We are already pretty well aware of the case of people such as George Soros – the man credited with helping remove the UK from the European exchange rate mechanism in 1992 – who make a killing from financial markets, while attacking liberal capitalism. Another example is Warren Buffett, the so-called “Sage of Omaha” who, now in his 80s, is one of the world’s wealthiest men with an enviable track record for making money over the long term by what is said to be a ruthless, yet almost heartbreakingly simple commitment to “value investing”.
Over at the Cobden Centre, one of its writers, Detlev Schlichter has an excellent, and measured piece about the Buffett phenomenon. He respects Buffett’s track record (who wouldn’t?), but has this to say:
“So, should we feel sorry for Buffett for being dragged out of his comfort zone of the equity market and being quizzed on everything else? Hell, no. Buffett is a global celebrity and he obviously loves it. These big media events that celebrate him are carefully orchestrated. The tiresome shtick of the loveable everyman from the American heartland who just happens to be a billionaire is a carefully fabricated public image that Buffett uses skillfully to his own advantage – not only to sell shares in his company but – apparently – also to be on good terms with political power. It appears that, while honing his public image of the traditional investor committed to time-tested investment principles, he simultaneously has a big lobbying effort going on Capital Hill, asking for exemptions from collateral requirements for some massive derivative trades his company has made. Maybe it’s time to write another gushing letter to ‘Uncle Sam’?”
“Seriously, I have nothing against the man. I think he deserves admiration for his investment success and he may well be a nice guy. But everything else is show – and probably a cynical show at that. As Porter Stansberry has one of his characters say in this fictional but very illuminating dialogue, Buffett is a member of the establishment and now has a vested interest in the status quo, in government support of the paper money system. But remember that when paradigms shift, fortunes change. When it comes to assessing the future of our monetary system the billionaire and legendary investor may well be wrong. If so, he has the means to survive it but what about the middle-class minions who adore him and follow him blindly and who – I think- he has been lulling into some false sense of systemic stability.”
Here is something by me recently about the Koch brothers, who certainly do support capitalism. And this recently top US banker is probably one of the most hard-core defenders of laissez faire around. A refreshing break from the norm.
George Soros is not a Marxist, indeed (as his defenders endlessly remind us) he spent money opposing Marxism in Eastern Europe.
However, he employs Marxists (people who have called themselves Marxists – so it is not me smearing them) in political work in the United States, political work in undermining what is left of freedom in the United States.
So why does he do this?
I think it is worth bearing in mind two facts:
Marxism is not the only form of collectivism.
And.
People can be used – and then dropped.
When George Soros uses the term “Open Society” he clearly is not thinking of a free society in the way Karl Popper’s friend Hayek did.
Indeed Soros has openly (and repeatedly) stated how much he opposed the political ideas of Hayek.
And it must be kept in mind that Hayek was no anarchocapitalist, or even minimal state libertarian. Hayek was a mainstream classical liberal – the type of liberal that was quite common in the 19th century (although there were also lots of people with other political opinions who called themselves “liberals”) but less so since.
In short George Soros opposes (passionatly opposes) classical liberalism as someone like Gladstone understood it.
What does he want instead?
Well he wants world goverment (sorry “world government” is “paranoid” so let us say “world governance” instead). This was true of the world language fanatic father or Soros – and it is true of him.
And Soros wants this world governance to be ruled by “educated” people (people like himself).
Countries would still exist, and there would still be elections in these countries – but they “should not matter very much” as Nancy Pelosi would say.
So it would be a bit like Francis Bacon’s “The New Atlantis” accept on a globel scale.
Objections?
“The ship has sailed” (as the representative of Soros said when he was trying to scare Glenn Beck and co) so it is too late for objections.
And the Marxists – when they have served their purpose in undermining the United States (the most powerful Western nation – and, therefore, the most important to undermine if world governance is to be real) and other weird countries like Israel (Mr Soros hates Israel not because he is a “self hating Jew” as some allege – but because of a less complex reason, it is nation that complicates his plans, it does not “fit”, it messes up the chances for the Middle East to be peacefully incorporates into the world “Open Society”).
Well anyway…. once the Marxists (and so on) have served their purpose they will be dropped (discarded like the garbage they are).
Even relgion has a place in his plans – after all being an athiest does not stop a person having influence in organized relgion.
Mr Soros has had great success in coopting “Progressive” Christians, and he thinks that (if only Israel was gone – so it did not inflame the Middle East) lots of Progressive Muslims could be found (or created) as well.
I think there is a basic problem (indeed more than one) with the plans of Mr Soros (and his friends – because he is just one in quite a large group of wealthy people seeking to push what they consider to be a Progressive world agenda), but I will not go about the problems with his plans here.
“But what about Warren Buffet”.
I have tried to get interested in Mr B. – but I find him a rather boring person. I do not think he has any great world plan – in fact I do not even think he is very intelligent.
“But he must be really clever – he is the richest man in the world”.
Well perhaps it is all act then (perhaps he is a mastermine behind closed doors), but Warren B. always gives me the impression of being a bit thick – and that is one of the reasons I find him boring.
It is possible that wealth and intelligence (let alone wealth and wisdom) do not automatically go together.
The ability to make money may not automatically mean that a person has any other abilities.
Much – very much – like the EU writ large. And that’s no coincidence.
Without disagreeing with any comments, as such, I am a bit surprised how no one seems to acknowledge that one of the premises of Western pop culture in general, and American pop culture, in particular, is the Authority of (apparent) Success.
Anyone successful – well, more successful than “you” are – is perceived to be an authority. On anything. If their qualifications as bien pensant are in order, their opinions will be sought out and published far and wide. From Bono, to Al Gore – hell, McCain’s daughter, Trixie or whatever her name is – are all given deference and space in the media as authorities.
Why wouldn’t Buffet be considered an authority in matters related to investing? He proven to hold the Right Opinions and he’s, you know? like an investor and stuff and I mean, investing is like money and finance and stuff, and you know, like, taxes and, I mean like, he like rich and, you know… he knows.
Paul Marks makes his usual excellent commentary, but omits a great distinction between Soros and Buffet (WB); that is the quality and capacity of judgement.
Disclosure: I am and have been a (pitifully small) investor in BK for quite some time.
Whilst WB follows the standard Graham, Dodd and Baker techniqes in the valuation of the assets ongoing businesses, it has been his judgement of of the abilities, reactions, innovations, plannining and execution (perhaps even moralities) of mangements that has earned him a placed in the financial pantheon.
That is quite distinct from Soros (who most certainly misses the judgement of his erstwhile colleague from Demopolis, AL.).
I would suggest that judgement and its demonstrated effects are the principal reason for the consideration given to WB’s views by many.
I wonder how much of these billioniares’ actions are ideological, how much is financial self-interest, and how much is simply ego. Imagine how it would feel to be a billionaire and know you’re going down in history as the guy who manipulated a country into destroying its own economy because you could.
@ Rockwell
Failure to act, where one has efficacy, rather than action, however motivated, would be the grreater cause of potential “destruction” (or severe damage).
Historicaly, we have the example of J P Morgan, who forced others to act -regardless of what might have otherwise been in their self-interest.
Nothing much similar since.
The motivation of these people is hard to pinpoint but possibly self evident if one looks at all the facts.
I think Paul has substantially got it but the vicious and severe means they can use to pursue their goals is hard to understand if they just want to “create a better society”.
And why do they never seem to achieve the betterment goals they profess to seek?
Garet Garrett makes the point that if one tries to understand it as incompetence to govern, or foolish financial policies, it does not make sense. But that if one views it as a revolutionary process, and the desire to achieve that revolution as the guiding force, then: ” . . they made not one mistake . . . ”
But this still leaves the question of what they hope to achieve by their revolution, unanswered.
If it is the betterment of society, then they should clearly have seen by now that the socialist/collectivist model has failed. Why do they continue to pursue it?
The people who rise to power, whether in politics or in finance (probably both – it’s the same people?) cannot be stupid or they would never work out how to climb the slippery power-heap, and must be realistic, or they would not address reality in their clamber, and would fail. They must also be tough or they would not survive.
So we have clever, tough realists trying to achieve the stupid and the unworkable?
Something is missing from the equation.
but the vicious and severe means they can use to pursue their goals is hard to understand if they just want to “create a better society”.
Not if you look at them as “religious”.
I don’t think they claim to be religious.
But that’s a side issue.
Main thing is it all does not make sense.
Most modern economics is versions of the perpetual motion machine concealed behind vast swathes of jargon and superiority attitudes taught at various institutions.
I am wondering where is the reason of these people.
Okay some just want to make big bucks. Then why not embrace the Austrian School free enterprise model?
Why go for big government – The destroyer of wealth?
Okay, some can get rich quick down that road.
But there is more to it than that. Why embrace the policies of poverty which have been clearly demonstrated to be just that?
I guess it seems obvious to me but the behaviors of utopians, whether strictly adhering to the traditional precepts of a religion or not, all seem the same – that’s why I put the term religious is quotes.
Utopians are all convinced of the goodness of their goal and the depravity of their opponents – no matter how mild the opposition. Also no matter how many times their program for utopia has been disproved.
My take is that there is a psychological need in some to believe in something greater, bigger, better, utopian. The details of that belief are somewhat irrelevant.
Buffett has been very successful, but he’s made a few bloopers.
About three years ago he bought a stake in W Holding Co. (WHI), a banking company in Puerto Rico. I was pleased to hear this because I had put about $3,000 in WHI and it was down about 50% from where I bought it.
Then WHI went down another 90%, and was closed by the FDIC. (Stockholders got nothing.)
I lost my whole investment, and I guess Buffett lost all of his.
So he could be just as dumb as I am.
jdm, you are nudging me down the route of discussing rational belief in God and I think it would be O/T to comment on that!
However. The US became great, despite its manifold faults, when it held to the motto on its currency: In God We Trust.
Rich Rostrom – Buffett may have got something (at least indirectly) one thing he is very good at is pleasing the powers that be (he has a pig like cunning in this area). And he is given lots of inside information – remember “insider trading” is only a “crime” if the government does not like you. If the government does like you then acting on information not available to other people is “helping the economy”.
RRS – yes Soros may indeed have the ability to spot a good manager.
That may even have led him to support Barack Obama.
“Barack good manager – therefore support” may have been the thoughts inside Warren’s mind (although I continue to believe that there are not many interesting thoughts in there). And indeed Barry is cunning – for example ordering the killing of Bin Laden close to the time that the debt vote comes up (in order to get a boost in popularity at a key time – in order to put the Republicans in a bad place).
However, the OBJECTIVES of Barack Obama may not have been a matter that Warren Buffet even considered.
The US also achieved its greatness prior to the advent of kiwi fruit as a popular snack food or the ubiquity of gore-tex rainwear.
Correlation =! Causation, unless there’s something here not obvious to me.
jdm, you are nudging me down the route of discussing rational belief in God and I think it would be O/T to comment on that!
I must be awfully unclear in my writing, I apologize. I have no intentions in that direction and pretty much won’t follow you. I was merely answering – trying to answer – your question.
BTW, to change my focus, there are no investors, big or small, who haven’t made lousy investments. In fact, I would suggest it’s a bit like baseball in which a very good hitter is successful only a little more than a third of the time. It’s what you do with those hits.
The real difference seems to be knowing when to hold and when to fold – to make a somewhat but not too apt analogy between investing and gambling. Buffet has the approach of investing in management teams, somewhat regardless of the company, and trusting them to do well, which he eventually assumes will be manifested in a rising stock price. It’s not a bad policy that’s worked well for me although it’s meant I’ve held onto some stocks for very long periods of time while waiting for the market to realize my genius 😉