CEO outlines what he thinks is ‘wrong’ with America
In our opinion JP Morgan CEO Jamie Dimon represents what is good about corporate America and indeed somebody to emulate. As with Warren Buffett, when he has something to say, Dimon is somebody that commands respect as well as the attention of the investing public. The reader might believe Dimon’s views to be self- serving. We do not. In our opinion, Jamie Dimon has no need to opine about issues he does not believe to be true. That said, contained within this forty-five page letter to shareholders are the following statements, located under Section III entitled Public Policy.
Dimon begins with the observation that the “United States of America is truly an exceptional country,” citing the strength of the military, the fact that we are at peace with our neighbors, have abundant natural resources, some of the world’s best hospitals and universities, a generally reliable rule of law and low corruption and a citizenry with a “great work ethic and can- do at- titude.”
However, Dimon follows this compliment to the United States with “but it is clear that something is wrong – and it’s holding us back.” Providing evidence to support this statement the letter notes that “from 1948 to 2000, real per capita GDP grew 2.3%; from 2000 to 2016, it grew 1.0%. Had it grown at 2.3% instead of 1.0% in those 17 years, our GDP per capita would be 24%, or more than $12,500 per person higher than it is.”
Dimon cites other startling statistics to support the claim made in the paragraph immediately above. “In 1971, 61% of households were considered middle class, but that percentage was only 50% in 2015. And for those in the bottom 20% of earners – mainly lower skilled workers – the story may be even worse. For this group, real incomes declined by more than 8% between 1999 and 2015. In 1984, 60% of families could afford a modestly priced home. By 2009, that figure fell to about 50%.”
Dimon rebuffs the notion that the slower growth we have experienced over the past 17 years or so is permanent and referenced some noneconomic as well as economic factors.
“Over the last 16 years, we have spent trillions of dollars on wars when we could have been investing that money productively.”
“Since 2010, when the government took over student lending, direct government lending to students has gone from approximately $200 billion to more than $900 billion – creating dramatically increased student defaults and a population that is rightfully angry about how much money they owe, particularly since it reduces their ability to get other credit.”
“Our nation’s healthcare costs are essentially twice as much per person vs. most other developed nations.”
“40% (this is an astounding 300,000 students each year) of those who receive advanced degrees in science, technology, engineering and math at American universities are foreign nationals with no legal way of staying here even when many would choose to do so.”
“Felony convictions for even minor offenses have led, in part, to 20 million American citizens having a criminal record – and this means they often have a hard time getting a job.” In fact, “there are six times more felons in the United States than in Canada.”
Of the economic factors CEO Dimon notes that the labor force participation rate is too low, declining from “66% to 63% between 2008 and today. Of note is the fact that of men ages 25- 54, the rate has dropped from 96% in 1968 to a little over 88% today.
Dimon believes that “education is leaving too many behind.” Anecdotally, he observes that “inner city schools are filing our children – often minorities and children with lower income households. IN many inner city schools, few than 60% of students graduate, and many of those that do graduate are not prepared for employment.” Dimon fears that “we are creating generations of citizens who will never have a chance in this land of dreams and opportunity.” We concur.
“Infrastructure needs planning and investment.” Dimon cites a report, released every four years by the American Society of Civil Engineers, one which examines current infrastructure conditions and needs. The United States release scored a D+. “Another interesting and distressing fact: The United States has not built a major airport in more than 20 years. China, on the other hand, has built 75 new civilian airports in the last 10 years alone.”
Two other economic issues beyond the scope of this article is Dimon’s belief that our corporate tax system is driving capital and brains overseas and that excessive regulation reduces growth and business formation.
Briefly and in conclu- sion, Dimon is a strong advocate for collaboration between business and government, one which we also believe will help cure some of the ills negatively impacting ours as well as future generations.
Please note that all data is for general information purposes only and not meant as specific recommendations.
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