J.P. Morgan Chase CEO Jamie Dimon released his annual must-read letter to shareholders on Thursday, bashed socialism, defended stock buybacks and talked about some potentially dangerous days ahead.
“When governments control companies, economic assets (companies, lenders and so on) over time are used to further political interests – leading to inefficient companies and markets, enormous favoritism and corruption,” Dimon wrote in the letter, which was released along with the bank’s 2018 annual report.
Dimon in his annual letter, which is required reading every year for Warren Buffett and others on Wall Street, acknowledges there are flaws with capitalism and that it should be combined with a strong social safety net.
“I am not an advocate for unregulated, unvarnished, free-for-all capitalism. (Few people I know are.) But we shouldn’t forget that true freedom and free enterprise (capitalism) are, at some point, inexorably linked,” Dimon said.
Defense of big business
His comments come amid an escalating debate about America’s future and ahead of an election season that is starting to heat up.
A Democratic faction led by presidential candidate Sen. Bernie Sanders and echoed by freshman upstarts including New York Rep. Alexandria Ocasio-Cortez — both of whom identify as democratic socialists — have called into question the fundamental pillars of the U.S. system and have advocated new program that echo socialist ideals.
Without wading directly into the political debate, Dimon defended the capitalistic system.
“Show me a country without any large, successful companies, and I will show you an unsuccessful country – with too few jobs and not enough opportunity as an outcome,” he wrote. “And no country would be better off without its large, successful companies in addition to its midsized and small companies. Private enterprise is the true engine of growth in any country.”
At the same time, he said his bank, the largest by assets in the U.S., is bracing for a possible economic slowdown, though he does not expect a recession.
“The key point here is that a fairly healthy U.S. economy will be confronting a wide variety of issues in 2020 and 2021,” Dimon wrote. “It’s hard to look at all the issues facing the world and not think that the range of possible outcomes is broader and that the odds of bad outcomes might be increasing.”
The letter featured both a look to the future and the challenges ahead, as well as a look back at the financial crisis and what lessons have been learned.