Thursday, April 17, 2014

Does Warren Buffett Talk Like a Kenynesian...Yet Walk Like An Austrian?

By Chris Rossini

Jeff Deist, President of The Ludwig Von Mises Institute, makes a very interesting observation:
Watch what people do, not what they say...You can make a case that someone like a Warren Buffett is an Austrian in a sense, because if you look at his track record, his hardcore "value investing" and never-ever overpaying for anything, and giving up a possible home run hit to avoid the downside of overpaying...That value strategy oftentimes has an Austrian underpinning, in a sense that the value that someone like a Warren Buffett seeks is always based on a real rate of return net of the currency it's valued in.
In a certain sense you can say that Warren Buffett has been shorting the dollar for many years now through Berkshire Hathaway. The stuff that Berkshire Hathaway tends to buy is tangible physical stuff, companies with underlying real-world bricks and mortar assets, as opposed to '' or some ephemeral startup.

Warren Buffett is someone I would say who talks a Keynesian game, but perhaps in his own personal life walks a more Austrian line.
Warren also puffs out his feathers about how "the rich" should pay more taxes, while he himself avoids them, much like NYC Mayor Bill de Blasio.

Good point by Jeff Deist. Never listen to the words of crony oligarchs. Their actions speak louder. Warren seems to be nothing more than a finger-in-the-wind type guy.

Chris Rossini is on Twitter


  1. Chris and Jeff - good post.

    I think Soros fits in this group also; from a speech of his a couple of years ago:

    I believe that the failure [of modern economic theory] is more profound than generally recognized. It goes back to the foundations of economic theory. Economics tried to model itself on Newtonian physics. It sought to establish universally and timelessly valid laws governing reality. But economics is a social science and there is a fundamental difference between the natural and social sciences. Social phenomena have thinking participants who base their decisions on imperfect knowledge. That is what economic theory has tried to ignore.

    Social events, by contrast, have thinking participants who have a will of their own. They are not detached observers but engaged decision makers whose decisions greatly influence the course of events…. [A participant’s] lack of perfect knowledge or fallibility introduces an element of indeterminacy into the course of events that is absent when the events relate to the behavior of inanimate objects. The resulting uncertainty hinders the social sciences in producing laws similar to Newton’s physics.

  2. Don't forget it's known his father requested a copy of MES from Rothbard.

  3. Interesting observation. I fully agree that he talks like a Keynesian but I think he walks like a crony businessman seeking coercive benefits from government. In the middle part of his career he advised investing in businesses that had a "moat" protecting them from competition. The word "moat" was a euphemism for government patents, licensing, monopolistic franchises or contracts. A review of his top holdings shows the results of his actions:
    Banks, ins. cos., finance cos., investment mgrs., gov't. contractors. The man isn't so much an investor as he is a collector of gov't. protected special interest groups.

  4. Buffett's father knew Rothbard and was in correspondence with him. Ya gotta wonder if he was at least exposed these ideas.

  5. Always important to recall, that Buffett made his money off buying distress sale assets in Estate Tax trouble.

  6. When he says the Rich, he means those of us that make high 6 and very low seven figure ordinary incomes (ie not from investing) and not people like himself. We are the sacrificial lambs for the extremely wealthy elites like Buffet. They say keep your friends close and your enemies closer, and I truly believe that is why people like Soro's, Rothschild, Gates, Buffet, etc befriend and support the left and their idiotic and destructive collectivist economic polices. The best way to avoid being taxed, is to be good friends with the people that are most likely to do it. This was very apparent to me back when BO proposed his rich person minimum tax which was a total joke and very deceptive. It did very little to guys like Buffet but slammed people like me. At the end of the day they know that your average envy driven low information voter (rep or dem) is too uninformed and lazy to actually figure out that they are not taxing the ultra wealthy but rather the bottom layer of those climbing up. Essentially those climbing out of the middle class.

    And by the way, since 2000 Buffet IMO has overpaid for several things (L3, office depot, his debt hedges) including Berkshire Hathaway. And if Forest River is any indication of how BRK runs a company, I'm not very impressed. Dealing with Forest River is an absolute joke. I've seen Mom and Pop operations better run. My guess is that BRK starves its subs of capital.