From the article: "Of course, we know that active managers and their armies of analysts don’t always get it right. But without their work, securities are much more likely to be mispriced. That’s because active managers are better at valuation analysis than the mom and pop investors in index funds." (emphasis mine)

If the bolded part were true, wouldn't active managers have returns greater than the market index? By any definition of "mispriced securities" such knowledge should lead to outsized gains. The fact it hasn't shows this premise to be false.

50% of analysts overpricing something and 50% underpricing something doesn't add anything to efficient capital allocation, except fees.

can generate better returns than the passive funds to make them worth the additional fees. This reads like a bunch of fund managers whining about the fact that their products have lost popularity instead of trying to innovate to bring customers back.

I would also think there are plenty of institutional funds like CALPERS that are still actively managed that still have plenty of capital to "buy the dip" and help soften the fall when things turn bearish.

They perform a legitimate and efficient function in the economy, particularly
for institutions with large equity holdings to hedge their positions and
reduce their market risks, and to take advantage of market moves that they
foresee have a high probability of occurring.

Bad for the economy? They do add another layer of expense to equity-based
securities, and the extra costs of fund management get passed on to
shareholders. Since the performance of the funds is highly automated based
on their underlying indices, actively managed funds automatically suffer a
disadvantage to index funds.

why pay to do something?
Paying for stock augury when augury provides little insight seems foolish, writ large, even if it does mean that the augury industry suffers. As for augury uncovering bad companies, how many augurs predicted the 08, how many augurs predicted Enron, etc?

carnage

what's interesting about portfolio management and passive investing is that it isn't always what you own that can hurt you (vis a vis the index) it's what you don't own.

I remember sitting through a PM's presentation where Enron surfaced. The look on his face was horrific and sad. He starts muttering, "Enron was the worst part about my career. I was vindicated but the 18 months where it was running hot while I couldn't figure out why was horrible. My boss literally came into my office weekly and asked why I didn't own it."

I know there are many "index hugger" managers who may "hate JNJ, but I own it". If JNJ is, let's say 2.5% of the index, they may dislike the stock but allocate 1.5% of the fund to JNJ just because they are so benchmark aware.

smelled a rat. He was ridiculed by Enron management whenever he asked tough questions.

He never felt like gloating because he knew how many people had been burned.