Warren Buffett's Lame Attack on Whole Foods

Buffett's economic views don't always match reality.


That clanging sound you heard coming from Omaha this weekend was the noise of Warren Buffett's comments at the 50th anniversary Berkshire Hathaway shareholder meeting colliding with reality.

"We think any company that has an economist has one employee too many," Buffett reportedly said. Funny, I haven't seen anyone point out that the Burlington, Northern, and Santa Fe railroad, which Buffett's Berkshire owns, employs a chief economist named Sam Kyei.

Nor has anyone pointed out that at least two of Buffett's "big four" investments—IBM and Wells Fargo—also employ economists. These are companies in which Berkshire has invested billions of dollars, and that Buffett praised in his recent annual letter as "run by managers who are both talented and shareholder-oriented." Wells Fargo's website, under the headline "Meet our economists," lists 15 individuals, including a chief economist and four senior economists.

IBM's chief economist is named Martin Fleming. (Disclosure: I own some IBM stock.)

Buffett may have been trying to be provocative in making the point that businesses should avoid trying to time big-picture macroeconomic developments. But unless he is going to fire all these economists, he is a hypocrite, saying one thing while doing another.

Then there was Buffett's comment about the risks to his investments of changing consumer attitudes toward sugar. "I don't see smiles on the faces of people at Whole Foods," he said.

That is just nonsense for many reasons.

First of all, Whole Foods sells sugar, not just broccoli and Brussels sprouts. The one near me sells not only refined sugar, but also gelato and two-bite brownies and chocolate bars. The store also sells beer, wine, marshmallows, and pretzels, potato chips, and plenty of other foods that would put a smile on the face of even non-broccoli-lovers such as Buffett. I even smile sometimes when I'm in there shopping, and I'm well known as a grouch.

Second, Whole Foods turns out to be pretty good at keeping its customers, employees, and shareholders happy, notwithstanding Buffett's aspersions. If you look at the Whole Foods Market stock price versus the Berkshire stock price over the period since Whole Foods went public in 1992, Whole Foods increased about 36 times while Berkshire Hathaway increased about 25 times. Both are impressive, and some of the Whole Foods appreciation is based on assumptions about dividends being reinvested. (I can hear people asking what happened to the dollar and to gold over the same period. Short answer: you were better off buying either Berkshire or Whole Foods stock than either one, though the slide of the dollar against gold makes the appreciation of both companies less dramatic.)

To longtime Buffett-watchers, these latest departures from reality pale beside the biggest Buffett phoniness of all, his claim on taxes. This was put most starkly in a New York Times op-ed piece a few years back in which Buffett called for increased taxes and claimed that investors who turn down opportunities because taxes are too high exist "only in Grover Norquist's imagination."

Since that piece appeared, Buffett has been involved in a series of highly tax-efficient deals, ranging from the Burger King-Tim Hortons inversion to Canada (before which Buffett called Senator Orrin Hatch to check on Congress's plan to curb such maneuvers) to the trade of appreciated Procter & Gamble stock for Procter's Duracell battery brand.

At Berkshire's annual meeting, Buffett reportedly expressed support for tax simplification but dismissed concerns that corporate rates were too high. Berkshire's vice chairman, Charles Munger, had a more emphatic view. According to a New York Times account, Munger "derided California's policies as 'really stupid,' contending that they imposed such a high tax that they were driving businesses out of the state. Florida, Munger said, is 'much smarter' by adopting a lower tax regime that draws new businesses to the state."

Why, now Buffett's own vice chairman, of all people, sounds like someone the sage of Omaha would dismiss as a figment of Grover Norquist's imagination. He also sounds like he's making sense.

It's great that tens of thousands of shareholders, reporters, and analysts gather each year in Omaha for the annual meeting that Buffett describes as the Woodstock of capitalism. Buffett's business and investment achievements have been impressive. But his pronouncements deserve to be subjected to skepticism that is often lacking.

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  1. derp

    1. A few years back our local Whole Foods decided to try a “Farmers Market” in their parking lot. But, it had to be Tuesday morning.

      Why you might ask? Well, Tuesday mornings suck for grocery stores so why not generate a little buzz & traffic?

      Except, the first morning of the market, Whole Foods featured a “Locally Grown” produce section right at the entry to the store.

      You guessed it! The farmers market ended within a few weeks. Turns out Whole Foods shoppers support principals over principles.

      Whole Foods is a theme park that serves the fantasies of infantile minds and charge accordingly.

  2. I’ll never understand how someone as smart, educated, and accomplished as Buffett can be so obtuse

    a 5 year old could tell you that having the highest corporate taxes in the world is bad for american businesses

    1. a 5 year old could tell you that having the highest corporate taxes in the world is bad for american businesses

      Great point, but on the other hand something, something, Koch Brothers.

    2. I’ll never understand how someone as smart, educated, and accomplished as Buffett can be so obtuse

      He’s not obtuse. He’s a hypocrite.

      Two things you’ll never go wrong assuming about Warren Buffett – Everything he says and everything he does is calculated to benefit Warren Buffett. Period. Full stop. He’s not the kindly old grandfather from Omaha. He just plays that role on TV.

      Why doe Warren Buffett like high corporate tax rates? You don’t think it could have something to do with the nature of Berkshire’s funding and business mix, do you?

      1. If I understand correctly, when taxes are ridiculously high rich people just put their money into annuities?

        1. No corporate taxes. Berkshire is sitting on a boatload of deferred tax liabilities. Higher corporate tax rates increase their value.

          1. Ah, I get it. That’s pretty fucked up.

          2. Higher tax rates increase the value of deferred taxes? Clearly you know nothing about financial accounting, corporate taxes or entity valuation.

            1. Wow, what a well thought out and fact driven rebuttal.

              1. It wasn’t a rebuttal. It was a statement that his statement has no basis in fact. To explain why he is so wrong would require a tutorial in the subject matter that is well beyond a comments section. And why do you feel that I should explain my position, when Dalasio didn’t explain his? Where was his “well thought out and fact driven” explanation? I called him out to let those who have no expertise in accounting, taxes or valuation know that I think that what he said is nonsense. If he wants to explain why he thinks his statement made sense, he can do so.

      2. He’s Mom from Futurama.

        1. Hermes Conrad: We can’t compete with Mom! Her company is big and evil! Ours is small and neutral!

          That Guy: Switzerland is small and neutral! We are more like Germany, ambitious and misunderstood!

          Amy Wong: Look, everyone wants to be more like Germany, but do we really have the pure strength of will?

      3. He’s also in favor of the estate tax, because one of his big money makers is buying private companies at fire sale prices when the founder dies and the heirs have to sell it quick to pay the tax bill. cf. Dairy Queen

    3. Ironically the average 14 year old couldn’t tell you that.

      I wonder what happened between the ages of 5 and 14…

      1. Probably public school.

    4. I guess it shows that people who are good at business are non necessarily that good when it comes to defending the market 😀

      1. I’ve known several ultra-democrat entrepreneurs and the amount of mental gymnastics they display is phenomenal.

        I can’t count the number of times assholes like this genuinely wax radical about how evil corporations are constantly shafting the little guy as they turn around and order mass layoffs, or engage in some pretty shady “interpreting” of their contracts with partners.

        My observation- and true, it is anecdotal- has been first that they are really good at rationalizing what they do, while assuming the worst intentions of others doing the exact same thing. Second, I have inferred that this is why they hate markets and capitalists so much- deep down they feel that everyone is as amoral and duplicitous as they are.

        1. Projection lies at the heart of *so* much seemingly inexplicable behavior.

        2. first that they are really good at rationalizing what they do

          Numerous sources have noted the correlation between success as a high level executive and psycopathic traits.

    5. a 5 year old could tell you that having the highest corporate taxes in the world is bad for american businesses

      Someone get Warren Buffett a 5 year old to explain it to him…

    6. Berkshire Hathaway is heavily invested in railroads and insurance companies. Insurance benefits from high taxes and railroads, being virtual monopolies, benefit from government regulation, subsidies and systemically imposed barriers to entry.

      What Buffet is really against is competition and a free market. He is the capitalist the Fascist designed “corporatismo” for.

    7. He’s not obtuse. He’s made it up to yhr tree house and now he wants to pull the ladder up behind him. He’s not obtuse, he’s evil.

  3. It’s sad indeed that one of the greatest wealth creators in the history of mankind is so completely and utterly full of shit like he is.

    1. Has he actually created wealth? Or merely captured it?

  4. Even Buffet can’t afford to shop at Whole Foods?

  5. Everything Warren Buffet says in public is batshit crazy. I really wish the press would realize this and just say so whenever he opens his yap.

    1. They always well as soon as buffett proclaims something that doesn’t fit the narrative.

  6. Any time Buffet opens his mouth about anything, it’s usually in the furtherance of him making more money, and usually in incredibly crony-tastic ways. Always look behind the curtain with Buffet. Always.

    1. Yeah and what does it say about our fucked-up society that it’s much, much easier to get rich and stay that way being a rent-seeker than by actually making a product people want and will pay for.

      1. It says that you’re a chump?

        1. One of those things has nothing to do w/ the other, true though they both may be.

          1. If it had not been for the gargantuan gift and estate tax regime back in the day, he may never have been able to rent-seek his way to riches.

    2. Exactly. He dresses it up in Middle American cornpone because he knows there’s a lot of suckers out there happy to eat it up.

    3. I think another motive for him is to avoid the “evil rich guy” image that the Koch Brothers have been given. It’s a symbiotic relationship: he pays lip service to progressive policies (while ignoring them) and in return, the progressives don’t hassle him about his “evil 1-percenter” status.

  7. It’s about the rents. It’s always about the rents.

    1. Are they… are they too damn high?

      1. The landlord never thinks so.

  8. Don’t worry,his companies sell products to avoid all those ‘fair taxes’.BTY there is no way,after all deductions and exemptions middle class people pay a higher tax rate on their gross income then the ‘rich.’

    1. Actually, a lot do. But the answer to that isn’t raising the rate for the rich.

  9. How is this thread happening without shrike? Was he abducted by rednecks or something?

    1. I am rather enjoying it…please do not speak the name of the Devil, for he may then appear. And I shan’t want to see SHREIK deep throat Buffet’s shriveled old member.

  10. I smile when I shop a Whole Foods, esp when I just smoked some reefer.

  11. “”We think any company that has an economist has one employee too many,” Buffett reportedly said.”

    I don’t believe that. The man’s company is largely built on owning insurance companies, and there is no insurance company that doesn’t employ economists by the herds.
    If he really said that, he’s a worse hypocrite than anyone guessed.

  12. Buffet is a Fascist Corporatist. He has fought the Keystone project because he owns million$ in railroad tanker cars. Hopefully, one day the Mussolini of Nebraska willl be dragged through the streets of Omaha and strung from a Tim Horton’s sign by his heels.

  13. Buffet is a Fascist Corporatist. He has fought the Keystone project because he owns million$ in railroad tanker cars. Hopefully, one day the Mussolini of Nebraska willl be dragged through the streets of Omaha and strung from a Tim Horton’s sign by his heels.

    1. Funny, I’ve just been reading something about one of Buffet’s company’s business practices and the guy has been hit with the usual bumptious legal threats of libel and slander and defamation of character for posting a negative Yelp review on the company and its practices..

  14. Well, it’s a pretty true observation. I’ve had to go there dozens of times, and the customers there tend to be a pretty sour-faced crew. Remarkably so, as I’ve in the past so remarked upon. Not that it means anything and any interpretation he puts to it is wrong. Most Safeways I’ve visitted have some really high-strung people making up the main body of customers. There’s probably a reason for it. I don’t know what it is. And the Wholefoods people seem to be generally sourfaced and disdainful. I don’t know why.

  15. I find it very unlikely that he shops at Whole Foods. The people he has to shop for him are probably rich and disconnected enough to have people who shop for them.

  16. Increasingly I tune out Buffett when he speaks on topics that in any way involve public policy. Though I note this morning Buffett (with Charlie Munger and Bill Gates) was interviewed at length on CNBC and said a few sane things such as he did not support a signifiant increase in the minimum wage. He said “If you increase the minimum wage dramatically you are going to change the number of people employed in a significant way?.” Usually I disagree with his public policy positions. Within the last year Buffett made a comment about abolishing private education so as to improve public schools. As an aside, the emphasis should be on education whether private or publicly funded. His reason was that the wealthy who send their children to private schools would then spend more money and time to better the local public schools – thus benefiting all. What he failed to see is that those parents who have the money and or care about and take an interest in their child’s education will find ways beyond the local public school to give their child that extra edge. These parents will hire tutors, encourage, support and participate in extracurricular activities, etc. Unless Buffett is going to outlaw parents doing those activities then there will still be a divide between those who have the money and inclination to see their child gets the best education available and those that do not have the money or do not have that inclination.

  17. Another thing that really got me with Buffett was his position on tax rates – when he said that the system was not fair because his secretary paid a higher tax rate than he did. His solution was to increase his and others’ tax rate. Why did he not say there is no reason in the US today for his secretary or those like her to pay such high rates. Also, something else does not jive. Warren has the money to hire the best tax experts. If he is so concerned with the unfairness of his secretary paying such a higher rate that he does, why does he not structure her pay in such a way that she is at the same tax rates at he is?

  18. Gimme Howard, you can keep Warren…

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