dungeon or an elderly relative at a Southern Cross care home, you have encountered a company that forms, or has recently formed, part of the Blackstone empire.” (The Blackstone rebellion: how one country took on the world’s biggest commercial landlord by Hettie O’Brien, 29 September 2022)
US investors buying up residential real estate has fuelled an explosion in housing prices, turning families’ homes into a speculative asset rather than a place to live.
The cost of housing in the United States has grown significantly faster than wages in the past decade. The housing bubble that burst in 2008 was simply reinflated after 2012, and is much larger today.
Approximately 45 percent of US households spend more than 30 percent of family income on rent, over 30 percent of households spend more than 40 percent of family income on rent, and nearly one-quarter of households spend more than 50 percent of family income on rent. (The 2024 Economic Report of the President, the Whitehouse, 21 March 2024)
Although BlackRock and Blackstone are different companies, they have overlapping histories, and BlackRock owns 6.56 percent of Blackstone, making it the second-largest shareholder.
Blackstone’s biggest shareholder is Vanguard, which has a 9.05 percent stake. The fourth-largest is State Street, which owns 4.12 percent.
BlackRock, Vanguard, and State Street are popularly known as the ‘Big Three’ US index fund mangers.
A 2017 academic paper found that the Big Three were the largest shareholders of 438 of corporations in the S&P 500, an index that consists of the 500 biggest companies listed on US stock exchanges. These 438 firms made up 88 percent of the total of S&P 500 companies, representing 82 percent of the index’s market capitalisation at the time.
When he was campaigning for president in 2019, Joe Biden promised wealthy donors in Manhattan that he would not “demonise” the rich, and that, if he won, “no one’s standard of living will change, nothing would fundamentally change”. (Joe Biden to rich donors: ‘Nothing would fundamentally change’ if he’s elected by Igor Derysh, 19 June 2019)
US presidents, whether Republican or Democrat, have consistently kept this promise to serve the rich.
Just 10 percent of people in the United States own 93 percent of stocks, whereas the bottom 50 percent of the country holds just one percent, as of 2023. This is the highest level of equity ownership concentration in recorded history.
The wealthiest 50 percent of Americans receive 95 percent of capital income. The top ten percent alone get 60 percent of income from capital, and 90 percent of income from financial assets.
An influential 2014 study by scholars at Princeton and Northwestern Universities empirically showed that the United States is an oligarchy, not a democracy. The academics wrote:
“Multivariate analysis indicates that economic elites and organised groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of economic-elite domination and for theories of biased pluralism, but not for theories of majoritarian electoral democracy or majoritarian pluralism.” (Testing theories of American politics: elites, interest groups and average citizens, 18 September 2014, our emphasis)
The 2024 election is the second-most expensive in the history of the United States, with approximately $16bn spent. This enormous sum was only surpassed in the 2020 election, which cost a staggering $18.3bn.
In the past decade, the amount of money spent on US elections has roughly doubled, from $8.5bn in 2016.
Why do wealthy donors spend so much on US elections? Because they have a lot of success investing in politicians.
Over the past two decades, on average, the candidates who have the most funding win the elections in the House of Representatives over 90 percent of the time and in the Senate roughly 80 percent of the time.
