“Free-Market Capitalist” Jamie Dimon on “Amazing Power” of Freedom
Plus, NewsGuard faults New York Times for “derision of Trump” in news stories.
JP Morgan Chase CEO Jamie Dimon has been talked about as a potential presidential candidate. If he ever gets tired of running the bank he is welcome here at The Editors as a guest writer. He seems to have more public-policy-related ideas than fit comfortably within the confines of a single annual shareholder letter, so maybe he could use a more regular outlet.
There’s so much good material in Dimon’s annual shareholder letter, which came out today, that the big risk for him as a communicator is that his many messages drown each other out. I will try—this is The Editors, after all—to edit Dimon’s book-length epistle down to something more digestible. He has enough material there, though, for a weekly Albert Shanker-style quarter-page newspaper ad, or a Substack-based newsletter of his own.
The core message, as I read it, at least, is about freedom.
“The heart and soul of the dynamism of America is human freedom — freedom of speech, freedom of religion, free enterprise (capitalism), and the freedom and empowerment brought to us by our democracy through the right to elect our leaders. Free people are at liberty to move around as they see fit, work as they see fit, dream as they see fit, and invest in themselves and in the pursuit of happiness as they see fit. This freedom that people enjoy, accompanied by the freedom of capital, is what drives the dynamism — economic and social — of this great country….We should do more to applaud the virtue and amazing power of our freedoms.”
Relatedly—and interestingly for the head of a company that does business all over the world—Dimon writes patriotically about America and American leadership.
Every time I see the American flag, it reminds me of the values and virtues of this country and its founding principles conceived in liberty and dedicated to the notion that all men and women are created equal. Talk with someone who has recently become a naturalized citizen or watch a ceremony where groups of people take the oath to America, and you will see extraordinary joy and newfound pride. They now live free, with individual rights protected by the Constitution and with their life and the well-being of their family and community protected by the U.S. military. As Americans, we have much to be grateful for and much to defend….
…I have a confession to make: I am a full-throated, red-blooded, patriotic, free-enterprise (properly regulated, of course) and free-market capitalist…..We believe in the values of democracy, including freedom of speech and expression, and are staunchly against discrimination and hate. We have not turned away — and will not turn away — customers because of their political or religious affiliations nor would we tell customers how they should spend their money…..
He ties that to the need for victory in the war in Ukraine:
Staying on the sidelines during battles of autocracy and democracy, between dictatorship and freedom, is simply not an option for America today. Ukraine is the front line of democracy. If the war goes badly for Ukraine, you may see the splintering of Pax Americana, which would be a disaster for the whole free world. Ukraine’s struggle is our struggle, and ensuring their victory is ensuring America first. It is imperative that our national leaders explain to the American people what is at stake and make a powerful case – with energy, consistency and clarity – for our strong enduring commitment to Ukraine’s survival for as long as it takes (and it could take years)….
He also says economic growth is key to American strength:
“For over two decades, since 2000, America has grown at an anemic rate of 2%. We should have strived for and achieved 3% growth. Had we done so, GDP per person today would be $16,000 higher, which would, in turn, have paid for better healthcare, childcare, education and other services. Importantly, the best way to handle our excess deficit and debt issues is to maximize economic growth.”
Back in 2011 I attended a conference of the George W. Bush Institute’s “4% Growth Project.” Four percent would be even better than three percent, but directionally Dimon is right that we can grow more with better tax and regulatory policies, and also with less hostility toward business:
“Unfortunately, the message America hears is that the federal government does not value business — that business is the problem and not part of the solution. There are fewer individuals in government who have any significant experience in starting or running a company, which is apparent every day in the political rhetoric that demonizes businesses and free enterprise and that damages confidence in American’s institutions. The relationship between business and government, in fact, might improve if there were more people from the business sector working in government.”
A portion of the letter is given over to general management and leadership advice:
He mentions what the military calls the “OODA loop” — Observe, Orient, Decide, Act — repeat.
“One cannot overemphasize the importance of observation and a full assessment — the failure to do so leads to some of the greatest mistakes, not only in war but also in business and government.”
“Curiosity is a form of humility — acknowledging that you don’t know everything.”
“When people disagree with you, seek out where they may be partially right.”
“Sometimes you should take the time to measure twice and cut once. And then sometimes making a quick decision is better than delaying. You should try to distinguish between the two.”
Dimon expressed some skepticism about inflation being conquered long-term.
there seems to be a large number of persistent inflationary pressures, which may likely continue. All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future (even though there currently is an oversupply of gas and plentiful spare capacity in oil) due to a lack of needed investment in the energy infrastructure. In the past, fiscal deficits did not seem to be closely related to inflation. In the 1970s and early 1980s, there was a general understanding that inflation was driven by “guns and butter”; i.e., fiscal deficits and the increase to the money supply, both partially driven by the Vietnam War, led to increased inflation, which went over 10%. The deficits today are even larger and occurring in boom times — not as the result of a recession — and they have been supported by quantitative easing, which was never done before the great financial crisis. Quantitative easing is a form of increasing the money supply (though it has many offsets). I remain more concerned about quantitative easing than most, and its reversal, which has never been done before at this scale….
we are prepared for a very broad range of interest rates, from 2% to 8% or even more, with equally wide-ranging economic outcomes — from strong economic growth with moderate inflation (in this case, higher interest rates would result from higher demand for capital) to a recession with inflation; i.e., stagflation. Economically, the worst-case scenario would be stagflation, which would not only come with higher interest rates but also with higher credit losses, lower business volumes and more difficult markets….
He also addressed the backlash against diversity, equity, and inclusion:
We are often asked in particular about “equity” and what that word means. To us, it means equal treatment, equal opportunity and equal access … not equal outcomes. There is nothing wrong with acknowledging and trying to bridge social and economic gaps, whether they be around wealth or health. We would like to provide a fair chance for everyone to succeed — regardless of their background. And we want to make sure everyone who works at our company feels welcome.
There’s a story buried within the letter about how regulations have pushed mortgage origination out of banks. He writes:
mortgage regulations around origination, servicing and securitization could be simplified, without increasing risk, in a way that would reduce the average mortgage by 70 or 80 basis points. The Urban Institute estimates that a reduction like this would increase mortgage originations by 1 million per year and help lower-income households, in particular, buy their first home, thereby starting them on the best way to build household net worth….
A figure in the letter reports that the nonbank share of mortgage originations reached 69 percent in 2023, up from 9 percent in 2010 and 12 percent in 2007.
Perhaps relatedly, a lot of action has moved out of publicly traded companies and into privately held companies:
From their peak in 1996 at 7,300, U.S. public companies now total 4,300 — the total should have grown dramatically, not shrunk. Meanwhile, the number of private U.S. companies backed by private equity firms — which does not include the rising number of companies owned by sovereign wealth funds and family offices — has grown from 1,900 to 11,200 over the last two decades….
I fear we may be driving companies from the public markets. The reasons are complex and may include factors such as intensified reporting requirements (including investors’ growing needs for environmental, social and governance information), higher litigation expenses, costly regulations, cookie-cutter board governance, shareholder activism, less compensation flexibility, less capital flexibility, heightened public scrutiny and the relentless pressure of quarterly earnings.
Dimon isn’t an isolationist or a xenophobe by any stretch, but in a couple of places he raises concerns about potential foreign influence or the danger of offshore supply chains.
On proxy voting, he notes: “There are essentially two main proxy advisors in the United States. One is called Institutional Shareholder Services (ISS), and the second is called Glass Lewis….I should also point out, because it may be relevant, that ISS is owned by Deutsche Boerse, a German company, and Glass Lewis is owned by Peloton Capital, a Canadian private equity firm. I question whether American corporate governance should be determined by for-profit international institutions that may have their own strong feelings about what constitutes good corporate governance.”
He also writes, “The United States cannot rely on any potential adversaries for materials essential to our national security — think rare earths, 5G and semiconductors, penicillin and materials critical to essential pharmaceuticals, among others.”
I don’t agree with Dimon on everything, but it’s so nice to see a CEO use his platform to defend freedom and capitalism and America and business. If more business leaders spoke out this way, more often, perhaps there’d be less of a need for it.
NewsGuard on the New York Times: A former Washington Post reporter, Paul Farhi, reports that NewsGuard, a company founded by Steve Brill and Gordon Crovitz that rates news organizations on their credibility, “has downgraded the New York Times,” in part for failures in responsibly handling the difference between news and opinion. NewsGuard says that in the Times, “derision of Trump courses through basic news stories.”
That criticism strikes me as on-target. Before I saw the NewsGuard news, I was getting ready to write an item complaining about a New York Times news article about a Trump fundraiser. The article includes the sentence, “During his rallies, Mr. Trump frequently laments migrants from a list of countries from Africa, Asia and the Middle East as he stokes fears around the surge at the border, which he blames for a spike in crime, blame that has not been supported by available data.”
The ”stokes fears” language made it into the online Times subheadline, too: “At rallies, Donald Trump frequently laments migrants from a list of countries from Africa, Asia and the Middle East as he stokes fears around the surge at the border.”
Biden spoke the other night at a Radio City Music Hall fundraiser with Presidents Obama and Clinton and said this about Tump: “our democracy is at stake. Not a joke. I think democracy is literally at stake….This guy denies there’s global warming. This guy wants to get rid of not only Roe v. Wade, but he -- which he brags about having done, he wants to get rid of the ability of anyone anywhere in America to ever choose….saying, ‘You know, I’m going to -- I’m going to be a dictator on the first day.’ He's not joking. And he’s serious about it. …He says he going to suspend the Constitution.”
The Times somehow managed to report on that without accusing Biden of stoking fears about dictatorship, climate change, and abortion rights.
Are fears about migrant-related crime “not supported by available data”?
Here is a story from the New York Times of July 25, 2022: “Migrant smuggling on the U.S. southern border has evolved over the past 10 years from a scattered network of freelance ‘coyotes’ into a multi-billion-dollar international business controlled by organized crime, including some of Mexico’s most violent drug cartels….While migrants have long faced kidnappings and extortion in Mexican border cities, such incidents have been on the rise on the U.S. side, according to federal authorities.”
A February 4, 2024 Times story about “a group of men charged with assaulting police officers in Times Square” reports that “all of them were migrants, according to a law enforcement official.” (The same story says that “On Sunday, former President Donald J. Trump baselessly cited the attack as evidence that Latin American governments were picking criminals to send to the United States.”)
A March 16, 2024 Times story said, “A Haitian migrant has been charged with raping a 15-year-old girl at a hotel serving as a migrant shelter in Massachusetts, authorities said Thursday….The killing of a 22-year-old woman at the University of Georgia campus in February became a political flashpoint when a Venezuelan migrant was charged with the crime.”
An August 31, 2023 Times article, headlined “Gang Member Pleads Guilty in Killing of 2 Long Island Teenagers,” reports, “One night in September 2016, two teenage girls were walking down a street in the Long Island hamlet of Brentwood when they were spotted by four members of MS-13, a violent transnational gang with Salvadoran roots….As part of his plea agreement, Mr. Portillo, who is from El Salvador and is not a U.S. citizen, will be deported….Federal authorities have said that MS-13 is responsible for more than two dozen murders on Long Island since 2013.”
How much more “data” do you need? Is the idea that we’re supposed to wait for more violent crimes to be committed so that there’s more data available?
I’m a grandson of an immigrant. I think legal immigration makes American stronger and contributes to economic growth. But I see this less as an immigration policy question and more of a journalistic standards question. Where are the editors?
What are the issues where a politician is allowed to speak to voter concerns (abortion access, health care costs, climate change, gun violence if it involves schools, mob violence in the Capitol on January 6) and what are the issues where if you are doing it you are stoking fears (gun violence if it involves immigrants, mob violence by mostly peaceful Black Lives Matter protesters)? Is the dividing line the politics of the issue or the politician doing the fearmongering or what?
It seems to me that NewsGuard is indeed correct to discern some derision of Trump coursing through in the Times news copy. Readers who share the derision may not mind. But it’s grating to readers who just on principle want the news without the spin, and to readers who are bothered by the Times continually claiming that it’s independent and impartial without actually living up to the promise. Let them accuse me of stoking fear about the decline of independent journalism.
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