Cairo
A few days ago, I vented on the pathetic nature of the Republican Party’s presidential field for 2012, as seen from overseas. And now, again reading the US newspapers from abroad, I’m amazed by the greed-soaked myopia of the “enlightened” business community, in the persons of two of Barack Obama’s favorite business guys, Jamie Dimon of JPMorganChase bank and Jeffrey Immelt of GE.
First, Dimon.He’s predicting the utter decline and fall of American finance as a result of the milquetoast mild financial regulatory bill that passed Congress last year. He’s especially worried that, having helped destroyed the value of middle class housing, he won’t be able to suck middle America totally dry by charging higher credit card rates.
This is nonsense, of course. But even if it weren’t, even if Dimon were right and it meant the end of the U.S. finance as we know it, I’d say…what’s so bad about that? I mean, how terrible would it be if U.S. companies and credit-card holders had to borrow money from banks that operated with the sobriety of, say, Canadian banks? And how terrible would it be if all those hot-shot quants from Harvard and MIT had to find jobs where they actually contributed to creating jobs and building the economy, rather than creating financial products, like credit-default swaps, that are (except in the rarest of cases) a form of legalized crap-shooting with loaded dice? The American economy won’t get healthy until our financial energy is focused on creating new products (that are actual good or services, not casino games) and getting rid of the financial speculators making obscene profits in return for the creation of smoke and poison gas.
So, you don’t like financial reform, Mr. Dimon? You’re angry at Obama? That’s great news! Please stay away. (And Mr. President: please take a moment to step away from Libya and consider the impact the bank lobbyists are currently having on the evisceration of your financial reform. I’d much prefer you’d gone to war with them–by appointing Elizabeth Warren to chair the Consumer Finance Protection Bureau–than with this peripheral lunatic dictator in the Middle East.)
As for Jeffrey Immelt, I was pleased, with reservations, when the President appointed him to chair a panel to encourage manufacturing. After all, GE makes things–or so it seems, when you watch their great commercials on Sunday morning tv. But an ever-increasing slice of GE’s profits over the past few decades has come from banking–including investments in all the housing gimmicks that led to the 2008 crash. The losses that accrued from that crash have now enabled Immelt’s GE to pay no–that is, zero–taxes on $5 billion profits in 2010. This is not illegal, but it should be instructional. The system of corporate taxation in this country is a scam, with a deceptively high marginal rate and lavish loopholes.
The President wants to close those loopholes–good for him!–but I think we’re taxing the wrong things: we should be encouraging profits (especially since profits are taxed again as income on personal returns) and discouraging things like pollution and stock-churning. I think the corporate income tax should be replaced by a tax on externalities (the fancy name for pollution) and another on stock derivatives transactions. I’d be a lot less concerned if General Electric paid no taxes because it (a) had stopped polluting and (b) stopped making money by gaming the financial markets.
Of greater concern about Immelt–hat tip Rick Perlstein–has been the mini-holocaust of GE plant closings in recent years, with jobs shipped overseas. Some of this is the natural force of creative destruction–the death of incandescent light bulbs, for example–but where’s the creative production? You’d hope that the head of the President’s manufacturing board would, uh, figure out a way to create some jobs (certainly, more than the 6,000 claimed by a GE spokesman in response to the ABC news story attached).
And, once again, I know I’m part of the problem for the moment–two weeks here in the Middle East–but isn’t this foolishness what we in the press should be focusing on, rather than silly Gaddafi, and the confusion of a tribal civil war with genocide?