Our So-Called Foreign Policy: A Wall Street Kingpin Lays a Grand Strategy Egg

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America First, China, climate change, ESG, fossil fuels, globalism, globalization, Immigration, industrial policy, Jamie Dimon, JPMorgan Chase, Our So-Called Foreign Policy, productivity, supply chains, The Wall Street Journal, Ukraine War, Wall Street, woke capitalism

In several senses, it’s not entirely surprising that The Wall Street Journal recently allowed Jamie Dimon to share his thoughts on the domestic and especially global grand strategies the United States should pursue in the post-Ukraine War world.

After all, Dimon heads JPMorgan Chase, the nation’s biggest and most important bank. As a result, he clearly needs to know a lot about the U.S. economy. And as Wall Street’s biggest poohbah, he surely must know a lot about the state of the world overall – in particular since he’s had extensive contacts with the heads of state, senior officials, and business leaders of many countries.

What is somewhat surprising, then, is how little of Dimon’s analysis and advice is new or even interesting, and how much of it could well put America ever further behind the eight-ball.

Dimon’s article wasn’t completely devoid of merit. Since he’s dabbled in some (symbolic) woke-ism himself, it was good to see him seemingly take a shot at what’s become mainstream liberal as well as radical lefty dogma by urging the education of “all Americans about the sacrifice of those who came before us for democracy at home and abroad.”

Given the strong support by the Biden administration and by some finance bigwigs for influential for encouraging and even requiring lenders to take climate change risks into account when extending credit, it was encouraging to read his pragmatic position that “Secure and reliable oil and gas production is compatible with reducing CO2 over the long run, and is far better than burning more coal.”

Dimon showed that, unlike many on Wall Street, he supports some forms of industrial policy to make sure that “we don’t rely on potential adversaries for critical goods and services.”

And he endorsed the larger point that the neoliberal globalization-based triumphalism that undergirded the policies of globalist pre-Trump Presidents needs to be buried for good:

“America and the West can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims—particularly against what they perceive as weak, incompetent and disorganized Western democracies. In a troubled world, we are reminded that national security is and always will be paramount, even if it seems to recede in tranquil times.”

But on most of the biggest issues and just about all specifics, Dimon either punted or retreated into the same globalist territory that proved as profitable for Big Finance as it was too often dangerously naive for the nation as a whole.

For example, he wants Washington to “fix the immigration policies that are tearing us apart, dramatically reducing illegal immigration and dramatically increasing legal immigration.” Completely ignored is the depressing impact the latter would have on wages that have already been falling recently in inflation-adjusted terms, and on desperately needed productivity growth – as a bigger supply of cheap labor is bound to kill many incentives for businesses to improve their efficiency by innovating technology-wise or devising better management approaches.

And on China, Dimon’s clearly determined to talk his company’s book, insisting that “We should acknowledge that we have common interests in combating nuclear proliferation, climate change and terrorism.” and blithely predicting that “Tough but thoughtful negotiations over strategic, military and economic concerns—including unfair competition—should yield a better situation for all.”

But most important, Dimon fully endorses the foundations of the very globalist strategy that for decades perversely ignored the distinctive and paramount advantages the United States brings to world affairs and has thereby created many of the dangers and vulnerabilities with which the nation has been struggling.

The way Dimon seems to see it, there’s no reason to pay any attention to the extraordinary degree of security the America enjoys merely by virtue of its geographic isolation and powerful military; or to its extraordinary degree of economic self-sufficiency thanks to its immense and diverse natural resource base, its technological prowess, and its dynamic free market-dominated economic system. And evidently, it’s just as pointless to concentrate foreign and economic policy on the nation’s equally formidable potential to build on these advantages.

Instead, like other globalists, Dimon flatly rejects the idea that “America can stand alone,” or should seek to maximize its ability to do so. Instead, it should keep defining nothing less than “global peace and order” as “a vital American interest” – the standard globalist recipe for yoking the country’s fate to an agenda of more open-ended military interventions, more hastily approved and usually wasteful foreign aid, and more nation-building in areas lacking any ingredients of nation-hood.

Asa result, it would anchor America’s safety and prosperity on efforts to shape foreign conditions (over which is has relatively little control), rather than on efforts to shape domestic conditions (over which is has much more control). (For a much fuller description of this America First strategy and its differences with globalism, see this 2018 article.) 

In fact, and revealingly, Dimon’s piece was titled “The West Needs America’s Leadership.” If only he and other globalists would start thinking seriously about what America really needs. 

(Full disclosure:  I own several JPMorgan bond and preferred stock issues.)    

 

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Im-Politic: Advice Biden Should Reject, but Probably Won’t

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Alibaba, Andrew Ross Sorking, Biden, Biden administration, China, foreign policy, globalism, globalists, health security, Henry Kissinger, Im-Politic, Jamie Dimon, Joseph C. Tsai, JPMorgan Chase, multilateralism, nationalism, The New York Times, Tony Blair

All Americans of good will should hope for the Biden administration’s success. In fact, on a trouble-shadowed Inauguration Day, it seems especially appropriate to create and nurture the brightest feel-good glow possible.

Nonetheless, it’s also vital to keep something else in mind: Powerful forces are acting more determined than ever to convince the public that the new President should double down on the same major policy blunders that ensured the elites’ own power and wealth, but that dangerously weakened U.S. security and prosperity. For good measure, of course, these decisions brought hardship, despair, and (as demonstrated by the country’s deep polarization), bitterness to tens of millions of Americans. And there’s every reason to believe they have a willing audience.

And before you dismiss those thoughts as the sour grapes of a Trump policy supporter, I hope you’ll read this column from Monday by The New York Times‘ Andrew Ross Sorkin, who the paper seems to be enabling to settle into a role of out-and-out establishment mouthpiece.

According to Sorkin, “a provocative memo [is] being circulated among policymakers on both sides of the aisle and the Biden transition team ahead of his inauguration.”

Continues Sorkin, “It is even more notable for who wrote it….an under-the-radar group of global boldfaced names that act as a private advisory committee to JPMorgan Chase. Among others, they include Tony Blair, the former British prime minister; Condoleezza Rice and Henry Kissinger, two former secretaries of state; Robert Gates, the former secretary of defense; Alex Gorsky, chief executive of Johnson & Johnson; Bernard Arnault, chairman of LVMH; and Joseph C. Tsai, executive vice chairman of Alibaba.”

These globalist A-listers “typically [meet] once a year in a far-flung location with JPMorgan’s chief, Jamie Dimon.” Their discussions “are usually kept private. But given the precarious state of the world during a pandemic and change in leadership in Washington, the group put its views on paper in hopes of persuading policymakers to address what it sees as the most pressing priorities.”

Sorkin at least has the…honesty?…to describe their musings as “ a manifesto of sorts calling for a reset, a return to the pre-Trump days. It seeks to turn back the clock to a time when being called a globalist wasn’t an epithet….”

And although he adds that it “acknowledges the failures of globalism and seeks to correct them,” the group’s intentions (which readers need to take on face value, since the full document itself isn’t reproduced), justify deep skepticism for several reasons, starting with its make-up.

After all, it’s one thing to include a former foreign leader (the United Kingdom’s Tony Blair) and the head of a foreign multinational company (French-owned luxury goods maker LVMH). There’s no reason to believe that they have any special concern for America’s security and well-being, but at least they come from allied democracies.

But Joseph C. Tsai, a bigwig at Alibaba? JP Morgan’s Dimon is of course free to seek his advice on various matters, too, but maybe a senior executive from a Chinese entity that by definition is ultimately controlled by China’s hostile thug dictatorship could have been included out of the group’s effort to provide advice to an American President?

So not that other members of the group (like Kissinger for much of his post-government career) don’t have long records as China apologists and lobbyists for companies hungry to do business with and therefore curry favor with Beijing.

But Tsai’s involvement casts in an especially suspicious – and suspiciously defeatist – light the recommendation that “The best outcome for U.S.-China relations is likely managed competition — an accommodation that avoids military conflict while allowing for limited cooperation. It is impractical to think that supply chains and manufacturing can be moved simply, affordably or comprehensively out of China.”

If anything’s impractical, and indeed a spectacularly proven failure, it’s their stated belief that (in Sorkin’s words), U.S. interests can adequately be served by “a return to engaging with China, especially on climate issues and global health, while acknowledging the ‘significant challenge’ the country poses.” This soothing formula is exactly what’s led to the U.S. economic and technology policies that led directly to the rise of the Chinese threat.

The group’s perspectives on the CCP Virus and what it’s taught us about global supply chains and public health security and the like is no more impressive: “The near-total absence of American leadership, coupled with the nationalist approach of too many countries, have come at the expense of a strategically coherent, international response to the pandemic.”

Of course, it’s precisely because so many countries responded nationalistically to the virus – ostensibly when a globalist perspective was needed most – in particular blocking the export of crucial healthcare goods to ensure that their own supplies would be sufficient, that the United States can’t afford to be an exception, and needs to achieve self-sufficiency.

As for the group’s notion (as explained in the words of member Robert Gates, a former U.S. defense secretary) that “international cooperation and engagement on the international front and the relationships with our allies, …serves America’s self-interest,” it simply doesn’t suffice in bromide form any more. Now’s the time to explain exactly why this stance amounts to something more than what it turned into under the last few pre-Trump Presidents – a formula for needlessly risking nuclear war by coddling wealthy but militarily free-riding allies, and winning international friends and influencing people by giving away huge chunks of the U.S. economy’s productive heart.

Perhaps most revealing of all – both of the group’s cynicism and possibly Sorkin’s – was Dimon’s statement to the latter that “The first thing businesses should do is separate their company’s interests from what’s in the interest of the country.” This from a finance sector that has worked tirelessly for decades to push the offshoring of American manufacturing, with all the national security dangers and economic ruin it’s produced – as Sorkin conspicuously failed to point out.

Sorkin’s contention that “the message the group is advancing is common sense” makes clear that he’ll be an eager collaborator. And that probably goes for much of the rest of the establishment-idolizing and Never Trumper Mainstream Media. Fortunately for these elites, but worrisomely for the American people, everything known about Mr. Biden’s career is telling us that he will be, too.

Note: Eagle-eye readers may notice that I just called the new President “Mr. Biden” rather than “Biden.” That’s because he’s the new President, and therefore, at least in my view, deserves to be identified in a manner as distinctive as the authority of his office when the name is being used as a noun. By the same token, Donald Trump will be called “Trump” – a designation I’ve used for all other individuals I’ve written about in RealityChek, except when referring to them for the first time in a particular article.

But I’ll still restrict myself to using the family name when it functions as an adjective (e.g., “Biden administration,” “Biden policy”).

Truth to tell, I’ve had some ongoing trouble figuring out how to treat former Presidents. The tentative solution I’ve come up with is using that last-name-only form when they’re recent (e.g., “Obama”) and tending (not entirely consistently, I’m sure) to use their full names more frequently the further back in time we travel. (E.g., “former President Richard Nixon” or “former President Ulysses S Grant.”)

Even in such instances, though, I’ve struggled to be consistent without being overly pedantic with the exceptionally well known Presidents (like Washington and Lincoln). And when it comes to “Bush” and “Johnson” and “Roosevelt” and “Adams” I’ve needed to make clear whether I’m talking about George H.W. or George W.; Lyndon Baines or Andrew; Franklin D. or Theodore; and John or John Quincy, respectively.

And another complication: Sometimes, the temptations of stylistic diversity have led me to refer to former Presidents by their first and last names (e.g., “Barack Obama,” “Bill Clinton”). I’m sure these temptations will continue, but I just wanted to let you know that I’m trying to be as consistent as possible. Kapische?

(What’s Left of) Our Economy: Why Increasingly Disposable Workers Become Increasingly Wary Consumers

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benefits, bubbles, consumers, debt, Employment, Federal Reserve, growth, incomes, Jobs, JPMorgan Chase, Robert Samuelson, salaries, savings, savings rate, spending, temporary jobs, volatility, wages, {What's Left of) Our Economy

After his last clunker attempting to debunk claims of a U.S. employment recovery led by lousy jobs, Washington Post columnist Robert Samuelson owed us a good piece. I’m pleased to say he’s delivered with this morning’s effort examining the roots of the consumer caution witnessed since the Great Recession ended.

First, however, let’s specify that “caution” is a relative concept here. Yes, Americans are spending much less of their income these days than they did during the bubble decade – when it hit all-time lows. In fact, in July, 2005, the personal savings rate, which measures that relationship, sank to 1.9 percent, and some news reports back in those days said that it actually went negative that whole year (though it seems that figure has been revised). All the same, even the 1.9 percent figure showing up in the government’s tables now is much lower than the 5.6 percent for last month reported this morning by the Commerce Department.

Yet although it’s clear that savings have been growing on a monthly basis since late 2013, they’re still not close to their highs earlier in the recovery, when the rate regularly hit high single digits. And for decades until the last massive spending and housing bubble, high single-digit savings rates were the American norm.  In other words, the nation knew how to expand the economy in ways other than launching shopping sprees.

Nonetheless, since U.S. growth is still so spending-heavy, any sign of slackening is at least a short-term cause for concern. And Samuelson’s column today presented a great explanation. On top of still being burdened by accumulated debts and understandably gun-shy after the worst economic downturn since the Great Depression, Americans are facing a labor market in which employers increasingly treat them as more disposable than ever before. Principally, more and more businesses are looking at their employees as variable costs, which they can and should reduce whenever possible even in normal times to boost profits, rather than as fixed costs, which they’re stuck with except when economic conditions worsen significantly.

The resulting move toward using temporary workers has lowered employers’ costs both by giving them more flexibility and by enabling them to use more workers who can’t command significant benefits. But as Samuelson observes, these trends also creates much more economic insecurity for those workers, and logically a greater reluctance to spend.

In addition, Samuelson points out, this insecurity is being reinforced by ever more flexible compensation practices. Fewer and fewer workers are earning wages and salaries that are regularly and predictably increased (when possible via some combination of their bargaining power and their employers’ finances). Compensation increases that are handed out increasingly consist of various one-time payments that don’t need to be added to base wage and salary structures, and therefore can be withdrawn at the drop of a hat.

I’d just add two points. First, it looks very much like increasingly flexible employment and pay practices by business are showing up in statistics on how much Americans are earning. According to a recent major study from JPMorgan Chase, between October, 2012 and December of last year, 84 percent of Americans saw their incomes change by more than five percent month-to-month. Even year-to-year, when smaller fluctuations would be the norm, 70 percent of Americans still experienced such large income swings.

Even more noteworthy, 26 percent of the 2.5 million Americans examined by JPMorgan Chase saw their incomes rise or fall (mainly rise, fortunately) by more than 30 percent between 2013 and 2014. Forty-four percent experienced swings of between five and 30 percent. And this volatility was somewhat greater among higher income Americans than among lower.

Second, although U.S. businesses may see their workers are increasingly disposable, the American economy can’t afford nowadays to see consumers – most of whom are workers – in this dismissive light. Indeed, as I’ve just written, personal consumption is just about as great a share of the economy these days as it was during the bubble decade.

Combine an economy that remains consumption-heavy with income sources that are becoming less and less reliable, and it’s no mystery why what meager growth the nation can still generate remains so greatly fueled by ever greater indebtedness – and why the Federal Reserve is so reluctant to end America’s addiction to easy money.