The Myth of Warren Buffett's Economic Non-Self-Interest

New York Times biz columnist Andrew Ross Sorkin, in a column hailing the brave policy outspokenness of Berkshire Hathaway investment super-genius Warren Buffett, writes this passage:

In the midst of what is becoming a very political season, Mr. Buffett made it clear that he never considered politics when studying an investment.

"I don't know the politics of Muhtar Kent, Ken Chenault, Ginni Rometty — I don't know her politics or religion," referring to the chiefs of Coca-Cola, American Express and I.B.M., among Berkshire's biggest holdings. "It doesn't make any difference and I just want to know how he or she will run the business," he said. "I don't think it makes sense to make investment decisions based on politics."

Well said.

It might have been well said, but the private political beliefs of various CEOs of companies Berkshire invests are as irrelevant as can be to the question of whether Buffett "consider[s] politics when studying an investment." On that issue, you're much better off referring to Peter Schweizer's feature in the March issue of Reason, "Warren Buffett: Baptist and Bootlegger." Sample:

[In fall 2008], Wall Street was on fire, and Buffett was running toward the flames. But he was doing so with the expectation that the fire department (that is, the federal government) was right behind him with buckets of bailout money. As he admitted on CNBC at the time, "If I didn't think the government was going to act, I wouldn't be doing anything this week." [...]

Buffett needed the TARP bailout more than most. In all, Berkshire Hathaway firms received $95 billion in TARP money. Berkshire held stock in Wells Fargo, Bank of America, American Express, and Goldman Sachs, which received not only TARP money but also Federal Deposit Insurance Corporation (FDIC) backing for their debt, worth a total of $130 billion. All told, TARP-assisted companies constituted a whopping 30 percent of Buffett's publicly disclosed stock portfolio. The folksy outsider with his home-spun investment wisdom, the Houston Chronicle concluded in an April 2009 investigative piece, was "one of the top beneficiaries of the banking bailout."

Buffett received better terms for his Goldman investment than the government got for its bailout. His dividend was set at 10 percent, while the government's was 5 percent. Had the bailout not gone through, and had Goldman not been given such generous terms under TARP, things would have been very different for Buffett. As it stood, the arrangement with Goldman Sachs earned Berkshire about $500 million a year in dividends. "We love the investment!" he exclaimed to Berkshire investors. The General Electric deal also was profitable. As Reuters business columnist Rolfe Winkler noted on his blog in August 2009: "Were it not for government bailouts, for which Buffett lobbied hard, many of his company's stock holdings would have been wiped out."

By April 2009, Goldman share prices had more than doubled. By July 2009, Buffett had already received a return of $2.5 billion from his investment.

Whole thing here. In February, I wrote in CNN Opinion about how "the man who has become the left's favorite billionaire in the service of bashing plutocrats could be...the single most successful crony capitalist in the country."

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  • plu1959||

    Altruistic like a fox.

  • ||

    Matt Welch, you forgot step four: Sue to prevent paying back the taxes you are demanding of everyone else.

  • o3||

    interesting that buffett didnt run to detroit in expectation of a bailout considering chrysler had previously been bailed-out & the unions were obama backers. >this seems to confirm that private equity was NOT available vs romney's assertion

  • Hugh Akston||

    It's cute how Obama and Buffett are wearing the same outfit in that picture. Same tie, same jacket, no pants. They make such an adorable couple.

  • ||

    Also, Boofay is a magnificent Berk.

  • crazyfingers||

    The comments on the CNN article are depressing. Apparently Warren Buffet being a crony corporatist is Chris Cristie and Romney's fault.

  • sarcasmic||

    And the Koch brothers. Can't forget them.

  • Sharon Stone||

    Bush's Fault'12

    Seriously though, it is his fault

  • Brandon||

    Speaking of the CNN comments:
    "If the wealthy are so overburdened by taxes, why then are they so rich?"

    They truly can't be parodied.

  • AlmightyJB||

    That article gave me brain freeze. No Icee required.

  • fresno dan||

    Buffet reminds me of what Hollyfield said about Tyson, "He's (Tyson) has never been hit."
    Buffet has never been asked an educated, knowledgeable, critical question. Why doesn't CNBC just go straight to porn and have Becky go down on uncle Warren - CNBC needs to fill up air time and I am sure it would take a couple of hours...

  • Scruffy Nerfherder||

    What no mention of his lobbying for estate taxes when his main cash cow is life insurance?

  • ||

    Warren Buffet is another in a long list of rich/famous people who has figured out how to play redistributionists like marionettes. It's really quite easy; just mouth the right words, and since they only care about what you say and not what you do, you become a hero to them while still embodying everything they purport to hate.

    Just another example of the stupidity of people who care about intentions and not consequences.

  • Hugh Akston||

    Getting rich in the free market is hard. You have to make good products and supply real value to lots of customers over a long period.

    Getting rich in the corporatist world is easy. You just have to convince 268 people that it is in their interest or the interest of the nation to make you rich.

  • Mike M.||

    So much this. Virtually everything that comes out of Buffett's mouth is designed to get the scummy vermin in the media to say nice things about him, because if he just made billions of dollars and kept his mouth they would hate his guts.

  • ¿Ex Nihilo?||

    Warren Buffet is another in a long list of rich/famous people who has figured out how to play redistributionists like marionettes.

    He is also loved by business schools, practically their patron saint. Which is sad because he gets the gov to back his investments.

  • Tulpa the White||

    "the man who has become the left's favorite billionaire in the service of bashing plutocrats could be...the single most successful crony capitalist in the country."

    I wonder if that's a coincidence.

  • Number 7||

    Is that the very definition of a Cheshire Cat grin?

  • ||

    But skrike told me Warren Buffett is the one true capitalist...

  • Juice||

    Don't forget that on 9/11, Warren Buffett was waiting for Bush at Offutt AFB.

  • Michael||

    Warren Buffett pulls the ladder up behind himself while chants of "They got bailed out, we got sold out!" grow ever louder from so many that revere him as a saint. What else is new? Stupidity truly knows no bounds.

  • 0x90||

    He's only acting rationally -- if he doesn't do it, somebody else will. Which is to say, the problem we think we have is not the problem we have. The one we have has a solution, but it is unintuitive, and that is the real problem. :)

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