Billionaire Warren Buffett and owner of Berkshire Hathaway (NYSE: BRK-A) held court at the 2020 Berkshire Hathaway annual meeting on May 2, 2020.
In an interview with Yahoo Finance and Becky Quick, Warren Buffett, explains what changes he believes should make sense to reduce the economic inequality between rich and poor in the United States.
The gap between rich and poor has widened in recent years and decades. Stock market legend Warren Buffett believes this trend will continue unless the US government does something about it.
The rich are getting richer, the poor are getting poorer
In the past, the gap between rich and poor was not that big. To illustrate this, stock market legend Warren Buffett goes back a long way: “If you went back to 1800s and 80% of the people were farmers and you were the best farmer in Omaha and I was the worst, the difference in our value could be two to one.” Buffett explains. “They could be worth twice as much if we harvested corn out there or whatever we do or plant.”
But times have changed and so capitalism is doing its part to continue to widen the gap between people “with market knowledge, regardless of market requirements, and others.” unless the government does something […] “.
People who are particularly good at things for which market demand is very high would get extremely high salaries these days.
As a good example, Buffett gives sport: If you are one of the best of the best in a certain field, whether football, basketball or other sports, you are worth millions in our day and age. This is because people want entertainment and the demand for certain sports is particularly high, which is exactly where the money goes.
Nobody should be left behind
CNBC’s Becky Quick asked Mr. Buffett: “Warren, this question comes from Bill Murray, the actor, who is also a shareholder in Berkshire. He says “This pandemic will graduate a new class of war veterans, health care, food supply, deliveries, community services. So many owe so much to these few. How might this great country take our turn and care for all of them?”
Warren Buffett explains his position on this matter:”Well, we won’t be able to pay actually – it’s like people that landed at Normandy or something. The poor, the disadvantaged, they suffer – there’s an unimaginable suffering. And at the same time, they’re doing all these things – they’re working 24-hour days and we don’t even know their names. So we ought to – if we go overboard on something, we ought to do things that can help those people.
“This country – I’ve said this a lot of times before – we are a rich, rich, rich country. And the people that are doing the kind of work that Bill talks about, they’re contributing a whole lot more than some of the people that came out of the right womb, or got lucky and things, or know how to arbitrage bonds or whatever it may be. In a large part, I’m one of those guys. So you really try to create a society that under normal conditions with more than $60,000 of GDP per capita, that anybody that works 40 hours a week can have a decent life without a second job and with a couple of kids. They can’t live like kings, I don’t mean that, but nobody should be left behind.“