WARREN
BUFFET (WB) SAYS, SOME EXCERPTS.
OTHER
TYCOONS AND WANTING TO BE TYCOONS, CONSIDER VIEWS AND PERCEPTIONS OF WB AS
GUIDANCE AND ‘GOLDEN ADIVICE’ MAY ALSO ACCEPT AND FOLLOW THESE.
(Taken
with thanks from the article in TIMES- Jan. 23, 2012- Profile - WARREN BUFFET
by Rana Foroohar)
Genes,
luck and birthplace may have helped make Buffett the world's third richest man.
He's an
ardent capitalist who is demanding higher taxes on the rich and more government
spending on the rest to solve our economic problems. Although he is giving away
99% of his $45 billion fortune, he operates less out of a sense of noblesse
oblige than noblesse outrage. The country that made him rich is lousy with
bailout billionaires, a culture of selfishness and a loss of opportunities.
"We can rise to any challenge but not if people feel we're in a
plutocracy," he says. "We have to get serious about shared
sacrifice." (Plutocracy= government or controlling class of the wealthy).
Shared
sacrifice, to Buffett, means not just higher taxes for the rich--who often pay
extremely low rates on money made by moving money around--but also curbs on
short-termism. He'd like to see speculative-trading gains taxed at much higher
rates. He believes CEOs of publicly bailed-out institutions should be on the
hook for everything they own if their institutions go bust. He's only half
joking when he says he'd like to see private schools banned so that rich
families would be forced to invest in the public K--12 system. (No Buffett in Omaha has ever gone to a
private school, he notes proudly.)
It's the
opposite of the Darwinian capitalism embraced by many prominent conservatives
who believe the market is the only means to distribute the economy's assets.
"The market system rewards me outlandishly for what I do," Buffett
says, "but that doesn't mean I'm any more deserving of a good life than a
teacher or a doctor or someone who fights in Afghanistan."
He doesn't
want to stop bond traders from making their billions: "Capitalism has
unleashed more human potential than any other system in history." But, he
says, "We need a tax system that essentially takes very good care of the
people who just really aren't as well adapted to the market system but are
nevertheless doing useful things in society." Bond traders and corporate
raiders of the world, take note: your higher taxes should subsidize bridge
builders and child-care workers.
In Washington, where
economic theory is now a partisan grudge match, the prospect of higher taxes
and income redistribution enrages Republicans and their business and banking
allies. Republican Mitch McConnell said last September that if Buffett felt
guilty, he should just "send in a check." Republicans subsequently
proposed a rule that would make it easier for millionaires--and McConnell is
one--to voluntarily pay more taxes.
Buffett
paid a tax rate of only 11% on adjusted gross income of $62,855,038 in 2010.
(After deductions, most of which were for charitable contributions, he paid a
still low 17% rate on his $39,814,784 of taxable income; his office staff,
meanwhile, paid percentages somewhere in the 30s.)
Asked if he's ever
considered writing a check for what he thought his taxes should have been, he
says, "I have thought about that. But what I've thought more about,
because Mitch McConnell put it out there, is offering to match the total amount
of voluntary contributions made by all Republican members of Congress. And I
will. I'll go 1 for 1 with any Republican. And I'll go 3 for 1 with
McConnell." He chuckles. "And I'm not worried."
At 81,
Buffett says he's in a unique position to speak out. "If you are a CEO or
you have to deal with a conservative board or you have a boss that might get
upset by what you say, you can't do what I do. But I don't have a boss. It's
hard to hurt me. If you don't speak up now, when are you going to? As my
partner Charlie told me, it's like saving up sex for your old age!"
AUSTERITY MEASURES
The reason people listen
to Buffett, at a time when being the 0.001% may not seem like the best public
relations asset, is that in matters of finance he's very often right. But it's
also that he's not like other billionaires.
Buffett lives not on an
isolated island of wealth but in Omaha,
in a shingle-roofed five-bedroom house on an unpretentious street that looks as
if it might belong to a successful dentist.
The
corporation he runs, Berkshire Hathaway, owns 76 businesses--from a candy
company to an electric utility--that throw off $1 billion a month in free cash,
and he holds major stakes in many of the country's biggest blue-chip firms,
including Coca-Cola, American Express, IBM and Procter & Gamble. Yet aside
from his indulgence in private air travel (he named his first jet the
Indefensible), he estimates his personal yearly expenses to be no more than
$150,000. The company canteen in his small office suite, where he has a habit
of walking around turning off lights in empty rooms, features a beat-up wooden
table, a faux-leather sectional couch and Formica countertops.
His
investment habits are as austere as the decor. In an age of leverage, he likes
to steer clear of debt, preferring to keep from $10 billion to $20 billion of
liquid assets on hand at all times--"so that I can sleep better," he
says. In a world of high-frequency traders with two-hour sell windows,
Buffett's investment horizon is somewhere between 10 years and forever.
Now he's
President Obama's highest-profile supporter, a crusader for higher taxes on the
millionaires' club. As he wrote in an op-ed article for the New York Times last
summer, in which he noted that his personal tax rate was lower than that of his
office staff, Washington needs to "stop coddling the superrich."
His worry
is that in this era of late-stage capitalism, the next generations won't be as
lucky as he has been. The problem of inequality is likely, he says, to get
worse. When people can't climb up the ladder, it's bad for the economy.
"Someone
in America
who has a 90-point IQ is qualified for many fewer jobs today than he was 100
years ago."
The
solution, to him, is obvious. "People who make withdrawals from societies'
resources--like me with my plane--should have to pay a lot for it." That
means not only higher taxes for the rich and an extremely progressive
European-style consumption tax but also fewer loopholes for corporations.
Buffett says it's "baloney" that corporate America's tax rates are too high
and says companies should not be allowed to repatriate profits tax-free. (It'll
just encourage more investment to flow overseas.) In general, he says, "I
find the argument that we need lower taxes to create more jobs mystifying,
because we've had the lowest taxes in this decade and about the worst job
creation ever."
He (Howard
Buffet, four terms Republican Congressman and WB’s father) once turned down a
raise because his constituents had voted him in at a lower salary. And he was
shocked by the way his peers padded payrolls with friends, relatives,
mistresses and fake expenses.
I ask
Buffett if, when he started, his aim was to be the richest man in the world.
"I knew I wanted to make a lot of money. But that's because I knew I
wanted to be independent. That was very important to me. The money itself is
all going to charity," says Buffett, who in 2006 pledged 99% of his
personal wealth to charity, with the bulk going to the Bill & Melinda Gates
Foundation. "I'm really just a steward of it for now."
He gives
the ratings agency Moody's and the investment bank Goldman Sachs, both of which
he owns stakes in, a pass for dubious behavior during the financial crisis, as
they were both a part of "a mass delusion. Everyone felt houses couldn't
go down."
In a speech
delivered at the famous Allen & Co. Sun Valley Conference in 1999, at the
height of the Internet bubble, Buffett succinctly explained the virtues of
being a Luddite: (Luddite- one of a group of
early 19th century English workmen destroying laborsaving machinery as a
protest; broadly : one who is opposed to
especially technological change).
"[The automobile was] the most important
invention, probably, of the first half of the 20th century. It had an enormous
impact on people's lives. If you had seen at the time of the first cars how
this country would develop in connection with autos, you would have said, 'This
is the place I must be.' But of the 2,000 companies, as of a few years ago,
only three car companies survived. So autos had an enormous impact on America
but the opposite direction on investors."
As for President Obama--should he win re-election--Buffett would like to see
him lay out the truth about the road ahead to the American people. "I
think that the American people would be pretty responsive to shared sacrifice
if it was really shared and they knew what to expect," says Buffett.
"I've always thought that part of my job at Berkshire
is telling people what they should expect and what they shouldn't expect from
us. I don't want to be held to things I can't do. On the other hand, I
shouldn't totally downplay what can be done just to create a phony
target."
Buffett feels the President
missed an opportunity to do that right after he took office. But he's
optimistic that it can still be done. "We need to tell people that the
road is going to be long. We've got too many damn houses. They're not going to
go away. This recovery is going to take a long time. And the financial crisis
has exposed a lot of flaws in our system." But the flaws can be fixed.
With the right rules, says Buffett, our system can work again.
"It's like Martin Luther
King said. We aren't trying to change the heart. We're trying to restrain the
heartless.
