When Jamie Dimon, head of JPMorgan, flew to Shanghai this week, he might have expected to draw attention to his views on Sino-US relations. But that was before Bill Ackman, the veteran activist investor, jumped in. On Wednesday, Ackman made an impassioned appeal for Dimon to throw his hat into the 2024 presidential race, challenging incumbent Joe Biden on a Democratic ticket.
“Our country is at risk with $32 trillion in debt with no end to massive deficits in sight, headed for recession at a time of great political uncertainty,” Ackman tweeted, lamenting that “@POTUS (i.e. Biden) is extremely weak and in cognitive decline(s) 70 percent of Democrats don’t want him to run.” Ouch.
“Jamie just needs a nudge from people he respects and the broader electorate” to run, Ackman continued, praising him as the “centrist” who defeated both Biden and Donald Trump. The former president is currently being elected as the Republican presidential nominee by 56 percent of Republican voters, according to a poll. recent Quinnipiac survey.
As a potential POTUS, should Dimon be taken seriously? It seems difficult. Ackman tells me he didn’t tell Dimon about the tweet beforehand. But Dimon’s friends say he’s been thinking about the idea of the presidency for a while; indeed, he had already remarked in Shanghai that “maybe one day my country will serve in some capacity”. Moreover, he has not yet publicly shot down the suggestion.
The experience of watching Mike Bloomberg, former mayor of New York City, spend about a billion dollars in 2020 losing his own presidential bid has made Dimon wary of politics. And he knows he can withstand attacks from the progressive Democratic wing, which resents his stance on fossil fuels and his Wall Street pedigree. Then there are the legal battles over JPMorgan’s financial ties to disgraced financier and pedophile Jeffrey Epstein. That timing is bad.
But even if Ackman’s trial balloon (Twitter) soon bursts, investors should take note for at least two reasons. First, it shows how frustrated the American business elite are at the prospect of another Biden-Trump mismatch (something that also applies to the wider electorate).
The problem is not simply that both politicians – and their parties – have high disapproval ratings among general voters. According to recent conversations I’ve had, what really upsets the big potential donors for both sides is that the Quinnipiac poll also suggests that Biden and Trump would be neck and neck in a theoretical match.
This is alarming for American democracy given Trump’s repeated denial of the 2020 election results. But what really worries Wall Street is that a return of the former president could mean a new economic upheaval, in the form of erratic policymaking, geopolitical isolation and rising debt. The US can’t afford that given geopolitical tensions that are much worse today than they were in 2016 – along with the country’s fiscal situation.
The second reason Ackman’s tweet is revealing, at least in a symbolic sense, is that it shows that the American elite still dreams that a centrist caucus could save them. And Dimon is not the touchstone here. When the Milken Institute held its annual conference in California last month, one of the hottest topics of conversation at the funders’ private dinners was whether Joe Manchin, the Democratic senator from West Virginia, would run as an independent presidential candidate with the support of the bipartisan presidential nominee. . No Labels platform.
Manchin himself seems uncertain. “While I understand Americans are frustrated with DC’s dysfunction, I’m currently focused on doing my job” for West Virginia, he tells me. The leaders of the No Labels organization won’t decide until next spring whether to launch a third-party challenge — and won’t if polls show the move would deliver a victory for Trump.
In any case, history shows that third-party presidential candidates in the US have always performed very poorly, as the two-party duopoly is entrenched. To understand why, it pays to do some rereading sharp analysis of 2017 published by Harvard Business School. Katherine Gehl and Michael Porter use antitrust analysis to show why the US “political industry” harbors such harmful extremism – even though many voters have centrist instincts.
“The failure of politics has persisted because the normal checks and balances of healthy competition are neutralized” (as they can be in duopolies), the pair write, pointing out that “the failure of competition in politics is mainly perpetuated by the very high barriers to entry, many of which are artificially and deliberately constructed to deter new competition and substitutes.” In other words, independent candidates are struggling.
But even if this makes the chatter around Dimon — or Manchin — sound far-fetched, No Labels shouldn’t be ignored, especially since many Wall Street backers, including Ackman, tell me they support it as an “option” or “insurance.” strategy. In any case, it shows that not only the mainstream voters have lost confidence in the political system; many of the ultra-rich also feel political “orphans.”
And that suggests that the race of 2024 may turn out to be less predictable than financial markets expect. Now that the debt ceiling dramas are (almost) over, investors should brace themselves.
gillian.tett@ft.com
