Let me be clear: just as every value investor I admire Warren Buffett’s skills as an investor and have learned a lot reading his letters. I also appreciate his ability to express his thoughts in a witty and folksy way – it is required reading for every serious practitioner of investing. However, I prefer the Buffett of the 60-ies and 70-ies with his sharp style and willingness to tell the unpleasant truth, rather than the kind grandfather-type trying to be everybody’s darling. Rather than pointing out current developments to our political class (and I think there are a lot of things going wrong on both sides of the Atlantic), thereby using his understanding of business and reputation for the greater good, he tries to be everybody’s darling and plays into the hands of politicians urging for greater taxation of wealth and more regulation – although he must be aware of what that implies for the future.
Now, I understand that confronting general public opinion is unpleasant and requires a willingness for conflict, a willingness that certainly diminishes with age. But this is exactly what makes a person great: if not him, who can afford it, who else?
The “streetwise professor” has an excellent post on Buffett’s his recent moves from the perspective of an energy-market expert. Far for being concerned for the greater good, he shows, Buffett proposes regulation to benefit from it by squeezing the competition.
Now, that is his right and i do not hold that against him from a business perspective. As young value investors we should however recognize, that these measures limit growth and social mobility. They consequently inhibit our possibility to compound wealth accordingly. We should also not hesitate to criticize one of our idols if we think (as I do) he deserves criticism.
More worrying: there is also a certain short-sightedness to this call for more regulation in order to protect one’s spoils. To make my point short: if you think it through to its ultimate consequences, in an overregulated society social mobility is greatly inhibited and the prospect for violent revolution increases. Our global business elite, although certainly well meaning, do not seem to understand this point enough. Is this what Lenin meant when he reportedly said about the bourgeoisie: “in their greed they will sell us the ropes, with which we will hang them”? Let’s hope there are still some leaders with courage out there!