Warren Buffett has released his annual encyclical on the need to raise taxes for the wealthy, from theNew York Times, the de facto cathedral of the Church of Enlightened Envy. As usual the arguments make no sense, and conservatives have issued the usual challenges: Capital gains taxes are a second layer of taxation, so it’s irrational to compare that only to a middle class person’s total tax rate; capital gains tax rates are lower because capital is at risk from speculative losses, unlike wage and salary income; capital gains rates are lower because most capital gains are long term, and those are subject to false gains due to inflation, which is not accounted for in capital gains calculations. Buffett’s periodically proposed tax hikes do nothing to deal with the issue of large foundations, like Buffett’s, which shield vast amounts of income from any ‘Buffett Rule.’
Every year he says the rich pay too little, and less than the middle class. Every year conservative think tanks and pundits go to work tearing the reasoning to pieces, and every year Mr. Buffett ignores their reasoning.
Maybe it’s time for us to consider the idea that the usually very rational Buffett is in this case not reasoning at all, but simply emoting. That by adopting the Buffett Rule as the new operating principle of American tax reform, we’re not tapping into the best that his higher brain functions have to offer, but instead taking his own private psycho-drama of paternal conflict and hard coding it into the law of the land.
You see, Mr. Buffett is the son of Howard Buffett, the Ron Paul of the WWII generation. Howard Buffett ran for Congress in 1942 as a harsh critic of the New Deal, and surprisingly, he won. He was an ardent libertarian, friend of Murray Rothbard, and an entrepreneur who built his own stock brokerage firm. He gave gold jewelry as gifts to the women in his life, not principally for adornment purposes, but as an investment against paper money. The Buffetts were committed Christians, members of a conservative Presbyterian Church.
Buffett rebelled against his father. According to Roger Lowenstein’s biography, “Buffett: The Making of an American Capitalist”, if memory serves me correctly, Warren actually visited his sick father in the hospital to announce his shift to liberalism and to the Democratic party, a sure and cruel blow to his father, a four term Congressman who had lost his seat.
Why did Buffett rebel against all that, against his family’s faith and politics? I think a big part of the answer lies with two women.
Howard’s wife, Warren’s mother, Leila Stahl Buffett, who agreed with her husband’s views on both the spiritual and political, bragged that her husband asked one question of every piece of legislation on which he was required to vote: ”Will this add to, or subtract from, human liberty?” Also, according to Buffett and others she was viciously emotionally abusive to Warren, and perhaps mentally unstable herself. Howard was, for whatever reasons, unable or unwilling to protect his son from that.
Eventually Warren met someone who could protect him. Susan Thompson was a friend of Warren’s sister, and a kind of proto-hippie-beatnick. Susan was in full revolt against her own father, a very conservative Christian minister. Her act of rebellion at the time was that she was dating a Jewish man, something her father disapproved of. She was, and remained throughout her life, a kind of hub around which people with similar cultural left sympathies gathered. Warren, an exceptionally socially awkward and isolated young man, saw something both in Susan and her friends which was intoxicating to him. Here in front of him was acceptance, and not just acceptance, but acceptance from a culturally hip group of young people. Behind him were an abusive right-wing Christian mother and a father who offered no protection from her.
Warren set out to win Susan, but instead of only or even principally courting Susan, he courted the father, convincing Reverend Thompson that although Warren was not perfect in the minister’s eyes, he was better than the Jewish boyfriend. Having won the father’s approval, in an act of brilliant emotional arbitrage, he won the daughter. As Buffett said later, “I was just Jewish enough for her, and non-Jewish enough for her father.” By Jewish, of course, the gentile Buffett meant ‘liberal’.
Warren was accepted into Susan’s circle, which at the time was primarily concerned with two main ideas: nuclear freeze and population control. Warren joined the ideological chorus, singing as lustily as the rest. Eventually he and Susan married, but the politics remained the same. Both remained interested in nuclear freeze for decades, as well as population control and its direct offspring, abortion rights. These remained a life-long passion, even an obsession, for both, and has been heavily funded by their foundation. They also made their ideological pilgrimages through the chic ideological and spiritual shrines of the time: est, the New Age movement, etc. But the consistent cause was always abortion, and not just the right to abortion, but abortion itself. There are many who will fund groups which will advocate laws which keep abortion a ‘right’, but few which are willing, as the Buffett foundation was, to actually purchase abortion machinery and donate it to clinics in poor countries.
This was true of the Buffett circle in general, not just of the Buffetts themselves. Charlie Munger, Buffett’s business partner and the alleged conservative of the group, was at a party celebrating the life of one of their members, who was an OB/GYN. One of the group offered a toast to the thousands of babies he had delivered. Munger then asked them to raise a glass to the thousands of babies he didn’t deliver. This sort of thing goes way beyond the language of ‘rights.’
It’s quite clear that Warren was completely bewitched by Susan, but not at all clear if she was by him. In fact, eventually Susan proposed what would become in the modern parlance an open marriage. She moved to San Francisco to pursue her singing career, which went nowhere, and nurture her circle of ideological friends and lovers – on Warren’s dime, of course.
Leaving nothing unaddressed, she arranged for Astrid, an attractive woman of the proper age, to become Warren’s live-in housekeeper and to look after him in whatever ways he needed. Astrid functioned as a kind of wife substitute in all ways except in law while Susan was alive. The odd relationship even evolved to the point where Christmas cards were sent from “Warren, Susie, and Astrid.” Two years after Susan’s death in 2004, Warren and Astrid finally wed.
My point here is not to judge their moral conduct, but to evaluate the degree to which Warren was emotionally captivated by Susan who was at once his ideological mentor, his sexual goddess, his gateway to social acceptance, and his therapist, who Warren would later say pulled out ‘every one’ of the claws that his conservative mother had left in him. She got money and an extraordinary amount of ‘freedom’ for a married woman.
Can anyone seriously believe that Buffett’s ideological break from his parents came only, or even chiefly, from his upper cognitive functions? There is nothing in the biographical material which shows some kind of intellectual ‘aha’ moment. Susan Thompson’s arguments were standard issue liberal slogans. Buffett was a well-educated young man whose father was a Congressman, and he spent a great deal of time in Washington D.C.. Had he really never heard about the dangers of the alleged ‘population explosion’ before? Was this sweet and pretty girl who was everything his mother was not and who seemed for all practical purposes well beyond the social reach of this awkward math geek the first to explain them to him?
I think the simpler explanation is that he made a switch. Like many smitten spouse wannabes, he converted to the faith of the desired one. He made his deal, and she made hers, and he has since then been a reliable verbal (and more reliable financial) supporter of Susan’s causes. Perhaps our logical rebuttals of Buffett’s arguments will not work because it’s not logic we’re rebutting, and his arguments aren’t arguments at all: They’re something deeper in the heart than arguments can reach.
Mr. Bowyer is the author of "The Free Market Capitalists Survival Guide," published by HarperCollins, and a columnist for Forbes.com.
New Time 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for Thursday April 17th, 2014 | John Ransom
New Time 11:20 AM PT: Get the Market Movements in Advance: William's Edge Webinar for Wednesday April 16th, 2014 | John Ransom