OMAHA — It is called “Woodstock for Capitalists” for a reason.
More than 40,000 investors descended on Omaha this weekend for Berkshire Hathaway’s annual meeting, in celebration of an economic model that has come under attack over the past year by political leaders like Alexandria Ocasio-Cortez as well as billionaires who warn that capitalism could lead to “class warfare.”
The most prominent face of capitalism — Warren Buffett, the avuncular founder of Berkshire and the fourth wealthiest person in the world, worth some $89 billion — appeared to distance himself from many of his peers, who have been apologizing for capitalism of late.
“I’m a card-carrying capitalist,” Mr. Buffett said. “I believe we wouldn’t be sitting here except for the market system,” he added, extolling the state of the economy. “I don’t think the country will go into socialism in 2020 or 2040 or 2060.”
There is something oddly refreshing about Mr. Buffett’s frankness.
Many of today’s business leaders appear to publicly wring their hands over the state of inequality or take moral stands on public policy issues. But when it comes to offering up concrete solutions and actually making the hard decisions that could affect their bottom lines, they have much less to say.
Some billionaires agonize about inequality and the education system, for example, but don’t push for higher taxes on the wealthy to help pay for fixes (one of Mr. Buffett’s preferred remedies). A raft of chief executives who boycotted going to Saudi Arabia after the murder of Jamal Khashoggi last year quickly returned to doing business with the kingdom when the headlines died down.
Mr. Buffett’s moral code is one of being direct, even when it is not politically correct. In his plain-spoken way, Mr. Buffett, a longtime Democrat, acknowledged that the goal of capitalism was “to be more productive all the time, which means turning out the same number of goods with fewer people or churning out more goods, with the same number,” he said.
“That is capitalism.” Two years ago at the same meeting, he bluntly said, “I’m afraid a capitalist system will always hurt some people.”
In some ways, Mr. Buffett may be misunderstood. He is often looked to by his supporters as the conscience of capitalism. And in many ways he is — railing against hedge fund fees and private equity and raising questions about what he considers the ills of business.
But at his core, he believes that the pursuit of capitalism is fundamentally moral — that it creates and produces prosperity and progress even when there are immoral actors and even when it creates inequality.
Asked about the backlash against capitalism, Mr. Buffett and his partner, Charlie Munger, went so far as to dismiss the growing movement among investors and policymakers to fix it by focusing on environmental, social and governance initiatives — known as E.S.G. Mr. Buffett appeared to suggest that the movement is largely virtue-signaling and ultimately counterproductive.
“We are not going to tie up resources doing things just because it is the standard procedure in corporate America,” Mr. Buffett said.
Mr. Munger added: “When it comes to so-called best corporate practices, I think the people that talk about them don’t really know what the best practices are. They determine that on what will sell, not what will work.” He added: “I like our way of doing things better than theirs and I hope to God we never follow their best practices.”
In its filings with the Securities and Exchange Commission, Berkshire explicitly states that it does not consider diversity when hiring board members: “Berkshire does not have a policy regarding the consideration of diversity in identifying nominees for director. In identifying director nominees, the Governance Committee does not seek diversity, however defined. Instead, as previously discussed, the Governance Committee looks for individuals who have very high integrity, business-savvy, an owner-oriented attitude and a deep genuine interest in the company.”
(Mr. Buffett did say that Berkshire’s energy business was focused on generating 100 percent of its energy in Iowa from wind energy, but it was also clear that was a business decision, not one made for moral or public relations reasons.)
He even backed companies and executives that have fallen into disrepute. He said Wells Fargo, one of Berkshire’s largest holdings, had made “mistakes” but defended its former chief executive, Tim Sloan, and contended he was unfairly sacrificed for political reasons. Mr. Sloan was pushed out as regulators cracked down on the bank after a series of scandals.
Some people will read those comments as a setback for those who are trying to push business to be more progressive, inclusive and diverse.
And to some extent, it is a genuine setback that he doesn’t use his soapbox in such a way.
But there is also an underlying truth to many of Mr. Buffett’s words — ones that even the do-gooders among us may heed. For example, Mr. Buffett made a persuasive argument that the obsession among corporate governance experts with appointing so-called independent directors to company boards was one of the great hoaxes perpetrated on public investors.
“The independent directors in many cases are the least independent,” Mr. Buffett said. He explained that many independent directors need the money that comes with being a director, usually an annual fee of about $250,000. “They aren’t going to upset the apple cart,” he said, explaining that these independent directors get put on the compensation committee because they can be controlled.
“How in the world is that independent?” Mr. Buffett exclaimed. “You don’t get invited to be on your boards if you belch too often at the dinner table.”
One prominent chief executive I spoke with after the meeting said he wished he could speak as bluntly as Mr. Buffett. He said in this politically sensitive climate, he often has to tiptoe around controversial topics and at least nod at the societal concern of the moment.
Therein lies the truth of the particular moment that the business community faces and one that, at least so far, Mr. Buffett, at age 88, may be immune from.
And so while Mr. Buffett may have missed an opportunity to use his perch, he comes to his views of a just business world honestly.