|Bill Gates and Warren Buffett answering questions from business students at the University of Nebraska |
Legendary American investor Warren Buffett (b. 1930) is to business what Nelson Mandela has been to politics - they stand apart because they are individuals who have gone against the grain in significant ways.
"Let it never be said by future generations that indifference, cynicism or selfishness made us fail to live up to the ideals of humanism which the Nobel Peace Prize encapsulates," Nelson Mandela said on acceptance of the Nobel Peace Prize in 1993 and last June, Warren Buffett announced that he would begin transferring the bulk of his fortune of about $40 billion, to the Bill and Belinda Gates Foundation. He has said that it's almost un-American to pass great wealth to your children.
NBC NEWS REPORT ON WARREN BUFFETT'S JUNE 2006 ANNOUNCEMENT
(Click arrow to load)
When viewing it is best to hit play and immediately hit pause. Wait for the download bar to hit 100% and THEN hit play again. This gets rid of any playback jerkiness resulting from the speed of your connection.
An Irish businessman recently commented that the real thrill of success is to drive to a friend's house in the expensive new car following a business killing and just watch for the momentary expression of envy.
Warren Buffett, the world's second richest person, has shown that success does not have to be defined by conspicuous consumption and Adam Smith, the great advocate of the market would surely approve, if he is somewhere out in the ether.
Warren Buffett, the role model for modern business, is the Finfacts Businessperson of the Year 2006.
Business channel CNBC is my background wallpaper during the business day and in a rare interview CNBC anchor Liz Claman takes an inside look into his surprisingly simple life in "Warren Buffett: The Billionaire Next Door," a one-hour special that first aired last month.
The result is an hour-long fascinating look at the man and an opportunity for viewers to learn firsthand from the world's most famous investor.
Buffet takes Claman on a personal tour of his hometown of Omaha, Nebraska from his grandfather's store where he turned his first profit selling chewing gum and soda, to the $31,500 house he's owned for almost a half-century. The unassuming billionaire says, "I like the way I was living when I was in my 20's. I still like that way…I like to go home and put on a sweat suit."
Buffett owned his first stock at the age of 11, but admits, "I don't know why I wasted time before that stock…I got started late."
In the hour-long special, Claman gets Buffett to open up on a variety of topics such as his gut instincts about business, his feelings about Wall Street, how he feels when he makes a deal, his surprising view about his own tax rate and his $31 billion pledge to the only person in the world with more money, his good friend Bill Gates.
Buffett says on the issue of honesty and ethics that it's easy for him to talk about it but if there were two sick kids in the house without food, he's not sure if he would consider holding up a store.
So how does the second richest man on the planet measure success? "Well," Buffett says, "I would say success is really doing what you love and doing it well…It's simple as that."
Buffett also offers insight into his famed company, Berkshire Hathaway, and what may happen when "The Oracle of Omaha," as Buffett is commonly referred, decides to step down.
Warren Buffett on Inequality in America
We at Finfacts have often reported on the wide gulf between superearners and the rest of workers, in the US.
It's an issue that is a concern for Warren Buffett.
Buffett has opposed repeal of the estate inheritance tax saying that it "would be a terrible mistake," the equivalent of "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics."
"We would regard that as absolute folly in terms of athletic competition," he said.
"We have come closer to a true meritocracy than anywhere else around the world," he said. "You have mobility so people with talents can be put to the best use. Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit."
New York Times columnist Ben Stein wrote last month that he had met Buffett who compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.
It turned out that Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”
Even though Stein says that he agreed with him, he warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.
“There’s class warfare, all right,” Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”
Berkshire’s Corporate Performance vs the Standard & Poor's 500 1965/2005