Dear Fellow Shareholders,

Across the globe, 2023 was yet another year of significant challenges, from the terrible ongoing wars and violence in the Middle East and Ukraine to mounting terrorist activity and growing geopolitical tensions, importantly with China. Almost all nations felt the effects last year of global economic uncertainty, including higher energy and food prices, inflation rates and volatile markets. While all these events and associated instability have serious ramifications on our company, colleagues, clients and countries where we do business, their consequences on the world at large — with the extreme suffering of the Ukrainian people, escalating tragedy in the Middle East and the potential restructuring of the global order — are far more important.

As these events unfold, America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate. We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy. During this time of great crises, uniting to protect our essential freedoms, including free enterprise, is paramount. We should remember that America, “conceived in liberty and dedicated to the proposition that all men are created equal,” still remains a shining beacon of hope to citizens around the world. JPMorgan Chase, a company that historically has worked across borders and boundaries, will do its part to ensure that the global economy is safe and secure.

In spite of the unsettling landscape, including last year’s regional bank turmoil, the U.S. economy continues to be resilient, with consumers still spending, and the markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus. There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs. This may lead to stickier inflation and higher rates than markets expect. Furthermore, there are downside risks to watch. Quantitative tightening is draining more than $900 billion in liquidity from the system annually — and we have never truly experienced the full effect of quantitative tightening on this scale. Plus the ongoing wars in Ukraine and the Middle East continue to have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost. These significant and somewhat unprecedented forces cause us to remain cautious.

2023 was another strong year for JPMorgan Chase, with our firm generating record revenue for the sixth consecutive year, as well as setting numerous records in each of our lines of business. We earned revenue in 2023 of $162.4 billion¹ and net income of $49.6 billion, with return on tangible common equity (ROTCE) of 21%, reflecting strong underlying performance across our businesses. We also increased our quarterly common dividend of $1.00 per share to $1.05 per share in the third quarter of 2023 — and again to $1.15 per share in the first quarter of 2024 — while continuing to reinforce our fortress balance sheet. We grew market share in several of our businesses and continued to make significant investments in products, people and technology while exercising strict risk disciplines.

Throughout the year, we demonstrated the power of our investment philosophy and guiding principles, as well as the value of being there for clients — as we always are — in both good times and bad times. The result was continued growth broadly across the firm. We will highlight a few examples from 2023: Consumer & Community Banking (CCB) extended its #1 leadership positions and grew share year-over-year in retail deposits, credit card sales and credit card outstandings (adding close to 3.6 million net new customers to the franchise); the Corporate & Investment Bank (CIB) maintained its #1 rank in both Investment Banking and Markets and gained more than 100 basis points of Investment Banking market share; Commercial Banking (CB) added over 5,000 new relationships (excluding First Republic Bank), roughly doubling the prior year’s achievement; and Asset & Wealth Management (AWM) saw record client asset net inflows of $490 billion, over 20% higher than its prior record.

In 2023, we continued to play a forceful and essential role in advancing economic growth. In total, we extended credit and raised capital totaling $2.3 trillion for our consumer and institutional clients around the world. On a daily basis, we move nearly $10 trillion in over 120 currencies and more than 160 countries, as well as safeguard over $32 trillion in assets. By purchasing First Republic Bank, we brought much-needed stability to the U.S. banking system while allowing us to give a new, secure home to over half a million First Republic customers.

As always, we hold fast to our commitment to corporate responsibility, including helping to create a stronger, more inclusive economy — from supporting work skills training programs around the world to financing affordable housing and small businesses to making investments in cities like Detroit that show how business and government leaders can work together to solve problems.

We have achieved our decades-long consistency by adhering to our key principles and strategies (see sidebar on Steadfast Principles below), which allow us to drive good organic growth and promote proper management of our capital (including dividends and stock buybacks). The charts below show our performance results and illustrate how we have grown our franchises, how we compare with our competitors and how we look at our fortress balance sheet. Please peruse them and the CEO letters in this Annual Report, all of which provide specific details about our businesses and our plans for the future.

I remain proud of our company’s resiliency and of what our hundreds of thousands of employees around the world have achieved, collectively and individually. Throughout these challenging past few years, we have never stopped doing all the things we should be doing to serve our clients and our communities. As you know, we are champions of banking’s essential role in a community — its potential for bringing people together, for enabling companies and individuals to attain their goals, and for being a source of strength in difficult times. I often remind our employees that the work we do matters and has impact. United by our principles and purpose, we help people and institutions finance and achieve their aspirations, lifting up individuals, homeowners, small businesses, larger corporations, schools, hospitals, cities and countries in all regions of the world. What we have accomplished in the 20 years since the Bank One and JPMorgan Chase merger is evidence of the importance of our values.

CELEBRATING THE 20TH ANNIVERSARY OF THE BANK ONE/JPMORGAN CHASE MERGER

J.P. Morgan Chase

By 2004, J.P. Morgan Chase already represented the consolidation of four of the 10 largest U.S. banks from 1990: The Chase Manhattan Corp., Manufacturers Hanover, Chemical Banking Corp. and, most recently, J.P. Morgan & Company. And some of their predecessor companies stretched back into the 1800s, one even into the late 1700s.

Bank One

Bank One had been even busier on the acquisition front, especially across the United States. By 1998, then Banc One had more than 1,300 branches in 12 states when it announced a merger with First Chicago NBD, a Chicago-based bank created just three years earlier by the merger of First Chicago and Detroit-based NBD. Now headquartered in Chicago, the new Bank One became the largest bank in the Midwest, second largest among credit card companies and fourth largest in the United States. But the merger didn’t go as planned, with Bank One issuing three different earnings warnings. In March 2000, Bank One reached outside its executive ranks, and my tenure began as Chairman and CEO, working to overhaul the company and help bring it back to profitability and growth.

The story begins ... A merger 20 years ago helped transform two giant banks

Fast forward to 2003, and another wave of consolidation was well underway in U.S. banking. Most of the nation’s larger banks were trying to position themselves to be an “endgame winner.” In the biggest deal, Bank of America agreed to buy FleetBoston Financial Corp. for more than $40 billion. Those two banks — already amalgamations of several predecessor companies — touted the breadth of their combined retail branch network.

But they were hardly alone. In 2003, some 215 deals were announced among U.S. commercial banks and bank holding companies for a total value of $66 billion, according to Thomson Financial, which tracks merger data.

In July 2004, J.P. Morgan Chase and Bank One merged — as part of a 225-year journey — to form this exceptional company of ours: JPMorgan Chase. At its merger in 2004, the combined bank was the fourth largest bank in the world by market capitalization. But with patient groundwork over the years — fixing systems and upgrading technology, managing the notable acquisitions of Bear Stearns and Washington Mutual (WaMu) and continuing to reinvest, including in our talent — we have made our company an endgame winner.

In earlier years, banks worried about their survival. While the past two decades have brought some virtually unprecedented challenges, including the great financial crisis and a pandemic followed by a global shutdown, they did not stop us from accomplishing extraordinary things. Our bank has now emerged as the #1 bank by market capitalization.

Each of our businesses is among the best in the world, with increased market share, strong financial results and an unwavering focus on serving our clients, communities and shareholders with distinction and dedication. The strengths that are embedded in JPMorgan Chase — the knowledge and cohesiveness of our people, our long-standing client relationships, our technology and product capabilities, our presence in more than 100 countries and our unquestionable fortress balance sheet — would be hard to replicate. Crucially, the strength of our company has allowed us to always be there for clients, governments and communities — in good times and in bad times — and this strength has enabled us to continually invest in building our businesses for the future.

You can see from the following charts what gains and improvements we have achieved along the way.

Read footnoted information here

Read footnoted information here

Read footnoted information here

Within this letter, I discuss the following:

I. SUMMARY OF OUR 2023 RESULTS AND THE PRINCIPLES THAT GUIDE US

• Celebrating the 20th anniversary of the Bank One/JPMorgan Chase merger
  • Steadfast principles worth repeating (and a new one)
  • A timeline of accomplishments
• Financial performance

II. UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY

• The critical impact of artificial intelligence
• Our journey to the cloud
• Acquiring First Republic Bank and its customers
• Navigating in a complex and potentially dangerous world
• Our extensive community outreach efforts, including diversity, equity and inclusion
  • What we learned: A five-point action plan to move forward on the climate challenge
  • Powering economic growth in Florida
• Giving the bank regulatory and supervisory process a serious review
• Protecting the essential role of market making (trading)

III. STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS

• The pressure of quarterly earnings compounded by bad accounting and bad decisions
• The hijacking of annual shareholder meetings
• The evolving influence of proxy advisors
• The benefits and risks of private credit
• A bank’s strength: Providing flexible capital

IV. MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART

• Benefiting from the OODA loop
• Decision making and acting (have a process)
• The secret sauce of leadership (have a heart)

V. A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER

• Coalescing the Western world — A uniquely American task
• Strengthening our position with a comprehensive, global economic security strategy
• Providing strong leadership globally and effective policymaking domestically
  • Manager’s Journal: "A Politician's Dream Is A Businessman's Nightmare"
• Out of the labyrinth, with focus and resolve
  • We should have more faith in the amazing power of our freedoms
  • How we can help lift up our low-income citizens and mend America's torn social fabric

In previous letters, I have described the diminishing role of public companies in the American financial system. From their peak in 1996 at 7,300, U.S. public companies now total 4,300 — the total should have grown dramatically, not shrunk. Meanwhile, the number of private U.S. companies backed by private equity firms — which does not include the rising number of companies owned by sovereign wealth funds and family offices — has grown from 1,900 to 11,200 over the last two decades. This trend is serious and may very well increase with more regulation and litigation coming. Along with a frank assessment of the regulation landscape, we really need to consider: Is this the outcome we want?

There are good reasons for private markets, and some good outcomes result from them. For example, companies can stay private longer if they wish and raise more and different types of capital without going to the public markets. However, taking a wider view, I fear we may be driving companies from the public markets. The reasons are complex and may include factors such as intensified reporting requirements (including investors’ growing needs for environmental, social and governance information), higher litigation expenses, costly regulations, cookie-cutter board governance, shareholder activism, less compensation flexibility, less capital flexibility, heightened public scrutiny and the relentless pressure of quarterly earnings.

Along with the universal proxy — which makes it easier to put poorly qualified directors on a board — the pressures to retreat from the public market are mounting. In addition, corporate governance principles are becoming more and more templated and formulaic, a negative trend. For example, proxy advisors may automatically judge directors unfavorably if they have a long tenure on the board, without a fair assessment of their actual contributions or experience. Another example is the constant battle by some proxy advisors who try to split the chairman and CEO role when there is no evidence this makes a company better off — in fact, today, lead directors generally hold most of the authorities previously assigned to the chairman. The governance of major corporations is evolving away from guidance by governance principles that focus on a company’s relationship to long-term economic value toward a bureaucratic compliance exercise. Good corporate governance is critical, and a little common sense would go a long way.

THE PRESSURE OF QUARTERLY EARNINGS COMPOUNDED BY BAD ACCOUNTING AND BAD DECISIONS

There is something very positive about detailed and disciplined quarterly financial and operating reporting. But company CEOs and boards of directors should resist the undue pressure of quarterly earnings, and it is clearly somewhat their fault when they don’t. However, it is naïve to think that the pressure doesn’t exist because companies that “disappoint” can face extensive criticism, particularly those with a new or young CEO. It’s possible for companies to take short-term actions to increase earnings, such as selling more product cheaply at the end of a quarter, cutting certain investments that may be terrific but can show accounting losses in the first year or two, or just deploying more aggressive accounting methods at times. Once shortcuts like this begin, people all over the company understand that it is okay to “stretch” to meet your numbers. This could put you on a treadmill to ruin. Obviously, a company should not resort to these tactics, but it does happen in the public markets — and it’s probably less likely in the private markets.

THE HIJACKING OF ANNUAL SHAREHOLDER MEETINGS

One of the reasons it is less desirable to be a public company is because of the spiraling frivolousness of the annual shareholder meeting, which has devolved into mostly a showcase of grandstanding and competing special interest groups. We should treat shareholders with tremendous respect — and we do. At JPMorgan Chase, we are constantly talking with our investors — our directors, our lead director and our corporate governance experts visit most of our major investors whether they be direct owners or asset managers who manage the money for others. Meeting with your shareholders and investors is critical, but the annual shareholder meeting itself has become ineffective. We should try to come up with a far more constructive alternative.

THE UNDUE INFLUENCE OF PROXY ADVISORS

There are essentially two main proxy advisors in the United States. One is called Institutional Shareholder Services (ISS), and the second is called Glass Lewis. These proxy advisors started out providing reams of data from companies to help their institutional investor clients vote on proxy matters (information on executive compensation, stock returns, detail on directors, policies and so on). However, they soon also began to provide advice on how shareholders should vote on proxy matters. And, in fact, institutional investors generally execute their voting on an ISS or Glass Lewis platform, which often includes a clear statement of the advisory service’s position.

I should also point out, because it may be relevant, that ISS is owned by Deutsche Boerse, a German company, and Glass Lewis is owned by Peloton Capital, a Canadian private equity firm. I question whether American corporate governance should be determined by for-profit international institutions that may have their own strong feelings about what constitutes good corporate governance.

While asset managers and institutional investors have a fiduciary responsibility to make their own decisions, it is increasingly clear that proxy advisors have undue influence.

Asset managers (who manage money on behalf of others) and institutional investors (e.g., pension plans and endowments) may rely on a variety of information sources to support their valuation decision-making process. While data and recommendations may form pieces of the information mosaic, their votes should ultimately be based on an independent application of their own voting guidelines and policies. To the extent they use recommendations from proxy advisors in their decision-making processes, they should disclose that they do so and should be satisfied that the information upon which they are relying is accurate and relevant. However, many companies would argue that this information is frequently not balanced, not representative of the full view and not accurate. In addition, companies complain that they often cannot get the data corrected, and, therefore, a vote may go uncorrected.

Almost all asset managers receive proxy advisor data and recommendations; while some asset managers vote completely independently of this information, the majority do not. Most asset managers have formed corporate governance or stewardship committees that are responsible for their voting, and these committee positions are often held not by portfolio managers and research analysts (i.e., the people buying and analyzing the individual securities) but by stewardship experts. While it is good to have stewardship experts, the reality is that many of these committees default large portions of what they do to proxy advisors and, more troubling, make it harder for actual portfolio managers to override this decision making.

Some have argued that it’s too hard and too expensive to review the large number of proxies and proxy proposals — this is both lazy and wrong. If issues are important to a company, they should be important to the shareholder — for the most part, only a handful of proposals are important to companies.

We are making enhancements to J.P. Morgan Asset Management’s proxy voting processes to amplify the role of portfolio managers and to address the perception of asset managers’ reliance on third-party advisor voting recommendations.

Enhancements to the firm’s internal proxy voting process will include:

• More portfolio manager participation in proxy committee decision making. The firm has significantly expanded the representation of portfolio managers on its North American Proxy Committee in an effort to increase the diversity of viewpoints represented on the committee. As part of this change, and in recognition that portfolio managers, as fiduciaries, may differ in their views on how to vote on particular proposals depending on a mandate’s investment strategy and guidelines, we are broadening our capabilities to support voting results that may vary across our platform.
• Diminished role of proxy advisor recommendations. J.P. Morgan Asset Management makes its own independent proxy voting decisions (based on deep fundamental research) and stands behind the depth and rigor of its processes and historical information advantage. In most cases, the firm will only use proxy advisory firms for research, data and technical mechanics of vote transmission and not for outsourced recommendations. By the end of 2024, J.P. Morgan Asset Management generally will have eliminated third-party proxy advisor voting recommendations from its internally developed voting systems. Additionally, the firm will work with third-party proxy voting advisors to remove their voting recommendations from research reports they provide to J.P. Morgan Asset Management by the 2025 proxy season.
• Other enhancements. We are working to give a company and its management even greater access to the ultimate decision makers; to raise critical issues to a company as early as possible in a constructive and proactive way; and to be willing to tell companies how we have voted once our decision is made rather than waiting until votes are finally counted.

Taken together, these steps are designed to respond to a growing perception (and, I believe, reality) that the asset management industry generally places undue reliance on proxy advisors in how proxies are voted. We believe these actions will strengthen our relationships with our clients and with companies while helping to build trust between shareholders, investors and companies.

THE BENEFITS AND RISKS OF PRIVATE CREDIT

I have already mentioned some of the benefits of private credit, and I’ll now mention some more. Many people in the private credit arena are very smart and creative and want to help the companies they invest in navigate through market shoals. They can move quickly, discreetly and flexibly. Most generally understand that bad accounting drives bad decisions, and their goal is to make the right decisions for the future of the company.

On the other hand, not all players are that good. And problems in the private credit market caused by the bad players can leak onto the good ones, even though private credit money is locked up for years. If investors feel mistreated, they will cry foul, and the government will respond by putting a laser focus on the business. It’s a reasonable assumption that at some point regulations will focus on the private markets as they do on the public markets.

This scrutiny will include a look at how private credit values its assets, which isn’t as transparent as public market valuations. In addition, private market loans commonly lack liquidity in the secondary market and are not generally supported by in-depth market research.

New financial products that grow extremely rapidly often become an area of unexpected risk in the markets. Frequently, the weaknesses of new products, in this case private credit loans, may only be seen and exposed in bad markets, which private credit loans have not yet faced. When credit spreads gap out, when interest rates go up and when some leveraged companies suffer in the recession, we will find out how those loans survive stress testing. In addition, they can create a little bit of a “credit crunch” for borrowers since it might be hard for private creditors to roll over loans under those conditions. Under stress conditions, private creditors would have to charge exorbitant prices that companies simply cannot afford in order to book the new loan at par. Banks are in a slightly different position.

A BANK’S STRENGTH: PROVIDING FLEXIBLE CAPITAL

Banks generally try to be there for their borrowers in difficult times — striving to roll over loans, renegotiate terms and raise additional capital. Banks do this for multiple reasons: They normally feel an obligation to help their clients, they have long-term relationships and they can commonly earn other sources of revenue from client-driven transactions. Banks can also flex their capital and lending base as needed by their clients. This is because a bank can and should make decisions to help companies through good times and bad, seeking to retain them as long-term clients across many areas of the bank. They can and do take “losses” that help the client maintain the franchise. But an asset manager must act as a “fiduciary” of other people’s money and cannot lend based on a moral obligation or potential future relationship.

Recently, we have been witnessing a convergence between the public and private markets. But it’s too soon to say how this ultimately will play out, particularly if we go through a recessionary cycle.

Read footnoted information here

In past years, I have written extensively about public policy issues. It is important to engage in these conversations, particularly around domestic economic policy because policy matters. While JPMorgan Chase can execute specific plans to improve outcomes for customers and communities, there is no replacement for effective government policies that add to the general well-being of the country. A stronger and more prosperous country will make us a stronger company.

As CEO of this company, every year I visit numerous countries around the globe. I meet with foreign government leaders, presidents and prime ministers, business leaders, and civic and academic experts, which allows me to learn a significant amount about how public policy is executed around the world. It also reinforces some of the critical values and virtues that are essential to a healthy country.

Every time I see the American flag, it reminds me of the values and virtues of this country and its founding principles conceived in liberty and dedicated to the notion that all men and women are created equal. Talk with someone who has recently become a naturalized citizen or watch a ceremony where groups of people take the oath to America, and you will see extraordinary joy and newfound pride. They now live free, with individual rights protected by the Constitution and with their life and the well-being of their family and community protected by the U.S. military. As Americans, we have much to be grateful for and much to defend.

If you read the newspaper from virtually any day of any year since World War II, there is abundant coverage on wars — hot and cold — inflation, recession, polarized politics, terrorist attacks, migration and starvation. As appalling as these events have been, the world was generally on a path to becoming stronger and safer. When terrible events happen, we tend to overestimate the effect they will have on the global economy. Recent events, however, may very well be creating risks that could eclipse anything since World War II — we should not take them lightly.

February 24, 2022 is another day in history that will live in infamy. On that day, 190,000 Russian soldiers invaded a free and democratic European country — importantly, somewhat protected by the threat of nuclear blackmail. Russia’s invasion of Ukraine and the subsequent abhorrent attack on Israel and ongoing violence in the Middle East should have punctured many assumptions about the direction of future safety and security, bringing us to this pivotal time in history. America and the free Western world can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims — particularly against what they perceive as weak, incompetent and disorganized Western democracies. In a troubled world, we are reminded that national security is and always will be paramount, even if its importance seems to recede in tranquil times.

The fallout from these events should also lay to rest the idea that America can stand alone. Of course, U.S. leaders must always put America first, but global peace and order are vital to American interests. Only America has the full capability to lead and coalesce the Western world, though we must do so respectfully and in partnership with our allies. Without cohesiveness and unity with our allies, autocratic forces will divide and conquer the bickering democracies. America needs to lead with its strengths — not only its military but also its economic, diplomatic and moral forces. And now we must do so as America’s leadership is being challenged around the world. There is nothing more important.

Policy and strategy matter, and it’s important to be engaged.

In our increasingly complex world, there is a vital interrelationship between domestic and foreign economic policy, particularly around trade, investment, national security and other issues. And, of course, while American voters and leadership set U.S. foreign policy, being a constructive part of the global conversation has become more important than ever.

If you doubt how important public policy is for the health of a country, you need to look no further than the recent history of Greece, Ireland or Singapore. Each of these countries, starting from deeply challenging places, implemented effective government and policies that have done a great job of lifting up their people when many thought it wasn’t possible. Sweden is another great example of a country with good broad-based policies that have succeeded at precisely what we all may want — a dynamic, innovative, free-market economy (Sweden actually has fewer government-owned enterprises than America) and safety nets that work. Conversely, you need to look no further than North Korea or Venezuela to see the complete destruction and havoc that terrible public policies (often in the name of the people) can cultivate.

Strategy by its nature must be comprehensive. In the rest of this section, I try to answer the question: What must we do to ensure that the world stays safe, not only for America but for freedom and democracy? A comprehensive strategy entails four important pillars, and we must succeed at each:

1. Maintain American leadership (including military).
2. Achieve long-term economic success with our allies.
3. Strengthen our nation domestically.
4. Deepen focus and resolve on addressing our most pressing challenges.

COALESCING THE WESTERN WORLD — A UNIQUELY AMERICAN TASK

Only America has the full capabilities of military might, economic power and the principles that most people around the world yearn for — based on “liberty and justice for all” and the proposition that all people are created equal. America remains the bastion of freedom and the arsenal of democracy.

There is no alternative to American leadership.

In the free and democratic Western world, and, in fact, for many other countries, there is no real or good alternative to America. The only other potential superpower is China. Other nations know they can rely on the founding principles of America. If we reach out our hand, most nations will happily take that hand. America is still the most prosperous nation on the planet, which not only can guarantee our military strength but also positions us to help our allies develop and grow their nations (though we should minimize the “our way or the highway” type of behavior). This leadership is needed today to help Ukraine stay free in its battle with Russia.

Most of the world wants American leadership.

America continues to be the envy of much of the world, and as we’ve seen with the challenges at our borders, there is a reason people want to come here and not to autocratic nations. If you opened America’s borders to the rest of the world, I have little doubt that hundreds of millions of people would want to move here. By contrast, not many would want to emigrate to autocratic nations. Also, I have little doubt that if most investors across the globe could only invest in one country, they would choose the United States. Beyond our country’s borders, people and nations around the world understand the role that America has played in promoting world peace — known as Pax Americana. For the most part, Pax Americana has kept the world relatively peaceful since World War II and helped lead to enormous global economic prosperity, which has helped lift 1.3 billion people out of poverty.

Modern America does not engage in economic coercion or foreign wars to steal land or treasure. The fact that some of our foreign excursions might have been misguided does not negate this. We helped rebuild Europe and Japan after the devastation of World War II, and we, with our allies, have helped create global institutions to maintain peace. We are still trusted.

First and foremost, the Western world needs unquestioned military might — peace through strength.

“We know only too well that war comes not when the forces of freedom are strong, but when they are weak,” said Ronald Reagan in 1980.

So far, the Western world has done a good job in strengthening military alliances in response to the war in Ukraine. Ukraine is essentially the front line that needs immediate support. Providing that support is the best way to counter autocratic forces that would seek to weaken the Western world, particularly America. But the ongoing wars in Ukraine and the Middle East could become far worse and spread in unpredictable ways. Most important, the specter of nuclear weapons — probably still the greatest threat to mankind — hovers as the ultimate decider, which should strike deep fear in all our hearts. The best protection starts with an unyielding resolve to do whatever we need to do to maintain the strongest military on the planet — a commitment that is well within our economic capability.

American leadership requires not only the military but also the full “symphony of power.”

Former Secretary of Defense Robert Gates, in his book Exercise of Power, writes extensively in the first chapter about “the symphony of power.” He makes the critical point that America has often overused and misused military power and has massively underused other muscles — diplomacy, intelligence, communication (explaining to the world the benefits of democracy and free enterprise) and comprehensive economic policy.

America has the most extensive group of partners, friends and allies — both military and economic — that the world has probably ever seen. We should put this to better use.

The American public ought to hear more about why this is so important.

International isolationism has run through American foreign policy throughout our history, frequently with good reason. The chant, “Don’t get involved in foreign wars” was often right. That said, the American public should remember that even after the Revolutionary War, we did, in fact, have British and French armies on our soil. The sinking of American merchant and passenger ships during World War I and the surprise attack on Pearl Harbor in World War II brought isolationism to a close for a time. America is never far from being dragged into terrible conflicts. Global wars come to our shores whether we like it or not — we need to stay engaged.

In perilous periods of history when our allies and other democracies were under serious assault, great American leaders have inspired the American people — through words and actions — to stand up to help and defend them. Staying on the sidelines during battles of autocracy and democracy, between dictatorship and freedom, is simply not an option for America today. Ukraine is the front line of democracy. If the war goes badly for Ukraine, you may see the splintering of Pax Americana, which would be a disaster for the whole free world. Ukraine’s struggle is our struggle, and ensuring their victory is ensuring America first. It is imperative that our national leaders explain to the American people what is at stake and make a powerful case – with energy, consistency and clarity – for our strong enduring commitment to Ukraine’s survival for as long as it takes (and it could take years).

One last point: Ukraine needs our help immediately, but it’s important to understand that much of the money that America is directing to Ukraine is for purchasing weapons and equipment, most of which will be built in America. Not only is our aid helping Ukraine, but it is going directly to American manufacturers, and it is helping the country rebuild our military industrial capacity for the next generation.

STRENGTHENING OUR POSITION WITH A COMPREHENSIVE, GLOBAL ECONOMIC SECURITY STRATEGY

Sustaining America’s economic strength is a bedrock for our long-term military strength. There are many things we need to do to strengthen the U.S. economy, and I talk about that later in this section. This discussion is about foreign economic policies – the economic battlefield.

The whole Western world is rethinking and reimagining its military strategies and alliances. We need to do the same for our economic strategies and alliances, but we should be guided by a comprehensive global strategy that deals with critical issues. Done properly, such a strategy would help strengthen, coalesce and possibly be the glue that holds together Western democratic alliances over decades.

Foreign economic policy involves trade and investment, export controls, secure and resilient supply chains, and the execution of sanctions and any related industrial policies. It must also include development finance — think of the “Belt and Road” efforts in China — which are critical to most developing nations. This framework should tell us not only how to deal with our allies but also how to work with nonaligned nations around the world. These strategies should not be aimed against any one country (such as China) but rather be focused on keeping the world safe for democracy and free enterprise.

Economic national security is paramount — both for the United States and for our allies.

It is a valid point that the Western world — both government and business — essentially underestimated the growing strength and potential threat of China. It’s also true that China has been comprehensively and strategically focused on these economic issues, all while we slept. But let’s not cry over spilled milk — let’s just fix it.

We missed the potential threat from three vantage points. The first is companies’ overreliance on China as the sole link in their supply chain, which can create vulnerabilities and reduces resiliency. But to the extent this involves everyday items, like clothes, sneakers, vaccine compounds and consumer goods, this dependency is not as critical or complex and will eventually be sorted out.

The second is the most critical. The United States cannot rely on any potential adversaries for materials essential to our national security — think rare earths, 5G and semiconductors, penicillin and materials critical to essential pharmaceuticals, among others. We also cannot be sharing vital technologies that can enhance an adversary’s military capabilities. The United States should properly and narrowly define these issues and then act unilaterally, if necessary, to fix them.

The third is also complex, which is countering unfair competition or “mercantilist” behavior in critical industries; think electric vehicles, renewable energy and AI, among others. Examples of this would be where a state, any state, uses government powers, capital, subsidies or other means to dominate critical industries and deeply damage the economic position of other nations. Weakening a country economically can render it a virtual “vassal state,” reliant on potential adversaries for essential goods and services, which also weakens it militarily. We cannot cede our important resources and capabilities to potential adversaries.

All these issues can be resolved, though they will take time and need devoted effort.

Every nation will have different national security issues. For example, Europe in general and countries like India, Japan and Korea need reliable, affordable and secure energy; many nations would put food security as their top concern. This means that we must work with our allies to accomplish our own goals and to help them accomplish theirs. We have extraordinary common interests in our joint security: We must hang together — because if we don’t, we will assuredly hang separately.

We already engage in trade — improving it is good economics and great geopolitics.

We must have a better understanding of trade. As a nation, we refuse to get into genuine trade discussions, but this ignores the complete and obvious truth — we already have trade relationships with all these countries. Approximately 92% of the world’s consumers live outside the United States. Increased trade allows our workers and farmers to access those markets. We should negotiate trade agreements that can achieve more, economically, for ourselves and our allies, as well as meet all of our national security needs. While it is appropriate to use trade to continue to nudge allies in the right direction around human rights and climate, this objective should be subordinated to our national interests of long-term security.

Negotiating must be done in concert with our allied nations so as not to cause a fissure in economic relations. This is critical — strong economic bonds will help ensure strong military alliances. The Inflation Reduction Act has much good in it (more on this later), but it angered many of our allies. To them, the bill was by America and for America, and, subsequently, they felt a need to match it so their businesses would not be disadvantaged. The terms of the legislation could have been better negotiated with our allies in mind, strengthening our economic ties with the free world.

We should also immediately re-enter, if possible, the prior negotiated Trans-Pacific Partnership agreement. Not only is it good for the economy, but it also could be a brilliant, strategic, economic security move — an economic alliance that binds us with 11 other important countries (including Australia, Chile, Japan, Malaysia, Mexico, Singapore and Vietnam). Geopolitically and strategically, this might be one of the most important moves to counter China. While this is a challenging step, our political leaders need to explain and lead — and not be afraid of dealing with the tough issues. We also need to acknowledge that there have been real negative job impacts as a result of trade, which are usually concentrated around certain areas and businesses. So any new trade policy should be combined with a greatly enhanced Trade Adjustment Assistance program, which provides retraining, income assistance and relocation for those workers directly impacted by trade.

Trade is realpolitik, and the recent cancellation of future liquified natural gas (LNG) projects is a good example of this fact. The projects were delayed mainly for political reasons — to pacify those who believe that gas is bad and that oil and gas projects should simply be stopped. This is not only wrong but also enormously naïve. One of the best ways to reduce CO2 for the next few decades is to use gas to replace coal. When oil and gas prices skyrocketed last winter, nations around the world — wealthy and very climate-conscious nations like France, Germany and the Netherlands, as well as lower-income nations like Indonesia, the Philippines and Vietnam that could not afford the higher cost — started to turn back to their coal plants. This highlights the importance of safe, secure and affordable energy. Second, the export of LNG is a great economic boon for the United States. But most important is the realpolitik goal: Our allied nations that need secure and affordable energy resources, including critical nations like Japan, Korea and most of our European allies, would like to be able to depend on the United States for energy. This now puts them in a difficult position — they may have to look elsewhere for such supplies, turning to Iran, Qatar, the United Arab Emirates or maybe even Russia. We need to minimize anything that can tear at our economic bonds with our allies.

The strength of our domestic production of energy gives us a “power advantage” — cheaper and more reliable energy, which creates economic and geopolitical advantages.

Industrial policy is now necessary, but it should be carefully constructed and limited.

In some cases, industrial policy (using government resources to subsidize investments to help make businesses more competitive) may be the only solution for quickly building up the industries we need (rare earths and semiconductors, among others) to guarantee resilient national security. The IRA and CHIPS Act are good examples of this and government has to get it right.

Such policy can also be used to help combat unfair competitive policies of nations that are using state capitalism and state control to dominate critical industries. However, when crafting industrial policy, the function of government needs to be narrowly defined and kept simple; i.e., governmental jurisdiction should be limited to very specific products and probably to what we know works, such as tax credits and, to a lesser extent, loan guarantees. And industrial policy should include twin provisions: 1) strict limitations on political interference, like social policies, and 2) specific permitting requirements, which, if not drastically improved, will badly inhibit our ability to make investments and allow infrastructure to be built. Adding social policy, politics and matters other than simple tax credits dramatically reduces the economic efficiency of industrial policy and creates conditions for corporate America to feed at the trough of government largess. We should quickly address how we can improve on already executed legislation. We do not want to look back and have great regrets about how so much of this policy work failed.

There are those who argue that the U.S. government needs much more far-reaching industrial policy to be able to micromanage and accomplish its many ambitious objectives. To those I say, read further in this section about how ineffective so many government policies have been.

We should be tough, but we should engage with China.

Over the last 20 years, China has been executing a more comprehensive economic strategy than we have. The country’s leaders have successfully grown their nation and, depending on how you measure it, have the first or second largest economy in the world. That said, many question the current economic focus of China’s leadership as they don’t have everything figured out. While China has become the largest trading partner to many countries around the world, its own GDP per person is $13,000. And the country continues to be beset by many economic and domestic issues.

China has its own national security concerns. The country is located in a very politically complex part of the world, and many of China’s actions have caused its neighbors (e.g., Japan, Korea, Philippines, among others) to start to re-arm and, in fact, draw closer to the United States. It also surprises many Americans to hear that while our country is 100% energy sufficient, China needs to import 10 million barrels of oil a day. It is clear that China’s new leadership has set a different course, with a much more intense focus on national security, military capability and internal development. That is their right, and we simply need to adjust to it.

America still has an enormously strong hand — plenty of food, water and energy; peaceful neighbors; and what remains the most prosperous and dynamic economy the world has ever seen, with a per person GDP of over $80,000 a year. Most important, our nation is blessed with the benefit of true freedom and liberty. See the sidebar on the amazing power of freedom later in this section.

While we may always have a complex relationship with China (made all the more complicated and serious by ongoing wars), the country’s vast size and importance to so many other nations requires us to stay engaged — thoughtfully and without fear. At the same time, we need to build and execute our own long-term, comprehensive economic security strategy to keep our position safe and secure. I believe that respectful, strong and consistent engagement would be best for both our countries and the rest of the world.

We need to strengthen and rebuild the international order — we may need a new Bretton Woods.

The international rules-based order established by the Western world after World War II is clearly under attack by outside forces, somewhat weakened by its own failures and inability to keep up with the increasingly complex world. This international order relies on a web of military alliances, trade agreements (e.g., World Trade Organization), development finance (e.g., International Monetary Fund and the World Bank) and related global tax and investment policies and diplomacy organizations (e.g., United Nations), which have evolved into a confusing and overlapping regime of policies. You can now add to it the new issues of cyber warfare, digital trade and privacy, and global taxes, among others.

It might be a good idea to convene a group of like-minded leaders to build and improve upon what already exists. The time may be right for a reimagined Bretton Woods — and by this, I mean revitalizing our global architecture. Since too many parts of the world have been neglected, any new system has to take into account and properly address the needs of all nations, including areas of concentrated poverty.

While we hope the wars in Ukraine and in the Middle East will end eventually (and, we hope, successfully from the standpoint of our allies), these other critical economic battles could possibly continue throughout our lifetime. If the Western world is slowly split apart over the next few decades, it will likely be the result of our failure to effectively address crucial global economic challenges.

PROVIDING STRONG LEADERSHIP GLOBALLY AND EFFECTIVE POLICY MAKING DOMESTICALLY

When you travel around the United States and talk with people of all types and persuasions, there is a rather common refrain; namely, why are we helping foreign nations with the safety of their borders and economies when we are not doing a particularly good job of protecting our own? While there is no moral equivalency in these arguments, they are understandable. It is clear that many Americans feel we need to do a better job here at home before we can focus over there. We can understand why some people living in this country, who have been neglected for decades, ask how their government can find the money for Ukraine and other parts of the world but not for them. It is a reasonable question.

From my point of view, our highly charged, emotional and political domestic issues are centered around 1) immigration and lack of border security and 2) the fraying of the American dream, particularly for low-income and rural Americans who feel left behind amid the growing wealth and prosperity of others around them. Please read the sidebar below, which I believe explains the legitimate frustration of some of our citizens. And I agree with them.

In the sidebar, I also explain how two policies (a large expansion of the Earned Income Tax Credit and focus on work skills and job outcomes at high schools, community colleges and colleges) would not only dramatically increase both the income and employment opportunities for many of those left behind but would also have the virtue of actually growing the workforce. The combined effect of all of this would be quite a boon to our GDP.

I believe that many affected Americans are not angry at hardworking, law-abiding immigrants and, in fact, acknowledge the critical role immigrants continue to play in building this wonderful country. Rather, they are angry that America has not implemented proper border control and immigration policies. It is astounding that many in Congress know what to do and want to do it but are simply unable to pass legislation because of partisan politics. Congress did come close on a few occasions — and I hope they keep trying.

Deliberate policies meant to drive healthy growth are needed.

For over two decades, since 2000, America has grown at an anemic rate of 2%. We should have strived for and achieved 3% growth. Had we done so, GDP per person today would be $16,000 higher, which would, in turn, have paid for better healthcare, childcare, education and other services. Importantly, the best way to handle our excess deficit and debt issues is to maximize economic growth.

Growth policies include (the list could be very long so I’ll just mention a few):

• Consistent tax policies, conducive to both employment and capital investment. Capital investment is the primary driver of innovation, productivity and, therefore, growth in America. Tax policies change too frequently, which causes uncertainty and complicates long-term capital investment decision making (I won’t bore you with the details here). A bipartisan committee of Congress is probably required to fix this — and the sooner the better.
• Well-conceived regulations (and related laws). This requires an ongoing concerted effort to streamline regulations to cost-effectively drive better outcomes for the United States. The last thing we need is a constant pile-on of politically driven, fragmented policies. Please read the sidebar, an editorial in The Wall Street Journal by George McGovern, one of the most liberal presidential nominees in our lifetime, in which he clearly lays out the complexity, risks and costs that businesses, large and small, face every day. While he acknowledges the worthiness of the goals of many regulations, he points out their negatives. He also calls out the “blame-shifting and scapegoating" and "the endless exposure to frivolous claims and high legal fees.” Not only is this state of affairs demoralizing, but it also reduces employment, capital investment and the formation of new businesses, as well as cause unnecessary bankruptcies. Estimates of the regulatory costs for America are approximately $19,000 per worker, dwarfing the regulatory burdens in other countries. We all want sensible regulations that make us a better and safer nation – but this number is astounding. We should be able to accomplish our goals while sharply reducing needless and wasteful expenses. And remember, it’s discouraging not only to companies but to all citizens who have to deal with it on a daily basis.



• View Text Version

  WALL STREET JOURNAL

  June 1, 1992

  (Copyright © I992, Dow Jones & Co., Inc.)

  Manager's Journal: A Politician's Dream Is a Businessman's Nightmare

  By George McGovern
  Wisdom too often never comes, and so one ought not to reject it merely because it comes late.

  — Justice Felix Frankfurter

  It's been 11 years since I left the U.S. Senate, after serving 24 years in high public office. After leaving a career in politics, I devoted much of my time to public lectures that took me into every state in the union and much of Europe, Asia, the Middle East and Latin America.

  In 1988, I invested most of the earnings from this lecture circuit acquiring the leasehold on Connecticut's Stratford Inn. Hotels, inns and restaurants have always held a special fascination for me. The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility — complete with an experienced manager and staff.

  In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn's 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.

  Today we are much closer to a general acknowledgment that government must encourage business to expand and grow. Bill Clinton, Paul Tsongas, Bob Kerrey and others have, I believe, changed the debate of our party. We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.

  My own business perspective has been limited to that small hotel and restaurant in Stratford, Conn., with an especially difficult lease and a severe recession. But my business associates and I also lived with federal, state and local rules that were all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting our customers from fire hazards, etc. While I never have doubted the worthiness of any of these goals, the concept that most often eludes legislators is: "Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape." It is a simple concern that is nonetheless often ignored by legislators.

  For example, the papers today are filled with stories about businesses dropping health coverage for employees. We provided a substantial package for our staff at the Stratford Inn. However, were we operating today, those costs would exceed $150,000 a year for health care on top of salaries and other benefits. There would have been no reasonable way for us to absorb or pass on these costs.

  Some of the escalation in the cost of health care is attributed to patients suing doctors. While one cannot assess the merit of all these claims, I've also witnessed firsthand the explosion in blame-shifting and scapegoating for every negative experience in life.

  Today, despite bankruptcy, we are still dealing with litigation from individuals who fell in or near our restaurant. Despite these injuries, not every misstep is the fault of someone else. Not every such incident should be viewed as a lawsuit instead of an unfortunate accident. And while the business owner may prevail in the end, the endless exposure to frivolous claims and high legal fees is frightening.

  Our Connecticut hotel, along with many others, went bankrupt for a variety of reasons, the general economy in the Northeast being a significant cause. But that reason masks the variety of other challenges we faced that drive operating costs and financing charges beyond what a small business can handle.

  It is clear that some businesses have products that can be priced at almost any level. The price of raw materials (e.g., steel and glass) and life-saving drugs and medical care are not easily substituted by consumers. It is only competition or antitrust that tempers price increases. Consumers may delay purchases, but they have little choice when faced with higher prices.

  In services, however, consumers do have a choice when faced with higher prices. You may have to stay in a hotel while on vacation, but you can stay fewer days. You can eat in restaurants fewer times per month, or forgo a number of services from car washes to shoeshines. Every such decision eventually results in job losses for someone. And often these are the people without the skills to help themselves — the people I've spent a lifetime trying to help.

  In short, "one-size-fits-all" rules for business ignore the reality of the marketplace. And setting thresholds for regulatory guidelines at artificial levels — e.g., 50 employees or more, $500,000 in sales — takes no account of other realities, such as profit margins, labor intensive vs. capital intensive businesses, and local market economics.

  The problem we face as legislators is: Where do we set the bar so that it is not too high to clear? I don't have the answer. I do know that we need to start raising these questions more often.

  - - -

  Mr. McGovern. the 1972 Democratic presidential candidate, is president of the Middle-Eastern Policy Council in Washington.

  (See related letters: "Letters to the Editor: A Politician's Dream Is a Businessman's Nightmare" •· WSJ July 2, 1922)

  _{THE PUBLISHER'S SALE OF THIS REPRINT DOES NOT CONSTITUTE OR IMPLY ANY ENDORSEMENT OR SPONSORSHIP OF ANY PRODUCT, SERVICE, COMPANY OR ORGANIZATION CUSTOM REPRINTS (609) 520-4331 P.O. BOX 300 PRINCETON, NJ 08543-0300. DO NOT EDIT OR ALTER REPRINTS, REPRODUCTIONS NOT PERMITTED}

• Timely permits on projects large and small. There is virtually no industry — from agriculture and construction to transportation, technology, and oil and gas — or business, large or small, that isn’t disadvantaged by the tedious process and the length of time it takes to get approvals for permits to get things done. This includes federal, state and local requirements. These bottlenecks also make investment far more costly and slow. Timely permits would improve infrastructure and save lives, not endanger them.
• Proper federal government budgeting and fiscal management. The staggering inability of the government to draft and pass a proper budget causes deep and unnecessary damage to our growth. Some people estimate that the waste alone (due to improper payments, overlapping programs, and fragmented and duplicative contracts, among other things) could cost the nation hundreds of billions of dollars annually. This uncertainty filters through virtually every part of the American economy and should not be accepted.

We can all forgo a little self-interest to do what is right for our country.

Those of us who have benefited the most from this country bear even greater responsibility to do this. It’s perfectly understandable that institutions, including businesses, unions and industries, lobby in Washington, D.C., to protect themselves — in good ways and bad — but we should more regularly put national interests ahead of self-interests. It’s good to want to ensure well-paying jobs and healthy industries. But it is not good when it reduces competition, stops the deployment of enhanced technology, harms efficiency, creates fake jobs or builds bridges to nowhere or damages the general health of the economy. Doing the right thing, the right way – which is achievable – would be better for everyone. As former President John F. Kennedy said, “Ask not what your country can do for you — ask what you can do for your country.”

Celebrate American exceptionalism.

We can safely say that America is an exceptional nation built and grounded on principles — principles of freedom of speech, freedom of religion, free enterprise (capitalism), and the freedom and empowerment brought to us by our democracy through the power to elect our leaders and of our Constitution, which makes these individual freedoms sacrosanct. Much of the world yearns to be here because of those principles — the right to life, liberty and the pursuit of happiness. We should extol those virtues while recognizing that America has never been a perfect nation, like all other nations. We can acknowledge our flaws and strive to constantly correct them, without denigrating our nation.

Let’s celebrate the shared sense of sacrifice that gives us all strength.

There were very few positives from the pandemic, but I’m mentioning one, which, unfortunately, didn’t last, but reflected the best of us. In New York City, at 7 p.m. every evening, people throughout the city would open their windows, shouting and screaming and banging pots and pans to show gratitude to the essential workers — sanitation workers, police, firefighters, emergency responders, nurses and doctors. Of course, these workers were always essential, but I was hoping that spirit and civility would become deeply embedded and have longer lasting effects in our society.

I can understand when an individual for conscientious reasons chooses not to do work that helps our military. But I cannot understand when an entire company takes that position. How can we have a sense of shared sacrifice, when America is home to 18 million veterans who were willing to risk their lives for America’s safety, and yet some companies are not even willing to use their fingertips to help?

For example, back in 1969 the cancellation of the Reserve Officers’ Training Corps programs by the country’s most prestigious universities and colleges likely fueled the great divide – between elites and others in our country – that persists today. Our strength as a nation is best served when the best students and the best soldiers are brought together and we would all benefit from more civility and better teaching around basic virtues like hard work, shared sacrifice, justice, rationality and more respect for the enduring values of American freedom and free enterprise.

Resist being “weaponized.”

We can start by trying to understand other people’s and other voters’ points of views, even around deeply emotional topics. We can stop insulting whole classes of voters. We can stop name calling. We can stop blame-shifting and scapegoating. We can stop being petty. Politicians can cease insulting, baiting and belittling each other, which diminishes them and the voter. It has also become too acceptable for some politicians to say one thing in private and deliver a completely different message in public. It would also be nice to see some cabinet members from the opposing party. We should also stop degrading and demonizing American business and American institutions, which are the best in the world, because it erodes confidence in our very country.

Social media could do more.

There is no question that social media has some real negative effects, from the manipulation of elections to the increasingly documented negative effects on the mental health of children. These are issues impacting our individual and collective spheres, and it’s time for social media companies to take more action to remedy these challenges — and swiftly. Rapid advances in technology will not only make these existing issues harder to address, but they will likely create new ones. The current state of the online information landscape has wide-ranging implications on trust in institutions, information integrity and more — and it bears on institutions like ours, where platform policy has increasingly widespread implications for concerns about fraud, security and other issue spaces.

A range of tools and approaches is required to address this complex and important situation — and there are several measures that platform companies can immediately enact, voluntarily, while strengthening and improving their business models. One common sense and modest step would be for social media companies to further empower platform users’ control over what they see and how it is presented, leveraging existing tools and features — like the alternative feed algorithm settings some offer today. I believe many users (not just parents) would appreciate a greater ability to more carefully curate their feeds; for example, prioritizing educational content for their children.

Platforms could also consider enhanced authentication measures; i.e., having users identify themselves to the platform or to a trusted third party. This would have the virtue of increasing individual accountability and reducing imposters, bots and possibly foreign political actors on platforms. It would have immediate benefits for users who prefer content from authenticated sources that take responsibility for their postings. There are clear competing values that need to be balanced in such an approach, including those related to our cherished right to free speech, individual privacy and inclusion (for example, roughly 850 million people globally don’t have a way to easily authenticate themselves today). There are also legitimate questions as to whether authentication would be used as a tool to chill or block speech or quash bona fide political dissenters, and real work needs to be done to identify policy and technical solutions that balance such risks and benefits.

I offer these approaches as a starting place, understanding that it's crucial to continue honest conversation across sectors about the immediate, incremental improvements we can make to our online public square, considering the high stakes involved in how information is created and shared.

Effective measures will require time, money, learning and improvement, all in service of significantly enhancing the well-being, quality, and civility of our experiences online and in the world around us.

Healthy collaboration with business is needed.

Companies big and small create jobs, pay for employee healthcare and benefits, and build bridges, roads and hospitals. The people who work for and run these companies care deeply about their country — they are patriots, and they want to see people and communities succeed and prosper.

Unfortunately, the message America hears is that the federal government does not value business — that business is the problem and not part of the solution. There are fewer individuals in government who have any significant experience in starting or running a company, which is apparent every day in the political rhetoric that demonizes businesses and free enterprise and that damages confidence in American’s institutions. The relationship between business and government, in fact, might improve if there were more people from the business sector working in government. Inexperience with business is also evident from the regular lack of transparency or curiosity from regulators as they develop economic policies with potentially seismic consequences for the economy.

When I travel around the country, I experience a very different perspective on the street and at the local level — I see that many governors, mayors and city council members understand they are not facing big challenges alone. They stand shoulder to shoulder with our company, even when some of their constituents disagree or are skeptical about big banks. These government officials know they need partners who have the same stake in helping successful communities thrive and who care about building a prosperous future as much as they do. For example, in fewer than 10 years, Detroit saw one of the greatest turnarounds because of a vibrant collaboration between government and business. And businesses know they cannot succeed if individuals, families, towns and cities are not flourishing. We obviously don’t agree on everything, but there is a shared belief that we must work together. We can and should be full partners in developing solutions to our big problems.

The federal government, regardless of which party is in charge, needs to earn back trust through competence and effective policymaking.

The world is becoming more complex, more technologically competent and faster. Unfortunately the government simply is not built to innovate, compete and move quickly, as in the competitive business world. This may be the reason why government is becoming less effective. We need to take action on this because the loss of trust in government is damaging to society. We should be brutally honest about the staggering number of policies, systems and operations that are underperforming: Too many ineffective public schools do not give students the skills they need to land a well-paying job; we have over 25 million uninsured Americans, soaring healthcare costs and too many bad outcomes; we are unable to plan, permit and build infrastructure efficiently; our litigation system is capricious and wasteful; progress on immigration policies and reform is frustrating; lack of efficient mortgage markets and an affordable housing policy keep housing out of reach for many Americans; problems plague the Department of Veterans Affairs, the Federal Aviation Administration and the Internal Revenue Service; public universities don’t take responsibility for their costs and are often funded by excessive student lending; underinvestment in the electric grid results in high costs and unreliable service; highly inefficient U.S. merchant shipping and ports; and we have unfunded pension plans and no action on deficit spending, Social Security and Medicare. I’ll stop here. This should be unacceptable to all of us.

We need to find a way to bring more varied expertise and accountability to government.

We should be more ambitious in striving for excellence in government. I acknowledge that some of the best and the brightest are in government and the military today. Yet we should return to a government that seeks out more of the best and the brightest people from every background, including the private sector, to benefit from their knowledge and experience. Government also needs to leverage the expertise of business to address problems that it cannot solve on its own. And to be fair, business could use its influence to do less to further its own interest and more to enhance the nation as a whole.

We need good government. And there are some things only governments can do, such as oversee the military and justice systems. And while most innovation happens through the private sector, there are certain types of foundational innovations that can only be advanced by the government, such as basic research that simply cannot be funded by business. The Democrats want the government to do even more and the Republicans even less — I think we should spend more time trying to do even better. But no one, not even my most liberal Democratic friends, thinks that sending the government another trillion a year would be a wise use of money.

OUT OF THE LABYRINTH, WITH FOCUS AND RESOLVE

Even America, the most prosperous nation on the planet with its vast resources, needs to focus its resources on the complex and difficult tasks ahead.

I hope to never read a book about How the West Was Lost, summarized as follows: The failure to save Ukraine and find peace in the Middle East led to more bickering among the allies and weakened military alliances. This accelerated a division within the Western world, splitting countries into different economic spheres and with each nation trying to protect its economy, trade and energy sources. America’s economy weakened, eventually leading to the loss of its reserve currency status. Besotted by populism and partisanship and crippled by bureaucracy and lack of willpower, America failed to focus on what it needed to do to lead and save the Western world. The enemy was within — we just didn’t see it in time.

Paraphrasing what Winston Churchill was thought to have said: America, after it had exhausted all other possibilities, would do the right thing.

What I want and hope to see is a book about How the West Was Won. As the wars in Ukraine and the Middle East dragged on and as the fears of the Western world mounted, America rose to the challenge as it had in other turbulent times in history. America coalesced with its allies to form the alliances necessary to keep the world safe for freedom and democracy.

I remain with a deep and abiding faith in the strength of the enduring values of America.