James Dimon and Ray Dalio are among the most successful capitalists in the U.S. today. So when they worry aloud about the future of capitalism, it’s worth listening.
“I believe that all good things taken to an extreme become self-destructive and that everything must evolve or die. This is now true for capitalism,” Mr. Dalio, founder of hedge-fund manager Bridgewater Associates, writes on LinkedIn.
Mr. Dimon, chief executive of JPMorgan Chase & Co., writes in his annual letter to shareholders: “In many ways and without ill intent, many companies were able to avoid—almost literally drive by—many of society’s problems.”
Captains of industry have always opined on the issues of the day. Still, these latest missives are noteworthy for three reasons.
- First, the authors: Mr. Dalio anticipated the financial crisis; his systematic management and investment style has made Bridgewater the world’s largest hedge-fund manager. Mr. Dimon is arguably the country’s most successful banker, having steered J.P. Morgan clear of the subprime mortgage disaster to become the country’s most valuable financial institution.
- Second, the timing: They are speaking out at a time when the free-market capitalism that has served them so well is questioned by many Americans, including prominent Democrats.
- Third, the content. Mr. Dalio and Mr. Dimon love capitalism and aren’t apologizing for it. But they recognize the system isn’t working for everyone, and they have ideas for fixing it, some of which might require rich people like themselves to pay more tax. Yet they fear the federal government is hamstrung by intensifying partisanship. So they are putting their money and reputations where their mouths are by speaking out, backing local initiatives and hoping like-minded business leaders join them. In effect, they are breathing life into the shrinking nonpartisan center.
In an interview, Mr. Dalio says many business leaders “don’t want to get into the argument. I can understand that. I say to myself, Should I get in? I do think if everyone keeps quiet, we’re going to continue to behave as we’re behaving, and it’s going to tear us apart.”
Mr. Dalio’s essay was inspired by a longstanding interest in the parallels between the 1930s and the present:
- the growth of debt and
- the relative impotence of central banks, the
- widening of inequality and the
- rise of populism.
Capitalism, he says, is now in a “self-reinforcing feedback loop”:
- companies develop labor-saving technologies that enrich their owners while displacing workers.
- The haves spend more on child care and education, widening their lead over the have-nots,
- whose predicament is compounded by underperforming schools,
- the decline of two-parent families, and
- rising incarceration.
Mr. Dalio thinks inequality has fueled populism and ideological extremism, which he fears means capitalism will be either abandoned or left unreformed.
But, like Mr. Dalio, he worries partisanship has crippled the country’s ability to enact basic reforms that elevate economic growth and strengthen the safety net, such as
- improving high schools and community colleges’ provision of useful skills,
- more cost-effective health care,
- faster infrastructure approval,
- more skilled immigrants coupled with legalizing illegal immigrants, and
- requiring fewer licenses to start a small businesses.
“Can you imagine me saying, I can do a better job for the Chase customer if I don’t get involved in details, the products, the services, the prices, how we treat people, how call centers work?” Mr. Dimon asks in an interview. “Policy has too often become disconnected from the analytics; we got slogans instead. It’s driving people apart.”
There’s a chicken-and-egg problem with these well-intentioned calls for nonpartisan problem solving: It requires a level of nonpartisanship that doesn’t exist; otherwise the problems would, presumably, have been solved.
If business leaders can’t persuade with words, they may by example. Mr. Dalio and his wife, Barbara, have donated $100 million to the state of Connecticut, to be matched by the state and other philanthropists, to create a $300 million partnership devoted to reducing dropout rates and promoting entrepreneurship in underserved schools and communities.
For its part, J.P. Morgan has under Mr. Dimon combined commercial and philanthropic resources to finance affordable housing, small business and infrastructure and job training in Detroit, announced $600 million in workforce development grants since 2013, and boosted salaries for lower-end employees. Mr. Dimon, in his shareholder letter, called on fellow CEOs to “take positions on public policy that they think are good for the country.”
It doesn’t always work. The Business Roundtable, which Mr. Dimon chairs, successfully pressed Congress and President Trump for lower business taxes, but unsuccessfully for more infrastructure and legalizing illegal immigrants. Says Mr. Dimon: “We should give it the best shot we’ve got.”
Trump’s immigration policies have been a failure. Neither he nor Democrats have much of a solution to the current problem.
For the president, immigration is a proxy for many issues — national security, domestic security, cultural change, nationalism, even nostalgia. The president’s rhetoric inflames the left as much as it energizes his loyalists, which is exactly his purpose. Democrats oppose Trump’s policies and cry foul when he seeks to blame them. They also point out that Trump tried to use immigration during the closing weeks of last year’s midterm elections, only to see his party lose its majority in the House.
Immigration will continue to animate Trump’s core supporters and will likely be one of two pillars of his reelection campaign. The other is the economy, the issue he will look to as a bridge to other voters whose support he will need to win what looks to be an extremely competitive election. Here, too, the Democrats appear to be struggling to find their own voice on what should be a central part of a presidential campaign message.
.. The new Battleground Poll by the Tarrance Group and Lake Research Partners under the auspice of Georgetown University’s Institute of Politics and Public Service shows the president holding a clear advantage over Democrats in Congress on which party people trust to deal with the jobs and with the economy. Democrats need to narrow or reverse that margin.
As an insurance policy, Trump has already gone on the attack against the Democrats on the economy, playing the “socialism” card. He has seized on Democratic proposals for a Medicare-for-all health-care plan and a Green New Deal, both of which in their most expansive iterations would require a heavy dose of government intervention and regulation, warning of dire consequences to the economy.
Candidates like Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.) have economic messages built around populist us vs. them themes, including attacks on big corporations and wealthy individuals. Their platforms contain the broad promise to rebalance the economic scales in favor of middle- and working-class Americans, in part through a variety of new taxes on those corporations and wealthy individuals. Warren in particular has offered a fresh list of detailed policies.
Most of the Democratic presidential candidates favor new taxes on the wealthy. But at this stage, most haven’t really said how they would pay for what they propose. The Democrats are often more focused on other issues than on the centrality of the economy in the lives of voters. Another sign of a lack of consensus in the party is the inability of House Democrats to agree on the outlines of a new budget.
The president has begun to set the themes for his reelection campaign. Democrats have vowed not to make the mistakes in 2016 of focusing too much on Trump’s fitness to be president. But they can’t ignore legitimate questions about how they would govern — or how they will credibly respond to the president’s attacks on his issues of choice.
Tucker Carlson Mis-Quotes Robert Putnum (Cherry Picked Quotes)
At Politicon, Tucker Carlson cited:
2007 Robert Putnam:
Ethnic diversity is increasing in most advanced countries, driven mostly by sharp increases in immigration. In the long run immigration and diversity are likely to have important cultural, economic, fiscal, and developmental benefits. In the short run, however, immigration and ethnic diversity tend to reduce social solidarity and social capital. New evidence from the US suggests that in ethnically diverse neighbourhoods residents of all races tend to ‘hunker down’. Trust (even of one’s own race) is lower, altruism and community cooperation rarer, friends fewer. In the long run, however, successful immigrant societies have overcome such fragmentation by creating new, cross‐cutting forms of social solidarity and more encompassing identities. Illustrations of becoming comfortable with diversity are drawn from the US military, religious institutions, and earlier waves of American immigration.
Donald Trump Is Magnifying the Border Crisis (David French)
After two years of ineffective efforts to fix America’s immigration system, it’s time for President Trump to change course.
It’s time to face facts: Donald Trump is failing on his signature issue. There is a humanitarian crisis at the southern border. The number of people crossing is surging to numbers not seen in a decade. In February, 76,103 undocumented immigrants either presented themselves at ports of entry or were apprehended at the border. That was the largest number since February 2007 — until March, when border officials stopped 103,000 undocumented immigrants crossing the border.