TonyCinTX

Buffett Warned Us in 2003

Nicky: No, a country should NOT be run like a company. The job of government is to do what the private sector WILL NOT DO, or those things that we worry would be corrupted by an explicit profit motive (like law enforcement, the military, licensing of professionals, etc.) This means that the hallmark of a good government program is unprofitability; they build infrastructure, conduct basic research, stop disease, educate children, prevent criminals from committing violent crimes and frauds, run the courts, collect the trash, maintain the sewer system, and prevent employers from enslaving their workers or sacrificing their health and safety for profits.

No business is going to profit from stopping a disease before anybody catches it. We don't want courts or law enforcement to be a pay to play proposition, this creates a caste system where the wealthy are protected by private armies and the poor get screwed. We don't want the sewer and trash to be a profit-oriented operation, or the poor catch and spread disease to all of us.

We don't want schools privatized as profit operations, because we can't hold them accountable until a decade later, after they have taken the money and run.

Businesses engage in short-term R&D that shows a promise of profit; if all research is privatized as for profit operations, basic research grinds to a halt, because the hallmark of **basic** research is we don't know whether it will lead to anything or not, we just want to answer an open question or explore a mystery.

We don't want for-profit enterprises certifying or food is safe, licensing our doctors or lawyers, inspecting our buildings and restaurants or even certifying our drivers, because business would simply be driven to the lowest cost, most corrupt operators imaginable. (Can you spell your name? Okay good, here is your driver's license, and for today's special, here is your license to practice medicine.)

Government is the polar opposite of business. Businesses are psychopathically focused on profit, government is there to provide the counterbalance that keeps businesses from enslaving the population for their own gain.

That in turn is the reason for taxes, you must force businesses to give up a share of the profit to provide this counterbalance, because 95% of them are amoral or immoral and don't give a crap about anything or anyone that doesn't produce a profit.

As for Buffett, half my assets are in BRK.B, there was a brief bubble in it at the beginning of this year but it has returned to its 5 year track of 10.7% return and is undervalued by a few $100 as I write. But I don't think anybody should run the country like a business. That is what got us into the current meltdown.

I don't think the government should be anti-business, we need a balance of for-profit and not-for-profit thinking, and there is a fair level of taxes that isn't socialism. The role of the government is to promote common good, provide security and safety, and ensure businesses aren't exploitive, fraudulent, cooking the books or lying to customers and investors.

The U.S. on the Precipice

huangjin: Programs such as Social Security and Medicare do exactly the opposite of what you claim, they force people TO "save". Yes, I know they are not actually saving and their contributions are redistributed to the elderly. But historically, the problem was that *nobody* saved for retirement. If they did anything, they relied on lifelong employers to fund their retirement, and when those all went under in the Depression everybody was screwed.

We have already tried the alternative to SS, it fails miserably and creates poverty, disease, homelessness and crime. When it comes to planning for retirement, people are no smarter now than they were a century ago. They won't do it! They ignore their financial future and bet on schemes and wild chances and lose all their money! If you completely eliminate their taxes they will bet and lose that, too.

Politicians and corporations are just as bad as individuals, short term thinking is inherent human nature. There is absolutely no evidence that people are "discouraged" from saving by SS, in fact among people under 35 that firmly believe SS will be gone before they retire and they will have to fund their own retirement, they still do not save or invest anywhere close to what that would cost. Education is not the answer either, this same thing holds true for professors and college graduates. THEY JUST DON'T CARE ENOUGH to sacrifice this year's comfort for their future comfort, and NEVER WILL.

Some sort of mandatory, inescapable long term investment combined with a social safety net is the answer, and SS and Medicare taxes are the closest we can come. The big problem with SS and Medicare is they are managed by appointees and politicians that never have to face any consequences for their own short term thinking. But something must be done and this is as close as we get.