The hosts of capitalism’s biggest party endorse the social safety net

Three cheers for wealth—and regulation.
Three cheers for wealth—and regulation.
Image: AP Photo/Nati Harnik
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Berkshire Hathaway’s annual shareholder meeting, taking place today in Omaha, Nebraska, is often likened to a Woodstock festival for capitalists, with parodies of “Empire State of Mind” and “Uptown Funk” praising Berkshire managers blasting over speakers in a packed arena full of khaki pants and zip-up fleece vests.

It’s not the most likely setting for a call for a stronger social safety net.

Asked about his thoughts on increasing tensions between capitalist- and socialist-leaning political forces in the US, Berkshire chairman Warren Buffett confirmed himself as a “card-carrying capitalist.” But, he added, “I also think capitalism does involve regulation. It involves taking care of people who are left behind.”

“I think we’re all in favor of some kind of government social safety net in a country as prosperous as ours,” vice chairman Charlie Munger added, saying his greatest objection to social programs was the “enormous stupidity” with which some of them are managed. “I also think it might be better if we did it [expanded the safety net] more liberally,” he added.

The 95-year-old Munger recently expanded his thoughts on social support in an interview with the Wall Street Journal (paywall). He’s certainly bullish on capitalism, and believes that a certain amount of inequality is an inevitable byproduct of prosperity. But once that prosperity is there, he said, some of it should be invested back into strengthening the society as a whole:

You’ve got to have individual ownership of a lot of things, with somebody getting and gaining for himself, because otherwise you don’t get the plenty. And the only option you have is to make the social safety net big or small, and you can make it stupid or [you can make it] wise[r], the richer you are.

In other words, the better your inequality-producing civilization that produces the plenty is, the more you’ve got to put into the social safety net. Now if you get a place like Denmark or Sweden or something, a lot of these modern students would like it better, free education, free medical care and so forth. And if you have to bet, the United States will be way more like Canada pretty soon, in terms of more free education at the university level and more Medicare and some kind of medicine for all. And that we can afford without ruining the productivity of the civilization.

…. We can afford [a higher minimum wage]. If you make it too high it will be counterproductive but yes, a prosperous civilization can have a higher minimum wage the way it can have a social safety net. Don’t make it too great and you can afford it.