Sunday, February 28, 2016

Buffett Thinks Our Past is Our Future

Warren Buffett's annual letter to shareholders, written in a year after his stock's performance continues to be an embarrassment, suggests that the average American has a great economic future. Why? Because our past economic performance is so great.

But that's just the point.  Past economic growth in the US was the envy of the world.  That is no longer true.  The American middle class has consistently lost ground over the past twenty years mainly because of the dramatic increases in government rules and regulations and the incredible growth of employer mandates.  In the long run, employer mandates, such as family leave, litigation rights, health care, etc. come right out of the pocket of employees, not employers.  This is the single most important reason the middle class has lost ground.

So what has Buffett contributed to this discussion -- mostly an amazing arrogance and hypocrisy.  He laments his inability to pay a tax rate equivalent to that paid by his secretary.  That's strange.  He has a perfect right to pay higher taxes in order to equalize the rate paid between himself and his secretary. Why doesn't he?  The only conceivable answer is personal greed.  Nothing else can possibly account for the fact that he doesn't mail in higher tax payments, which are perfectly legal.  Indeed, the tax forms have a line that enables folks like Buffet to pay more in tax if they like.  He just doesn't choose to pay it.  Some folks actually do send in more taxes than they owe, knowingly , but not Warren Buffett.

As for his optimism about America's future, one has to admit that Buffett's personal future looks great. At last count, Buffett's bathtub could be filled with $ 65 billion and not exhaust his personal fortune. As for the average American, Buffett and his allies whose policies have created economic stagnation, have all but guaranteed declining real income as the future for the average American.  The past was great for the average American, but Buffett and his allies have made sure that only Buffett and his allies will have a great future. Everyone else will have to scramble for scraps in the stagnant economy of today and into the future.


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