Warren Buffett has been in the news twice recently: yesterday for having announced he’s giving $31 billion to Bill Gates’s foundation, and several weeks ago for buying an Israeli tool company.
The Israeli stock market surged on the news that the Oracle of Omaha had bought one of their own companies — a welcome vote of confidence in a remarkable but besieged economy.
The $31 billion gift will make a lot more noise, and for a lot longer. Surely everyone in the non-profit world is wondering how this will reshape things. Politicians too.
But I was particularly captured by one sentence that Buffett said last night on The Charlie Rose Show. He was explaining why he wanted to give so much money to a foundation that mainly tries to alleviate poverty. “A market system has not worked in terms of poor people,” Buffett said.
Coming from Buffett, this statement isn’t much of a shock. But it certainly is an indictment — of the free-market system that has made so many people like Buffett very, very rich (though not as rich as him), of the system that so many economists and businesspeople and politicians and journalists believe in on so many dimensions, including its ability to help poor people stop being poor. Note that Buffett didn’t say that the government hasn’t worked for poor people (although I am guessing he wouldn’t disagree with that statement either). It was the market system directly, even with Adam Smith’s wonderful invisible hand, which is meant to correct, to police, occasionally to lift someone up.
I am wondering how conservative politicians and economists and journalists in particular will repond, if at all, to Buffett’s comment.
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Hard to judge a remark like that out of context, but it sounds like a remarkedly short-sighted view from an investor famous for taking a long view. (Of course, in the investing world 5 or 10 years is a long time. Assessing the relative merits of economic systems probably would require an even longer perspective.)
Hard to judge a remark like that out of context, but it sounds like a remarkedly short-sighted view from an investor famous for taking a long view. (Of course, in the investing world 5 or 10 years is a long time. Assessing the relative merits of economic systems probably would require an even longer perspective.)
Funny you should mention politicians. I’ve often been convinced that every time anything of any value changes hands, the politicians (via taxes via the gov’t) try to take a share of it. Income tax, sales tax. Death tax.
I give my car to my kid, and there’ll be a tax. I give my kid an apple from the fridge, and there’s no tax, but that’s probably only because the politicos haven’t found a good way to tax it yet.
If more people put solar power on their houses, they’ll get more energy for “free” and pay less taxes on their electric bills … therefore I predict the gov’t will want to tax sunshine when that time comes.
So when I heard that Warren Buffet was giving $31,000,000,000 away … I knew that the politicians are positively drooling over how big of a wet bite they want to take out of it for themselves.
To be honest, I’d like to see what happens to this $31 B that’s going from Warren Buffet to the B&MG Foundation. How will it be taxed? How much of it will go to taxes? I simply don’t believe that it *won’t* be taxed … I don’t think it’s possible to move that kind of money without some taxes being invented for the sake of taking some of it …
Funny you should mention politicians. I’ve often been convinced that every time anything of any value changes hands, the politicians (via taxes via the gov’t) try to take a share of it. Income tax, sales tax. Death tax.
I give my car to my kid, and there’ll be a tax. I give my kid an apple from the fridge, and there’s no tax, but that’s probably only because the politicos haven’t found a good way to tax it yet.
If more people put solar power on their houses, they’ll get more energy for “free” and pay less taxes on their electric bills … therefore I predict the gov’t will want to tax sunshine when that time comes.
So when I heard that Warren Buffet was giving $31,000,000,000 away … I knew that the politicians are positively drooling over how big of a wet bite they want to take out of it for themselves.
To be honest, I’d like to see what happens to this $31 B that’s going from Warren Buffet to the B&MG Foundation. How will it be taxed? How much of it will go to taxes? I simply don’t believe that it *won’t* be taxed … I don’t think it’s possible to move that kind of money without some taxes being invented for the sake of taking some of it …
“including its ability to help poor people stop being poor”
I’m not exactly sure what part of free market theory indicates that poor people are going to stop being poor. Free market theory depends on people being physically and intellectually mobile in order to avoid poverty. The model predicts poverty for people that can’t do that, so I’m not sure why Buffet is saying it’s not working correctly.
“including its ability to help poor people stop being poor”
I’m not exactly sure what part of free market theory indicates that poor people are going to stop being poor. Free market theory depends on people being physically and intellectually mobile in order to avoid poverty. The model predicts poverty for people that can’t do that, so I’m not sure why Buffet is saying it’s not working correctly.
mjbigelow: “Free market theory depends on people being physically and intellectually mobile in order to avoid poverty.”
The old “people are poor because they are lazy/stupid” canard.
How can someone be “physically mobile” when they can barely afford their beater that breaks down every other week? How can someone be “intellectually mobile” when public schools in the poorest areas are crumbling, furthering the cycle?
True, many aren’t physically or intellectually mobile. But both the market and government has failed to create anything to help fix that problem.
Now we can argue if it’s really a problem or not. I see a large and growing underclass with little hope for upward mobility as a problem.
mjbigelow: “Free market theory depends on people being physically and intellectually mobile in order to avoid poverty.”
The old “people are poor because they are lazy/stupid” canard.
How can someone be “physically mobile” when they can barely afford their beater that breaks down every other week? How can someone be “intellectually mobile” when public schools in the poorest areas are crumbling, furthering the cycle?
True, many aren’t physically or intellectually mobile. But both the market and government has failed to create anything to help fix that problem.
Now we can argue if it’s really a problem or not. I see a large and growing underclass with little hope for upward mobility as a problem.