What Warren Buffett Didn’t Tell Us
Warren Buffett makes the Wall of Shame today for – apparently – failing to understand limits to growth. One would hope such a smart and successful businessperson would be aware that the wealth “creation” of the last 80 years has come at a very heavy price on our ecosystems and natural resources, and cannot possibly continue. Of course, I’m reminded of that astute Upton Sinclair observation:
“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
In remarks at a Hillary Clinton rally yesterday in Omaha, Buffett was just a little too fond of GDP. He also conflated GDP with prosperity. And he seemed to be saying that we today have all the economic potential we had in 1930 when he was born:
“…that blueprint has done wonders for this country, in terms of overall prosperity….The GDP per capita is six times what it was when I was born (1930)…. It’s a miracle. The miracle was America. And it still has all the qualities that it had in 1930 and which propelled us forward like this.”
(about 13:40 into this video)
GDP per capita provides, at best, a rough clue of standard of living. And Buffett’s line about the qualities that “propelled us forward” gave me pause. This gives the impression Warren Buffett does not recognize the extent we’ve plundered our own continent (and much of the rest of the world). Perhaps the “qualities” he had in mind were all related to values and character. Two critical qualities we had in 1930 but don’t have today are a sustainable level of population and a healthy amount of natural capital. Unfortunately, U.S. population has soared from 123 million to 325 million, and we’ve been liquidating natural capital at an ever faster, unsustainable rate.
I bestow this “honor” reluctantly, for there has always been a lot to like about Buffett. He is very open about how he benefits from, and we need to change, a tax code that favors the one percent. He also still lives in the modest (by billionaire standards) house in Omaha that he purchased for $31,500 in 1958. Unfortunately, he does travel in a private jet and reportedly owns a $4 billion mansion in Laguna Beach. I don’t consider these positive attributes because the planet cannot support 7 billion people flying private jets and occupying multiple, large houses. But he has also pledged to give away the lion’s share of his wealth philanthropically.
Warren Buffett was charming and authentic as he endorsed Hillary Clinton and chided Donald Trump at yesterday’s rally. He also got this right:
“America in terms of delivering wealth has been incredible. In terms of distributing wealth, it has not been living up to what I consider its potential.”
So, in spite of his preoccupation with GDP (which measures destruction as much as productive economic activity, and is a very poor indicator of true prosperity), the third richest person in the world gets a nod of approval from me even as I give him two thumbs down for ignoring limits to growth.
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