Every year, when it comes time for a publicly traded company to make its annual report to shareholders, its CEO writes a letter thanking those shareholders for owning their stock, reflecting on the company’s wins and losses, and offering some forward-looking projections for how that company will perform in the future. While most of these letters typically consist of misleading graphs that help break up pages of fluffy bullshit about how the CEO is focused on the long-term growth of the company and doesn’t care whether the stock price goes up (while also justifying the stock buybacks that artificially prop it up), some corporate bigwigs like Jeff Bezos and Warren Buffett use their annual letters as an opportunity to reflect on the nature of the world, the nature of business, and the nature of the world of business. Such letters are tomes of Fake Deep wisdom, revered by dudes who like to dress “zany” on Casual Friday. Jamie Dimon, CEO of the megabank JPMorgan Chase, is one such epistolary-minded titan of industry.
Jamie Dimon is a famous CEO for two reasons. One, he is very good at fulfilling his “fiduciary duty” to JPMorgan Chase’s shareholders by creating value for them — most notably during the financial crisis of 2007-2008, when he was able to keep the company afloat at a time when basically every other bank was going under. Two, he oversaw JPMorgan Chase at a time when it was handing out a shitload of the bad loans that helped cause the financial crisis of 2007-2008, and in 2012, personally approved the actions of Bruno Iksil, the so-called “London Whale” who placed such heavy derivatives trades that he singlehandedly lost JPMorgan Chase $6 billion. Together, these scandals resulted in JPMorgan Chase paying a total of roughly $14 billion in fines over the course of 2013 (about $13 billion for helping cause the recession, plus a cool $920 million for the London Whale).
People in the finance world tend to focus on thing one (the good thing), while those of us in the real world tend to focus on the bad thing, a.k.a. the shoddy mortgages and irresponsible trades and billions of dollars in fines and all that. Intuitively, this makes sense: If a bank such as JPMorgan Chase is creating value for its shareholders, that value has to come from somewhere, frequently its customers. In other words, your opinion of Jamie Dimon probably depends on whether or not you’re on the receiving end of his innovation that the bank industry should engage in the upward redistribution of wealth.
For Dimon, however, this is not enough. He is a well-known public figure, and it must be sort of a drag, I assume, to be hated by millions of strangers. Plus, if it could be said that you were both a cause and a beneficiary of the financial crisis, you might be interested in rehabilitating your image just a tad.
In recent years, Jamie Dimon has tried his hardest to take advantage of the incredibly low expectations America holds for its richest citizens, who can say things like “capitalism might have some problems, honestly” and be hailed as brave visionaries. Last January, the bank announced it was raising the minimum wages of its lowest-paid employees to $15-$18 per hour, essentially voluntarily meeting the demands of the significant coalition of activists advocating for a national minimum wage of $15 per hour. On March 14, it was announced that JPMorgan Chase would no longer finance private prisons, while a few days later, Dimon did, indeed, admit that America was “fundamentally anti-poor.”
It’s his annual shareholder letters, though, where Dimon really relishing in talking his shit. While high-level finance people tend to promote a specific vision of the world in which peace, or at least global stability, and the spread of free-market capitalism go hand in hand — after all, if your country is involved in a serious war, you probably aren’t thinking too hard about getting a loan to start a business or buy a house — Dimon’s shareholder letters have taken on an activist edge in the Trump era. This started in April of 2017 with his letter shareholders covering the 2016 fiscal year, in which he advocated for an increase in education spending offset by decreased military budgets, lamented the effects that increased healthcare costs and mass incarceration have had on the economy, and generally came across, as The New Yorker joked, “like a more restrained Bernie Sanders.”
These themes, of economic inequality and the stagnation of American middle-class progress, were also present in his most recent shareholder letter, which was issued early last week. In tone and substance, it is not substantially different from the 2017 letter, once again touching on the numerous ailments to the United States that most rational people agree really ought to be fixed. “America has always had its flaws,” Dimon writes. “Some of its more recent issues center on income inequality, stagnant wages, lack of equal opportunity, immigration and lack of access to healthcare.” Which, yeah, sure, fine. I’m a firm believer that you deserve credit for being able to point out there’s a bird in the sky even if you only know it’s there because it just crapped on your head.
But then Dimon gets to the really good stuff:
Is capitalism to blame? Is socialism better?
There is no question that capitalism has been the most successful economic system the world has ever seen. It has helped lift billions of people out of poverty, and it has helped enhance the wealth, health and education of people around the world. Capitalism enables competition, innovation and choice.
I point this passage out specifically because it’s more or less a mashup of rhetoric used by The Heritage Foundation (read the first paragraph of this), as well as Sean Hannity (read this transcript and keep scrolling until you get to the part where he screams about Alexandria Ocasio-Cortez), and also because whenever a rich finance guy starts talking about socialism you know you’re in for a wild ride. He continues, with some even better stuff:
When governments control companies, economic assets (companies, lenders and so on) over time are used to further political interests – leading to inefficient companies and markets, enormous favoritism and corruption. As Margaret Thatcher said, “The problem with socialism is that eventually you run out of other people’s money.” Socialism inevitably produces stagnation, corruption and often worse — such as authoritarian government officials who often have an increasing ability to interfere with both the economy and individual lives — which they frequently do to maintain power. This would be as much a disaster for our country as it has been in the other places it’s been tried.
This assertion, coming from Dimon, is hilarious, given that when Jamie Dimon controls a company, he will further its interests politically by personally calling legislators trying to convince them to vote for bills that will make him money, as well as do things that interfere with the economy — such as helping cause a financial crisis — and individual lives — such as screwing people over by giving them loans despite knowing they weren’t in a position to pay them back. Throw in his random invocation of Margaret Thatcher, and I offer the above passage as proof that Jamie Dimon is at least as funny as mid-tier comedian Colin Jost.
The fact that Dimon is so incensed by the specter of creeping socialism is telling. It’s easy to imagine a world in which a politician like Bernie Sanders or Elizabeth Warren becomes president, nationalizes the healthcare system to at least some degree, and then causes people to wonder what other stuff should be taken out of the hands of profit-seeking CEOs with a hard-on about dividend increases. For years, Sanders has advocated for revitalizing the lagging postal system by authorizing every post office to perform basic banking services. Meanwhile, the idea of communities putting their money in state-owned public banks, rather than privately held banking institutions, is growing in popularity, especially as operators in the legal weed industry need a place to put all their cash. Hell, even Andrew Yang’s goofy-ass “everybody gets a thousand bucks a month, ESPECIALLY gamers” platform might convince people that they don’t need banks such as JPMorgan Chase to live their lives. I realize that personal banking, which I am referring to above, only makes up a fraction of what large banks such as the one Dimon runs actually does, but megabanks only work if they have other people’s money to do crazy shit with, and in a more socialist country, those other people might put their money elsewhere and put the Jamie Dimons of the world out of a job in the process.
Politically, Dimon could best be described as a “centrist” in the Howard Schultz sense of the word: socially liberal, but with a self-serving fiscal sensibility that he convinces himself is not somehow at odds with whatever “progressive” views he might have. In that same shareholder letter, Dimon praises Trump’s big business-favoring tax cuts before arguing that they don’t go far enough: He claims that countries, in order to reap any taxes from large companies, need to bend over backwards before those companies find another country that will. He doubled down on this assertion yesterday while appearing in front of the House Financial Services Committee, offering his weaselly “Eh, whaddya gonna do?” argument in response to a barbed line of questioning from Rep. Nydia Velazquez.
“It’s not enough just for companies to meet the letter and the spirit of the law. They can also aggressively work to improve society,” writes Dimon as he inches towards the conclusion of his 50-page letter that, frankly, I wish I had not read the entirety of. In his view, governments should act more like companies, competing with one another in order to earn the pittance of tax revenues doled out by global megacorporations. It only follows, then, that he thinks companies should conduct themselves more like governments, engaging in ostensibly selfless efforts to improve society for the better. This is a tack I suspect we’ll see more of in the future, a fundamentally conservative appeal made by those in positions of power that uses the language of social justice to cling desperately to a status quo that ultimately favors them, rather than dramatically shifting power away from those who have proven that they in no way deserve it.
Hearing a CEO like Jamie Dimon argue that the solution to capitalism is for he and his colleagues to aspire to a greater degree of social responsibility is not unlike hearing an unrepentant alcoholic argue that the solution for drunk driving is for he and his drinking buddies to take driving lessons — after all, if you take their licenses away, how the hell are him and his friends going to get around town? Jamie Dimon’s billions of dollars in fines does not grant him an ounce of moral clarity; he is vaguely woke strictly out of a sense of self-preservation.
The metaphor I used in the above paragraph was not 100 percent apt. After all, driving under the influence of alcohol is a clear, and clearly punishable, crime, but there is no equally enforceable law for serving as an accessory to a recession. So let me try again: If a soldier returns home from combat to tell you that war is hell, then you should believe them; if a banker returns from paying $14 billion in fines to tell you that America is broken; then you should believe him as well — and then throw him in jail for breaking it.