NEW YORK / Bloomberg
Billionaire investor Warren Buffett, long an optimist about the nation where he made his fortune, rejected the economic pessimism dominating the 2016 U.S. presidential campaign and forcefully made the case for a bright future.
“As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do,” Buffett wrote in a letter to shareholders of his Berkshire Hathaway Inc. posted online.
“That view is dead wrong: The babies being born in America today are the luckiest crop in history.”
Buffett’s annual message, released as part of the company’s earnings report, rebuffed a central theme in campaign to succeed President Barack Obama in the White House: that the U.S. is in decline, and that middle- and working-class Americans are feeling it the most. A supporter of Democrat Hillary Clinton, the 85-year-old Berkshire chairman didn’t name the candidates championing a dark outlook, but his message put him at odds with most of the Republican field and Clinton’s primary challenger, Vermont Senator Bernie Sanders.
While he touched on risks including terrorism, cyber warfare, climate change and economic dislocation for workers, Buffett also suggested that the picture of woe was generated out of of politicians’ self-interest, not because it accurately reflects the nation’s challenges. “It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve),” Buffett wrote. The real story of America has been a dramatic growth in prosperity, he said. Citing the six-fold increase in U.S. economic output per capita since he was born in 1930, Buffett said the “all-powerful trend” toward more efficiency and productivity would continue.
Led by front-runner Donald Trump, the billionaire real-estate magnate, Republicans have delivered a relentless critique on the direction of the U.S. economy, which they say is being pummeled by an ascendant China and an inflow of immigrants from poor counties. The Democratic socialist Sanders, meanwhile, has stirred up working-class and young voters with a focus on income inequality and skewed growth that he says has ravaged the middle class.
Many voters appear to share those pessimistic views. Despite successive quarters of economic growth, employment and jobs topped the list of concerns among Democrats, while for Republicans, the economy tied with terrorism as the number one worry, according to Gallup’s Jan. 21-25 election benchmark survey.
The result has been sweeping policy proposals that promise to turn the tide. Some Republicans have said they would impose stiff sanctions on China and renegotiate trade pacts, while Sanders wants to place a new tax on Wall Street trading and make public universities tuition-free.
Sticking with his long-held views, Buffett, said America’s prosperity would come from businesses and individuals striving for ever-greater productivity. The billionaire, who has a net worth of about $62 billion according to the Bloomberg Billionaires Index, has spent decades riding that wave, becoming one of the richest people in the world.
Berkshire owns dozens of businesses — from auto insurer Geico to railroad BNSF — that Buffett said are constantly working to become more efficient. While Buffett’s preference over the years has been to own and operate companies that are already lean, he has recently partnered with buyout firm 3G Capital Inc., known for firing workers at the businesses it controls.
Berkshire teamed with 3G in 2013 to buy ketchup giant H.J. Heinz, and swiftly eliminated thousands of jobs. Last year, Buffett and the investment firm engineered Heinz’s merger with Kraft Foods Group Inc., which is making additional cuts.
Buffett defended that approach in his letter, saying it was part of the long march of capitalism. But he also called for a robust social safety net to help workers left behind by the changes wrought by the U.S. economic system. And the billionaire supported an increase in the earned income tax credit, which allows many lower-income Americans to pay no net income tax.
Addressing another major topic in the election, Buffett said climate change poses a great risk to society — while downplaying the potential harm it could cause to Berkshire’s insurance businesses. Berkshire shareholders will vote this year on a proposal that would require the company to examine how it could be impacted by a warming planet, he wrote.