In his annual letter to JPMorgan Chase shareholders, Chairman and CEO Jamie Dimon expressed both optimism and concern over America’s economic prospects. Although Dimon expects the economy to boom after COVID, he believes the pandemic has revealed deep, systemic flaws that will slow economic growth.
For Dimon, the deepest of these flaws has to do with inequality:
“The fault line is inequality. And its cause is staring us in the face: our own failure to move beyond our differences and self-interest and act for the greater good.”
COVID-19 did not create inequality, but the pandemic has exacerbated it across the globe. According to Inequality.org, billionaire wealth increased by $3.9 trillion between March and the end of 2020. Simultaneously, workers’ earnings fell by $3.7 trillion.
Focusing back on America, inequality threatens to drag down the country’s recovery. Over the past two decades, Dimon says, there has been virtually no income growth at the lower rungs of the economic ladder, contributing to a 4% drop in labor force participation for working-age men. That, coupled with the fact that just under 30% of American workers making “barely a living wage” at $15 an hour is a recipe for disaster.
Dimon’s letter comes complete with 15 well-reasoned policy ideas for closing the gap between the country’s wealthiest and its poorest citizens, including jobs training, social safety net reform, modernized infrastructure, and so on. In his view, the endgame is to grow the economy by shrinking the gap between “haves” and “have-nots.”
Let Them Have Our Cake and Eat it Too
Whenever someone throws out a far-reaching policy proposal like Dimon’s, the question naturally arises as to who will pay for all of these new programs. For Abigail Disney and a growing class of “Patriotic Millionaires,” the answer is simple: we’ll do it.
The “we” there, of course, are the country’s wealthiest people. The way they intend to combat inequality is by endorsing plans like those proposed by Senator Elizabeth Warren. The “Ultra-Millionaire Tax Act,” a release from Warren’s office states, “would level the playing field and narrow the racial wealth gap by asking the wealthiest 100,000 households in America, or the top 0.05%, to pay their fair share.”
Disney is just one of many “proud traitors to their class” who believe that too much wealth in the hands of few causes harm to many. The solution is to allow the government to take that money off their hands and spend it on more laudable items than another private jet or house in Cabo.
Not every member of Disney’s class is ready to entrust their wealth to the government. Many point to philanthropy as the way forward (for a good example, look at Bill Gates). Disney and her fellow “traitors” see the value in philanthropy yet still believe Washington is better positioned to reform society from the top down.
From Washington to Wall Street
For those of a more conservative stripe, tax hikes a la Warren’s plan will be a tough sell. Without any compulsion from the government, though, forward-looking companies have taken it upon themselves to attack income equality by whatever means at their disposal. Here are just a few ways in which they’ve done that.
Whether it’s in the direct form of valuable benefits or more indirect means such as education and training, these are just a handful of the many ways in which smart companies are providing additional value to their lower-skilled employees. As these efforts increase, those on the lower ends of the earning spectrum will find opportunities to climb the ladder and close the gap between them and those further up.
Top Down or Bottom Up?
From a “progressive” angle, the Abigail Disneys of the world are raising their peers’ economic consciousness and challenging them to contribute their fair share. From a “conservative” slant, smart business leaders are engaging in activities that will not only enable their people to move up in the world but improve their own economic prospects.
It’s often been said that politics follow the culture. If these two “cultures” can bridge the gap between top-down and bottom-up approaches to the issue, then we just might see a real narrowing of the gap between the rich and poor in our society aided by political candidates, policies, and programs who are genuinely interested in solving problems.
If Dimon is right, then that narrowed gap will translate to tremendous growth for us all.