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May 11th, 2017 under West Texas Talk » West Texas Talk Highlight

Tap Dancing to Work

By TOM JACOBS

“I tap dance to work each day.” – Warren Buffet, Chairman and CEO of Berkshire Hathaway

Talk about a guy who loves his job! Your Money Man mentions Warren Buffett a lot, and for good reason. Not because he has more money than anyone, depending on the day and price of Berkshire Hathaway stock. Rather, he is no “idle rich,” instead working tirelessly to educate investors and the public. His life has been one long course offered for free, and he loves it.

He is devoted to Berkshire investors – the owners – of whom he is the largest. We learn a lot about that the first weekend of each May, when he and Berkshire’s Vice-Chairman, Charlie Munger, sit in the CenturyLink Center in Omaha, fielding questions from investors for as long as it takes. It’s Berkshire’s annual shareholder meeting, dubbed “Woodstock for Capitalists.” Last weekend, the dynamic Berkshire duo listened and answered for over six hours. Keep in mind that Buffett is 86 and Munger 93. Holy moly!

Buffett in his annual letter details Berkshire’s business operations, but in his and Munger’s Q&A, he addresses issues important to all US business. Here he looks at the greater good, and his stinging rebuke to executives this year was, “Forget taxes. The real problem is health care.”

This is not political, but rather common sense. The current administration is short on facts, but Buffett has some simple ones. For example, far more important than the percentage corporate tax rate of 40%, which with Japan’s is the highest in the world, is the corporate tax’s share of annual GDP (the sum of all goods and services produced in a country in a year).

In 1960, corporate taxes were about 4% of GDP. Now, they are 2%. Corporations are bearing half the national economic burden they did almost six decades ago. Healthcare is different. Buffett stated that about 50 years ago, “health care was 5% of GDP, and now it’s 17%.” It’s more than tripled.

Lost in the healthcare “debate” – if it counts as one – is that it’s good for business and the country if more people are insured. A healthy populace is happier at home and more productive at work. Not only that, but insurance not tied to an employer means that the workforce can move where the jobs are. You and I don’t have to hang on to a job or area so as not to lose healthcare. What sane person would take that risk? Business should want labor to move freely.

We do not have the best healthcare in the world (it’s a fact, look it up), measured by life expectancy, infant mortality, and so on. Yet we pay more for it – and this pre-dates Obamacare by decades, so don’t even go there. Our costs are 17% of GDP, while Germany comes in at 11.3%, Japan at 10.2%, Britain 9.1%, and China 5.5%. Except for China, all have better medical outcomes and overall population health – by any measures – than we do. That, Buffett says, is the issue. If you’re hunting for dinner, do you shoot the largest animal – the biggest buck for the bang – or the smallest? It’s healthcare that’s the problem for business, not taxes.

Buffett is the rare CEO who knows that what is good for business is good for America, and vice versa. What makes him different is that he takes the long view, not what’s expedient today. We should wish him many more years at Berkshire and in the public eye.

 

Tom Jacobs has no magic answers to the healthcare problem, but he is a Marfa-based fee-only Investment Advisor and Portfolio Manager of Huckleberry Capital Management, serving clients of all ages and means throughout the Big Bend, 20 states and three foreign countries. You may contact him for an informal and free consultation at tom@investhuckleberry.com and 432-386-0488.

 

Story filed under: West Texas Talk » West Texas Talk Highlight

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