Maybe he was a member of this board?????

[LC]

True, but as with everything I think there's a line. Buffett said something to the effect of how he could pay thousands of people to sit and paint portraits of him all day for years on end, but it would take away from productive uses in society: those people could be researching diseases, etc. and so he's not going to do that.

 

Now if he said that, I think it's a silly comment.  He knows that artists are artists, and scientists are scientists.

 

An extreme example yes, but take this case:

 

How many talented and potentially great scientists, computer programmers, and IT professionals are/were attracted by lofty salaries to high-frequency trading outfits at JP Morgan, Goldman Sachs, etc. over the last decade?

[JBird]

True, but as with everything I think there's a line. Buffett said something to the effect of how he could pay thousands of people to sit and paint portraits of him all day for years on end, but it would take away from productive uses in society: those people could be researching diseases, etc. and so he's not going to do that.

 

Now if he said that, I think it's a silly comment.  He knows that artists are artists, and scientists are scientists.

 

For what it's worth, here's what LC was quoting: http://youtu.be/VdYxVx3PHxk?t=2m39s

 

Artists are artists until it doesn't pay to be an artist. Generally speaking, laborers follow the money.

[ERICOPOLY]

True, but as with everything I think there's a line. Buffett said something to the effect of how he could pay thousands of people to sit and paint portraits of him all day for years on end, but it would take away from productive uses in society: those people could be researching diseases, etc. and so he's not going to do that.

 

Now if he said that, I think it's a silly comment.  He knows that artists are artists, and scientists are scientists.

 

For what it's worth, here's what LC was quoting: http://youtu.be/VdYxVx3PHxk?t=2m39s

 

Artists are artists until it doesn't pay to be an artist. Generally speaking, laborers follow the money.

 

Trust me on this one and ignore Buffett's jibber jabber -- we are not going to lose our talented scientists to art school.  Can Bill Gates sketch my child for a trillion dollars?  Highly unlikely!  More likely to spin straw into gold.

 

But yes, a scientist can run a hedge fund.  He cannot, however, be an artist unless he has the talent.

[Mephistopheles]

What about an artist who takes a job in medicine or engineering because it's extremely hard to make a living as an artist? You need to have talent to be a good artist, but being a good scientist can be taught (I'm not talking about being a Bill Gates). Now if Buffett decides to hire 10,000 talented artists to paint pictures for him, that may bring those 10,000 people into the field whom otherwise would may have been working in something like medical research.

[JBird]

Trust me on this one and ignore Buffett's jibber jabber -- we are not going to lose our talented scientists to art school.  Can Bill Gates sketch my child for a trillion dollars?  Highly unlikely!  More likely to spin straw into gold.

 

But yes, a scientist can run a hedge fund.  He cannot, however, be an artist unless he has the talent.

 

An employment offer at the right price is going to attract laborers. And a huge sum of capital can command a huge amount of labor. The labor can be used to skip stones across a lake, or perhaps engage in cancer research. The quality of work is irrelevant to my point. I'm only saying people will sign up at the right price.

[DTEJD1997]

Maybe I'm not understanding, but if you are going to give away 100% anyway, does it matter if you compounded it all and then gave it away or gave away your whole life?  Aren't we just choosing who benefits--people now or people later?  Is there a big difference between now-people and later-people?  I'm not sure I particularly care which time period of people I'm helping, but perhaps there is some reason for preference for now-people.

 

I guess you could argue affecting people now is better since they can influence more people, but isn't that similar to the lost-compounding of money that you have given away?  (In other words, does the helping of people now help more over the long term than waiting and giving more away?  That seems very hard to answer, and would dramatically depend on what you were giving to.)

 

Yes, that is indeed a very hard question to answer, and the correct answer may be different for different people...but I am going to argue that we all have an obligation to try and help other in the "here and now".  For example, somebody may DESPERATELY need food, medicine or some other benefit TODAY.  Tomorrow may be too late to help them.

 

The money you give TODAY may have a compounding effect GREATER than any investing return you may make on it.  For example, helping somebody today will enable them to get their life back on track.  Them getting their life back on track may keep their family together.  Keeping their family together keeps their kids out of trouble, and has a positive cascading effect.

 

 

 

 

 

[ERICOPOLY]

What about an artist who takes a job in medicine or engineering because it's extremely hard to make a living as an artist? You need to have talent to be a good artist, but being a good scientist can be taught (I'm not talking about being a Bill Gates). Now if Buffett decides to hire 10,000 talented artists to paint pictures for him, that may bring those 10,000 people into the field whom otherwise would may have been working in something like medical research.

 

I believe that artists should be artists.  They enrich our lives.

[rmitz]

So if I spend my life investing (current plan) and give the majority of what I have earned to charity since I will not spend most of it, is that good? That money that I am accumulating like a squirrel accumulates nuts, could it not be better used by someone else or society now vs in 10, 20 or 50 years?

 

Of course if I am a good investor, the rate of return will make the pile bigger overtime and may look like a fine endeavour but, again looking at point #1 and #2, it is someone else money that I am hoarding or society's money. That money could have been spent on some goods and make someone work right way. That is even if it was spent on some lavish spending. It could also have been reinvested in some new technology helping the human condition earlier which is now not possible since I am holding that capital.

 

It may sound like doing Robin Hood's work but, sometimes I wonder.

 

A very important observation.  My personal inclination here is to not hold back on things you need or want, but with an eye to possibly paying more for things if they are manufactured in a way that supports people you want to support, ideally with better quality as well.

 

One of the things that rubs me wrong about the list of capital hoarders above is that having good clothes (i.e. not worn, without holes, stains, etc.) is not only a sign of respect for yourself, but also a sign of respect for others.  I believe most of those folks came though the depression, thus were scarred in their mentality for reasonable consumption.  Now, I don't believe consumption is a sustainable way for a society to live; given the level of automation, we simply don't need everybody working to supply a ludicrous amount of material goods, so there will have to be another solution eventually.  I think the biggest hurdle to overcome is the viewpoint that people need to work to be valued to society; we simply do not need that many workers.

 

Regarding another point; if you live long enough, you don't have to be good at capital allocation to gather a lot of capital.

[rmitz]

Maybe I'm not understanding, but if you are going to give away 100% anyway, does it matter if you compounded it all and then gave it away or gave away your whole life?  Aren't we just choosing who benefits--people now or people later?  Is there a big difference between now-people and later-people?  I'm not sure I particularly care which time period of people I'm helping, but perhaps there is some reason for preference for now-people.

 

I guess you could argue affecting people now is better since they can influence more people, but isn't that similar to the lost-compounding of money that you have given away?  (In other words, does the helping of people now help more over the long term than waiting and giving more away?  That seems very hard to answer, and would dramatically depend on what you were giving to.)

 

Yes.  In either case, you have compounding.  You need to grow to a certain size before you can work on certain problems, at least with your own capital, but education, sanitation, etc, have real (and arguably huge) compounding effects.  Easily in the multi-bagger territory, though any specific number I would pull out of thin air.  They just don't flow back to you directly.  Obviously, this is BillG's approach.  Philanthropy can definitely be done poorly as well.

[Kraven]

True, but as with everything I think there's a line. Buffett said something to the effect of how he could pay thousands of people to sit and paint portraits of him all day for years on end, but it would take away from productive uses in society: those people could be researching diseases, etc. and so he's not going to do that.

 

Now if he said that, I think it's a silly comment.  He knows that artists are artists, and scientists are scientists.

 

For what it's worth, here's what LC was quoting: http://youtu.be/VdYxVx3PHxk?t=2m39s

 

Artists are artists until it doesn't pay to be an artist. Generally speaking, laborers follow the money.

 

Trust me on this one and ignore Buffett's jibber jabber -- we are not going to lose our talented scientists to art school.  Can Bill Gates sketch my child for a trillion dollars?  Highly unlikely!  More likely to spin straw into gold.

 

But yes, a scientist can run a hedge fund.  He cannot, however, be an artist unless he has the talent.

 

+1  Buffett's argument, like everyone else who makes that argument, is seriously flawed.  I've heard it in many different contexts and it's almost always wrong.  The assumption that if someone wasn't doing something unproductive or sub-productive that they would be doing something wonderful is nice in theory, but not realistic.  People do what they do.  Someone painting Buffett's picture, as Eric said, isn't going to be finding the cure for cancer if they weren't.  Instead they'll be sitting around in their living room watching soaps and attempting to figure out how to make it through life.  But Buffett doesn't want to acknowledge this, so instead he claims he's doing them and society a favor.  Meanwhile, he just doesn't want to spend the money on the portrait.  Why should he when thousands of adoring fans would happily paint him one for free?

 

This argument is used all the time in business.  Don't take "poor business" J.P. Morgan had admonished.  This led to the modern mantra of don't take unprofitable business with profitability determined by a black box like process.  The assumption was always that if you weren't doing that unprofitable business you'd be doing some huge piece of business instead.  Life doesn't work that way.  In most cases whatever business someone had, that was it.  It wasn't either/or in most cases.

[Cardboard]

It seems to me that some PHD in economics must have come up with some equation to determine the advantages and disadvantages of that model: "Save, Invest, Give away" vs "Save, Invest, Spend it all".

 

If the model is beneficial to the world on a "net" basis and one is a great compounder (wired for that), then the only answer is for one to give it all once the compounding talent is exhausted or at last breath. For that, I would think that the answer lies once one cannot compound any faster than world's GDP growth rate.

 

To give some before in very limited fashion seems to make the most sense if that is true. And to do volunteering seems like the best way to give now assuming that it does not take too much time away from the compounding part. To give a lot like Buffett before death seems like a disservice. Almost seems like someone wanting to attract fame and recognition while obviously more could be done later on. Finally, the only risk to waiting is that humanity disappears and that money ended up serving no purpose.

 

It is also pretty clear to me that money or capital is simply deviated from one place in society to another via charity. If it is not used on "teach to fish" type of charity, then it may be net negative on a GDP or standard of living improvement standpoint. I realize that I am talking coldly about this but, I would think that Buffett and others have spent some time thinking about it to make sense of it all.

 

Cardboard

 

 

[SharperDingaan]

We live in a world measured on multiple metrics; family, happiness, wealth, health, etc. We know they are interrelated, yet insist on measuring against just one metric - compound growth through to end-of-life. Here lies the richest man on earth .... so what.

 

Some Himalayan nations use Gross National Happiness as their measure of wealth. Laughable to western eyes, but perhaps just maybe ... those monks, who have been around for a very long time, are a little wiser & more worldly than most of us. Wealth is a servant, not the master.

 

Most would argue that if you just make your small part of the world a better place, while you are still living; you have done enough. Different cultures have different approaches, but some money/time/effort out today versus tomorrow is pretty universal; individuals  execute according to what make sense to them.

 

SD

 

[ERICOPOLY]

Laughable to western eyes, but perhaps just maybe ... those monks, who have been around for a very long time, are a little wiser & more worldly than most of us. Wealth is a servant, not the master.

 

We all date back to the same origins in Africa a very long time ago -- so we have all been around for as long as those monks.  Well, I've only been around for 40 years, so plenty are wiser based on how long they've been around.  I had a grandmother that lived to 93, and she was very wise.  Perhaps some of the monks have an edge on her if they are pushing past 93.

 

But are they more worldly?  Well, my grandmother was raised in Finland, married in England, emigrated to Australia, and travelled extensively.  How many cultures and varied peoples do the monks expose themselves to?

[Guest Dazel]

 

 

A kind heart and a curious mind will make anyone rich. Those that are around most wealthy individuals know they are not happy...their families disastrous. That however, does not give them the excuse to be assholes unfortunately, the stereo type is correct. Most fortunes are built on cheating, stealing and lying in some form or another...it is  a big burden to carry.

 

If you are 93 and you are still an asshole...does age really bring wisdom?

 

Dazel.

[SharperDingaan]

Ah, but they keep getting re-incarnated;  you could be talking to the nth version of Adam ..... & he could also have been a few versions of Eve along the way!

 

I am not going to argue with a levitating amped up Lola .... though I would like to know how its done  :D

 

SD

[rkbabang]

http://seattletimes.com/html/localnews/2022337460_childrensdonationxml.html

 

Something else no one is mentioning is that the above story explicitly states why he tried to look poor:

 

“Jack went out of his way to look poor, partly because he didn’t want to be badgered by people who wanted money"

 

Modesty isn't the only reason one would not want to let others know he was rich.  Not wanting to deal with the envy and greed of others is a perfectly legitimate (and selfish) reason to do so.  Maybe he was a saint, or maybe he just thought most people suck.

 

[Guest Dazel]

 

 

I know one thing for sure...he decided "not" to hang out with rich people. The "saint" should have to go hang out in the rich circles and listen to bullshit all day long. The press has it wrong...but capitalism would not work without that premise.

 

As for Monks they beg all day long...how do you think they eat and teach? Donations.

 

Dazel

[Ham Hockers]

 

http://blogs.reuters.com/felix-salmon/2013/12/02/philanthropy-stock-picking-and-presbyterian-frugality/

[zippy1]

 

http://blogs.reuters.com/felix-salmon/2013/12/02/philanthropy-stock-picking-and-presbyterian-frugality/

I just couldn't believe this. The man gave his fortune away when he died and now everyone is setting some high standard saying he has not done enough or well enough. 

 

I would love to know how much Mr. Salmon himself has given to charity over the years :(

 

[rkbabang]

http://blogs.reuters.com/felix-salmon/2013/12/02/philanthropy-stock-picking-and-presbyterian-frugality/

 

Damned if you do, damned if you don't.  A good illustration of why anonymity is a valuable asset while one is still alive.  Being rich is desirable, it gives you options even if in the end you don't exercise them. Being rich and famous, not so much.    He clearly understood that if he were to start giving away millions while alive that he would have to deal with the publicity and envious pricks like the author of the above article second guessing his every move.  IMHO, he made the right call.

[JBird]

+1  Buffett's argument, like everyone else who makes that argument, is seriously flawed.  I've heard it in many different contexts and it's almost always wrong.  The assumption that if someone wasn't doing something unproductive or sub-productive that they would be doing something wonderful is nice in theory, but not realistic.  People do what they do.  Someone painting Buffett's picture, as Eric said, isn't going to be finding the cure for cancer if they weren't. 

 

Buffett could offer 1,000 cancer-researchers $10 million a year to skip stones across a lake. You don't think those researchers would pick up a stone?

 

Instead they'll be sitting around in their living room watching soaps and attempting to figure out how to make it through life.

 

In 1980 there were 6 million farmers in the US. By 1990 there were 3 million. Is it more likely those 3 million ex-farmers spent the 90's watching soaps, or found another line of work? People do what they do until the economics either force them to move on or incentivize them enough to move on.

 

[ERICOPOLY]

Buffett could offer 1,000 cancer-researchers $10 million a year to skip stones across a lake. You don't think those researchers would pick up a stone?

 

Isn't that what Buffett himself did?  He became a useless allocator of capital, getting paid more than $10m a year.  How many cures has he found?  Would we have a cure for cancer if Buffett made less money?

 

What if lawyers were paid less.  Would they be curing cancer?  Perhaps they'd slap spreading cancers with a trespass suit? We haven't yet used their outside the box thinking to approach the cure, I'm sure that's what the problem is.  Damn it.

 

Or how about hotel operators.  Is Trump a would-be scientist, dorky hair and all?  Kill the skin cancers by blocking out the sun with an analogue to the Trump Towers.

 

Is Moynihan a scientist?  What's Angelo Mozillo doing on a Montecito beach when he should be in a lab coat?  Perhaps if we didn't properly document the cancers and sold them with reps and warranties to an unsuspecting alien species, we could rid the human race of them.  If only the CEO didn't get paid as much, he would be the budding scientist we desperately need.

 

Maybe... we already have a lot of bright scientists working on the cancer problem already, and the true problem isn't that a groovy looking UCSB dude is teaching guitar to my daughter on Sunday afternoons (he is) instead of joining the fray.  Just maybe.

[SharperDingaan]

If you ever get the chance to talk to a lottery organizer... ask them privately what proportion of the big prizes ultimately get quietly put back into the pool - at the winners request (ie: won $100M, but gave back $90M); & the reasons why. It is not immaterial .....

 

Most newly rich simply blow up either themselves &/or their family; with surviving generations often ending up as in-breeds because the eligible social circle becomes too small (Various Royal Families). The solution has long been to escape the gilded cage, or procreate all over the place, but you have to be your own person (ie: Henry VIII). Most are not up to it though; hence the drugs, booze, break-ups, hookers, etc. trying to escape.

 

The next time you see/suspect a secret Santa; laugh loud, quietly congratulate them, & ask to talk to him/her over a coffee. The conversations are usually very illuminating, & burgers over a bottle of very lux Chateau Laffite - not particularly unusual.

 

SD

[JBird]

 

Isn't that what Buffett himself did?  He became a useless allocator of capital, getting paid more than $10m a year.  How many cures has he found?  Would we have a cure for cancer if Buffett made less money?

 

I agree that Buffett's work as a capital allocator hasn't much benefited the wider world.

 

What if lawyers were paid less.  Would they be curing cancer?  Perhaps they'd slap spreading cancers with a trespass suit? We haven't yet used their outside the box thinking to approach the cure, I'm sure that's what the problem is.  Damn it.

 

Straw-man arguments are funny, but don't help me change my mind. I'm not arguing that if a group of laborers is given a pay-cut they'll suddenly become cancer-researchers. I'm just saying that incentives determine behavior. Laborers go where the money goes. If a profession offers very high pay, over time more people will enter/ stay in the profession. If a profession offers terrible pay, over time fewer people will enter/ stay in the profession.

 

Maybe... we already have a lot of bright scientists working on the cancer problem already, and the true problem isn't that a groovy looking UCSB dude is teaching guitar to my daughter on Sunday afternoons (he is) instead of joining the fray.  Just maybe.

 

Of course we do. And of course people choosing to teach guitar is not a problem.

 

 

 

[ERICOPOLY]

 

Isn't that what Buffett himself did?  He became a useless allocator of capital, getting paid more than $10m a year.  How many cures has he found?  Would we have a cure for cancer if Buffett made less money?

 

I agree that Buffett's work as a capital allocator hasn't much benefited the wider world.

 

What if lawyers were paid less.  Would they be curing cancer?  Perhaps they'd slap spreading cancers with a trespass suit? We haven't yet used their outside the box thinking to approach the cure, I'm sure that's what the problem is.  Damn it.

 

Straw-man arguments are funny, but don't help me change my mind. I'm not arguing that if a group of laborers is given a pay-cut they'll suddenly become cancer-researchers. I'm just saying that incentives determine behavior. Laborers go where the money goes. If a profession offers very high pay, over time more people will enter/ stay in the profession. If a profession offers terrible pay, over time fewer people will enter/ stay in the profession.

 

Maybe... we already have a lot of bright scientists working on the cancer problem already, and the true problem isn't that a groovy looking UCSB dude is teaching guitar to my daughter on Sunday afternoons (he is) instead of joining the fray.  Just maybe.

 

Of course we do. And of course people choosing to teach guitar is not a problem.

 

Incentives determine behavior.  Yes.

 

That's why artists are not working on Wall Street.  They are incentivized by what they love doing, and it obviously isn't about making money, it's about making art.

 

Do the people going to art school do it because they think they'll be rich?  Uh, of course not.  So Buffett's argument is nonsense.