The Berkshire Hathaway shareholders meeting, also known as "the Woodstock of Capitalism," just concluded this year's festivities in Omaha. CEO Warren Buffett, the "Oracle of Omaha," presided over events as diverse as a special shopping excursion to Borsheim's Jewelry and Fine Gifts, dinners at Gorat's Steakhouse, private bridge games, and the meeting itself.
Shareholders from all over the world come to Omaha for this event, to bask in Buffett's investing brilliance and to hear him deliver his evaluations on "life, the universe, and everything" [apologies to Douglas Addams--Ed.]. One of Warren's gems this year was to note that "risk is inherent in capitalism" as his reason for not helping bail out individuals trapped in the mortgage lending crisis.
Mr. Buffett is usually very wise and practical--for a maven of capitalism, he lives relatively modestly; he supports Planned Parenthood; he doesn't believe in investing in things he doesn't completely understand (one of the main reasons Berkshire Hathaway did not get caught when the so-called "dot.com" bubble bust). But I must disagree with his take on the mortgage lending crisis.
He did say that people who were misled about the adjustable rate mortgages they took should get some relief, but his implication is that many, many people were not misled and that their present problems are due to their own greed, so they should suffer the consequences and learn from their mistakes. (1) Is that even true? (2) Why doesn't he apply this same logic to the mortgage companies who lent exorbitant sums willy-nilly to people who really shouldn't have received such largesse in the first place?
The root problem is that we don't actually have true capitalism. Those with money and power influence legislation so that they get to reap the benefits of their money and power without taking any of the risks of doing the same. Joe Schmo, individual, is not afforded these same advantages, however. It's upside down. Collective greed, massed in companies to maximize power and influence, gets protected . . . and the majority of the burden is borne by those who can afford it the least. The little guy carries the big guys on his back. No wonder things break down and individuals' lives are thrown into chaos at the same time the biggest companies are reporting record profits. Anybody out there ever hear of noblesse oblige? Apparently not.
It's the same reason we need labor unions but much union-protecting legislation has been eviscerated of late. It's the same reason the US Supreme Court until after FDR's "court-packing scheme" in the 1930s, claimed that corporations, being artificial persons, had equal and identical bargaining power to individual job-seekers. It's the same reason the Fed will bail out Bear-Stearns but won't help individual mortgagors . . . except for the ones who don't really need it. The only individual mortgagors who will get relief under Dubya's plans are the ones who are not behind on their payments and whose credit is otherwise good. But the people who've been struggling along and whose crises are more immediate are hung out to dry. I've said it before and I'll say it again: "Them what has, gets. The rest of us gets screwed."
Then again, I'm basing my criticism of Mr. Buffett's remarks on a news report I heard yesterday on the radio. I, in turn, should know better than to accept what any reporter says without checking to make sure he didn't miss any nuances in what he's quoting. Context matters. I'll check further and post any changes to my analysis soon.
On the third hand, Mr. Buffett is also known to have said, "money cannot buy happiness." True enough. I wish, however, he'd indicated some understanding of the concept that the lack of money sure causes a lot of distress, especially when it forces people to choose between such frivolous things as eating or buying needed prescription medicines.
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