Anger, economics, and actuality

warrenbuffett

There is a lot of political chatter these days about this deep anger that so many Americans are said to feel. While I don’t doubt that there is a kernel of truth to that narrative, I do doubt the usual suspects blamed for its origins.

Do people feel betrayed by their politicians? Sure, people have always felt betrayed by politicians.

Do people feel like things are getting worse? Sure, people have always believed things are getting worse.

Do many people think that crime is getting more prevalent, jobs more scarce, and that the standard of living they enjoy is increasingly less available for their children? Absolutely, many people have always felt that way; in all past generations. And while that emotion may be, and may have always been, sincere, there is one thing we should never forget – they are wrong. If we look at the transcript of history, in the short term, they’ve almost always been wrong, and in the long term – they’ve always been wrong. While pessimism is the bread and butter of every right wing, and left wing, demagogue – its historical track record is abysmal.

If you listen to the politicians talking during an election year you would never know it, but, the economy is going strong, and our economic future looks bright. Each generation has enjoyed far more goods and services than the one that came before, and there is no evidence that points to that centuries old trend changing. Crime is down. In fact, violent crime in the United States is down almost 50% from its high in the early 90’s. And the diminishing violence trend isn’t new, it has been going on for thousands of years.

The evidence is clear, my children will live in a much safer world, with a lot less poverty, and a lot more opportunity – for everyone. And while that narrative doesn’t sell papers, garner ratings, or amass fortunes in fund raising efforts, it has one great, irrevocable advantage – it is factually true.

It’s an 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.

That view is dead wrong: The babies being born in America today are the luckiest crop in history.

That quote is from a letter that comes out once a year, written by one of America’s wealthiest businessmen, Warren Buffett, to his Berkshire Hathaway shareholders. You may not agree with all of Buffet’s politics, but you would be foolish to ignore his opinions on this subject. The man has a bank account that testifies to his economic insight. And the strength or lack thereof, of the American economy, affects us all.

His full letter is worth reading, and can be found here:  Buffett’s letter

The Washington Post just published an excellent piece on this letter as well, available here: Washington Post article

Here are some notable excerpts:

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.

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. Just as is now the case, there will be struggles for the increased output of goods and services.

Congress will be the battlefield; money and votes will be the weapons. Lobbying will remain a growth industry.

But even members of the ‘losing’ sides will almost certainly enjoy – as they should – far more goods and services in the future than they have in the past.

American GDP per capita is now about $56,000. As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries.

American efficiency and productivity drove — and will continue to drive — that growth. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.

Productivity, is the all-important factor in America’s economic growth over the past 240 years — a fact lost on too many Americans. That kind of improvement has been the secret sauce of America’s remarkable gains in living standards since the nation’s founding in 1776. Unfortunately, the label of ‘secret’ is appropriate: Too few Americans fully grasp the linkage between productivity and prosperity.

We don’t need to be Pollyanna about the world’s problems. But we need to remember the world has always had problems, and if we were to take a time machine back into past generations, the further we went, the worse they were.

Why is it so important we remember that?

Because real solutions to real problems involve close inspection of not just what we have done wrong, but also, what we have done right. And all the things we do right, are easy to forget, when we listen to politicians during an election year.