Does Billionaire Buffett put profit over principle?

When you’re called “the Oracle of Omaha,” ranked as one of the wealthiest people in the world, and speak with a kind of folksy directness, people listen.

That’s Warren Buffett, the head of Berkshire Hathaway, the huge investment company that seems to operate as a personal extension of the man.

Last week, the firm held its annual shareholders’ meeting in Nebraska, where it is headquartered, and tens of thousands of people attended. The meeting, recalling the hippy gathering decades earlier, is known as the “Woodstock of Capitalism.”

They listened to Buffett answer questions for about five hours, an appearance unlike that of any other corporate leader.

He was asked about his attitude to the tax cuts passed by Congress. He is well known for opposing tax reduction, especially for the wealthy. He complains that his tax rate is less than his secretary’s and generally supports Democrats.

But Buffett had warm words for the Republican tax overhaul. Why? It’s aimed at helping corporations and Berkshire Hathaway more than most.

He said that he does not mix his personal and professional views. He willingly discusses his thoughts on tax cuts, but as the keeper of shareholder interests, he supports tax measures that boost profits, in his company’s case by tens of billions of dollars.

Under the U.S. free enterprise system, profits are the reward investors receive for the risk they take in backing corporations. If the outfit is well run – Buffett is a star at Berkshire – they may expect to see profits boom. His investors are well rewarded.

Buffett made clear that he sees his responsibility as gaining profits for today’s investors. Thanks to his success, investors expect more of the same in the future. But that means Buffett won’t endanger their investment return for his view of taxes, even if he believes tax cutting is contrary to the national interest.

His views echo much of the Trump administration’s economic policy. Across the government, from taxes to the environment to banking, the administration favors corporate interests over policies to fight poverty or climate change or to protect borrowers.

Take environmental policy. President Trump pulled the U.S. out of the Paris climate accord because American participation might limit the use of fossil fuels, especially coal. Companies engaged in extracting and processing these fuels are the chief beneficiaries of his move. Their short-term interest is profits.

When a shareholder raised environmental issues at the Berkshire meeting, Charlie Munger, Buffett’s sidekick, feigned falling asleep. You cannot produce good profits, it seems, if you worry too much about air quality.

Any harmful effects of Trump’s environmental policy are simply denied or delayed, while profit gains may come before the next election. If your constituents are corporate operators, you favor them now and don’t allow views of the long-term effect of climate change to influence your policies.

Though Buffett buys and holds his investments in the belief they will remain profitable for years, Trump does not take the long view. It matters little that coal is fading as it gives way to natural gas and renewable energy, if it can provide an immediate and politically profitable boost.

At least one analyst has pointed out that the Trump policy is not market oriented so much as business oriented. Promoting coal undercuts increased economic efficiency, which is what the market should produce. Helping coal is only about immediate profit and the false promise of retaining jobs in a dying industry.

The effort to promote business over the individual’s interest runs through Trump policy. The tax bill has given the false impression of cuts for average taxpayers. Their withholding has been lowered in hopes of influencing their votes in November.

But next April, when the expected tax refunds for many don’t materialize, they will learn the hard way about short-term fixes. Far greater corporate tax benefits will continue.

The soundness of the banking system, the level playing field of the Internet, and the protection of the shoreline are all being sacrificed to business interests. That’s all right, in theory, because booming business should add jobs, though unemployment is now about as low as it can get.

Buffett is a chronic optimist. He believes the U.S. will survive and flourish, because it always has. He notes the country survived the Civil War. Tell that to people who suffered under Jim Crow laws for another century after the war ended.

Buffett divorces his personal integrity from investment decisions. For a man who invests for the long run, that approach seems to be short-sighted.

Privacy, security, truth vulnerable -- but here’s an answer

You leave your home, get in your car and drive off to shop, go to the bank and say hello to a friend.

As usual, in the rear view mirror, you see a car following you.  It’s not the same car every day, but one’s always there.  The vehicle never comes close, and the driver never tries to talk with you.  But, when you stop, he or she stops, always taking notes.  It’s a bit unnerving.

That really doesn’t happen, at least that you’re aware of.  Not in the world you can see.  But in the invisible world, it is happening all the time.  You are being followed, and some people know almost everything about you. 

What you read, what you write and what you buy, even your political views, can be accessed by corporate and political data collectors or lone hackers.

The explosion of the Internet to allow for massive, personal communication and greater commerce has transformed the world.  Believing in the anonymity provided by huge numbers using social media, many have abandoned their privacy.  Undisciplined use of social media destroys privacy.

While this cannot be undone, it can be slowed. The best way to protect privacy and prevent misuse of the Internet is for individuals to actively protect as much of their privacy as they would like to keep. 

A single tool can increase privacy and also improve security and drastically reduce “fake news.”  Paper.

Privacy begins with communication.  A snail-mail letter goes only to the intended recipient not as a “Reply to All” message.  Because it takes more effort than email or texting, we can think more carefully as we write.  Usually, nobody, except law enforcement, can know what’s in the envelope.

Right now, many people blindly trust billing.  Instead of refusing printed receipts, we should ask for them and review monthly statements from banks and credit card companies.  Look at the Central Maine Power billing investigation, though it only occurred when bills skyrocketed.

Along the same lines, people would do well to obtain and keep bills, statements and tax returns.  They are hard-copy records of their financial lives, not entirely dependent on data stored on remote computers and accessible only through the Internet.

The ‘cloud” in which one can store personal data on a distant computer is a useful idea, but can anyone say with absolute certainty that their information is secure from prying eyes or tampering?  At least, we should print out the most essential records.

Some people remember paper’s value.  While checks are giving way to electronic wallets and transfers, their rate of decline has markedly slowed.

Using checks could even affect retail prices.  Merchants don’t pay for accepting checks, but their credit card charges involve bank fees.  If their costs are lower, some merchants might share the savings. 

How vulnerable is your electric service?  The federal government has reported that Russian hackers have already been able to penetrate some parts of the electric grid.  They could greatly disrupt the economy if they closed down a major part of it.

The electric transmission system was operated for decades using printed manuals.  While it did not work as well as it does today, it still could be operated by people flipping switches.  The problem is that operating manuals have been discarded. Bring back the paper manuals and test operations by the book once a year.

But there’s an even bigger role for paper.  Your vote, even if counted electronically, should be cast on a hand-marked paper ballot. If the Russians undermined electronic tabulation, printed ballots that could be counted manually as a backup. 

By the way, when outsiders try to influence an election by false reports spread over social media, there’s even a paper solution for that.  The newspaper you may now be holding or the verifiable electronic version of it cannot be used by a hacker in China or Russia to lead voters astray.

Russian tampering in the 2016 elections depended mainly on use of the social media, which were never intended to be reliable news sources.  Newspaper reports, subject to review by editors, and clearly identified opinion, like this column, can block freelancing by foreigners. Fact-checking, done by some papers to rebut fake news, also helps.

The electronic age is like the rising tide.  It cannot and should not be stopped.  But it is not a replacement for old-fashioned paper.

The hard copy in our own possession is the best way to maintain privacy, promote security and keep informed.   That’s worth some extra effort on our part.

Media promotes partisan wars: “Let’s you and him fight.”

In a 1930s comic strip, Popeye the Sailor argued heatedly with Bluto, his enormous nemesis. “Let’s you and him fight,” Wimpy urged Popeye. That’s the first known use of the phrase.

Like Wimpy, the national media goads opposing sides into a fight, because a good dispute attracts viewers or readers.

Of course, bitter divisiveness exists between some conservatives and liberals, Republicans and Democrats. Differences run deep, and opinions may cause some to believe their opponents are not only wrong, but bad. Why make it worse?

Here’s a recent story that makes the point. It’s about a U.S. Supreme Court decision that attracted editorial attention last week, because it suggested that a conservative justice had flipped sides.

The decision came on a 5-to-4 vote of the justices. There are supposedly four liberals and four conservatives and possibly one swing justice on the Court.

The big news was Neil Gorsuch, the conservative judge put on the Court by President Trump, had voted with the four liberals. His appointment is one of Trump’s proudest accomplishments, so the implication in some reports was that Gorsuch had surprisingly betrayed Trump.

All of this added up to major news in the conservative-liberal wars. “Gorsuch Sides With Liberal Justices,” trumpeted a Wall Street Journal headline.

The only problem is the case had little to do with ideology. The Supreme Court was struggling, as usual, to determine what the law is.

In 2015, the Court voted 8-1 that a catchall federal law defining a violent felony was so vague that it could not be used in criminal sentencing. In that case, merely carrying an illegal weapon did not necessarily threaten violence. Courts could not interpret the law to make it a violent act.

The decision was written by Justice Antonin Scalia, the conservative hero whose sudden death opened the way to Gorsuch’s appointment as his successor on the Court. All the liberal justices and all the conservatives but one agreed with Scalia.

A week ago, the Court had a similar case. But this time, the language of the law was slightly different, and it did not relate to criminal punishment. The defendant could be thrown out of the country if he had threatened violence.

The four liberals found the law in this case was just about as unclear as in the previous case and the definition of violence too vague to apply. The sole dissenter in the first case kept to his view that neither wording was vague.

The minority in last week’s case thought the catchall language differed enough that this version was not unduly vague. The government argued that expulsion is not the same as being convicted of a crime, so the new language was good enough. One justice thought vagueness only mattered in criminal cases.

Gorsuch agreed with Scalia’s reasoning and said it should apply to civil as well as criminal matters. In other words, the new justice took the same position on vagueness as the conservative idol he replaced. He ended up agreeing with the liberals who stuck to Scalia’s previous decision.

If you find all this either confusing or boring, you can understand why the Supreme Court should be composed of people able to think in depth about the law. But you may also see how, never mind the media coverage, this case had little to do with liberals versus conservatives.

Gorsuch was just doing his job, not fighting an ideological war. But it seemed newsworthy to imply that his decision was an unexpected switch to the left. That beats remarking that the liberals, along with Gorsuch, adopted a conservative position for individual rights against government power.

The media has taken to identifying all federal judges by whether they were appointed by a Republican or Democratic president. The false assumption is that they make decisions based on their political affiliation, though their job is to decide based on the law.

Recently, three judges on a federal appeals courts ruled that the Attorney-General could not cut off some funding for Chicago after he had determined it was a “sanctuary” city. The court found the Constitution’s separation of powers allowed only Congress, not an executive branch official, to make such a decision

The Republican Attorney-General was following directions from a Republican president. All three judges had been appointed by Republican presidents. But their loyalty was to the Constitution not to a political party.

In “Let’s You and Him Fight,” a cartoon film based on the comic strip, Popeye and Bluto fought to a draw.

The media should quit promoting more Popeye-Bluto bouts.

Federal debt out of control, crisis looms

Last week, the U.S. got news of an impending national disaster, a situation that could have “serious negative consequences for the budget and the nation.”

The warning came from the Congressional Budget Office, a rare, nonpartisan federal agency. Almost nobody paid attention.

The threat comes from ever-increasing deficits and an exploding national debt. It is not a bill that will be paid by our grandchildren, as is often said, but one that we will have to begin paying soon.

The national debt will soon be the same size as the value of the country’s entire annual economy.

While the U.S. usually runs deficits, two recent congressional actions have taken the unbalanced budget to a whole new level.

First came the tax cut bill. New breaks were added to the tax code, mainly to benefit the wealthy and corporations. In theory, they would use their added funds to invest. Everybody knew the argument was flimsy that such investment would spur new tax revenues.

The CBO says that effect will last about a year, then melt. The tax cut will never pay for itself.

Without cutting spending, the result is a growing deficit each year.

While revenues were cut, spending was not touched. Then came the spending bill. Congress decided to spend more on almost all government programs.

For the Republicans to gain votes they needed for their expanded defense spending, they agreed to let the Democrats have more funding for their favorite programs. Previously agreed spending caps, applying to both sides, became historic relics.

The Republicans traditionally charged the Democrats with seeking a “tax and spend” economy. The Dems would add more government programs and propose raising taxes to pay for them. Nobody likes higher taxes, so the GOP would be “deficit hawks” and oppose them.

When President Obama proposed more economic stimulus spending, the Republicans opposed it because of increased deficits. Now, the deficit hawks have flown away, though they could reappear just as soon as there’s a Democratic president.

What’s more, technology will reduce payrolls. The economy will take a break from its continuous growth. The effect will be even less tax revenues.

How does the U.S. pay for the growing annual deficit? It borrows the money. It can borrow because the U.S. dollar is the world’s standard, based on the belief that the country always pays its debts.

Spending on “mandatory” programs like Social Security and Medicare now accounts for 62 percent of all outlays. “Discretionary” programs take 30 percent with half of that going to defense. The fastest growing portion is interest on the national debt, now amounting to 8 percent.

Because the size of the debt will soon come to equal all national output, the CBO warns of a “fiscal crisis,” a situation in which the government can’t pay its bills. The effect of this crisis would quickly spread across the entire economy.

Annual shortfalls in the federal budget must be cut to keep the national debt from bringing on this crisis. How can the yearly deficit be reduced?

The government could cut spending. Departing House Speaker Paul Ryan targeted major programs like Social Security and Medicare. Social Security could be made financially healthier without affecting benefits for those who need them. But it’s not realistic to propose across-the-board cuts.

Could we keep borrowing? Debt service costs less than paying the full price. But the CBO says more borrowing will suck money out of the economy, raising interest rates for both the government and the people. That leaves less money for saving and an even bigger federal debt.

The government could simply print more money, almost magically giving itself the ability to pay off its debt. But that would devalue everybody’s dollar, making what people and the government buys more expensive. That amounts to a hidden tax. It would also reduce the world’s confidence in the dollar as the standard currency.

Finally, the government could raise taxes, using the philosophy “there’s no free lunch.” If the people need or want government programs, they should pay for them and not try to pass the cost on to later generations. And it’s not possible to pay only for programs you like.

The alarming CBO report warns that we can no longer pile on the debt and expect future taxpayers to cover the deficit. We must recognize that refusing to increase taxes as spending grows is beginning to fail.

As the report shows, the future is now and the next ten years will only be worse.

The real bottom line? A tax increase becomes inevitable.

RCV demands serious debate, not partisan wars

Maine seems to be enjoying what could turn out to be a long-running political saga.

It began with the 2010 election, when a split electorate made Paul LePage governor, even though he had failed to gain a majority of votes. Frustrated, some saw a solid majority that could have elected an opponent if there had been no split.

Unhappy with the election outcome, they realized that electing governors who had not won an outright majority dated back decades. It looked like it was growing easier for independent candidates, thanks to public financing and the requirement of a relatively low number of nomination signatures.

The solution for some unhappy voters was a system called ranked choice voting. Through a complicated system under which people could vote for more than one candidate at the same time, an artificial majority winner could be guaranteed.

RCV, as it has come to be known, responded to broad unhappiness with LePage and others winning with less than a majority. No other alternative was offered, and voters adopted the RCV proposal.

That might have been the end of the story, except that the Maine Supreme Court opined that RCV violated the state Constitution, notably when it came to electing the governor. Since the 1880s, it had explicitly prescribed a plurality – the person with the most votes wins.

Now, Maine has embarked on what inevitably will be a multi-year story to resolve just how it will vote. This June’s vote is only one chapter.

RCV supporters have taken to claiming the RCV opposition comes from the Republicans. They hope the GOP’s expected lack of popularity in forthcoming elections can be used to leverage support for RCV. You don’t like the GOP, so you must like RCV. That was the theme of a piece in this paper last week.

Well, I am not a Republican, and I have serious reservations about RCV. I agree that we should look for ways to end plurality voting, but think it is far from the best available solution.

There are three reasons for looking for alternatives to RCV.

First, according to data from the Maine Secretary of State, it is the most expensive possible alternative.

Second, it can allow one person’s vote to count more than another’s.

Third, it is not the system in any state, while other states have developed sound ways of ensuring majority winners.

On cost, RCV requires special equipment and transportation, which must be rented for each election. The costs will be borne by both the state and local governments, and should hit seven figures. No alternative requires special equipment or transport of ballots.

This year, the Democrats have seven candidates for governor. Under RCV, you could vote for all seven or fewer in rank order. If your favorite washes out in the system, your second choice vote is then cast. Meanwhile, the voter who picked the leader gets no second vote.

That’s the second problem. One voter can get two or more votes, while others get only one. RCV solves the plurality problem, but only by undermining the principle of “one person, one vote.”

Finally, there are a number of better alternatives. Here are just two.

Some states use run-off voting. If no candidate receives a majority, the top two candidates run again. Voters can experience a new campaign and a chance to compare the two. That’s preferable to having a computer stage the run-off without benefit of an additional campaign.

The cost of run-offs is less than RCV. But run-offs have been criticized because the turnout on the second vote may be low. Not necessarily.

In 2015, the writer of last week’s pro-RCV piece ran for mayor of Lewiston. Under plurality voting, he would have won. But Lewiston uses a run-off, and on the second vote, another candidate received the absolute majority. Turnout was about the same in the two elections.

The coming new system is not RCV, but the “open primary.” A closed primary, now used in Maine, is accessible to party members only, and there is one for each party. An open primary is open to anybody who gets the signatures. Each candidate may declare a party preference. There is one primary for all candidates.

California uses the “Top Two Candidate Open Primary.” Every candidate participates in a single primary and the top two vote getters are on the general election ballot. In practice, the system reduces the chance for spoilers, but encourages more candidates, just as is claimed for RCV.

In 2016, among candidates for the U.S. Senate, Californians picked two Democrats for the general election. In the primary, there were 14 candidates from four parties receiving more than one percent of the vote.

How we vote should not be a partisan matter. It should be a question of good government with the intent to build a consensus on the best way to replace the plurality vote. Everything should be on the table – and soon.

Tampering, voter suppression threaten elections

This year’s elections will be confusing and possibly corrupt.

Voting used to be a routine process in which people had confidence. But the ways it is being undermined have only recently begun to be understood, raising real questions about just how “free and fair” elections really are.

Begin with the obvious Russian efforts to undermine voting. They are meant to destroy Americans’ confidence in our own political system far more than to dictate election winners.

The Russians admit nothing, but continue trying to tamper with vulnerable election systems in the U.S. and many European countries. They see election tampering as a war they can win.

They can mess with state voter lists. That means that everything in the election process should be backed up on paper and hand checked well before Election Day. Use electronics, but back up in hard copy. Creating smaller precincts, as in Canada, would help ensure local officials knew their voters.

While the Russians try to harm electoral operations, the Republican Party simply wants to keep people from voting – voter suppression. Using false assertions of voter fraud, states under its control impose voting access rules aimed at blocking likely Democratic supporters.

Its tactics range from higher voter ID requirements, which impose complexity and cost on lower income voters, to cutting hours and days for voting. The GOP faces increasing opposition to its moves, but opponents need to help people comply with the tougher laws.

Another openly announced GOP policy is gerrymandering, designed to reduce the number of Democrats elected to state legislatures and Congress. Under this system, bizarre district lines are drawn to cram as many Democrats as possible into one district, allowing the GOP to pick up more seats.

This year, that system will end in Pennsylvania, where the congressional delegation has been 13 Republicans and 5 Democrats. The parties are evenly divided in votes cast statewide, so the likely outcome is nine members each. The GOP sponsors most gerrymandering, but in a few places the Dems do the same.

If efforts to reduce voter suppression and gerrymandering succeed, either the House or Senate or both could flip from GOP control to the Democrats. In today’s negative political atmosphere, many incumbent Republicans have chosen not to seek reelection. Their seats have become more competitive.

The president’s party usually loses seats at mid-term elections. To an unusual degree, the president himself has become what may be the major issue of the election, particularly if discussion of impeachment surfaces.

Given their strong congressional majority, until quite recently the possibility of the GOP losing control of Congress would have seemed impossible. But this array of troublesome developments suggests that control of Congress is a toss-up.

More usually, voters will see presidential hopefuls in both the Democratic and Republican parties helping legislative candidates across the country as a way of building their political organizations for the 2020 primaries. This process should reveal who expects to challenge Trump.

Without election corruption, Maine has managed to add its own level of election confusion. It’s about ranked choice voting.

In a referendum, voters decided to end elections going to the candidate getting the most votes, if less than an absolute majority. RCV allows voters to pick more than one choice, in rank order, with their votes being electronically redistributed until a candidate has a majority.

The Maine Supreme Court found parts of RCV unconstitutional, leading the Legislature to delay its use until the State Constitution was amended. RCV supporters want voters to overturn part of that new law.

In June, the confusion may end up placing Maine voters in an unusual position. They may be asked to cast primary votes using RCV, for the first time ever at any state level, but also if they support the Legislature’s delay. In theory, they could agree to suspend using RCV now, but also cast their primary votes under that system.

Decisions on RCV issues will continue to rest with the Maine Supreme Court. It may take a few years for this confused system to sort itself out, and there could be still other legal challenges. For example, does RCV violate the rule of one person, one vote?

As in any discussion of elections, people are urged to vote. Fair enough, but the system will continue to become more vulnerable unless voters go beyond campaign TV spots to understand the system, candidates and issues.

Those who tamper with the election system try to exploit voters’ ignorance and apathy. To protect free elections, people need to be well-informed not merely well-intentioned.

Trump’s politics of change yields chaos, kills compromise

People say they want change. Politicians promise it.

Barack Obama offered change “we can believe in,” for fear of leaving the false impression that he meant to alter America democracy.

Donald Trump offered change by making proposals that broke with traditional policies. It’s possible that he means to alter American democracy.

Even if many, or even most, people want change, they say they also want it to be bipartisan and carried out peacefully. But these days political change seems to cause chaos. Perhaps what people want – change without chaos – is impossible.

To further complicate the equation, there needs to be some political continuity. Bringing broad change rapidly may produce clean breaks from the past. But previous policy produced some positive results.

Even more important, by recognizing the need for continuity, government can reassure foreign allies and give business the predictability essential for investing and planning.

Despite these considerations, the Trump administration has reduced the formula to its simplest terms. Change equals chaos.

Perhaps the prime reason for pushing change without considering the ensuing confusion is that Trump promised major changes and believes that such promises won him the White House. 

Surprising even himself by winning, he wants to stick with the formula that seems to have worked.

Also, the president’s main focus is himself, so many of his tweeted actions are launched more for their immediate public effect than for their impact, especially long term. In fact, his aides often seem to be chasing after his tweets to deal with the impacts not taken into account.

To be fair, Trump promised change. Many voters, including some of his supporters, thought he would mellow when he learned the difficult political and diplomatic balancing acts that go along with high office. Trump would become a more conventional president. Instead, he stuck to many of his promises.

When observers express surprise at the loyalty of his “core” voters, they may miss the appeal of keeping promises, no matter what they were or their unsuspected implications. For them, Trump may be entirely different from traditional politicians and that, more than policies, is what they want.

Among the problems of governing the way he does is that policy is developed on the fly. Trump reacts to his instincts without talking with advisors. In fact, the high turnover in top administration jobs leaves him with only the most loyal not necessarily the most savvy.

Recently, he launched a trade war with China, ignoring its effect on U.S. consumer prices. He had previously kept his promise to quit the Trans-Pacific Partnership, which he saw only as a bad trade deal rather than as an attempt to encircle China together with a dozen other countries.

He took great credit for a soaring stock market, but failed to recognize that his protectionist trade policy and attacks on Amazon would bring it down.

Trump gets a lot of his policy ideas from Fox News. He likes the outlet because it praises him. It lauds him because he follows Fox’s policy proposals, often based on false data.

One place where Trump’s desire for change has run into some reality is his relationship with Congress. At first, he seemed to believe that his surprise victory should cause Congress to fall in line behind him. He missed the fact the legislators also have real powers, especially when both parties can agree.

That’s what happened with the government spending bill. The parties engaged in horse-trading, but avoided paying the full bill for Trump’s wall, which Mexico was supposed to finance. The president was furious, but bipartisan majorities left him no choice but to sign.

Because of his refusal to learn on the job, it’s likely only two major bills will have passed in the first two years of solid GOP rule – the tax cut and the spending bill. If the Democrats gain this fall, even less will happen before the next presidential election in two years.

Maine echoes Washington. Referendum voters decide to accept federal Medicaid expansion. Gov. LePage creates chaos by refusing to allow it. He continues to believe that he is above mere democracy. Ignoring the law, he closed the prison facility in Washington County. A judge made him reverse course.

With his term ending, LePage won’t learn how to govern in the time left. With two years left in his term, Trump won’t learn how to govern, because of his personal limitations.

Both are right that change is needed. Change requires courage, to be sure, but also some wisdom to keep the chaos under control.