JP Morgan Chase 2015 Annual Report Download - page 51

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Our current inability to work together in
addressing important, long-term issues. We
have spoken many times about the extraor-
dinarily positive and resilient American
economy. Today, it is growing stronger, and it
is far better than you hear in the current polit-
ical discourse. But we have serious issues that
we need to address – even the United States
does not have a divine right to success. I won’t
go into a lot of detail but will list only some
key concerns: the long-term fiscal and tax
issues (driven mostly by healthcare and Social
Security costs, as well as complex and poorly
designed corporate and individual taxes),
immigration, education (especially in inner
city schools) and the need for good, long-
term infrastructure plans. I am not pointing
fingers at the government in particular for our
inability to act because it is all of us, as U.S.
citizens, who need to face these problems.
I do not believe that these issues will cause a
crisis in the next five to 10 years, and, unfor-
tunately, this may lull us into a false sense
of security. But after 10 years, it will become
clear that action will need to be taken. The
problem is not that the U.S. economy won’t
be able to take care of its citizens – it is that
taking away benefits, creating intergenera-
tional warfare and scapegoating will make
for very dicult and bad politics. This is a
tragedy that we can see coming. Early action
would be relatively painless.
The potential exit of Britain from the European
Union (Brexit). One can reasonably argue that
Britain is better untethered to the bureau-
cratic and sometimes dysfunctional European
Union. This may be true in the long run, but
let’s analyze the risks. We mostly know what
it looks like if Britain stays in the European
Union – eectively, a continuation of a more
predictable environment. But the range of
outcomes of a Brexit is large and potentially
unknown. The best case is that Britain can
quickly renegotiate hundreds of trade and
other contracts with countries around the
world including the European Union. Even
this scenario will result in years of uncer-
tainty, and this uncertainty will hurt the
economies of both Britain and the European
Union. In a bad scenario, and this is not the
worst-case scenario, trade retaliation against
Britain by countries in the European Union
is possible, even though this would not be
in their own self-interest. Retaliation would
make things even worse for the British and
European economies. And it is hard to deter-
mine if the long-run impact would strengthen
the European Union or cause it to break
apart. The European Union began with a
collective resolve to establish a political union
and peace after centuries of devastating wars
and to create a common market that would
result in a better economy and greater pros-
perity for its citizens. These two goals still
exist, and they are still worth striving for.
We need a proper public policy response to
technology, trade and globalization. Technology
and globalization are the best things that ever
happened to mankind, but we need to help
those left behind. Technology is what has
driven progress for all mankind. Without
it, we all would be living in tents, hunting
bualo and hoping to live to age 40. From
printing, which resulted in the dissemina-
tion of information, to agriculture and to
today’s computers and healthcare – it’s an
astounding phenomenon – and the next
100 years will be just as astounding.
The world and most people benefit enor-
mously from innovative ideas; however,
some people, some communities and
some sectors in our economy do not. As
we embrace progress, we need to recog-
nize that technology and globalization can
impact labor markets negatively, create job
displacement, and contribute to the pay
disparity between the skilled and unskilled.
Political and business leaders have fallen
short in not only acknowledging these chal-
lenges but in dealing with them head on.
We need to support solutions that address
the displacement of workers and communi-
ties through better job training, relocation
support and income assistance. Some have
suggested that dramatically expanding the
earned income tax credit (eectively, paying
people to work) may create a healthy and
more egalitarian society. Also, we must
address an education system that fails
millions of young people who live in poor
communities throughout the United States.