Mike left an interesting and important question in a comment on a previous post, and I left a much lengthier response than I intended. Nevertheless, why waste all of the time I spent answering it, as well as very good discussion material, in a comment thread? So here is the exchange…
“Question, please reply. Are Warren Buffett and Bill Gates and Donald Trump all socialists? I was wondering cause’ I was under the impression that they were devotees of the capitalist system and they all agree with Obama’s policies and the the things he has done so far. Maybe you can explain cause’ there seems to be a disconnect!”
A great question, Mike; I’m glad you posed it. It is one that can be addressed in a number of ways.
First off, a “devotee” of the capitalist system is, by definition, not a socialist. So either (a) Buffett, Gates and Trump are not socialists, (b) they are not really devoted to capitalism, or (c) there is a disconnect between their actions and their words.
I am going with “c,” which brings us to the question why?
It is important to note that the three men in question are billionaires, not just your run of the mill “rich guy.” Frankly, no matter how much they’re taxed, they’re still going to be insanely wealthy…but more importantly, with such wealth comes connections, influence, and sometimes power. An important misconception needs to be addressed here: very big corporations and the super wealthy more often than not support Democrats, not Republicans. It’s the small businesses, some of which are owned by “rich” people (making over $250,000 a year, as Obama would define it) who generally support Republicans. And, as an aside, it is these small businesses that provide the majority of jobs in this country, and as such, their success is an essential element to rejuvenating the economy.
The “super wealthy,” as I’ll refer to this triumvirate, may very well be capitalists, but they recognize that by supporting increased governmental regulation, they may actually benefit as the owners of large corporations. See, big likes big, and bureaucracy likes bureaucracy. These corporations are bureaucracies in and of themselves. They know the game and they have the means and the people, even entire departments, that know how to work within the government bureaucracy. They can afford lobbyists to make sure that specific regulations will actually help them in the marketplace.
It’s the small businesses that suffer under heavy government regulation and bureaucracy. Sometimes it is extraordinarily expensive for them to comply with specific regulations, and they simply cannot afford to pay the fines associated with not complying. When these small businesses go out of business, it’s the big corporations that benefit…with less competition, more dominance in the marketplace, and a growth opportunity if they choose to buy these smaller companies up. Look at it like this: what can maneuver better and more quickly in the water, an oil tanker or a little speed boat? Obviously, the speed boat. So how does the oil tanker make itself more competitive? By burdening down the speed boat with heavy regulations that necessarily make it less agile.
I think there is a great deal of simple self interest at work here with these guys. The problem, as I see it, is that when you play with fire, sometimes you get burned. As I noted before, with insane wealth comes connections and influence. These guys are hoping that even while they support politicians and policies that are socialist, they will still come out on top. AIG played the game, giving 100K to New York Democrats, but it didn’t save them in the end…they got burned, bad. It’s a dangerous game, but it can also be very profitable. The thing is, only the big corporations can afford to play it, at the expense of small business and the overall economy.
A slight tangent, but still relevant: Republicans would like to see the estate tax, aka the “death tax,” done away with. Warren Buffet supports the estate tax; he also benefits greatly from it. Consider this: Suppose my father owns a small business that he has done very well with and is worth 10 million dollars (remember, large corporations are worth billions of dollars). Then suppose he and my mom both die, and my siblings and I inherit the business. How on earth are we supposed to afford the estate tax on that? We can’t. So we are forced to sell it in order to pay the tax. Along comes Warren Buffet, who frequently buys companies like this at fire sale prices. No wonder he supports the loathsome estate tax. Another misconception dispelled…liberal policies very often help the “big” guy, not the “little” guy.
A quick explanation of the estate tax (thanks Dad):
“Upon your death, the government taxes what property (real estate, bank accounts, stock accounts, partnership, ownership in private companies, etc.) you leave behind. Amounts up to specified limits are excluded. I think the current limit is $3,000,000, but it reverts back to $1,000,000 either next year or in 2011. The tax rate is onerous, about 55%. Most average people don’t have to deal with it, but anyone leaving behind anything above the limits gets hit hard. The typical example is the family farm. The land may be worth a lot of money, but the farm doesn’t produce that much income. If the next generation wants to continue the farm (or family business) they often cannot, as they have to sell it to pay the taxes.”
Another thing to consider about the super wealthy is that perhaps there is an element of guilt associated with having acquired so much. Maybe they honestly just feel better about themselves if they adopt liberalism and allow themselves to be taxed at very high rates. If this is ever the case, I do have a better solution to offer…just give more money charitably. It would certainly be put to much better and more efficient use than having to be funneled through the federal government. Or perhaps these guys think that by embracing liberalism they can deflect some of the hatred that is directed at them by those who think it’s unfair that they have so much. Such hatred does not come from me, by the way; I don’t begrudge people for the money they have.
The most important thing to me, however, is not whether these men are socialists, but whether or not Obama is a socialist…and I would contend that without a doubt he has demonstrated that he is indeed. You may be interested in this post.
Also, back in March,Warren Buffet actually did offer some criticism of Obama. From Hot Air:
“The notable Obama supporter…attacked the President’s overall handling of the economic crisis and the rhetoric about not ‘wasting a good crisis.’ “
Micky Kaus points out that when Buffett critized Obama on CNBC, it became the “first time the MSM has ever ignored Warren Buffett.”