What Jamie Dimon Is Trying to Say to Trump

This article originally appeared on this site.

Jamie Dimon’s list of economic problems came from the progressive wing of the Democratic Party, but his solutions were out of the Republican handbook. Jamie Dimon’s list of economic problems came from the progressive wing of the Democratic Party, but his solutions were out of the Republican handbook.CreditPHOTOGRAPH BY DYLAN MARTINEZ / REUTERS

In March, 2003, I was living in Amman, Jordan, as the Iraq War was being fought across the border, and I remember interviewing a group of currency traders in the basement of a decrepit shopping mall. They were strong Islamists, confident that Saddam Hussein would destroy the American Army. They used the phrase “rivers of American blood.” Their trades told a different story; they were buying American dollars and selling Iraqi dinars, a trade that made sense only if they believed that the U.S., not Iraq, would win the war. When I pointed this out, one of them told me that the trades were business and shouldn’t be confused with what they said.

That was a rare instance of traders not talking their book, Wall Street slang for aligning your words with your particular investment strategy—that is, your “book.” Shorts—people who bet against stocks—are always bad-mouthing companies, while any investor who owns a lot of a firm’s stock will surely extol that company’s greatness. During the Obama Administration, I had a conversation with Jeffrey Immelt, the C.E.O. of G.E., who was at the time the head of a White House panel trying to improve employment. Immelt pressed a solution, rooted in his book: the President should help G.E. sell more heavy equipment to other countries.

Talking your book was on my mind when I read a recent letter to shareholders from Jamie Dimon, the C.E.O. of JPMorgan Chase, a document that got a lot of attention on Wall Street this week. In addition to the usual corporate spin about how well the bank is performing, there was a surprising section, titled “Public Policy.” “The United States of America is truly an exceptional country,” Dimon wrote, listing several reasons, from the grand (strongest military, longest democracy, rule of law) to the trite (“great work ethic and can-do attitude”). But the letter then turns to a surprisingly searing analysis of the American economy: “It is clear that something is wrong—and it’s holding us back.”

Dimon writes like a more restrained Bernie Sanders. He laments the disappearing middle class. He points to household median wages, which are lower today than they were in 1999, and to the “dramatically increased student defaults” owing to the sudden explosion of student debt. “We should be ringing the national alarm bell that inner city schools are failing our children,” he opines. In a line that could have come directly from a MoveOn.org appeal, he notes, “Over the last 16 years, we have spent trillions of dollars on wars when we could have been investing that money productively.”

The letter received a lot of attention on Twitter. One tweet referred to Dimon as a “New Deal Democrat.” He has, indeed, given hundreds of thousands of dollars to Democratic candidates, including Hillary Clinton and Barack Obama, but the tone of the letter seemed to go to another level. After reading the list of complaints against America, I thought, Why would a banker—whose mix of investment depends on growth and optimism—be so flagrantly talking against his book?

The answer came in the letter’s solutions. While his recitation of the problems came from the progressive wing of the Democratic Party, his solutions were entirely out of the Trump and G.O.P. handbook. “Reducing corporate taxes would incent business investment and job creation,” he wrote. Not satisfied with mere job creation, he asserted that “counterintuitively, reducing corporate taxes would also improve wages.” Most urgently, he called for a dramatic cutback in regulation. He said that regulations cost two trillion dollars a year, or “approximately $15,000 per U.S. household annually,” as if the best way to understand regulation is that it is a cost coming out of each American’s pocket. (It isn’t.) For Dimon’s book—the banking industry—regulation is definitely a hassle, and has become more of one since the passage of the Dodd-Frank financial reforms. He bemoans the fact that “since the financial crisis, thousands of new rules and regulations have been put into place by multiple regulators in the United States and around the world.” This has cost banks money. He doesn’t note that the explicit goal of much banking regulation is to protect consumers from bankers seeking profit, and to protect against another financial crisis.

Dimon is late to the analysis of inequality in America. It is a topic that has fixated economists and the public for at least a decade. Most other analyses focus on many of the same problems but look to other causes, like the shift of wealth and income over the past forty years from labor to capital, from workers to owners, from the poor to the rich. This is the fundamental change in our economic system over the past generation, not a sudden increase in regulation and taxation. In fact, the tax burden on the very rich and on corporations is at near-record lows since the dawn of our modern tax system.

The name Trump does not appear in the letter, but it hovers over every word. Dimon dances lightly with the President, turning Trump’s concerns into his own, with a slightly different rhythm. Yes, Dimon admits, he supports trade with Mexico, “a long-standing peaceful neighbor.” But he puts his support in Trumpian terms. Trade with Mexico, “actually reduces immigration,” he argues, and will help prevent Mexico from being “hijacked by populist and anti-American leaders (like Chavez did in Venezuela).” Dimon on China is, essentially, Trump on China, expressed more clearly: “The United States has some serious trade issues with China, which have grown over the years—from cybersecurity and the protection of intellectual property to tariffs, non-tariff trade barriers and non-fulfillment of World Trade Organization obligations.”

I have found one—and only one—economist who broadly agrees with Trump’s approach to the U.S. economy. Even those many Republican-leaning thinkers who embrace lower taxes and less regulation are horrified by Trump’s “America First” language, manifest in policies that are anti-immigration, anti-trade, and anti-global-institutions. Aside from whatever else might be wrong with them, these policies are widely seen as a deep threat to America’s economic health. Dimon barely touches on them. He, briefly, addresses his non-addressing of immigration: “I’m not going to write about immigration in this letter—we have always supported proper immigration—it is a vital part of the strength of America, and, properly done, it enhances the economy and the vitality of the country.” Even there, the repeated use of “proper” is clearly a nod to Trump, allowing this light slap at his anti-immigration policies to be reinterpreted as an embrace.

It has been a wonderful few months for Dimon. His company, which is the largest bank in the U.S., has seen its stock rise thirty per cent since the election. Bank stocks can go up for a variety of reasons, but one reason is that investors believe that they will be able to receive a larger share of the nation’s wealth. In a still slow-growing economy, this means that wealth will come from others. That is certainly the expectation in a Trump economy, and Dimon, in addressing his letter to his investors, but also to Trump and his Administration, seems to recognize that. He presented his expertise on what the government needs to do to improve Americans’ lives, and his solutions largely benefit the very rich, especially those who make money from trading financial instruments; in short, he talked his book.

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