JAMIE DIMON AND THE STATE OF THE WORLD
JAMIE DIMON AND THE STATE OF THE WORLD
As you likely know, last week, J.P. Morgan CEO Jamie Dimon debased himself and groveled for forgiveness. Not that we expect that any of you were surprised by this. If that were all there is to the story, then it wouldn’t be a story. It’s not like this is the first time the guy has (literally) gotten down on his knees to beg for…well…something.
But that’s not all there is to the story. There’s something else. Dimon’s groveling tells us a great deal about our world, about Wall Street’s relationship with China and its Communist Party, and even about Wall Street’s inner workings.
In the aftermath of Dimon’s almost literal kowtow, everyone who is anyone had something to say to someone about the whole mess. And among the most interesting somebodies to say something was a guy named Thomas Wright, who is not just anyone but is, in some respect, the very personification of the foreign-policy establishment. According to his bio, Wright is:
the director of the Center on the United States and Europe and a senior fellow in the Project on International Order and Strategy at the Brookings Institution. He is also a contributing writer for The Atlantic and a nonresident fellow at the Lowy Institute for International Policy. He is the author of “All Measures Short of War: The Contest For the 21st Century and the Future of American Power” which was published by Yale University Press in May 2017. His second book, "Aftershocks: Pandemic Politics and the End of the Old International Order," will be published by St Martin's Press in 2021. Wright also works on U.S. foreign policy, great power competition, the European Union, Brexit, and economic interdependence.
Wright has a doctorate from Georgetown University, a Master of Philosophy from Cambridge University, and a bachelor's and master's from University College Dublin. He has also held a pre-doctoral fellowship at Harvard University's Belfer Center for Science and International Affairs and a post-doctoral fellowship at Princeton University. He was previously executive director of studies at the Chicago Council on Global Affairs and a lecturer at the University of Chicago's Harris School for Public Policy.
That’s a pretty impressive somebody.
Now, to be blunt, despite being someone, Wright isn’t anybody to us. We wouldn’t know Wright if he walked up and sat down next to us in the Brookings Institution cafeteria – not that hang out there terribly often…or…ever. We did look at a few of his articles at The Atlantic, only to learn that they’re pretty Atlantic-y, which is to say that they’re very smart, very well-written, and not exactly our cup o’ tea. Whatever the case, this guy may be the greatest foreign-policy somebody since Hamilton or Washington. We don’t know. But we do know that his reaction to Dimon’s double-apology struck as a bit off:
Jamie Dimon made the comment as a joke about how JP Morgan and the CCP were both 100 years old. But for Beijing, jokes are no longer allowed so he has to express regret. A tiny but telling data point about the world today.
If you’re anything like us, then A.) you have our deepest sympathies, and B.) the words “no longer” probably seem a bit out of place to you. The sentence would make sense if it read: “But for Beijing, jokes are not allowed….” As it’s written, however, it’s bizarre. Jokes are “no longer” allowed. OooooK. When, exactly, were they allowed? Which of the Butchers of Beijing got a kick out of Americans mocking him or poking fun at the regime? Was it Mao? Deng? Jiang, maybe? What changed to make jokes “no longer” acceptable? Was it Dave Chappelle?
The statement is, as we say, bizarre, yet it’s precisely as Wright intended. It’s the whole point of his tweet, to note this “tiny but telling data point” about how the world is different than it used to be. He’s correct that something has changed, but the idea that that something is the regime in Beijing is truly nutty. We know that Xi is considered a real hard-line hard-liner, but that means only that he’s more successful than his last handful of predecessors, not that he is any different in character or ambition.
Of the three significant issues exposed by this incident, this, then, is the first: that our foreign-policy establishment is so entirely blinkered that its members – or at least some of them – believe the problem with China is Xi, not the CCP itself. That is both an ideologically driven and potentially quite dangerous position. It presumes that China is the way it is because of a cult of personality, Xi’s cult of personality, which is demonstrably untrue. China is the way it is because of an ideology that is, quite frankly, Marxist in origin, Maoist in evolution, and fascist in implementation. And it has been that way for a long, long time.
The second and third problems exposed by this incident are the real reasons why Jamie Dimon quickly changed course and decided to kiss Xi’s…uhh…ring. The first of these is that the American financial industry has become reliant on China and the prospects it holds for expansion – and not just any old expansion, mind you, but expansion in the contemporary equivalent of Deadwood, where the rules are pliable, and justice is meted out by power and brute force. As we have noted in these pages countless times and learned first-hand while working at “The Bank of Evil” twenty years ago, Wall Street craves relationships and acceptance in China.
The thing that has changed in the last few years is the desperation of that craving. As BlackRock’s Larry Fink and Bridgewater’s Ray Dalio keep telling us, the future – at least from their perspective – is plastics China. And everyone wants in on it.
And that brings us to the second reason why Dimon quickly changed course (and, for those of you scoring at home, the third problem exposed by his kowtowing): the ongoing and accelerating consolidation of power by the Massive Passive Wall Street firms. J.P. Morgan, obviously, is a publicly traded company. And who are its biggest institutional shareholders? If you guessed Vanguard, State Street, and BlackRock (in that order), give yourself a gold star. With a combined total of more than 17% of the bank’s outstanding shares, the Big Three own Dimon. And while each of the Big Three has its own unique relationship with Beijing, all of them have reasons to want Xi happy, content, and not ticked off at American financial companies. Most notably, State Street is trying desperately to hold onto its management of Hong Kong’s massive Tracker Fund, while Fink and BlackRock recently told their clients that now would be a good time to TRIPLE their investments in the PRC. Good stuff.
What we have here, in other words, is confirmation that our ruling class – from the head of the world’s largest bank (by capitalization) to the head of the world’s largest asset manager; from the head of the world’s largest passive asset manager to the virtual embodiment of the American/Western foreign-policy establishment – has determined that the CCP ain’t so bad. Some see Xi himself as a problem but think that the regime used to be better (and therefore could be again). Others see nothing but the road to riches, regardless of which butcher is running the shop over there. They ALL see the CCP as a “partner” not an adversary. And that, in turn, suggests that they have no understanding whatsoever of the relationship between democracy and capitalism or of the relationship between the two on the one hand and morality on the other.
They’ll sell our birthright for a billion here and a billion there.
If we let them.