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The other side of Warren Buffett
Don’t Buff it up
An investing hero is not a model for how to reform America’s economy

Aug 13th 2016 | From the print edition

If the intensity of Mr Buffett’s interventions has risen over time, so has the seriousness with which they are taken. This partly reflects his financial clout. Berkshire Hathaway, his investment vehicle, is worth $363 billion and is the world’s sixth-most-valuable firm. He is at least 20 times richer than Mr Trump. It also reflects Mr Buffett’s popularity: 40,000 people attended Berkshire’s annual meeting in April, compared to 5,000 two decades ago. Since the death of Steve Jobs, the boss of Apple, Mr Buffett has become the lone hero of big business in America. He stands for the promise of a nostalgic, fairer kind of capitalism.

But Mr Buffett is not as saintly as he makes out. He has to act in his own interests, and he does so legally, but if all companies followed his example America would be worse off. An example is his oft-expressed sympathy for workers. In 2013 Berkshire partnered with 3G, a Brazilian buy-out firm renowned for swinging the axe at acquired firms. Since 3G engineered the merger of Kraft and Heinz (Berkshire owns 27% of the combined firm) last year, staff numbers have dropped by a tenth.

Last year a hedge-funder, Daniel Loeb, attacked what he called a disconnect between Mr Buffett’s words and his actions. “He thinks we should all pay more taxes but he loves avoiding them,” he said. Mr Loeb was right: Berkshire’s tax payments have shrunk relative to its profits. Last year the actual cash it paid to the taxman was equivalent to 13% of its pre-tax profits—this is probably the fairest measure of its burden—making it one of the lightest taxpayers among big firms (see chart).


Stop Coddling the Super-Rich


Such inconsistencies are inevitable in a long and vigorous business life. But there is another problem with Mr Buffett: his fondness for oligopolies. After being disappointed by returns from textiles in the 1960s and 1970s, and then by shoe manufacturing and airlines, he concluded his firm should invest in “franchises” that are protected from competition, not in mere “businesses”. In the 1980s and 1990s he bet on dominant global brands such as Gillette and Coca-Cola (as well as Omaha’s biggest furniture store, with two-thirds of the market). Today Berkshire spans micro-monopolies such as a caravan firm and a prison-guard uniform maker, and large businesses with oligopolistic positions such as utilities, railways and consumer goods.


But he is far from a model for how capitalism should be transformed. He is a careful, largely ethical accumulator of capital invested in traditional businesses, preferably with oligopolistic qualities, whereas what America needs right now is more risk-taking, lower prices, higher investment and much more competition. You won’t find much at all about these ideas in Mr Buffett’s shareholder letters.

この批判はEconomistの信条である自由経済に反するものだからでしょう。what America needs right now is more risk-taking, lower prices, higher investment and much more competitionと締めのところで書いています。