Jamie Dimon isn’t convinced by U.S. President Joe Biden's fiscal vision and believes the current administration’s economic policies will be looked back on as a mistake in years to come.
At the end of June, the president gave a speech that touted “Bidenomics”—a raft of economic policies that he sold as a cure to the trickle-down economics of the Reagan era, famously dubbed “Reaganomics.”
His interventionist approach involves using taxes and government subsidies in a way meant to strengthen the middle class and, in theory, propel the economy into growth. Bidenomics, he argued, would help America invest in new technologies, create jobs and improve social mobility.
The invention of Bidenomics comes at a time when the president is keen to take ownership of the economic landscape, with inflation stabilizing, the odds of a recession declining, and the labor market remaining robust. The White House is using it as a buzzword to win over voters on Biden’s economic record ahead of the 2024 presidential election.
It hasn’t landed well with everyone. Republicans have hijacked the term and are using it as a slur that blames Biden for the historically high inflation that’s squeezed American budgets over the past year.
Meanwhile, recent polling showed that just 33% of Americans approve of Biden’s leadership on economic issues.
While some of Wall Street appears to have bought into the White House’s latest policy pledges, the head of America’s biggest bank is yet to be completely won over.
‘A huge mistake’
In an interview with The Economist’s editor-in-chief Zanny Minton Beddoes, which was published on Tuesday, JPMorgan CEO Jamie Dimon was asked whether he approved of Bidenomics.
“God, it’s a tough question to answer,” he responded.
He said he sees Bidenomics as a form of industrial policy—intervention by the state to encourage economic transformation—and admitted that “I’m in favor, for the first time in my life” of this form of economic strategy.
The justification for this, he said, was that national security and American competitiveness both needed bolstering—for example, policymakers needed to help the U.S. and its allies build strong chipmaking industries that can compete with China’s. Higher education, he added, needs help to become more accessible.
“We all agree we need to do a better job on our colleges—we should be making it cheaper, not more expensive,” he told Minton Beddoes. “Kids should know, if I graduate, this degree [could get me] a job making $75,000 a year. We should do a better job at that. Jobs lead to dignity, better outcomes, better social outcomes. I think in our society we make fun of that burger flipping job, that first job—it’s the first one on the ladder.”
But while Dimon agreed that there were certain areas the government should be investing in more heavily, he warned that industrial policy needed to be rolled out with caution—and without a political agenda.
Biden, on the other hand, is a supporter of social programs like subsidized child care, student debt forgiveness and free college for low-income applicants, which are viewed by some analysts as governmental social intervention.
“I’d be careful about that,” he said. “There shouldn’t be social policy around that, I think that’s a huge mistake. It shouldn’t be political, it should be purely economic.”
Above all, Dimon promoted a slow, careful approach.
“I think when they write books about this 10 years from now, a lot is going to be about how it didn’t work, [it was] ineffective, companies feeding at the trough, Solyndras taking place again, so I would caution people, yes, do it, but be really careful,” Dimon said in Tuesday’s interview.
‘Dimonomics’
Dimon was also asked how “Dimonomics” would differ from “Bidenomics.”
The banking veteran, who has headed up JPMorgan for almost two decades, has denied harboring any political ambition, despite calls for him to launch his own presidential campaign.
“I would have growth policies,” he told Minton Beddoes. “We haven’t done a particularly good job in this country [of establishing economic growth]. We grew in the last 20 years something like 1.7% a year. It should have been 3%—we should be criticizing ourselves, why wasn’t it 3%?”
Dimon argued that U.S. growth was lower than it should be because successive governments had done “a terrible job” on major issues such as immigration, taxation, mortgages, affordable housing and healthcare.
“Three percent [growth per year] would mean the average American would have $15,000 more GDP per person this year,” he said. “That’s what we should’ve done, that would’ve paid for better safety nets, that would’ve paid for more military, it would’ve paid for more schooling.”
He added that if he had the power to implement economic policies, he would “do things like expand the earned income tax credit, which is a little form of industrial policy, to negative income tax.”
“I think it would help society dramatically to get more hands in the lower paid, who would probably spend that money to take care of their families and their neighborhoods,” he explained.
