The annual shareholders meeting of Berkshire Hathaway Inc. was held this weekend in Omaha. More than 40,000 people attended. Yesterday CEO Warren Buffett and vice chairman Charles Munger held a five and one-half hour question and answer session for the attendees.
Says Mr. Buffett as reported by the Omaha World Herald:
- “We’ve got a big appetite for wind and solar projects.” BH Energy “borrows at taxable rates and Nebraska in terms of wind is not that much different than Iowa. We’re selling electricity in Iowa at lower rates than exist in Nebraska (with public power).”
- Should BH keep working with Brazilian investors 3G Capital, known for slashing jobs at companies it invests in? Replied Buffett, “The gains in this world have come from gains in productivity. … This is why we live so well. … Government can put in place policies and programs that help workers left behind by economic shifts.”
- “Trade, export and import, massive trade, should be and is enormously beneficial to the U.S. and the world.”
- Medical costs are the “tapeworm of American economic growth. … Corporate taxes aren’t crippling but medical costs continue to rise. … The problem seems to transcend political party.”
Conclusion. Just these few remarks, among many others from the meeting, touch on several broad economic themes which I discuss on this blog. Private enterprise is a powerful and efficient method of generating wealth for humanity. Government should intervene to help those hurt by progress. Renewable energy is profitable and here to stay. Healthcare costs have a significant effect on business growth and need to be controlled. Neither political party has a monopoly on the truth.
It Does Not Add Up 
Jack,
It is likely that the proportion, and its dominance, of our national economy that is allocated to healthcare spending is the most important determinant of our nation’s low economic growth rate. AND, there is no reason to believe that the current priorities for healthcare reform will solve any of its spending and quality problems. In 1960, 6.0% of the GDP was spent on healthcare. For 2016, it was 18.2%. The increase over 56 years represents a 1.98% increase, compounded annually, higher than our nation’s annual economic growth. In addition, our nation’s maternal mortality ratio continues to worsen as it has for 25 years. Our nation is the ONLY developed nation of the world with a “worsening” maternal mortality ratio.
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The recent new AHCA 2017 version by the HOUSE doesn’t have any capability to change much other than to slow down Medicaid expansion and to pass “the buck” to the states. Unfunded Federalism continues to be a recurring theme when Congress gets stuck.
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Is anyone listening?
Paul
I do expect the Senate to substantially revise the House version of the AHCA. However, the part dealing with Medicaid could stay about the same. The AHCA puts a cap on federal spending for Medicaid. I see this as absolutely essential. Once there is a strict federal budget, then states will likewise figure out how to limit their own spending on Medicaid. This is crucial for overall fiscal restraint. This is just one piece of overall healthcare spending but at least it is a start in the right direction.
Jack,
I had to spend a day to think about your remarks before I felt at all comfortable to respond. I shall toss out a couple of ideas and then draw upon the remarks of drpaul.
Somewhat out of the ordinary for you, I thought, was that you wrote only of abstractions that you turned into general principles. To explain my reflecting: private enterprise, wealth, humanity, government, energy, healthcare, growth, political parties, monopoly, and truth are all abstractions to me. As I say so often, I need pictures in order to see living and dead things and how they are moving about in those abstractions which you have identified to fit into a capitalist system.
So I turn to drpaul’s comment: He asks whether anyone is listening. Now he asks me to tend to my ears, but actually I have used my eyes to get at his words. And he gets closer to things but they are numbers describing how our money is being spent in this country. And, I could follow those numbers and see where the money was going, even though I have to calculate or think of them beyond the abstract. It seemed pretty clear that someone was buying and selling something which, I think, is health care. Now, I am not trying to be humorous. I am quite pleased that he makes himself clear about the tremendous increase in health care costs. So from my standpoint, where is the money going? Well, there seems to be four players–government, insurance companies, health care providers and patients. So, who profits in this free enterprise system?
Well patients, hopefully, get relief from their pains, their government is giving them a service, insurance companies gained dollars if they gambled correctly and health care providers hopefully received an opportunity for good commodities that they purchased with their salaries. I realize I am leaving out many other players whether it be researchers, companies of products, etc. Time and space constraints require brevity.
Anyway, many of your abstracts/principles could be explored in so many ways. We probably will not get to ‘the’ truth. However, we may be able to make a judgment of how ‘fair’ or moral is this system.
I thank you both!
Doug
I realize that I often speak in abstractions. It probably has something to do with the fact that I am a mathematician by training and practice. Of course healthcare is about helping individual people with their ailments and hopefully our system does a good job in this respect.
But our system is also way too expensive and will eventually bankrupt us if we don’t figure out how to do it more efficiently.
Only abstract thinking about efficiency will save us here!
No,
I don’t think abstract thinking will solve the problem. Real people will have to decide how generous and how selfish they are. Living people will have to inquire whether they are more interested in security and profit or in reducing suffering. They will need to ask whether they are or should be more than just a caretaker to their immediate family or to those in their country and the world at large.
Doug
Individuals can and should act in a moral way. But government programs need to be set up to operate strictly according to the rules and regulations established by law. This is the only way to be objective and fair to all concerned.
Jack,
What if the rules have been arranged to protect the rich and the not quite so rich a is the case with our mortgage interest deduction benefits since WWII.
See the NYTimes magazine for this week. In my mind the laws establishing those rules and regulation have helped the white upper classes and made life hell for minorities and the poor.
Generosity fell by the wayside.
Doug
I certainly agree with you about the mortgage interest deduction. It primarily benefits the rich. Of course, the real estate business also supports it because it (apparently) increases home sales. But it should be greatly scaled back if not eliminated entirely.