As the economy continues to sputter and estimates continue to be revised, one man seems to be able to stir up the media and the web 2.0 world. That man, the “Oracle of Omaha,” “the Woodstock of Capitalism”, Warren Buffett.
Yesterday, as many of you have probably heard, Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America, rising the stock of BoA nearly 25%. As the Bloomberg article relates in the previous link, this is of course not the first time Buffett has made major investments in companies and made huge returns. In the middle of the mortgage crisis, Buffett made a $5 billion investment in Goldman Sachs and made a sweet little return of $1.7 billion.
Buffett also made news in the last few weeks by his seemingly strange challenge to Congress, “Buffett said the rich are “coddled” by Congress “as if we were spotted owls or some other endangered species. While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks,” Buffett wrote in a Sunday New York Times Op-ed.” Liberals cheered everywhere on my Facebook news feed. This is one area where the Sage of St. Louis, or my dad, and Buffett part ways. But, be that as it may…
Why I am bringing this up? When is the last time in history one man has had so much power? One investment, one statement, and the world pays total attention. Of course, through history, there have been many men, and women, of power who usually assert their strength through military might, i.e. Alexander the Great, Julius Caesar, Napoleon, Hitler etc. Their have been men who have had great ideas that in the long term have changed the course of Western history, Socrates, Plato, Jesus, Muhammad, etc. But, what makes Buffett so incredible is the age that he lives in allows him to change multi billion dollar corporations in one quick moment. Some of these corporations are the very ones that in the past have been deemed “too big to fail,” for the good of the rest of the country and by relation the world. If America goes down, so does China, so does Europe and on and on. We have seen this domino effect in full force over the length of this recession (which looks like it is moving towards a double dip). Americans often pride themselves on their individualism and their belief that their actions effect only themselves. This is the way we talk about our ethics. “I am going to do what’s right for me.” Or, “I need to do what I need to do.” Granted, Buffett is in a pretty special role, and that is why I brought him up. He seems to have a unique interconnectedness to the world. But, through our decisions we have given people like him that power. We continue to be dependent on large banks and the government to provide credit for our schooling and our mortgages. Especially Americans have banked on the idea that credit is good in all cases and we are beginning to see that this might not be the best long term perspective.
This is a crucial intersection to me of theology and economics. People like Warren Buffett make decisions that will effect the entire country. I am actually somewhat comfortable with Buffett at that helm. Freakonomics has run a podcast about the way Buffett raised his children and seems to be an extremely ethical and conscientious person. Paul in the New Testament writes, “each of you should look not only into your own interests but also to the interests of others.” The whole Levitical legal code in the Hebrew Bible was given in order for them to live together and live well as a community. The 7 year jubilee and many other laws depict a community that is looking out for all people who will be effected. The problem with the American mentality is that we don’t think like a community. We think like individuals. Our perspectives are too often about instant gratification for ourselves and not up the impending disaster that will come not only to others but us too. I am not saying we are always going to act altruistically or without some self-interest. We have to act in some way with a delayed self-interest but it has to be in a larger community self-interest. What happens to us a people at large, will ultimately effect us as individuals. My dad often says, “a rising tide sinks all ships.” This delayed self-interest has to be able to think beyond what feels good at the moment, despite the difficulty that ensues. Another one of my favorite podcasts, not related to economics, is Radiolab from WNYC. They did a show about the difficulty of forcing that part of ourselves that only seeks instant fulfillment at the expense of long term health.
So what am I arguing for? Economics looks primarily at incentive. I am thankful that Warren Buffett’s incentives are to make money, but he is also concerned about the good of the community he is looking in. I am holding him up as an example, for Americans to consider how their actions although seemingly only effecting themselves have a much larger impact. And this large impact will in some cases turn back on them. I think that theology and ethics should guide the interests that Economics studies. But these interests should be long view interests. Not immediate self-gratifying ones. Thoughts? Please make a comment! I might be totally wrong.