Buffett, Gates, Rockefeller and the Conscience of the Very, Very Rich
Of all the farcical notions put forth during this time of high farce, casting America as “broke” places way up there on the list, as trillions of dollars are being stockpiled in the face of a national downsizing and its attendant growth in misery. Here we sit, a captive national audience to the president’s seemingly daily farce, “We are all in this together”.
Instances of hoarding in U.S. history are many, but the current example stands out for its enduring quality, as Congress reaches deep into corporate pockets, with occasional forays into legislation of the extreme incremental variety. Profits are up 41 percent since Obama’s election; yet half of American workers have suffered a job loss or a cut in hours or wages over the past 30 months— hardly the recipe for togetherness.
More farce: that irresponsibility is the root of poverty, a stalwart theme in American political theater, with the latest reminder from Treasury Secretary Geithner in a New York Times op-ed this month, saluting Americans for “saving more” and “borrowing more responsibly”. These instructions from the government’s top economic point man were imparted in the face of continued wage stagnation, high foreclosure rates and new forms of financial foolery.
Now enter stage left: the ”Great Givers”, they come in the form of American billionaires proposing to give away half their wealth. Beware strangers bearing gifts.
The billionaire pledge – a broadside of noblesse oblige – was formulated by none other than two of the planet’s leading mega-billionaires, Warren Buffett and Bill Gates. These two American moneybags are imploring fellow prophets of profit to address global suffering by earmarking not less than fifty per cent of personal wealth for charity. First discussed at a dinner in May 2009, the specifics are just now surfacing thanks to Carol J. Loomis in the June 16 issue of Fortune.
According to Loomis, Buffett and Gates, who share a commitment to charity and to the Democratic Party, summoned a group of billionaires to dinner in New York City. David Rockefeller — whose granddad cornered the market in kerosene, then gasoline – played host and invited this billionaire boys club to share their calling. Two subsequent dinners were held, expanding the group invited to take the plunge to about thirty. Areas of charitable concern shared by America’s very richest, Loomis says, include “education, culture, hospitals and health, the environment, public policy, the poor generally.” Generally.
Details are scarce because participating billionaires were promised privacy — privacy being a constitutional commitment to enormous wealth. One detail that did get out was the name Buffett assigned his file on this new initiative: “Great Givers”.
It would appear that the ability to give greatly stops at the factory door. Buffett’s billions, for example, include holdings in Wal-Mart, a company fresh from victory in Chicago where, after years of resistance by community forces, construction of its first mega-store was just given a green light. Times as they are, with “jobless recovery” taken to new heights and millions looking for work, Wal-Mart offered a wage of $8.75 per hour to seal the deal. The amount Wal-Mart agreed to pony up is 50 cents over the Illinois minimum; still, at under $20,000 per year gross, no one would argue that it constitutes a living wage. Such are the elements of Great Giving.
Buffett’s profits are not tied exclusively to low wages stateside; his Wal-Mart earnings are a result of paying the lowest garment wages in the world, according to labor rights advocates. Wal-Mart has started moving some of its garment factories out of China, where garment workers have been making the princely sum of $147 per month, to Bangladesh, where monthly earnings total $64, the lowest wage of its kind. In this world of farce these wages are linked to Bangladesh’s low literacy rate—55 percent. Had workers only acquired educations, the master thespians of farce would say, wages would be higher.
It’s not fair, however, to solely tie Buffett’s billions to uneducated Bangladeshis.
This Great Giver also bought a stake in Goldman Sachs and its Ivy-educated money managers, doing his part to rescue the financial system by transferring $5 billion to America’s gilded investment bank (in exchange for a 10 percent per annum return). Yes, this is the same Goldman that last month admitted “a mistake” in selling subprime mortgage bonds destined to collapse; the same Goldman that set aside $9.3 billion the first half of this year for salary and bonuses; and, yes, the same Goldman that orchestrated speculation in the world wheat crop with disastrous results, according to Frederick Kaufman’s cover story in the July issue of Harper’s, “The Food Bubble.” Undoubtedly, Buffett’s due diligence uncovered the following when sizing up the Goldman investment:
“The history of food took an ominous turn in 1991, at a time when no one was paying much attention. That was the year Goldman Sachs decided our daily bread might make an excellent investment…. [W]ith accustomed care and precision, Goldman’s analysts went about transforming food into a concept. They selected eighteen commodifiable ingredients and contrived a financial elixir that included cattle, coffee, cocoa, corn, hogs, and a variety or two of wheat…. They weighted the investment value of each element… that could be expressed as single manifestation, to be known thenceforward as the Goldman Sachs Commodity Index….
“Since Goldman’s innovation, hundreds of billions of new dollars had overwhelmed the actual supply of and actual demand for wheat….
“In 2008, for the first time since such statistics have been kept, the proportion of the world’s population without enough to eat ratcheted upward. The ranks of the hungry had increased in a single year, the most abysmal increase in all of human history.”
Clarifying what the Great Giver Buffett means by the poor generally.
Buffett’s Goldman investment remains solid, as the SEC fined Goldman for its “mistake” what amounted to little more than petty cash — $550 million. It was, according to finance professor Charles Geisst, “like passing around the church collection plate and collecting a few extra bucks for sins.” Geisst summed it up this way: “This is unlikely to change much at all. I think it will be business as usual right away.” More money for Buffett to give greatly.
Warren Buffett’s fellow Giver of Great Gifts, Bill Gates, has diversified his holdings as well. But his tens of billions result chiefly from the company he co-founded and led for decades, Microsoft, where profits remain very strong. “Microsoft Still Earnings Powerhouse,” barked the headline in USA Today, July 23, 2010. In its fledgling years, profits on Gates’ software were reportedly 70 per cent annually. Otherwise, after all, you don’t make upwards of $50 billion charging cost plus five percent.
Current returns for this scion of the responsible class were reported at 48 per cent, as Windows 7, the latest software batch out of Microsoft, led the company’s product pack. “It certainly shows that Office and Windows franchises are as strong as ever and delivering huge revenue,” analyst Brendan Barnicle told the Wall Street Journal recently. Indeed, annual sales have hit new records year after year, tripling to $62.5 billion in fiscal 2010. Net income for Gates’ Microsoft grew from $9.4 billion per year a decade ago to $24.1 billion this year.
Another way to gauge Gates’s billions is by catching a glimpse of the multitudes of students priced out of the computer market – thanks in part to that Great Giver’s expensive software – lined up daily at community college libraries for some free access to computers, each machine an expression of Gates’ creative commitment to profit in the +40 percent range – a gift Gates gave himself that keeps on giving. As Gates told Fortune: “The diversity of American giving is part of its beauty.”
CARL GINSBURG is a journalist in New York City. He can be reached at email@example.com.