Nice Warren Buffet interview
I just read some great comments by Warren Buffet from a fundraiser for Hillary Clinton. Whatever your politics, you have to appreciate the thoughtful responses of the "Sage of Omaha," so different from the usual political blather. Some tidbits, from notes taken at the event by Nick Nejad at Rational Angle:
Q: "Buffett, why are you a Democrat?"A: I have what I call the minus 24 hour genie test. Imagine a genie poofed up 24 hours before you were born and asked you what kind of world you would want to live in. And you being the smart minus 24 hour baby would ask, "what's the catch?" And the genie would respond that you would have to participate in the "ovarian lottery" and draw one of 6 billion tickets. Things such as born United States or Bangladesh; white, brown, or black; male or female; smart or dumb; these would all be completely up to chance. Well then, what kind of world would you create? And my [Buffett's] world would be a society with equality that treated everyone fairly. And the Democrats seem to be better at doing that.
I like to think that, like a lot of people I know, I'm neither a Republican nor a Democrat, but someone who sees a middle road between the extremes that the two parties seem to pander to. I love Buffett's characterization of the social ideal put forth by the Democrats, at the same time as I recognize the idea expressed by the most thoughtful Republicans that harnessing free market economics rather than government intervention may be the best way to reach that ideal. But harnessing the free market is very different from letting it run wild.
What I really want out of politics is for someone to do what they say they'll do, and to have the results tested and evaluated, and changes made based on the results, just as any business has to do in order to succeed. And on that count, the Republicans have failed miserably. They call endlessly for smaller government (a really good idea), but the reality is the exact opposite: government spending (and our national debt) has seen its largest increases under Republican administrations. But the Democrats suffer from their own version of this failing. When a cherished program fails to achieve its promised results, they tend to throw more money at it and don't hold anyone accountable. (Of course, so do the Republicans, just with different programs. Each party spoils some of their children while calling for tough love for the others.)
To riff off George Lakoff's idea in Moral Politics that the two parties reflect different models of government as parent, we have a choice between an authoritarian parent who doesn't follow his own rules, and an over-indulgent parent who doesn't set enough limits. When will we get parents who steer a middle road between the two, supportive yet firm? (I loved Lakoff's book right up till the end, when he threw away his brilliant analysis by saying that studies show that the nurturant mother model is better than the stern father model. Any successful parent knows that you need both!)
Speaking of parenting, Buffett said a few words about that too:
Q: What is the best way to get kids off to the right start?A: The most important job is parenting, and there is no rewind. Imagine if you could get one car of your choice, and get it for nothing. But the catch is you only get one. Well you will do everything and take the best care of it, reading the car manual, garaging it, etc. You should have the same mentality with your kids.
Actually, there's no rewind for anything in life. You only get one. So this is great advice for any situation. It reminds me of a line from a fabulous science-fiction book entitled The Last Dancer. The sentiment went something like this: "Most people say there's nothing worth dying for. But what you do every day is what you're dying for. Make it count."
I also liked Buffett on subprime and derivatives:
Q: Your views on new products such as derivatives, SIVs, etc. ?A: There's utility in securitizations. But the problem is these have become complex and the originators and investors have been stretched so far in part in the whole process. "If you can't make money off the things you do understand, how do you expect to make money off the things you don't?"
This comment goes to the heart of some things I've been thinking about since the spring, when I wrote the Release 2.0 issue Web 2.0 and Wall Street, which we've just recently made available for free download. Web 2.0 and financial markets have a lot in common. Both are highly networked information markets driven by "collective intelligence", with a lot of money at stake. But financial markets have been around a lot longer, and are much bigger and more mature, so I wondered if they might give us insight into possible futures for the Web 2.0 economy.
As we build collective intelligence applications, which are the heart of Web 2.0, we need to make sure that their inner workings remain open and transparent, or we may fall into the same trap that ended up bedeviling Wall Street in this past year, in which no one understood any longer just how the machine they'd built was going to perform, and the Golem was out of control.
tags: buffett, lakoff, politics, web_2.0
| comments: 28
| Sphere It
submit: 
0 TrackBacks
TrackBack URL for this entry: http://orm3.managed.sonic.net/mt/mt-tb.cgi/2720
[12.16.07 09:42 AM]
And let me add that the issue of Release 2.0 that Tim mentions in his post is now free and available to anyone. Just go to http://radar.oreilly.com/r2/release2_0_2.html and click on the yellow "Download Free Issue" button.
[12.16.07 10:08 AM]
I read your post and went away for an hour. But I had to come back and comment. I find my views to be in sync with your views quite frequently. However, I found one phrase in your post particularly troubling:
"I'm neither a Republican nor a Democrat, but someone who sees a middle road between the extremes that the two parties seem to pander to."
I find several things troubling about American politics that may not even be seen by those within the maelstrom.
First, American politics has drifted to the point that it seems the American left is to the right of most other Western democracies. So as the democrats reach for the center, America is necessarily pulled even further to the right.
I hesitate to use the right/left characterization because...
Second, the concept of two and only two parties is troubling. Where is the multiplicity of voice? The diversity of opinions? How can the crowd be wise with two voices?
Third, even otherwise thoughtful Americans seem to relish in being Republican or being Democrat. It is an us versus them mentality that often seems to be more about what your parents were than the values you espouse. It seems to subscribe to the "majority rule" definition of democracy rather than the more subtle "minority rights" definition of democracy.
So, although I applaud your note for seeing something between the two "extremes" you have available, I nonetheless am concerned.
The past few years I have left the sphere of influence of the American media machine and looking at it from afar, I have a genuine fear that Fundamentalism is on tomorrow's menu and that fear, insulation and isolation are perverting the ideals that America stands for.
[12.16.07 10:24 AM]
Brad --
I share your concerns about the rise of fundamentalism and that America is very much on the wrong path. I hope it can right itself, but history suggests otherwise. As a student of Greek and Latin classics, I'm always reminded of the decline of the Roman Republic, and I see many of the same steps playing out here:
* politicians driven by self-interest and cupidity rather than the real needs of the country and its people
* narrow partisanship trumping reasoned decision-making
* the rise of demagoguery
* government using the threat of terrorism to increase central power (yes, this happened in Rome, too. (See http://www.nytimes.com/2006/09/30/opinion/30harris.html for an account.)
But there are even scarier things happening here. When I see the Vice-President of the US doing a keynote at a conference held by Tim LaHaye (he of the "left behind" series about Armageddon), a gathering of folks who see steps towards "the end times" as a good thing, that is truly frightening.
So yes, "middle road" may not be the right term. That being said, I don't think that Europe necessarily has the right answers either. As populations decline in Europe, the civilization we've known is going to have to adapt dramatically.
In the end, if some nut doesn't pull the doomsday trigger, what's going to happen, I think, is that the entire Western democratic model is going to be supplanted by the Singapore model, which is being emulated in China, with a free market overlay on a "benevolent dictatorship."
Thus we make the transition from republic to empire anyway...
[12.16.07 10:55 AM]
Thanks Tim,
Glad to hear that my impressions of your other writings were not misguided. The Roman Empire parallel is one I've thought of before, albeit with much less rigor than you have applied.
I find your views on the direction of Western politics troubling. Although a truly benevolent dictatorship has promise, it is hard to imagine a truly benevolent dictatorship being something that endures unperverted.
Thanks for your original post and for taking the time to respond.
[12.16.07 11:55 AM]
"Actually, there's no rewind for anything in life. You only get one." But you can go out, and after selling off your first car as scrap, do better on your second; kids are for life (yours, theirs, their kids'...)
I'd have less problems with the "anyone can be a millionaire (and ought to vote accordingly)" plank of the Republican party if they, like Buffett, recognized what a crapshoot birth is, and used government to ensure a more level starting point for our citizens; we would be benefiting ourselves as well by expanding that globally. It's a huge resource suck to have hordes of underfed and undereducated humans struggling to survive, and raising those boats too would be wise.
[12.16.07 02:56 PM]
>"...a free market overlay on a "benevolent dictatorship."
Corporate, government dictatorship -- fascism -- is more like it.
[12.16.07 04:39 PM]
When I moved to the US over 11 years ago, one of the first things that struck me was the supposed idea that you had to be a Republican or a Democrat. I still do not understand it. How issues fall conveniently into two camps (e.g. since when did climate change have an ideology?) also befuddles me.
Regardless, one can only hope that you get politicians who think through the implications of their choices. But I blame the voting public too. While politicians pander to lobbyists and funders, people seem to be quite willing not to ask the hard questions and letting the system do its thing.
[12.16.07 05:03 PM]
the illusion of choice.... where is the choice between a and b, when a=b, and c is what you really want?... big shift is a comin' boys, just 'cause god is merciful.... enjoy
[12.16.07 05:07 PM]
"I'm neither a Republican nor a Democrat, but someone who sees a middle road between the extremes that the two parties seem to pander to."
I also have to add that I find it quite disturbing that you could describe the US political parties in this manner.
You have two centerist, corporate, militarist parties that you get to choose from every election season and yet you seem to think that there are "extremes" between these two?
Tim how can you justify this view? Perhaps you have been mired in US politics for some time but I have to say from outside the US your choices seem to be quite narrow. One corporate driven party that ignore the middle class and the poor and another corporate driven party that just ignore the poor.
[12.16.07 08:50 PM]
"harnessing the free market is very different from letting it run wild."
Can you give examples where harnessing the free market by the government is acceptable? I am a champion of the free market. I believe that the ability of two private parties to conduct transactions that are mutually beneficial, without government intervention, is the only way that resources can be properly apportioned. Of course there are cases when the government should step in (the courts deciding when fraud has taken place, for example) But I believe that minimal intervention is necessary. For example, I don't believe that "Big Oil" should be held accountable for any "profiteering." It is not the governments place to decide when there is too much profit in a product. That is a case of the government performing resource allocation. Government controlled resource allocation is quite clearly a form of socialism. I am curious where you draw the lines. When does government intervention become socialism, in your view?
It really is an interesting time in our democracy. Our country is extremely polarized between the "right" and the "left" views. The last time our nation was this polarized over issues, the polarization was much more geographically distinct. We fought a war to decide which side was right. While I don't foresee that happening again, it is compelling to see how entrenched both sides are in their views. And both sides seem to bring a predisposition in to any discussion. This predisposition does not allow the issues that we face today, to be effectively debated. This lack of debate, and the predisposition is what troubles me the most.
[12.17.07 05:54 AM]
"I like to think that, like a lot of people I know, I'm neither a Republican nor a Democrat, but someone who sees a middle road between the extremes that the two parties seem to pander to."
Have you read anything about politics in the rest of the world? If the two major American political parties are extreme in any way, it can only be in the tiny fraction they occupy of a genuinely open political spectrum. Come on.
[12.17.07 06:06 AM]
I'm neither a Republican nor a Democrat, but
someone who sees a middle road between the
extremes that the two parties seem to pander to.
Both parties pander to large corporations. That's it. To suggest that the parties are separated in any way other than by their propaganda machines indicates that you haven't been paying attention for at least ten years, if not twenty.
[12.17.07 09:23 AM]
"harnessing the free market is very different from letting it run wild."
"Can you give examples where harnessing the free market by the government is acceptable? I am a champion of the free market. I believe that the ability of two private parties to conduct transactions that are mutually beneficial, without government intervention, is the only way that resources can be properly apportioned."
Bob, I can give one good example, and it's a killer: In many other nations, broadband end-user service is structurally separated from backbone provision, with the result that broadband penetration is higher than here in the US, costs are lower, and speeds are faster (because the market incentives are aligned with customer benefits).
Here in the US, even the faux regulation that created CLECs was abandoned, and the resulting vertical integration and consolidation has given us a $200-billion swindle as the carriers focus on dragging their feet on infrastructure investment, minimizing their costs, and collecting rents.
[12.17.07 01:01 PM]
I have what I call the minus 24 hour genie test. Imagine a genie poofed up 24 hours before you were born and asked you what kind of world you would want to live in. And you being the smart minus 24 hour baby would ask, "what's the catch?" And the genie would respond that you would have to participate in the "ovarian lottery" and draw one of 6 billion tickets.
Sounds like someone likes John Rawls. This is basically Rawls' "original position" (google it - or look on wikipedia), described in his book "A Theory of Justice." It's a pretty powerful thought exercise, and a difficult philosophy to argue with. Definitely a book worth reading.
[12.17.07 01:26 PM]
"..a middle road between the extremes that the two parties seem to pander to."
You aren't seriously suggesting these 2 parties represent 2 different extremes are you? C'mon, they're basically indistinguishable.
[12.17.07 02:19 PM]
Buffett is cribbing from John Rawls. But before you get too excited about it, read Robert Nozick's "Anarchy, State, and Utopia"... an argument fo libertarianism. You'd need aggressive redistribution to overcome the "ovarian lottery".
[12.17.07 02:56 PM]
@Tim, your reference to the fall of the Roman Empire is apt, but chilling. Unlike at the time of the Romans, today the globe is highly interconnected by technology, culture, economy, migration... So, the fall of today's Roman empire might take down a lot more with it.
@Deepak, I know what you are saying. I moved to the US in 1991 for an MBA degree (U of Texas at Austin). In 1992, I realized that everyone needed to be either democrat or republican. Luckily, we could escape by saying Perot :)
[12.17.07 05:32 PM]
Bob --
Michael Bernstein pointed out one good example of how government can put the free market in harness rather than letting it run wild. Another is the investment that ARPA originally made in networking, which eventually gave us the internet. It was a great example of the government investing in something, then turning it over to the free market when it was launched.
I recently read Tom Standage's book, The Victorian Internet, and it sounds like the first telegraph lines were government funded as well (though they weren't involved in it to the level that they were in the Internet.)
Or how about rural electrification?
We also see the role of government by its absence. The subprime crisis was the result of the free market run wild, with greed driving the boat. Some regulation, looking out for the rights of the consumer, might not have been a bad thing.
I tend to agree that government intervention can be distortive -- e.g. we have the auto and oil industry "baked in" to our economy by tax support for roads vs railroads (which are expected to pay their own way). What appears to be a market choice is actually a structural choice that is maintained by intensive lobbying to make sure that the market doesn't really operate.
But look around the world. No government or excessively weak government tends to mean no rule of law.
The right answer was on the walls of the temple at Delphi: Nothing too much.
[12.17.07 05:52 PM]
chad --
You're dead wrong. While I do agree that the parties are both enmired in the same mesh of lobbyists who direct many of their decisions, there are still huge differences between the parties.
Ask yourself this: if Al Gore had been certified as president in 2000 rather than George Bush
* Would we be enmeshed in a war in Iraq?
* Would the US be stonewalling on climate change?
* Would the federal deficit and government spending have run amok (remembering how Gore led the initiative that shrank the size of government during the Clinton administration - link above)
It amazes me that people can argue that there's no difference. Now, I don't think that the differences always break down along party lines. But the folks who voted for Nader along the "there's no difference" axis have a lot to answer for.
[12.17.07 08:52 PM]
The Last Dancer, along with the two books that precede it, can be downloaded in PDF format, for free, from here:
http://immunitysec.com/resources-dkm.shtml
(This site is approved by the author, Daniel Keys Moran, who wants his books to be read, even though they are currently out of print.)
[12.20.07 10:32 AM]
Tim, I don't think the ARPA example was a good one in this context. Although it is an example of government compensating for market failure (by funding basic and blue-sky R&D) it isn't an example of 'harnessing' the market via regulation.
Another distortive example (there's no lack of these either) are corn subsidies + sugar tariffs which result in corn syrup displacing sugar in most prepared foods, not to mention corn starch, corn oil, etc.
This is particularly noticeable to anyone who has a corn allergy (like my SO). The Farm Bill is desperately in need of reform.
There are also some very interesting mixed blessing/curse examples like universal public education which created a 'platform' of rote factory workers and consumers for the furtherance of the industrial revolution (see John Taylor Gatto's 'Underground History of American Education').
A good point to remember is that large corporations are actually 'regulation agnostic' and don't really have a philosophical stance on the subject. If they profit by pushing regulation, regulation gets pushed. If they profit by pushing deregulation, deregulation gets pushed. In both cases astroturfing organizations and thinktanks get used as catspaws (though not the same ones).
Finally, Tim, don't conflate differences between candidates to differences between parties. I agree that there are big differences between the parties, but particular candidates aren't necessarily emblematic of them.
[12.20.07 11:42 AM]
Michael --
OK. I'll buy that ARPAnet is a different case. But addressing market failure is in fact an important role of government.
And I'll definitely agree that universal public education is definitely a mixed blessing (but so are market-driven initiatives like the internal combustion engine, television, and the web.)
Farm subsidies are a particularly egregious case of government distortion of the market, leading to poor downstream choices. It's shameful to see the feeding frenzy around subsidies around corn-based ethanol, for instance, which is clearly not the right way to address our energy issues.
But I'd add a couple more positive interventions:
* banning lead in paint
* banning DDT
* clean air and water regulations
* national parks
etc.
[12.20.07 07:00 PM]
But addressing market failure is in fact an important role of government.
I agree 100%. Market failures come in two basic flavors: Positive externalities that do not exist (ARPAnet is an example of the government creating one where the market hasn't), and negative externalities that do (or might) exist.
Most of the positive interventions you mention are examples of the second sort ('national parks' is a bit of both), but they are not really examples of 'harnessing' the market, at least not how I understood you to mean it.
Lets take banning lead in paint. This, and other such regulations that are extremely specific are difficult to formulate, update, apply, and enforce. For example, there are plenty of other toxic materials that are still used in paints and enormous resources spent to prevent them from being banned as well.
How much better if there were some way of structuring the market such that companies had a direct financial incentive in providing the least toxic paints possible? One (blue-sky) example might be a new form of product liability that tied some sort of mandatory pro-rated national medical fund contributions to offset the incremental medical costs those toxins create. Perhaps also figure in some common measures of the toxic load in average American bodies.
Or, let's go back to the broadband example. The solution that created the positive externalities of rising broadband adoption, rising speeds, and dropping costs (and avoided the negative externalities we have in the states) was effected via a simple requirement: Thou shalt not be in both the business of providing the network and selling services.
A similar example: media ownership rules, which work much better than trying to mandate diversity directly.
Markets are one of the most powerful tools we have available in our arsenal for effecting change in the world. Hemming them in is very hard (due to the regulatory capture problem), but if we can just point them in the right direction, then everybody wins.
[12.28.07 01:03 PM]
Gentlepersons,
Sadly, government regulation as a method for optimizing the performance of a market has become unworkable, for the simple reason that it's too slow. These days, markets come into being, go unstable, and head for an extreme outcome before the relevant government entities can even fully understand them, much less measure and begin to regulate. One need look no farther than the sub-prime crisis for a perfect example.
I don't know what the solution is. Maybe just "caveat emptor"? That seems a flimsy foundation for a world economy.
[01.02.08 06:27 PM]
"Sadly, government regulation as a method for optimizing the performance of a market has become unworkable, for the simple reason that it's too slow."
Well, that's the exact kind of micro-managing that I was saying wasn't necessarily ideal, giving counter examples where regulation is only used to point a market in the right direction, leaving the actual optimization to market forces. It's obviously not appropriate to all situations, but when it can be made to work it is very powerful.
[01.03.08 12:26 PM]
I find this talk by ken wilber on an integral politics which takes into account classic conservative interior responsibility while acknowledging the liberal embrace of exterior environmental influences to be a very illuminating map for negotiating this kind of territory.
Post A Comment:
Radar RSS feed
Dan [12.16.07 08:30 AM]
'But the Democrats suffer from their own version of this failing. When a cherished program fails to achieve its promised results, they tend to throw more money at it and don't hold anyone accountable. (Of course, so do the Republicans, just with different programs. Each party spoils some of their children while calling for tough love for the others.)'
Ok, just so we're clear--you are talking about a Republican version of a Democratic version of a Republican failing.