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Saturday, October 22, 2016

Jamie Dimon says banks are more successful than media companies, but which industry is actually following capitalist principles?

The phrase “Wall Street” is evocative in American culture. For generations, it has referred to the showcase of American capitalism: our financial services system that ensured the efficient use of funds by channeling capital to its most productive use. Indeed, the governing ethos in America is that Wall Street is the heart and soul of our capitalist economy.

As I have written before, capitalism involves four basic principles: absolute responsibility for anything and everything that happens to your company (i.e. total accountability), equal justice under the law, compensation based on the real value created for society, and competition, which involves failure and what is often called creative destruction.

The CEO of JPMorgan Chase, Jamie Dimon, has repeatedly touted the success of his efforts and disparaged critics. Earlier this week he compared compensation in the banking industry to the struggling media world, suggesting that the banking industry was far more successful. In speaking to journalists, according to Bloomberg, he noted, “Worse than that, you don’t even make any money… [while] we make a lot of money.”

Mr. Dimon is right. He and his colleagues are successful. But the real question is this: What are they successful at? By almost any criteria, the banks operate under rules that are so far from capitalism as to be unrecognizable. Let’s take Mr. Dimon’s comparison of the media industry and the banking industry further.

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Copyright 2012 The National Memo
  • concernedusa7

    MEGA BANKS – derive billions in revenue by circumventing the laws and with their billions, manipulating vulnerable markets, such as the commodities market, trading and inflating the price (cost) of grains and crude oil.
    The MEGA BANKS bring nothing of value to the economy, the MEGA BANKS extract value from the economy much like the HEDGE FUNDS. They are truly economic parasites!

  • Howz 1

    In this country we have socialism for the rich and capitalism for everyone else. Favored insustries have always been subsidised. Defense contractors have been paid for all the mistakes they make, called cost over runs, Oil companies are paid to drill, ADM paid to develop Ethanol, Halabutron given a no bid 6 billion a year contract,for the Iraq war. Where is the destructive capitalism that we are taught? If Grumman makes a huge error in development of a fighter why bail them out? why don’t they go under? So it’s no suprise we bailed out the banks. We bail out many industries. The companies live is a utopic socialistic world

  • dmarshall2305

    Dimon represents an industry that produces no wealth at all. It’s only “contribution” to society is to count and (sometimes) safeguard the wealth of others, and loan the funds it has on deposit, taking a piece of the action in every case.

    It’s that piece of the action that is the source for the very generous compensation Dimon brags about, not houses built or streets paved or lumber milled and built into furniture. No bank ever put food on the table or Johnny through college.

    And yes, Dimon and his fellow travelers try to harness the power of government to guarantee their profits even when they’re guilty of predatory or unprincipled behavior, as well as just plain stupidity.

    One sort of funny thing now is the banks’ desperate efforts to squeeze more money out of everyday people – they were shot down when they tried to impose fees on debit cards, now they’re going to try to charge fees on formerly free checking accounts.

    If banks are going to insist on the right to government guarantees, they should be treated as public utilities, with their profits guaranteed but capped and the compensation paid to their officials and managers likewise strictly regulated.

  • stsintl

    “The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than the democratic state itself. That in its essence is fascism ownership of government by an individual, by a group or any controlling private power.” –

    President Franklin Delano Roosevelt

  • k.drone

    JP Morgan Chase is one of the only banks I know of that contributes to “our” society, they manage accounts for lower classes and welfare programs, have created stipend programs for struggling entrepreneurship and students and even funnel monies in the arts, comparatively to other banks they do alot. I do agree the system is not in favor of the people and obviously many feel the same but constantly I read information which just never hits the mark correctly. And I refused to take any part in supporting Occupy Wall Street because a group of high powered corporate attorney’s assisted in saving my fledgling and still faltering music career from complete ruin by donating their time and service pro-bono. I could explain to you on how misinformed and reactionary the public is but why bother, that’s the role of the media to provide fair and accurate reporting, unfortunately sensationalism and shock sell, most ethical standards which are intended to govern American society have yet throughout the decades been able to manifest themselves due to people just are not willing nor have the understanding to “change”, but i have no doubt they would like to. As far as media is concerned 7 times out of 10 persons I know think the radio is a joke, its corrupted by kid pop music, and has starved out a greater population of the arts and music, from rock to new alternative sounds, remakes and so forth also have caused many to show great disinterest in purchasing or investing their time, money and heart into entertainment, its created apathy. Less demand=less supply and vice versa. What is most likely going to emerge is a prefabricated assortment of controlled product designed specifically for sales, the random aspect of new innovations and things that spurt growth/excitement has dwindled.