The economy, stupid
Commenter and forecaster extraordinaire “Cornhead” (aka attorney David Begley) writes about a question-and-answer session with Warren Buffett that he attended:
In response to another question Buffett said that while he spent his own money backing Hillary Clinton, it would have been completely wrong (and illegal) to spend corporate money backing one political candidate. I can say with complete confidence that Warren Buffett is not part of the Resistance and he has moved on from Hillary’s defeat.
I found it very interesting that Buffett seemed to back President Trump on some of his trade policies and particularly on steel. Warren rattled off some numbers about how much of our economy is dependent upon foreign trade and how it is generally good for America…
Many times Warren and Charlie [Munger] spoke favorably of the Trump tax cuts. Their point is that the corporate tax cuts will be channeled into more investment in America and higher wages for workers as confidence in the American economy grows. Buffett thinks that the full effect of the tax cuts is still not fully priced into the market.
From Buffett’s Wiki entry:
Buffett is a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Bill & Melinda Gates Foundation. He founded The Giving Pledge in 2009 with Bill Gates and Mark Zuckerberg, whereby billionaires pledge to give away at least half of their fortunes. He is also active contributing to political causes, having endorsed Democratic candidate Hillary Clinton in the 2016 U.S. presidential election; he has publicly opposed the policies, actions, and statements of the current U.S. president, Donald Trump
Here are more details of Buffett’s political point of view; he seems like a garden-variety liberal to me. I wonder whether his (perhaps grudging) support of the tax cuts, as reported by Cornhead, is representative of the reasons behind recent upticks for Trump in polls such as the one reported on here [emphasis mine]:
…But 52 percent of Americans approve of the president’s handling of the economy of the economy. And 57 percent say things are going well. That’s eight percentage points more than earlier this year, and it’s the highest mark since January 2007, before the last recession…
The improvement in the “how are things going” number is driven mostly by Democrats, though. 40 percent of the Dems in the survey say America is doing well. Only 25 percent said so in February. And 26 percent of Democrats approve of Mr. Trump’s handling of the economy, compared to 15 percent three months ago.
The pocketbook can be a heavy persuader.
It amazes me that Buffett, the wise and careful capitalist, is a Democrat. I suppose even those who know how to invest and grow their wealth can look at politics and think that government solutions to social ills might work. Buffett may be too busy analyzing balance sheets to give thought to the failures of so many government programs. Admittedly, small, localized charities don’t seem to make much of a difference until you realize that the money is usually not wasted and there is less corruption/chiseling. Also, since it is harder to game the system, it discourages the free riders who take advantage of the good will of others. Buffett and many other billionaires don’t seem to get that.
The one major thing Buffett has been correct about over the years has been his faith in America’s ability to grow and recover after every economic setback. No matter how grim things looked, he maintained an optimistic outlook and profited.
IMO, he would be better served to set up his own foundation and give his money away through it. The Gates Foundation is a major servant of progressive causes. I applaud Gates’ old partner, Paul Allen, for his approach to using his wealth wisely. He has continued to invest, build, and create new enterprises that create jobs and new wealth. IMO, using wealth for creating jobs is far better than charitable handouts. Not that charitable giving isn’t worthwhile, but it must be done wisely.
Buffett and Munger seem to understand that corporations don’t pay taxes, their customers do. The taxes businesses pay come from the money paid to them by their customers. Why progressives can’t grasp that simple principle is beyond me.
I’ve always been an admirer of Buffett and owned shares in Berkshire Hathaway for many years. Sadly, I sold them during the tech bull run in late 1999 and 2000. Just one of my many mistakes.
Just an ancillary point:
“Buffett is a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes,” [Wikipedia above]
Just for the record in the past Warren Buffet has gone on record favoring retention of estate taxes (aka the “death tax”). So what does he do? He avoids such favored taxes by philanthropic donations.
What many people do not know is that Buffet’s Berkshire-Hathaway has been heavily invested in insurance companies. Life insurance policies (oftentimes very large policies) taken out by the wealthy are how estate taxes are paid to avoid estate shrinkage
Now don’t get me wrong, I don’t object to this; all Buffet does is state a position. It’s the leftist media that projects this as altruism from the mega-wealthy.
In fact don’t ever look to Buffet for altruism; he is a businessman doing what he can to positively influence his asset value.
Let us not forget Warren Buffett, as described on his own website in 2012:
Within the business community, Warren Buffett is the greatest ally of President Barack Obama.
https://www.warrenbuffett.com/warren-buffetts-thoughts-about-president-obama/
Once upon a time as a rookie investor I looked up to Buffett as an admirable man with a sensible investment philosophy.
But his wholehearted endorsement of Obama signaled to me Buffett was some combination of a fool and a knave whom I could no longer respect.
J J,
As a follow-up to your post above and mine following. Don’t think of Buffet as an ideological Democrat. He most likely is registered that way because he sees is as a pathway to greater influence.
Keep in mind, as corporations grow, especially the very large corporations, their CEOs tend to favor big government because it helps keep competition at bay and gives them a pathway to legislative influence that smaller businesses can’t even dream of. Think of Jeffrey Immelt of GE during the Obama administration as an excellent example. More recently, Warren Buffet, again, opposed oil pipelines because his Berkshire-Hathaway has a large interest (I believe a controlling interest) in the former Burlington Northern railway which makes a lotta money shipping oil in tanker cars from the interior to the Pacific coast.
T: I came away from Buffett as a “What’s good for Warren Buffett is good for the country” kinda-guy.
“Once upon a time as a rookie investor I looked up to Buffett as an admirable man with a sensible investment philosophy.” [Huxley @ 2:01]
What I’ve written above supports the fact that Buffet still has a sensible investment philosophy. As I said above, he does what he does to support the asset value of his corporation.
Remember, it’s the leftist press that markets Buffet as an altruist as part of their own narrative. Of course Buffet, in turn, does what he does most likely because he knows exactly how the press will market it for him.
A “What’s good for Warren Buffett is good for the country” kinda-guy.
Huxley,
I wouldn’t disagree with your observation one iota.
I lost any respect I had for Buffet with his Democrat talking point statement that his tax rate was lower than his secretary’s. That is so wrong in so many ways that it is hard to know where to start.
Does he want capital gains taxed at ordinary income rates?
Why does his company not pay any dividends? Precisely to lower his effective tax rate.
As mentioned here he is giving away his money to avoid paying estate tax.
Mr. Begley has the same problem as his some time enabler Scott Johnson at Powerlineblog. They both take too charitable a view of genuinely evil partisan hacks.
Skeptic and others:
Warren’s political views were shaped by the fact that his Dad was a GOP congressman and his wife was a Democrat. Back in the 60’s, wife Susie was big on fighting racism in Omaha and so was Warren. At the time, the Dems were the good guys.
Warren is quite clear that his own personal views are separate from how he runs the company and his own investments.
He doesn’t pay any tax that he doesn’t have to.
And since he is giving his money to charity, the government won’t get it.
Charlie has not signed Buffett’s giving pledge.
If you spend your whole life looking at stock prices and business trends, you don’t have much time to explore anything else. Why didn’t he analyze how successful Obama was in organizing Chicago? He just jumps on what he thinks are moral positions so he can get back to analyzing the latest merger talks.
I should clarify. Warren’s late wife Susie was the Dem activist. She left him to live in SF but they stay married until his death.
Warren brags that he has only 30 people at HQ in Omaha and half of them are auditors.
Daughter Susie has her own foundation in Omaha and I bet she has close to 30 employees. The mission is to improve Omaha’s public schools. I know for a fact that there are not 30 people at the HQ for the Catholic schools. The high schools and grade schools are all very lean.
Buffet isn’t a fool for supporting Democrats. He is shrewd, in that every political position he espouses is an investment opportunity. He opposed the Keystone pipeline as he invested in railroads that transport oil. He favors the death tax – while too shrewd to actually let the government get it’s hands on his money- and buys insurance companies that sell estate planning products. He also has bought up many family businesses and newspapers forced to sell to pay their death taxes. He is much like Soros in his deviousness at making money while pretending to be virtuous.
Most people would act like Warren if they were in his shoes.
That’s the problem with humans.
This earth has needed a purge of evil for some time now.
Please erase this quick correction of what might be a typo in the opening sentence:
Should be Warren Buffett–two ts–not Buffet.
T Says:
May 8th, 2018 at 2:04 pm
J J,
As a follow-up to your post above and mine following. Don’t think of Buffet as an ideological Democrat. He most likely is registered that way because he sees is as a pathway to greater influence.
* * *
It’s hard not to be an ideological Dem in America (and other commenters point out some of Buffett’s biography), but I suspect this is the foremost principle.
It’s pretty much the same reason Donald Trump, as a businessman, was a Democrat before morphing into whatever he is now, and he was very up-front about why: you pay who you need to, to get the job done.
Hey Neo – just saw this post linked on PowerLine!
Re-reading the comments at the “Cornhead The Magnificent” post — do you have a turban, Dave? ;)– was interesting – kind of a Where Were You on November 8, 2016? – but these impressed me, after nearly 2 years into the Trump administration, as still being relevant.
Rufus Firefly Says:
November 8th, 2016 at 3:06 pm
Alan F.,
The night before the 2012 election I went to a small chapel to pray. …I still remember stepping outside and the feeling that came over me. I’m not a particularly dramatic person (and, unfortunately, not always very religious), but the entire environment had a strong air of, “you’re on your own this time.” It wasn’t vengeful. It was a sense that the cavalry wasn’t going to be called this time. We were destined to sleep in the bed we had made ourselves.
* * *
Nick Says:
November 8th, 2016 at 5:58 pm
“Can you tell me why we all personally struggle with providing for ourselves, staying in relationships with significant others, educating our own children.. with many mis-steps along the way, yet we so readily believe we have the answers for the rest of humanity? How do people convince themselves they understand how all others should live their lives?”
Simple. We believe that our lives are complex and unique, and that other people’s are simple and uniform. Partly that’s due to the fact that we’re aware of our own situation’s subtleties due to proximity. Partly we’re just that arrogant. Oh, and partly, other people’s problems are obvious to figure out because they’re boneheads just like we are and make obvious mistakes.
* * *
Ymarsakar Says:
November 10th, 2016 at 5:23 pm
[quoting] Thank God we’re not electing a king.
Whoops, too late for that. Once Hussein became your Messiah as a dead republic and democracy decided it as your Rule of Law, whoever comes afterwards inherits the throne.
CarolA: Thanks. Very insightful.
Just to give you the context for that, more than one Emperor and King was dethroned via internal Byzantine backstabbings.
So the King Throne image was very useful back then to foreshadow what Trum would face in DC. Kind of hard to make sense trying to talk about DC as a corrupt intrigue court back when people were going ELECTIONS ELECTIONS DEMOCRACY REPUBLIC… all the time. Heh heh, yeah America’s democracy, oo rah.
Drain the Swamp and MAGA or via MAGA!
Hold on people, the Swamp is normally not alive, full of evil, and does not normally fight back. Think of it more like an Imperial Byzantine court where you have the King but also the Shadow King, the Shadow prime minister, and various assassins. They might say or think, “Trum is too tough to be assassinated on twitter”.
Yes, I would reply, yes on social media he may be nigh invulnerable.
The Deep State never needed social media to strike you down. If DC wants you dead, you’ll be a corpse and everyone will be clapping at how the SS got rid of a terrorist domestic style with prejudice. But District of Columbia obeys America’s citizens: people would retort and think. District of Columbia obeys Columbia.
Cornhead Says:
November 8th, 2016 at 1:21 pm
I am predicting a slim DJT win. He wins NC FL IA MI OH PA WI.
Enthusiasm makes the difference. The Republic is saved.
That’s almost 50/50, because a dead Republic cannot be saved by elections or humans at least.
Aesop, check out why people kept a low profile back in 2001-2012.
https://www.youtube.com/watch?v=1aKRPcWAfbw
2018+ Age of Conspiracies