Warren Buffett Buffeted
You'll Never Get To Heaven If You Break My Heart
You make the largest donation ever known in the modern world, and you get slagged for it??!! What gives?? Buffett's contribution is not th end of the matter. Many, well-meaning influential people, have come out to critique the donation, motives, heaven/hell concepts, theology, effectiveness, etc... Here are some comments:
Richard Posner (on effectiveness), ex-Chief Judge on US Court of Appeals : "The foundation is an inherently inefficient allocative institution because, much like the government, it is not subject to market tests. There is no way to assess the value of the Gates foundation's expenditures because the foundation is not competing in any product or capital market. (Colleges and most other recipients of charitable gifts, in contrast, compete in product markets.) Gates and Buffett are extremely able businessmen but the Gates foundation is engaged in activities, such as fighting Third World diseases, that are remote from their business experience".
Warren Buffett told a crowd at the New York Public Library that his gift had secured him a cushy place in the afterlife. “There is more than one way to get to heaven, but this is a great way".
Father Richard Dillon, professor of theology, Fordham University: "I’m not surprised to hear that a man like Warren Buffett believes there's nothing he can't conquer based on his money. Not even the Kingdom of Heaven. While no theologian has any insight that will let them state an opinion on the state of an individual's soul, I can say that one doesn't pay one way to Heaven. Then there is a matter of divine grace—which makes the difference. Now I’m sure Buffett’s comment is probably not meant as a theological one. More an off-the-cuff sort of thing. But it is the kind of swashbuckling, self-satisfied remark that is typical of the great American entrepreneur. Once you get to a certain stage in life, with a certain level of wealth, you start to believe you can accomplish anything". Dillon also found the tax-avoidance aspect of Buffett’s gift is also troubling. “It shouldn't be missed, that the one thing he did intend as a serious thing—getting out of taxes. I'm sure it would be an embarrassment to the whole nation to discover how little he pays in taxes. He might make a better example if he paid his taxes and let the normal paths of social welfare distribute his money so that it might make its way to people who the Gates foundation doesn't have in its view. And, of course, it will most likely to glorify them in the processs.”
The financially cynical Wall Street Journal: "Warren Buffett's decision to donate the bulk of his Berkshire Hathaway Inc. shares to charitable foundations weighed on the company's stock amid concern that, as the charities sell shares to fund their projects, it could hurt the stock price in the long term." The article goes on to paint a variety of other scenarios, all hypothetical in the extreme, that serve to throw a dark cloud over Buffett's donation. The charities are going to wantonly cash in shares and hemorrhage money on AIDS research and development projects! If that isn't bad enough, all this reckless benevolence must be a sign that Buffett is on his way out the door. That will surely cause the stock to plummet! As for reporters' fears that billionaire hedge fund managers might lose a few bucks on short-term fluctuations in Berkshire stock, Buffett "estimated that about 15 percent of Berkshire's shares are bought and sold every year, and predicted that the figure would rise to 17 percent if all the charities sell all the stock they receive each year. That is a sizable increase of 13 percent in the annual turnover."
Gal Beckerman, Columbia Journalism Review, rebuttling the Wall Street Journal's article: "But there is only one question that really needs to be answered about this article: Why write it? Is it because the Journal's sources actually stand to profit from the very fluctuations they claim to fear (and profit even more if they can whip up some market hysteria with an article in a prominent business newspaper)? We can only speculate, but there is no doubt that there is a deeply cynical strain of business reporting that has come to reduce everything to numbers, seemingly blind to the reality that business affects people -- real lives that are either trampled or uplifted depending on the decisions of market players like Buffett. That is sad. But who knows? Maybe one day the folks on Wall Street will come to realize that good deeds add value, and maybe the journalists who cover that beat will report on the perfect negative correlation between the rise in Berkshire's stock and the demand for tasteless fortresses and marble statuary in Greenwich, CT".
The Australian (Newspaper) on putting Buffet's generosity into perspective, " "he ain't no Mother Teresa...": "Overlooked in the rush to deify the Oracle of Omaha for deciding to hand over the bulk of his extraordinary personal wealth to the Bill and Melinda Gates Foundation has been the fact that Buffett intends hanging onto some $US6 billion-$US7 billion of his pile. That's about what Rupert Murdoch is worth, so while the clarion call of philanthropy may finally have opened Buffett's bulging wallet, he's not going to be short of a quid.
Unkind you say? Perhaps. But let's call it despair at the truckloads of adoring, money-worshipping drivel written and spoken about Buffett over the past week. That's not to say Buffett's gift - at $US37 billion the largest in philanthropic history - isn't welcome. It is, and it deserves to be applauded. If it helps persuade other billionaire businessmen to send some of theirs the way of good causes, then so much the better. Already there are signs this is happening. But the idea, heard often in the last week, that Buffett is some kind of Wall Street Mother Theresa who has scaled new heights of holiness and become the greatest philanthropist in history is plainly ridiculous. Prior to last week's circus, Buffet was actually renowned as one of corporate America's great tightwads, a man whose charitable deeds amounted to little more than a few million dollars donated each year to an abortion-rights foundation started by his late wife. The fact is that being tight with money has always been a natural state for Buffett, a man who's spent his entire working life on the punt. Like all gamblers, whether they ply their trade at a racetrack, in front of poker machine or by playing the stock market, Buffett's life has been a treadmill of backing a winner, accumulating more money and then having a bigger punt next time round. In this world, cash is everything. Real entrepreneurialism doesn't exist. People like Buffett aren't interested in building a business or trying to mould the future in any way, because they're too busy reading the form. For them, capitalism is just a game. There is no social purpose to what they do. The only purpose is to acquire more and more money. As it has turned out, Buffett has been better at playing this game than just about anyone in history. Shares in his holding company, Berkshire Hathaway, were worth $US15 when he took it over in 1965. Today, they sell for something like $US92,000. But now, at age 75 and with a place in history to think about, Buffett has suddenly decided that the winnings he has hoarded for decades - money he can't possibly spend - might be able to do some good for someone else. Buffett also claimed his philanthropic gesture had been "coming for 50 years" and that there was "never really any other plan" for where the money should go. Fine sentiments but surely, given the extraordinary scale of his wealth, Buffett should have acted sooner. The contrast with his friend Bill Gates is striking. Gates's BMG foundation has been funding education, medical research and helping to alleviate poverty since 1998 when the Microsoft chief was barely into his 40s.
Earlier this month Gates, now in his early 50s, announced he was leaving the day-to-day management of Microsoft to run BMG full time. Gates appeared sensitive to the implied criticism of Buffett in this decision and tried to defend his friend's approach to life. "My situation is very different from his," Gates said. "He's in the job he wants to do for his entire life. I'm unusual in that I have two things that I feel fully engage me." Buffet's record as an asset stripper also seems at odds with the wave of eulogies about his concern for the poor.
Buffett's strategy in taking over a business has always been to cut costs to the bone and require managers to deliver cash surpluses to feed more Berkshire Hathaway forays on the share market. There's nothing wrong with this. Cost-cutting is a normal part of how a business operates. But it's a bit rich when someone who has closed factories and cut payrolls all over the US suddenly starts to feel the suffering of those he's put on the street. Where, for example, was Buffett's concern in 2004 when an underwear manufacturer he owned closed its plant in Cameron County, Texas, eliminating the jobs of 800 workers in an area with a double-digit unemployment and a poverty rate above 30 per cent? The Oracle would no doubt argue that he had shareholder interests to protect. That's fine too, but you can't have it both ways. Yes, you can reach the twilight of your life and decide to give most of your wealth to good causes.
But you can't take that gift and claim to be a genuine, committed philanthropist like Bill Gates and his wife. Nor should you be portrayed that way. People would be better off reflecting on what Buffett said at a recent stockholders meeting when a 14-year-old boy asked him about the key to success. Buffett replied: "It's better to hang out with people better than you. Pick out associates whose behaviour is better than yours and you'll drift in that direction." That's what Buffett has done by giving his money to Bill Gates - that and no more than that."
At the end of it all, here's my two-pence:
1) He could have chosen NOT to give it at all (much like the tightwads Wal-Mart family)
2) Buffett, despite his wisdom, is theologically incorrect - you cannot get to heaven via huge donations, even the Catholic church would not buy that... and definitely not the Protestant faith. By grace and grace of God alone ... sorry, good deeds are a by product of your faith and not a passport.
3) Buffett made too much on the tax aspect, assuming the government will not be able to spend as wisely as he did. I mean, you live in a country, under the laws, security and infra by the government of the country ... "Give to Caeser, what is due to Caesar".
4) It would have been better with more anonymity, but its really quite difficult with such a huge donation.