Note: If you become an annual paid subscriber, you will receive an autographed copy of my memoir.
Warren Buffett has been a Democrat for nearly 60 years. He has donated substantial sums to left-wing organizations and causes and Democratic presidential candidates. This is in sharp contrast to his father, Howard Buffett, a four term Republican congressman who philosophically was a libertarian. Clearly, Buffett has not embraced his father’s critique of the welfare-warfare state.
Although Buffett supports higher taxes on wealthy individuals, he uses every “loophole” to reduce his tax liability. If there was ever a more hypocritical public position than the one Buffett has taken, I do not know what it is. Buffett also supports a welfare state to help the poor even though the evidence is overwhelming that work and a two parent family is the best anti-poverty remedy.
As far as investing goes, Buffett has been—and still is—one of the sharpest minds in America. In addition, to buying businesses and the stocks of great companies for Berkshire Hathaway, which he has headed since the mid 1960s, Buffett released his letter to shareholders last Saturday with the 2022 annual report. In his letter,Buffett takes aim at critics of share buybacks, calling them “economic illiterates” and “silver tongue demagogues.”
According to Buffett there are compelling reasons that business executives pursue a stock buyback program, a concept that is over the head of the Bidens, Warrens and Sanders’ in American politics. These economic illiterates should keep their mouths shut. Otherwise, as my high school physics teacher would remind the class, “It is better to appear dumb, then to open your mouth and remove all doubt.”
Buffett also supports a central bank and fiat money. He and other multi billionaires have benefitted enormously by the Federal Reserves’ dollar depreciation. As the dollar has declined in value, real assets increase in price. Common stocks—claims to both inflated income streams and inflated real assets (buildings, land, etc.)—rise faster, in the long run, than prices of goods and services.
In a free market economy without a central bank, there would be few if any billionaires. Billionaires will exist only if they create goods and/or services that have a mass market, and if these products and services are in demand for decades.
The bottom line is twofold. If you want to get an education about Warren Buffett, the investor, I recommend you read a book I used in my Securities and Investments class, The Warren Buffett Way. Students learned a great deal about Buffett’s approach to “value investing.”
Secondly, just as we separate church and state, we need to separate the economy and the state. Free enterprise has lifted more people out of poverty around the world and entrepreneurs have done a magnificent job of increasing living standards despite the taxes, regulations, trade restrictions, and Federal Reserve’s interest rate manipulations.
Economic freedom, sound money, and peace is the recipe for a free and prosperous society. In other words, don’t listen the rants of Biden, Warren, and Sanders and the other statists that inhabit Washington DC.
Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin’s autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.