Though the combined net worth of America’s richest people listed in Forbes 400 jumped from $93 billion to $2.3 trillion in only 33 years, Warren Buffett thinks that people are not getting poorer because their peers are getting richer. Mr. Buffett believes that an “advanced market-based economy” is to blame.
In a recent opinion piece, the multi-billionaire argued that in a market-based economy people with specialized skills and expertise such as Steve Jobs, Henry Ford and Sam Walton can follow the American Dream, while people with “common place skills” are doomed to live the “American Nightmare.”
Mr. Buffett acknowledged that the number of Americans that had been living below the poverty line was not significantly reduced from its 1982 level of 15 percent. Two years ago, the figure revolved around 14.5 percent.
However, the CEO of Berkshire Hathaway said that the current state of affairs is not the result of a “conspiracy.” Instead we should put the blame on a really advanced market-based economy that tends to reward extremely talented people and let the rest of the people to “behave well, work hard but hardly get by.”
Mr. Buffett argued that 200 years ago, when technological progress was not so advanced and everybody could perform just about any job, there was no difference in productivity and net worth among extremely talented Americans and those less talented.
But today, not everyone can apply for an attractive job. People need a set of skills, education and extraordinary talent to be able to succeed, leaving the less fortunate behind. However, Mr. Buffett thinks that the poor and the market system are not to blame for the mishap. Instead there is an “economic engine” that favors the most talented people.
Apparently, education could give the poor equal chances, but Mr. Buffett noted that despite having one of the world’s most refined educational systems, most Americans do not fare well, while some of them even struggle for survival.
He explained that an advanced economic system that favors some mental or physical skills would put at a disadvantage a great deal of people just like in professional sports where you need also talent besides training.
As a way out, Warren Buffett proposes two solutions. One should focus on providing people who want to work with an income that would allow them to have a decent lifestyle. The second should focus on implementing the first solution without “distorting our market system.”
Mr. Buffet gives as an example of market distortion the tendency to hike minimum wage. He argues that such policy is extremely harmful to economy because it may trigger unemployment and crush basic-skilled workers.
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