Is An Un-Great America Headed For The Abyss? Warren Buffett Says 'No'
If you have been watching the presidential debates, you may be very worried.
The other day, GOP candidate Ben Carson said the U.S. is "heading off the abyss of destruction." And on the Democratic side, Sen. Bernie Sanders said Americans "are worried to death about the future of their kids."
It's been that kind of political season. But on Saturday, billionaire Warren Buffett used his annual letter to Berkshire Hathaway Inc. shareholders to say, in effect, relax.
The country may have challenges, but the doom-and-gloom predictions are "dead wrong," Buffett wrote.
Instead, "babies being born in America today are the luckiest crop in history," he wrote.
In his widely read annual letter, the 85-year-old investor did not say who will succeed him at Berkshire, but did mention he expects to make business-related announcements on Aug. 30, 2030 — his 100th birthday.
That sort of optimism runs deep in the investor who has personally seen the country work its way through the Great Depression, World War II, the Cold War and few other bumps along the way.
And through it all, he has made money. Lots of it. Forbes magazine ranks the legendary investor as the third-richest person in the world, worth roughly $73 billion.
His company, based in Omaha, Neb., owns scores of businesses involved in an array of sectors — including insurance, energy, railroads, newspapers, real estate, food and apparel.
After a half-century under his leadership, Berkshire reported a record annual profit of $24.08 billion, up 21 percent. In the fourth quarter, profit rose 32 percent to $5.48 billion, or $3,333 per Class A share.
Buffett's annual letter to Berkshire investors is so closely followed because he so often makes the right calls about the economy. And in this year's letter, he makes it clear that he considers the "negative drumbeat" about America to be very misleading.
"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. He put "they" in italics for emphasis.
Buffet is on the record supporting Democrat Hillary Clinton for president.
He wrote that "some commentators bemoan our current 2 percent per year growth" in real gross domestic product, and added that everyone would like to see it higher.
However, with the U.S. population growing at about 0.8 percent per year, a growth rate of 2 equals a 1.2 percent per capita growth rate. And over time, that adds up to create a much richer future for today's children, he noted.
"In a single generation of, say, 25 years, that rate of growth leads to a gain of 34.4 percent in real GDP per capita," he said.
"For 240 years it's been a terrible mistake to bet against America, and now is no time to start," he wrote. "America's golden goose of commerce and innovation will continue to lay more and larger eggs."
Despite his fundamental optimism, Buffett also acknowledged that income inequality is a profound problem rooted in rapid technological changes and globalization. The well educated and innovative tend to do well in this 21st century economy, while many workers get left behind, he suggests.
Although the "pie to be shared by the next generation will be far larger than today's," the political arguments over how it gets sliced up will "remain fiercely contentious," he warned.
He suggests the country weave more safety nets to help displaced workers.
"The price of achieving ever-increasing prosperity for the great majority of Americans should not be penury for the unfortunate," he wrote.
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