Concentration 

By Isaac Cohen*

Markets left to themselves tend to generate concentration. To prevent the pernicious effects on competition, antitrust legislation exists and there are government agencies responsible for enforcing it. However, since these agencies do not have enough preventive capacity, they end up acting after levels of concentration have increased.

There is evidence that concentration has intensified in the US economy. For instance, a small number of high-tech companies were the main contributors to the spectacular increase in the stock market, which lasted until the start of this year. The same eight companies are responsible now that the stock market has turned south. Apple, Alphabet, Amazon, Meta, Microsoft, Netflix, Nvidia and Tesla, listed alphabetically, together contributed 25 percent to the upswing in the S&P 500 index. Until last week they contributed 46 percent to the loses in both the S&P 500 and the Dow Jones indexes.

The same degree of concentration can be found in the financial sector, where the mega banks used to dominate. Now, three asset management companies, also listed alphabetically, Blackrock ($10 trillion), State Street ($4 trillion) and Vanguard ($8 trillion), together manage $22 trillion in assets, more than half of the $38 trillion value of all shares included in the S&P 500 index.

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

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