Warren Buffett’s Annual Shareholder letter is perhaps the most eagerly anticipated, widely read business news report. It came out online last Saturday morning, all 124 pages, and it is fascinating reading since Warren is both a good writer and the world’s third richest person. What stood out most to me was his comment on the economic future of children in America. Many parents wonder and worry if their kids will be better off than they are. Warren says ‘absolutely yes’. Here’s why in his own words.
“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.
That view is dead wrong: The babies being born in America today are the luckiest crop in history.
American GDP per capita is now about $56,000. As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.
Some commentators bemoan our current 2% per year growth in real GDP – and, yes, we would all like to see a higher rate. But let’s do some simple math using the much-lamented 2% figure. That rate, we will see, delivers astounding gains.”
[With a CEO’s passion for the numbers, Mr. Buffett then does the math to show that a generation from now, that seemingly meager 2 percent growth yields an after-inflation GDP increase to $76,000 annually for a family of four. Basically, even at 2% America is growing faster than it is multiplying]
“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honored and perhaps made more generous. And, yes, America’s kids will live far better than their parents did.”
John Osbon – firstname.lastname@example.org