Warren Buffet Knows Investing, Butchers Economics, Wears His Guilt on His Sleeve

I’ve always believed that people should stick with doing what they know best. Doctors should stick to medicine, lawyers should stick to law, and businesspeople should stick to business. Unless they’ve taken the time to delve into a different topic, say, ethics or economics, then they shouldn’t allow their fame or professional reputation to give more weight to their words than they deserve. In other words, actors and guilty businesspeople should just shut the Hell up.

Case in point: Warren Buffett: “Nobody Knows” If Gov’t Fixes Will Work:

WB: I was telling him business was going to be awful during the election period and that we were coming up in November to a terrible economic scene which would be even worse probably when he got inaugurated. So far I’ve been either lucky or right on that. But he’s got the right ideas. He believes in the same things I believe in. America’s best days are ahead and that we’ve got a great economic machine, its sputtering now. And he believes there could be a more equitable job done in distributing the rewards of this great machine. But he doesn’t need my advice on anything. [Emphasis added.]

That’s Buffet’s guilt speaking, and guilt is very easy to carry around when you’re worth a few million (or billion). Of course, a free society with a free market is the only possible “equitable” system for distributing “reward,” if one believes that words have meaning. In a truly capitalist market, one gets the value of what one produces and trades for, i.e., one is rewarded directly proportional to the value of ones efforts, value defined as that which other people are willing to trade for it–what could be more equitable than that? Bottom line is, if Buffet wants to redistribute someone’s weath, he should stick with his own.

Mr. Buffet, if you’re listening, you can start with me. I have more than a few bills to pay.

SG: But there is debate about whether there should be fiscal stimulus, whether tax cuts work or not. There is all of this academic debate among economists. What do you think? Is that the right way to go with stimulus and tax cuts?

WB: The answer is nobody knows. The economists don’t know. All you know is you throw everything at it and whether it’s more effective if you’re fighting a fire to be concentrating the water flow on this part or that part. You’re going to use every weapon you have in fighting it. And people, they do not know exactly what the effects are. Economists like to talk about it, but in the end they’ve been very, very wrong and most of them in recent years on this. We don’t know the perfect answers on it. What we do know is to stand by and do nothing is a terrible mistake or to follow Hoover-like policies would be a mistake and we don’t know how effective in the short run we don’t know how effective this will be and how quickly things will right themselves. We do know over time the American machine works wonderfully and it will work wonderfully again.

SG: But are we creating new problems?

WB: Always

SG: How worried are you about these multi-trillion dollar deficits?

WB: You can’t just do one thing in economics. Anytime somebody says they’re going to do this and then what? And there is no free lunch so if you pour money at this problem you do have after effects. You create certain problems. I mean you are giving a medicine dosage to the patient on a scale that we haven’t seen in this country. And there will be after effects and they can’t be predicted exactly. But certainly the potential is there for inflationary consequences that would be significant.

Buffet’s all over the map in this exchange, but basically he’s saying that if you don’t know what you’re doing, just do more of it. Doctors who do that are sued for malpractice. Hell, medicine has a whole Oath against that very kind of thinking. But I guess it’s fine for economists and Presidents, according to Buffet.

Really, all I can say is: if Buffet did his investing this way, he’d not have anything to feel guilty about.

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