The Economist 14Mar2020

10 Leaders The EconomistMarch 14th 2020

2 tem. It also means a commitment to raise taxes, which are only

20% of gdp. Better public services must be paid for.

Is a new constitution essential to achieve these changes? It

has been a device of the far left in several Latin American coun-

tries to seize control and impose a (failed) socialist model. But in

this respect Chile is different. Although much-amended, its con-

stitution is branded illegitimate by its origin under Pinochet.

Polls have long shown that two-thirds of voters favour a new

charter. The existing constitution is very hard to reform. Matters

of routine disagreement, such as health care and education, re-

quire a supermajority to change.

That is not to deny the risks. On April 26th Chileans will vote

not just on whether to set up the constitutional convention but

also on whether this should be wholly elected or composed

partly of existing legislators. The new body may suffer from inex-

perience. Many recent Latin American constitutions have been

prolix and Utopian, stuffed with unaffordable “rights” and

spending promises. But Chile has safeguards. Unless the new

document is approved by a two-thirds vote of the assembly and

then in a referendum, the existing constitution will remain.

Above all, the convention offers Chile a path out of its laby-

rinth. The new constitution should embody a new social con-

tract. It should remove the obstacles to reforming the police, pro-

viding universal health care and regulating private universities.

A healthier, better-educated population would be more produc-

tive. A stronger safety-net would encourage workers to be more

flexible. A new basic law could give Chile a fresh start—and Latin

America a new model from which to learn. 7

W

hen jamie dimontook the reins at JPMorgan Chase in

2005 he had, at the relatively tender age of 49, already

earned himself a reputation. In the 1990s he was the wunderkind

sidekick to the imperial Sandy Weill, then boss of Citigroup, the

world’s pre-eminent bank. Still, while some peers described Mr

Dimon as brilliant, charismatic, caring and dedicated, others

complained he was abrasive, foul-mouthed and unpredictable.

Plenty doubted he was well suited to such a large stage.

As we explain this week (see Briefing), Mr Dimon has put paid

to these doubters. JPMorgan weathered the financial crisis well

and has since become the bank that all the others want to emu-

late. It is big, globally active, dominant in retail and investment

banking, transparent, well capitalised and admirably profitable.

Last year its return on equity was a handsome 15%. Its annual

profits are now double the entire current market value of Deut-

sche Bank, once Europe’s pretender to the global

investment-banking throne.

However, another big question has remained

unanswered: when Mr Dimon should leave and

who will run the bank after he is gone. It has

been cast in sharp relief by the recent news that

Mr Dimon has undergone emergency surgery

for an “aortic dissection”, a rare heart condition.

The bank says he is recovering well. But inves-

tors, the board, staff and regulators have had a reminder that one

day JPMorgan will have to have a different leader.

Wall Street’s biggest succession decision is tricky for several

reasons. JPMorgan could benchmark itself against other banks:

in 2018 the head of Goldman Sachs retired and a flurry of Euro-

pean banks have waved goodbye to their leaders in the past few

months. But in all these cases the firms were performing below

their potential. Aged 63, Mr Dimon is no geriatric—77 ceos who

are older than him are serving at firms in the s&p500 index of

America’s biggest companies. The most seasoned, Warren Buf-

fett, is still, inadvisedly, clinging on at the age of 89.

Mr Dimon has served for longer than the typical American

ceo, who lasts about a decade. Bob Iger, the boss of Disney, has

just stood down after 15 years at the top. But tenure is not, in and

of itself, a disqualification. There are 66 s&p 500 ceos who have

been in place longer than Mr Dimon. Reed Hastings has run Net-

flix for over two decades and few reckon he should press stop.

So how to make a decision? Two tests matter. The first is that

Mr Dimon is not blocking the path of an entire generation of suc-

cessors who might end up leaving or becoming disillusioned. In-

evitably, one cohort has already departed. A JPMorgan diaspora

now run financial firms all over the world, including Wells Far-

go, Barclays and Standard Chartered. It would be a mistake to let

another generation go, too. Mr Dimon has two co-presidents di-

rectly beneath him who are both aged about 60. Beneath them is

a broader group of half-a-dozen potential successors, most of

whom are in their 50s and still being battle-hardened.

The second test is the likely time horizon of the strategic

threats and opportunities that the bank faces. These mainly arise

from technology—the prospect that big tech firms might chal-

lenge the big banks, or that new payments firms

win huge customer bases independently of the

banks, as they already have in China, or that new

digital currencies take the world by storm.

These trends will play out over a decade or

more—and no one, not even Mr Dimon, thinks

that he will stay that long.

Both tests suggest that Mr Dimon should

leave the stage sooner rather than later. A good

option would be for him to do so at the end of next year. By then

the next generation of executives will have acquired the experi-

ence necessary to run the Western world’s biggest bank at a time

of technological tumult, while not being so frustrated that they

quit. Even if JPMorgan and Mr Dimon follow this advice, they and

the shareholders should reflect on another succession. March

2nd saw the death of Jack Welch, the former chief executive of

General Electric (ge), and perhaps the most celebrated American

boss of recent decades. He retired from gein 2001 on a high, but

the firm soon slipped into brutal decline, reflecting in part long-

standing problems that became clear only once he had left. The

best bosses face up to the reality that at some point someone else

has to be in charge. But even then their legacy can only be as-

sessed years after they have thanked their team, shed a tear and

walked out the door with their head held high. 7

Mission accomplished

Should Wall Street’s most celebrated boss call it a day?

Succession at JPMorgan Chase