Is Warren Buffett right about American children?(Read article summary)
In his annual letter to shareholders, billionaire businessman Warren Buffett expresses bright optimism about America's future generations.
Nati Harnik/Associated Press
Even for America’s most economically desolate, Warren Buffett is hopeful.
In his annual letter to the shareholders of his company, Berkshire Hathaway, the 85-year-old business magnate exudes optimism, writing that the babies born today will live “far better” than their parents and that people shouldn’t listen to the “negative drumbeat” of this year’s presidential campaigns.
“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do,” he says in the letter.
“That view is dead wrong: The babies being born in America today are the luckiest crop in history.”
Using humor and lightheartedness, the billionaire goes on to cite increases in the national gross domestic product as the main indicator of economic progress for the future.
“American GDP per capita is now about $56,000,” he says.
Factoring in population growth and migration, there will be “a staggering $19,000 increase in real GDP per capita for the next generation,” Mr. Buffett predicts. “Were that to be distributed equally, the gain would be $76,000 annually for a family of four.”
But he is well-aware of the disparities in today’s wealth. Lightly alluding to the matter of inequality, he suggests that the politics of distribution will be with us forever.
“Though the pie to be shared by the next generation will be far larger than today’s, how it will be divided will remain fiercely contentious,” he says.
But regardless of who the winner is in this perpetual battle, he adds, everyone will be able to enjoy “more goods and services in the future than they have in the past” because of the free market and the innovation it drives.
“My parents, when young, could not envision a television set, nor did I, in my 50s, think I needed a personal computer,” he says. “I now spend ten hours a week playing bridge online. And, as I write this letter, ‘search’ is invaluable to me.”
On a side note, he adds, “ I’m not ready for Tinder, however,” referring to the popular dating app that boasts 50 million users.
The cheerful letter to Buffet's shareholders was accompanied by the fourth-quarter and annual financial results for Berkshire Hathaway. The company’s earnings rose to $24.08 billion last year from $19.87 billion in 2014. And revenue increased more than 13 times – $16 billion to $210.8 billion this past year.
While the investor certainly has reason to be upbeat – Forbes named him the third richest man in the world last year – much of the rest of America is optimistic as well. According to a Pew Research Center survey conducted in 2013, the majority, or 61 percent, of Americans said they believed that their kids would be the same or better off than they are.
But that’s not without a caveat. When asked about the future of “children today” overall, they were largely skeptical. Nearly two-in-three respondents said they’d be financially worse off than their parents.
Buffett, however, is more far-ranging in his optimism.
“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs,” he writes. “And, yes, America’s kids will live far better than their parents did.”