He's ponied up $49,000 to help pay down the national debt. He's simultaneously matching voluntary contributions already made by Rep. Scott Rigell of Virginia.
Yes, $49,000 to Mr. Buffett is the equivalent of 49 pennies to the rest of us (Mr. Buffett is a billionaire and most Americans are thousand-aires or hundred-aires at best, so this is actually pretty accurate).
Buffett had issued a challenge in Time Magazine recently in which he promised to match voluntary contributions for reduction of national debt made by all Republican members of Congress an impressive three for one.
The image below is of the actual letter from Warren to Scott.
Buffet claims that rich folks and politicians competing to see who could donate the most to the feds is a form of competition the American people would applaud?
A competition to see who can throw the most of their money down the grand canyon of federal government deficits? That's worse than watching reality tv and finding out which sap can make the biggest ass of himself in front of millions of viewers.
And what sort of example is this setting? What is the message? That if any of us have any extra cash lying around you ought to send it to the government? The same government which already takes around 40% of your nominal income off the top? We suppose if wrapping foreign aggression and subjugation to a police state in patriotism works, then making this sort of inanity seem patriotic will work, too.
We know there are those who defend taxes no matter what. We hear these people on the radio, see them on political talk shows and read their words in print (mostly in the New York Times). A few of them regularly read this letter and send us notes to stop whining about paying our "fair share".
Of course our own decidedly Austrian stance feeds our love or the agora, the market place, as the best use of all funds, including those funds we can no longer use because the government took them under pain of imprisonment and death...
We maintain in our free market zeal that all needs would be met and all goods and services improved upon via the free market far, far better than they could by taxation and central planning.
(We also call upon history to lighten our burden of proof. The more centralized the economy, the poorer and less sustainable it has been. The freest economy the world had ever seen has become poorer and poorer the more centralized it's become.)
Many would even agree. To a point. Except for things like infrastructure, national defense, public safety and security. And education. And medical services. And retirement income.
Ah, see. That list can keep growing. But let's pretend that most of us can agree on just infrastructure and national defense (the things that even many libertarians would let the feds handle). Do we really buy that the federal government needs nearly half of most of our incomes in order to maintain infrastructure and an army?
Most of us normally don't question how much of our money disappears down the federal maw. Because it generally does no good. We accept that what we supposedly get in return – highways and not going to jail – makes those taxes money well stolen.
But what happens when the cry comes to give even more of our earnings voluntarily? Might not a few us wonder why the enormous chunk we've already been forced to part with proved to be not enough? Just what is happening to all that money? Why are the central government's debt equal to the amount of money the private sector upon which it relies generates every year...while that private sector has already been handing over nearly half its income to the selfsame central government?
We'd warn Mr. Buffett that therein lies the danger in encouraging "voluntary" contributions. People might be willing to let the government take as much as the government decrees it legally can...
They may be willing to lie to themselves about how that legally stolen money is being used...because if they don't pay it, they will surely lose their property and freedom. So they wrap themselves in a comfortable fable in order to blunt the psychological trauma. In this respect they are like the prison punk who after each episode of forced buggery tells himself that his rapist cellmate really actually loves him.
But suggest that what the government needs is the voluntary offering of as much more as possible...and then people might start wondering what they're getting for their money. After all, in every other area of their lives when they voluntarily hand over their money, they get something in return, something that they value more than the money they just handed over.
It could be a cup of coffee, a sandwich, the use of a space for living or to conduct business, a car, a piano, or a laptop, repair of an existing item or building of a new one, performance of a song, and so on. But there was something that the money-giver wanted more than a given amount of money he had on hand. Thus the voluntary exchange was made.
Heck, it could even be an act of charity like the one Warren is trying to encourage among rich people and Republican Congresspersons. But even then the voluntary contributor commits a charitable act, he gets something he values more highly than the money he parts with: the sense of having helped someone far less fortunate than himself. It's the same reason he would give to a relative or other loved one in need. And – this is very important -- we assumed that he'd want the money to be used responsibly, and not enable the recipient to remain eternally dependent.
Note that Mr. Buffett has sheltered the bulk of his billions in a charitable foundation, sheltered from federal tax. Even Mr. Buffett feels that this sort of charity is a better way to give the vast majority of his money away. Else he would have taken those billions out of the foundation and handed it over to the Treasury. He could have added this to any amount he'd match from Republicans who met his challenge.
But it's not like the federal government is some hard luck case who deserves our sympathy and help. If it were a person, the federal government would be the guy in a natty suit, who comes to your store every few weeks to collect "protection" money from you. He would then use that protection money to keep his favorite prostitutes well fed and happy and to make turf war on the other guys running protection rackets.
Further, this shameless gangster would also be hopelessly indebted because of an impressive gambling habit! Never mind that the protection racket he's running is a scam at gunpoint...He's simply a horrible credit risk!
So here is the message:
"Help our government stop having to be in constant debt for its worldwide military presence (among other outright destructive redistributions). Give them more than they already demand from you."
That's right, citizen. Forget buying patriotic war bonds. In times like these, lending the government your savings isn't enough. You ought to give the money and never ask for it back. We'll start by asking the rich.
[Ed. Note: It's laughable to think that Buffett's voluntary contribution would "pay off" any federal debt...it might pay three seconds of the interest on a portion of the $15.2 trillion national debt...A proverbial blink of an eye.
It will take his accountant longer to write the check than it will take the government to spend it.
Aside from the moral hazards we discuss in this issue, Buffett's charitable streak probably doesn't extend pass our borders to the East. Alas, the Chinese are likely far less willing to voluntarily contribute to the U.S. Treasury more than they already have.
And some day they will say, "no more soup for you!" Then the game is up. Over.
See, the Chinese don't need to sell our bonds to create untold havoc on our financial system. They just need to stop buying our bonds...or even the threat of not buying our bonds...that's how fragile and dependent our economic system and government is on things we can no longer control.
We have spent almost a decade studying and writing about these ideas and have come up with a scenario that is getting a lot of attention from our readers. But be warned, you will likely greet our ideas with a healthy dose of skepticism. Which from our experience tells us that we are onto something big.
You can see for yourself here.]
Granted, Mr. Buffett is only asking this sacrifice of those who actually have significant amounts of money left to spare. We suppose it's assumed that "the rich" have tons of money that they're not putting to good use, even after gold-plating their billion-dollar mansions. So why not throw it at the debts the government has run up?
Further he's issued his challenge to Congressional politicians, people who draw paychecks from the government credit card.
But there are plenty of "progressive" thinking people who applaud the example Mr. Buffett is supposedly setting. Entire Web sites are devoted to garnering support for a Buffett-inspired increase in taxes on "the wealthy".
We'd recommend all income earners who aren't already at Mr. Buffett's level of wealth to be very wary of this. The federal income tax itself started as a tiny burden on only the richest in the U.S. Within a century it grew to consume nearly half the income of the middle class as well. The truly wealthy, meanwhile, managed to find ways to shelter most of their money from the income tax after setting the initial example and bearing the initial burden.
Mr. Buffett even uses this point to make his own...that the situation must be re-addressed so that they wealthy are once again paying their "fair share". We note with dismay that the first attempt to soak the rich via the IRS resulted, over time, in those of us making anything above subsistence wages having to fork over half our earnings to the feds.
Not that we think anything particularly sinister is at work here. Though we do find it less than coincidental that this $49,000 show of support comes the day after a popular uprising against wholesale federal-corporate control of the Internet.
Maybe Mr. Buffett really is a paid shill, but we suspect that he's more likely simply an enthusiastic one. He believes. For all his financial and investing acumen, Mr. Buffett rests his economic understanding on some faulty foundations. Like we said, he believes. He honestly believes that money generated privately ought to be then funneled through the central planners to find its best use.
Those who get excited about Mr. Buffett's suggestions and find inspiration in his example also imagine that the federal government would do a better job with the money...that the federal debt as it stands is just a matter of bad luck and not the inevitable result of economic law (As sure as gravity causes objects with mass to be attracted to each other, money stolen by elected officials at gunpoint will allocate resources worse than private interests working under pressure of profit and loss).
You can't really argue with someone who would say these things. Well, you could, but you'd be wasting your time and theirs. It's like the old joke. Don't try to teach a pig to sing. It wastes your time and annoys the pig.
It's not a matter of facts for the facts support liberty and free markets if you want to abolish poverty and raise standards of living across the world. It's a matter of philosophy. Just as it is hard to argue about the nuances of evolutionary biology to a fundamentalist holding his holy text, it is equally hard to talk to a true believer in central planning about why the nuances of human freedom and free markets to improve everything...and why they shouldn't so enthusiastically hand the central planners their money.