In an article published in The Wall Street Journal Thursday, the third wealthiest man in the world affirmed that the poor should stop blaming the rich for income inequality. Multimillionaire and CEO of Berkshire Hathaway Warren Buffet stated that, “The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving.” In his opinion, successful businessmen like Henry Ford and Steve Jobs have improved the quality of life of the world’s population, and keep doing so.
According to Buffet, such inequalities are “an inevitable consequence of an advanced market-based economy ... because [most] jobs [in the past] could also be carried out by almost any willing worker.” Now that most of the tasks have been mechanized, only a few workers manage to take advantage of their skills and benefit from a substantial income. For this reason, improving education or raising the minimum wage cannot be a viable solution, he argued.There is no solution under capitalism according to Buffett. It's just “an inevitable consequence of an advanced market-based economy...."
I guess his solution is — get used to it.
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Warren Buffet: The Poor Are Not Poor Because the Rich are Rich
10 comments:
The rich are MADE rich and the poor are MADE poor...
We are under no obligation to make people poor among us... we (mankind) have absolute authority to impose economic justice... we can impose this justice thru our institutions of civil govt...
libertarians do not want anything imposed... libertarians are ANTI-authority ignoramuses...
I always note that they roll out Steve Jobs and Henry Ford as the paragons of capitalism rather than Donald Trump and the various invisible CEOs of the Hedge Funds and other asset strippers and rentiers.
No argument with the first two. The problem is too many of the latter.
Where Buffet falls on that line is debatable.
I disagree with Buffett.
He's making the argument that it is not a zero sum game, that there is a way for everyone to get wealthier. He's right of course... in theory, but in practice our "authorities" operate using zero sum principles. Every public budget decision is always finished with cutting somewhere to pay for somewhere else. Tax cuts to wealthy are paid for by eliminating wasteful social spending. We raise taxes somewhere to pay for Hurricane relief.
Even our non govt budget decisions use zero sum logic. Gold standard economics is zero sum economics. A fixed money supply means taking form one to give to another, its simply a mater of whether its confiscatory or voluntary (to some degree)
Neoliberalism wants to use non profit institutions as substitutes for govt social spending so that all aid is voluntary and churches are used to get peoples hearts in the right place..... but its not working.
The fact is the poor are poor because the rich won't allow their relative standing on the wealth scale to diminish, they see that as losing and will fight tooth and nail against it.
"Dont force a min wage on me, Ill pay what I determine is the fair market wage that allows my profits/stock prices to remain competitive."
The fate of the middle class is now dependent on the generosity of the 1%.
Let's use neoclassical economics and Say's law against Buffett's argument. If money is neutral, then what is actually happening behind the veil is that the rich are allocating a huge percentage of global real resources to themselves, much much more than they need socially, with the result that many people in different countries are deprived of what they need socially and much of the world taken as whole.
How can that be justified as a reasonable way to allocate scarce resources in the name of efficiency.
The most valuable resource is human potential and that is being squandered by failure to allocate natural resources and direct capital efficiently and effectively.
If money is non-neutral, let's talk about economic rent as a result of economic power that reduces efficiency and results in market failure.
The fact that Buffett owns Santa Fe Railroad means that I can not own Santa Fe Railroad. No one else can own the land, rights of way or routes. Thousands of Americans would start rail roads of their own and become millionaires if BNSF's corporate charter expired and forced them to sell and liquidate their monopoly off in small pieces while preventing their sale to another mega-corporation. It would of course never happen, but thinking about the logic clearly demonstrates how owning regulatory monopolies, land and market leaders excludes others from taking opportunities, not for lack of willingness, ability, or competitive ability but because of the fact they got there first.
More precisely, the poor are poor because the rich like to make people poor, enjoy using their wealth and power to humiliate, crush and degrade. If it costs a billion to the wealthy class to make the poor 500 million poorer, it is accounted as money well spent. From the usual perspective, the rich class makes it a negative sum game, because they like it that way.
As Matt says "The rich are MADE rich and the poor are MADE poor."
From their oppression "escape is vainly sought by obedience and submission. Robbers of the world, having by their universal plunder exhausted the land, they rifle the deep. If the enemy be rich, they are rapacious; if he be poor, they lust for dominion; neither the east nor the west has been able to satisfy them. Alone among men they covet with equal eagerness poverty and riches."
Buffett had it much righter when he said the rich class is warring on the poor and winning.
You are right Cal, Buffet has vacillated it seems from seeing the true class warfare to becoming an apologist for vast income inequality.
Maybe he's senile or maybe some of his peers have pressured him to stop rousing up the rabble.
"Where Buffet falls on that line is debatable."
Oh, I'd say no different to the Icahns of the world.
There is this utterly absurd mythology surrounding Buffett. The received wisdom is that he's this avuncular old buffer with his homespun stories who through old-fashioned common sense and the kind of security analysis that anybody can do became possibly the richest man in the world!
Whereas the truth is that Buffett is possibly the most brilliant and ruthless speculator and trader in the history of finance before founding and presiding over, as the largest holder of equity, a company so staggeringly huge that it is now considered systemically "too big to fail".
He's Icahn and Soros put together. The man is a genius and a shark. If I shook his hand, I'd check I got it back. Yet people still fall for this spiel about value investing invest for the long term.
You are right Cal, Buffet has vacillated it seems from seeing the true class warfare to becoming an apologist for vast income inequality.
Maybe he's senile or maybe some of his peers have pressured him to stop rousing up the rabble.
He is what George Layoff calls biconceptual. This is the problem that compassionate conservatives face.
It is also a paradox of liberalism, where economic liberalism and social and political liberalism don't mesh.
The result is choosing one side or the other, or paralysis of indecision.
Buffett has resolved the matter for himself through charity, but that avoids the issues.
The Koch bro's will spend $900 million in this election cycle (so they say) to do exactly that: make themselves richer and the rest of us poorer. What more does Buffett need to see?
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