There’s a lot of negativity surrounding the current state of the American economy, particularly in the rhetoric and talking points being broadcast by the 2016 presidential candidates. Though the Obama administration has presided over a seven-year expansion, with unemployment falling below 5%, the economy – several candidates would have you believe – is on the brink of irreversible ruin. While there are some troubling signs out there, this negative spin is is fueling an already angry populace.
But one of America’s most well-regarded and respected business leaders isn’t buying it. This man thinks all of this doom and gloom talk isn’t construct at all, and points to the fact that bemoaning economic conditions in order to build up a messiah-like persona is all a part of a political strategy. That man is Warren Buffett.
In his annual letter to Berkshire Hathaway shareholders, Buffett set the record straight on the American economy – as it’s being portrayed by the candidates. “It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve),” Buffett wrote. “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.”
On the surface, it’s true that today’s children are living more comfortably than any ever have. We have iPads, self-driving cars, and even virtual reality technology to keep us all safe and entertained, whereas a mere century ago, cities were still ankle-deep in horse manure, and life expectancy was decades shorter than it is now. But economically speaking, Buffett’s main point is that America is heads and tails beyond what anyone even thought was possible a generation or two ago.
“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,” Buffett wrote. “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.”
While Buffett’s letter does broadcast some very clear optimism, you can’t blame Americans for being at least a little worried. While it’s true that we’ve seen our major economic indicators improve dramatically over the past six or seven years, there are still troubling rumblings that things are about to get ugly.
If we look at things from a big picture perspective, the very real prospect of wide-scale automation replacing thousands, if not millions of jobs, is something we’re going to need to address. So far, business and political leaders have largely ignored this, but that doesn’t mean that it isn’t in the pipeline. We’re starting to see it in some areas of the economy already, with fast food workers being replaced with kiosks, and Amazon experimenting with new drone delivery systems.
But in a more immediate sphere, the things that have Americans really concerned are related to widening economic equality. Much has been said about the fact that wage growth has been stagnant for decades, and as a result, a majority of Americans have seen an effective raise in purchasing power in quite some time. Meanwhile, we’re seeing the rich get richer. People are feeling that they’re being left behind.
So, it’s understandable that many would feel that they’re caught in a sort of economic limbo – that our current and past leaders have built an unsustainable system that has led to mass disarray. And it’s understandable, from a tactical perspective, that political candidates would want to seize and capitalize on those feelings, by portraying themselves as the only answer to the problems.
But, as Buffett says, they’re not really giving us the whole story. It’s all about keeping things in perspective. Even those who aren’t doing well now, or will struggle in the future, will be miles ahead of where we were in the not too distant past.
“Even members of the ‘losing’ sides will almost certainly enjoy – as they should – far more goods and services in the future than they have in the past. The quality of their increased bounty will also dramatically improve,” Buffett writes. “For 240 years it’s been a terrible mistake to bet against America, and now is no time to start.”