Is Blackrock an entity prioritizing metrics over people?

What are the implications of AI's role in seeking data-driven returns?

Did you know what Blackrock is? Is it a simple asset manager? Who manages it currently? Is is a human-run company or is Aladdin at the helm?

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Disclaimer: I am in the learning phase of my “economics” journey. I am in no way, shape or form offering financial advice. Just some thoughts written down as a part of my journey.

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Humans start companies. We all know that. When you think of a company, what do you think of? Companies like Ford? General Electric?

This is how I see companies. Take note: I grew up in the 80s. :)

Someone has a good idea. They make something real or practical from that idea. Oftentimes, it’s an invention, like a car. Also oftentimes, it’s something that might make the human experience better, like solar water heaters. Someone else might come along and see the idea manifested and may think: I want one of those. Sometimes that someone has money, and decides to give some of that money to the idea-generator to help with the cost of production or manufacturing of the product of that idea. Others may come along who simply want the product of that idea for personal use.

And then sometimes, a whole lot of people see the value in the product of the idea, and then the idea-generator has to start building more of those products and in this case, upscaling of production is required. Sadly, this does often translate into corner-cutting and the original product of the idea morphs into something dangerous, like a Pinto. Too bad, they do look pretty cool!

Figure 1: 1973 Pinto Runabout with its large hatch and rear window. https://en.wikipedia.org/wiki/Ford_Pinto

Ford, the company, wanted to get these babies out fast and in accordance with a schedule, and this resulted in corner-cutting which in turn resulted in multiple endpoint flaws that ended in several recall orders of these cars. Apparently, in some of the models the accelerator would get stuck, and in others, ignition by a backfire through the carburetor from fuel vapors in the engine air filter were also a problem.¹ Sounds, dangerous.

But in most cases, if the idea is something makable and sellable, it’s also scalable based on consumer demand. Investors make money, and the idea-generator makes money, and the people who buy the product of the idea have something cool that they can afford to buy, and their lives are cooler.

Investors are not the same thing as shareholders. Investors don’t always own “shares” in a company. A share (also called stock or equity), is a unit of ownership on the company’s overall value. Shareholders are “entities” that therefore buy and hold units of ownership in a company: they have power with regard to that company. All shareholders are investors, but not all investors are shareholders. From where I sit, it seems like investors might have a bit more of a benevolent spin in them stemming more from a belief in an idea that might make the human experience better, as opposed to being motivated to simply make money by doing nothing. But I am an idealist.

A company is in fact a legal entity that can exist independently of specific individuals once established - say our idea-generator - wherein the inner workings of the company are self-reliant. It’s disturbing to me that although there are laws that “generally” require some human oversight or accountability, the extent of this human oversight varies according to jurisdiction and the type of company involved.

BlackRock, Inc., was founded in 1988 by Larry Fink et al., and is a publicly traded multinational investment management firm headquartered in New York City. What the hell does that mean anyway? What do they actually, do? Manage investments? Ok, what does that mean? It means that this “firm” takes money from people and aims to ensure that this money comes back with solid returns (like wealth accumulation) or security with regard to preservation of assets.

Sounds like something that requires quite a bit of trust, non? Well I guess so because, the “firm” is recognized as the world’s largest asset manager with $11.5 trillion in assets under management (AUM). BlackRock’s own revenue (this is the amount they actually made off of this “management game” before subtracting expenses or costs) reached $17.86 billion in 2023. Their net income was $5.5 billion in 2023, and this was mainly from investment advisory and administration fees. That’s a lot.

Blackrock has eaten many other companies along the way by acquisition (buying them out) like Merrill Lynch (2006), Barclays (2009), and Global Infrastructure Partners (2024), and this makes Blackrock even more powerful in terms of assets and power. Even more alarming is that Blackrock has major influence in terms of its significant stakes in other major companies, and this raises some serious questions about corporate governance and the global market cookie jar. The hands of Blackrock are indeed too deep in that jar, if you ask me. And it’s getting worse.

So what once was a company in the context of Blackrock, is now something akin to an automated fiat blob that consumes and destroys all in its path with the sole motivator being wealth and power accumulation. There appears to be absolutely nothing elevated about what they do or the “product” they are selling, if you can even think of it that way. To me, the product they are selling is slavery.

Now here’s the thing about money. When I think of money, I think of cash. But money is not cash. Ever since the decoupling of gold as the backer of the U.S. dollar (thanks Nixon), fiat currency (the U.S. dollar) has been backed by nothing.² Well, not backed by nothing: it was backed by, get this, trust in U.S. government. This is what leads to the “ability” to continuously print endless amounts of paper money (quantitative easing - where do they get these bullshit names?): it’s pretty much monopoly money. So why do we place value on it?³

Most people think that the time and energy (that they are never able to get back) is being exchanged for money that they can subsequently use to buy things like food and shelter. When I think of how this system could actually work, I think of it like this.

Say that each hour of time and energy you spend, you get an amethyst crystal. More importantly, when you get this crystal: YOU GET THIS CRYSTAL. Let’s say you keep it in a box on your desk at home. It’s yours. You manage it. Let’s also assume that the ratio between the hour of time and energy spent is ALWAYS going to be equal to one amethyst crystal. You will be able to choose how many hours you want to spend working thus you will be able to choose how many crystals you accumulate and thus, you can decide to become wealthy, or not. The key would be to ensure prevention of centralized control - effectively, to prevent hoarding of amethyst.

It’s important to note that amethyst crystals have inherent value - they will never not be as valuable as they are, although they may increase in value through scarcity. This will be dependent on how many crystals will be required over many lifetimes or humans spending energy and time working. To me, if lizard overlords didn’t come along and say: restrict access to amethyst mines, there would never be a need to worry about running out of crystals.

In order for a commodity-based economy based on this type of system to work, people would have to agree that amethyst is and always will be valuable, and that everyone has a right to a certain amount but not too much, type thing.

In any case, the reason I brought up this amethyst-as-a-commodity-based system is because this is so NOT what exists today. That fiat currency that the FED prints in excess as a explosive short-term band-aid solution to massive economic problems, is simply data. That energy we all spend to “make money” is converted into computational energy that defines the way fiat is passed around. And here’s the kicker: that computational energy does not require humans. It requires water, but not humans.

Although the fiat system was designed and should be maintained by humans, its value depends on human trust and participation. So, in the face of “everything being computer”, where does that leave us? Today’s fiat system leans on computational efficiency, which is disconnected from the real energy expended by humans, and this could actually amplify inequality and instability when “mismanaged”.

So it seems to me that Blackrock may actually be doing exactly this: creating instability and inequality (real inequality not that DEI crap) by mismanaging a fiat system which is inherently doomed to collapse to begin with. And, if Blackrock is more like an automated entity with no other driving force than profit, then - as would be the case if AIs were in control of the fiat system - they might prioritize metrics over people. In my view, they are misallocating resources and amplifying inequality, and it is built into the model. Theoretically, they could flood the system with money (via investment control), mimic hyperinflation, and freeze transactions which would halting the economy. Sound familiar? Think 2008. Look closely at markers now.

In my opinion, trust in unbacked fiat is collapsing and the ironic thing about this is that it might indeed be eventual AI control of this system that prompts this. Is Bitcoin an answer? Or amethyst? Or gold-backed dollars?

One more thing, it’s not only Blackrock doing this.

Comments appreciated.

1. https://en.wikipedia.org/wiki/Ford_Pinto

2. This effectively ended the Bretton Woods system where the dollar was convertible to gold at a fixed rate.

3. The FED lends money to banks which then lend to customers based on the fractional reserve system. Thanks to Michael for the clarification! Correct.