Warren Buffett and Other Rich Predators on the Poor

Warren Buffett and Other Rich Predators on the Poor April 27, 2015

Billionaire philanthropist Warren Buffett controls a mobile-home empire that promises low-income borrowers affordable houses. But all too often, it traps those owners in high-interest loans and rapidly depreciating homes.

4 Hear this, you who trample upon the needy,
and bring the poor of the land to an end,
5 saying, “When will the new moon be over,
that we may sell grain?
And the sabbath,
that we may offer wheat for sale,
that we may make the ephah small and the shekel great,
and deal deceitfully with false balances,
6 that we may buy the poor for silver
and the needy for a pair of sandals,
and sell the refuse of the wheat?”

7 The LORD has sworn by the pride of Jacob:
“Surely I will never forget any of their deeds. (Am 8:4–7).

Meanwhile, this distraction technique from the class warriors on the Right continues working like a charm:

Here’s the sleight of hand: It turns out that the working poor don’t control the wages of soldiers, police, EMTs and other grossly abused and exploited workers. The rich for whom FOX acts as propagandist and court prophet do. But instead of directing their fire at the people who send our troops into harms way, or the people who promote the gun culture that keep our police and EMTs so busy, FOX and similar organs of propaganda for the rich always direct middle class rage toward the poor as though they are selfish for wanting a living wage and are somehow guilty of underpaying our troops, cops, and EMTs. Their message is clear, consistent, and a complete lie: “Let us all hate the Bad French Fry Slinger! He is selfishly demanding pay that is nearly the same as–or even more than!–these great heroes! Let us all take up torches and pitchforks and be very angry at this poor slob in his low-paying powerless job because…”

Because what  exactly? Because he’s responsible for depressing the wages of underpaid cops, firefighters, soldiers and EMTs? That’s rubbish. He has no power. He doesn’t sign their paychecks. He (and just as often she) is often on public assistance because the company he works for won’t pay him a living wage and pressures him to go on the dole to supply what they refuse to pay him (which means that, yes, you and I pay taxes so that the company doesn’t have to pay wages–effectively putting companies like Walmart and McDonalds on welfare). But the worker getting ripped off by his company and at the very bottom of the corporate food chain? He and she are struggling to get by on two or three jobs.  Such people have, quite simply, nothing whatsoever to do with whether cops, firefighters, soldier, and EMT’s are not paid a living wage.

On the other hand, the McDonald’s exec has everything to do with how much the French Fry Slinger makes and a vested interest in ginning up public hostility to his attempt to raise his income. Which brings us back to the real purpose of such memes. For as long as you are heaping scorn on the French Fry Slinger for his imaginary greed in desiring a living wage, you are not heaping it on the exec for his real greed in denying it to him. Likewise, as long as you are aiming your outrage at the French Fry Slinger for somehow being mystically to blame for the shameful treatment of the cop, firefighter, EMT and soldier (and their families), you are not aiming it at the people who cheat them out of their just wage and neglect them to death in VA hospitals.

In short, it’s the old strategy of “Divide and conquer.” Don’t get played.

My brethren, show no partiality as you hold the faith of our Lord Jesus Christ, the Lord of glory. For if a man with gold rings and in fine clothing comes into your assembly, and a poor man in shabby clothing also comes in, and you pay attention to the one who wears the fine clothing and say, “Have a seat here, please,” while you say to the poor man, “Stand there,” or, “Sit at my feet,” have you not made distinctions among yourselves, and become judges with evil thoughts? Listen, my beloved brethren. Has not God chosen those who are poor in the world to be rich in faith and heirs of the kingdom which he has promised to those who love him? But you have dishonored the poor man. Is it not the rich who oppress you, is it not they who drag you into court? Is it not they who blaspheme that honorable name which was invoked over you? (Jas 2:1–7)

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  • Joseph

    But, but, but… Buffet drives an old car and doesn’t have a chauffer… he’s an ordinary man like you and me! Do you know how many times I was told that by avid Fox News watchers?

    • Andy, Bad Person

      Buffet was defended by Fox News watchers? He’s a pretty vocal Democrat. Odds are Fox News would be first in line attacking him.

      • Joseph

        Interestingly, many of my family members who are *plugged in* to Fox News love Buffett. The look at him like the poster child of the American dream. Buffett apparently shares much of his stock market insight on Fox News and everyone pays special attention to him as they would their Protestant pastors in their megachurches. He’s like Moses of the stock market for Evangelical Fox News fans.
        .
        And, I’m not kidding, the ‘Good ‘ol Warren is just like you and me’ phrase has been oft repeated by the same Foxheads whenever I criticised him.

        • ManyMoreSpices

          He’s a smart investor. If you put your money where he’s putting his, you’ll probably do well.

          Paying attention to his investment advice/practices is not an endorsement of his political preferences. I think he’s kind of a jerk and many of his political views are awful. But if he says “I’m investing a billion in this railroad,” guess where I’m putting my own money?

  • Andy

    I would add to the issue the “on-call” economy — so many minimum wage employees are on call with the employers – expected to check to see if they are needed before they come to work, receive phone calls to come in early at a moments notice, show up and are sent home, are nt able to get regular shifts so they can plan. Great for the corporations bottom line, not so good for the employee.

    To echo Joseph below a couple of friends who believe every word from Fox News have told me that Warren is just like us – drives his own car and the like.

  • Dan13

    His first sentence said it all, “Wake up America . . . we’re all about the money.”

  • ManyMoreSpices

    “which means that, yes, you and I pay taxes so that the company doesn’t have to pay wages–effectively putting companies like Walmart and McDonalds on welfare”

    This argument is clever and wrong.

    If McDonald’s and Walmart were “on welfare,” their disappearance would result in reduced government expenditures. But what would happen if every McDonald’s and Walmart vanished tomorrow? All the people they employ would lose their jobs, the welfare rolls would swell, and the amount of welfare needed by those employees would increase.

    Moreover, McDonald’s and Walmart receive no benefit from welfare payments made to their employees. The wage for an hour of labor as set by the market is independent of the level of welfare spending. Actually, to the extent there’s an effect on wages at all, the wages demanded by employees probably go up when welfare benefits become more generous. Imagine the seventy-year-old greeter at Walmart. Do you have to pay him more or less to come in to work if the government increases his Social Security check? Obviously more, because he doesn’t need the money as much. Get rid of welfare today and tomorrow Walmart gets to pay even less tomorrow because the labor pool is even more desperate for money.

    This is not a defense of any failure to pay a just wage to employees. But the “the government pays Walmart’s employees so Walmart doesn’t have to” argument is nonsense. This is another bad argument service of a good end, much like the “here are some bad countries that execute criminals” argument against capital punishment.

    • thisismattwade

      I dunno. It smells like your theoretical proposals don’t really square with reality. Why would Wal-Mart encourage workers to sign up for welfare benefits at job orientation if they thought MORE welfare benefits would lead to HIGHER wages? It’s a common problem of our age that people of your ilk try to force reality to square with your theory, instead of just realizing the reality to which Mr. Shea is pointing. I’m told to imagine a 70-year old greeter at Wal-Mart demanding higher wages after his SS benefits increase, when really all I’m seeing is a 70-year old greeter demanding higher wages because his SS benefits and wages aren’t enough.

      • ManyMoreSpices

        Why would Wal-Mart encourage workers to sign up for welfare benefits at job orientation if they thought MORE welfare benefits would lead to HIGHER wages?

        Perhaps it’s because Wal-Mart isn’t the Devil incarnate?

        If people can get by on welfare, they have less incentive to take low-wage jobs. Once they’re in the door, once they’ve agreed on a salary, once they’re working for the company, a little public assistance isn’t going to drive them to quit. (“Oh wait, you mean I’m eligible for food stamps? Forget the rest of this orientation. I’m going home.”) I could see welfare distorting the broader labor pool, though. But your point is well-taken. I’m not sure that this is happening, anyway. I said “probably.”

        Again, I’m not really arguing that. I’m pushing back against the idea that the government subsidizes Walmart.

    • jroberts548

      There’s tons of things the government subsidizes, the disappearance of which would not result in reduced government expenditures. I think you don’t understand what subsidies are. For instance, if mortgages disappeared, that wouldn’t result in reduced government expenditures. HSAs and employer-paid health insurance could disappear, and it wouldn’t necessarily result in reduced government expenditures. It would result in increased tax revenue, but not reduced spending. (Economically, they’re the same thing, but politically we don’t treat them the same, even though we should).

      The government subsidizes many things in ways that don’t always look like spending.

      If workers can’t survive on the wages paid by employers, they won’t work. If it costs $X to feed and house an employee, wages + welfare can’t fall below $X. No one’s going to work for less than $X for very long. If they do work for less than $X, it will only be while incurring debt (and a creditor would be very dumb to lend money to such a worker unless he was likely to earn more than $X) or eating up assets (which will only last for so long). Even if we pretend that people will spend their time working for less than $X while they’re homeless and starving, they’ll still die, and Walmart will have to spend money to hire and train someone else, who will also just die.

      Economically, there’s no difference between giving Walmart money and giving Walmart’s employees money to not die.

      • ManyMoreSpices

        For instance, if mortgages disappeared, that wouldn’t result in reduced government expenditures.

        That’s wrong. It would result in reduced government tax expenditures.

        The mistakes in the remainder of your comment proceed from there.

        • jroberts548

          I know it would result in reduced tax spending. There is not a single politician who acts like they know that tax spending is spending, hence my acknowledgement that we don’t politically treat tax spending like spending. We don’t, but we should. I don’t even see how you thought I made that mistake.

          • ManyMoreSpices

            I don’t know. But if I had to take a wild guess, it’s probably where you wrote:

            There’s tons of things the government subsidizes, the disappearance of which would not result in reduced government expenditures. … For instance, if mortgages disappeared, that wouldn’t result in reduced government expenditures.

            A tax expenditure is an expenditure. If mortgages disappeared, there would be no mortgage tax expenditure, and government expenditures would decrease, irrespective of the words that politicians use to describe the mortgage interest deduction.

            • jroberts548

              Did you not see where I said that that’s the same as spending, but we don’t treat it like that politically? But fine, I’m not interested in arguing over whether I said something I clearly said, or whether you’re arguing in bad faith, so let’s grant, arguendo, that I was unaware that tax spending was spending until you graciously enlightened me, for which I am ever in your debt.

              I’m surprised you can understand that tax spending is spending (which eludes all of our politicians and nearly all voters) but you can’t understand that the government supplementing worker income so that workers don’t starve is a subsidy for employers who would otherwise either have to pay workers more or replace workers who starved to death.

              • ManyMoreSpices

                Because no one’s going to starve to death. Don’t be daft. I’m pretty sure the last person to starve to death in America was Terri Schaivo.

                Your mistake is assuming that Walmart’s employees currently receiving food stamps, government cheese, Social Security, Medicaid, SCHIP, or any other payment from the government would quit their jobs at Walmart, curl up into a ball, and await the sweet embrace of death if the government took away their benefits. That makes no sense. They’d continue to work regardless. They might even work for less.

                Do you really want to know what my problem is with this “expenditure” discussion? Okay, let’s try this:

                You said: “There’s tons of things the government subsidizes, the disappearance of which would not result in reduced government expenditures.” You then used the mortgage interest deduction as an example. But you recognize that that’s an expenditure. So you haven’t provided an example of something the government subsidizes that wouldn’t result in the government spending less if the subsidized thing disappeared.

                • jroberts548

                  And if Walmart didn’t pay them enough to eat? Why would they work for less?

                  • ManyMoreSpices

                    Absolutely irrelevant. No one is starving to death at any wage that Walmart pays.

                    • jroberts548

                      Yes, because Walmart workers are subsidized by the government.

                      We know what happens when there’s no safety net. People have in fact died of malnutrition and starvation, even in America, when the market price for labor wasn’t enough to feed workers plus dependents. This isn’t same great theoretical mystery.

                      Without the government subsidies for cheap labor, the market price for labor would either stay too low for people to eat, and people would starve, or it would rise. Either way, what we have now is a subsidy for both employers and employees.

                    • ManyMoreSpices

                      People have in fact died of malnutrition and starvation, even in America, when the market price for labor wasn’t enough to feed workers plus dependents. This isn’t same great theoretical mystery.

                      Nor is it the argument here.

                      You have contended that without welfare, workers would quit their jobs at Walmart and die. They’d just give up. “Well, Walmart only pays me minimum wage and I can’t get help from the government. Might as well give up on any hope of eating. Goodbye cruel world.” That’s what you’re arguing. That’s absurd. That’s what I’m disputing.

                      And I’m still waiting for you to explain how the disappearance of a subsidized item would not result in reduced government expenditures.

                      Corn is subsidized. Corn disappears. Government spends $0 on corn subsidies.
                      College is subsidized. College disappears. Government spends $0 on college subsidies.
                      Mortgages are subsidized. Mortgages disappear. Government spends $0 on mortgage subsidies.
                      Walmart is subsidized, the argument goes. Walmart disappears. What happens to welfare spending on Walmart’s former workers?

                    • jroberts548

                      I said at first that not all government subsidies look like spending. I incorrectly assumed that you were not someone who understood the concept of tax expenditures, like all of our elected officials and nearly all of our voters. Mea culpa.

                      When we subsidize corn, we indirectly subsidize a lot of things. We subsidize tractors. We subsidize beef. We subsidize chicken. We subsidize gas (sometimes; sometimes we make it more expense because congress is dumb). Corn disappears, you bet your ass we’re going to start directly subsidizing beef, chicken, and tractors,

                      The same is true of mortgages. The mortgage subsidy looks like we’re subsidizing borrowers, and we are. We’re also subsidizing banks and construction workers.

                      The same is true of Walmart. SNAP, TANF, etc. directly subsidizes poor workers. It also makes things a lot cheaper for Walmart.

                      I’m not saying people would stop working if the government didn’t supplement their income and Walmart didn’t pay them enough to live. I said that either Walmart would pay them more, or they wouldn’t work for Walmart for very long. Either way, Walmart benefits.

                      What do you think would happen to Walmart wages without the government subsidizing them? Do you really think Walmart would continue paying their workers less than they need to live?

                    • kenofken

                      No, they’re not starving to death, but the profit of slavery doesn’t come in starving your slaves to death. The economic magic lies in finding the bare minimum you can feed them to produce hard labor without constituting a real operating expense.

                      Minimum-wage workers in this country are essentially slaves. Serfs might be a better analogy. They’re not chattel slaves of course, but to all intents and purposes, they are effectively held in a loose but real bondage among a handful of corporations. The government indeed subsidizes this system because without the welfare net, this serf system could not exist.

                      Minimum wage, or the half-step above many of these companies pay, is not only NOT a “living wage”, it is not truly even a subsistence wage. It’s just enough to keep the worker (not his or her family), alive enough to return to work the next shift. It’s not a wage as much as a voucher for travel, a fast food meal and the clothes they stand up in, with a little bit extra to offset, but by no means cover – housing and other costs of basic living. Food stamps and other welfare programs are just enough to bridge that gap – just enough to create a work force that is not utterly homeless while also being just stable and desperate enough to keep working for the serf minimum wage.

                      Because they have some steady but minimal cash flow and the surety of working under any condition and pay, the working poor also make excellent targets for exploitation in the form of ultra-high interest payday loans and other scams designed for people who have no financial cushion, no credit and no options.

      • The argument Mark is using *is* clever and wrong but you are correct that the error is not that these companies are not on welfare.

  • jaybird1951

    For someone who never watches TV and most certainly not Fox News (or did he mean the Fox Business Channel?), Mark sure presents himself as an expert on the network, the target of so much of his venom and cliched thinking. I watch Fox News in the evening for O’Reilly and Megyn Kelly and have not seen or heard what Mark claims. Certainly, they do not idolize Warren Buffet but he is respected for his expertise in business. I agree with ManyMoreSpices about Buffet. He is a jerk in many ways and is actually closer to the liberals in his sympathies.

    • Mike Petrik

      I seldom watch television news, but my elderly mother is a FoxNews devotee and very informed, even if more thinly so than we might prefer. I asked her what she thought of Warren Buffet, and she claimed to have not heard of him. After some prompting she then recalled who he was but had no opinion at all, which is hugely remarkable in itself.

    • chezami

      The real victims here are FOX and Buffett.

      • Buffet is a very smart snake. GOP/conservative support of him is along the lines of Thomas More’s movie speech about giving the devil himself benefit of law.

        Fox is a similar situation.

  • The factual holes in this piece overwhelm any value that it may have theologically. On the planet where these facts are true, the article would have value. That is not this planet.

    The government controls the pay of public workers and that includes soldiers. While the rich have more influence than the raw numbers of their votes would indicate, the idea that we’re a plutocracy is just unsupportable.

    There was a time where the military pay scale did not keep up with the civilian pay scale. It was not a good time and we worked pretty hard as a nation to fix that because it was both unjust and it was dangerous for our ability to maintain ourselves as a free nation with a military paid that poorly. We do not want to go back to the 70s on this issue.

    The Fox commentary should have mentioned this if it wanted to be effective with those ignorant of that specific history. It did not. Much of Fox’s viewership is already well aware of the story. A good chunk of them lived it.

    Another factual issue is that McDonalds actually doesn’t operate that many restaurants. The fast food business is dominated by the franchise business model and specifically McDonalds only directly controls about 15% of its restaurants. Salaries are set by the franchise owners who tend to pay to local scale. In areas with a tight labor market, nobody at a McDonalds restaurant is paid the minimum wage and are making a pretty decent $11-$12 starting wages. Corporate headquarters in Illinois never has a problem with this and it never did.

    Waiting in the wings, of course is production automation:
    http://singularityhub.com/2014/08/10/burger-robot-poised-to-disrupt-fast-food-industry/

    It’s not practical at current wages on the low end of the business where McDonalds et al operate to automate burger production. At $15/hr the robot’s $135k capital cost is equivalent to the salaries of around four cooks in a single year which makes the robot a bargain.

    As for Clayton Homes, up to 2003, it doesn’t look like an unjust business model:
    http://www.encyclopedia.com/topic/Clayton_Homes_Inc.aspx

    It’s difficult to gain insight for beyond the time when Buffett acquired the company but given Mr. Clayton’s impeccable business timing for the previous three plus decades, I suspect that Buffett acquired a lemon and made some significant business model changes. It’s tough to say within the amount of time I’m willing to look at the issue and researching the mobile home market just isn’t interesting enough.

    The old Clayton Homes model had the sales manager eating half the losses when a sale went subsequently bad. If this equation of a bad outcome yielding losses to the company is still true, there is zero incentive to trap people into situations that ultimately go bad for the borrower because whenever it happens, that also goes bad for the lender. My own speculation is that Clayton Homes no longer has properly aligned incentives and is suffering from poor management decisions with some of the fallout landing on their customers who are taken advantage of by the internal sub-groups who profit while the larger entity loses. There are predators operating there but who they are specifically is more of a mystery to me.

    • ManyMoreSpices

      If the rich decided how this country was run, Obama wouldn’t be the president. Romney won the majority of votes from people earning over $75k

      • To be fair, Obama did win 52% of the $200k+ vote.

        • Joseph

          Yep. How this slips under the radar is… strange…

          • The vote profile for the GOP and Democratic paties are both educational. The GOP looks like a bell curve. The Democrats curve looks like a smile.

            Fox does cater to the rich but it is the the local gentry, the car dealer, not the international jet set who get invites to Davos. The ideological split among the rich in the US is both strange and analyzed strange.

    • antigon

      ‘the idea that we’re a plutocracy is just unsupportable.’
      *
      Cling to the hope TM.

  • Rory Collins

    Hey, as long as he pinches a little incense once in a while and says he doesn’t pay enough taxes (while spending millions on attorneys to assure he pays less) the press will usually give him a pass.

    http://www.genuineqs.com/qs_lu.html

  • Elmwood

    it really is amazing that our ruling elite have successfully convinced many of the middle class, that their real enemy in this world is comprised of the unions, EPA, climate science, fair wage laws, progressive taxation, immigrants, public schools, social security, medicaid medicare, assad, iran,… etc.

    it’s bad enough to be force fed a sh#t sandwich, it’s much worse when you actually ask for it.

    it’s all to distract us, just like the bolsheviks turning the peasants against the bourgeois-the guy with a cow.

    • Joseph

      I actually agree with you here.

    • ManyMoreSpices

      So who’s the real enemy? And if it’s someone who has more money than you, how are you certain that your complaint isn’t just disguised envy?

      • chezami

        Typically, for conservatives, the enemy is the person with less money than you.

        • ManyMoreSpices

          Is it okay with you if Elmwood answers that question, or are you answering for him?

  • Mark R

    I thought most McDonalds were franchises (the corporate element just owns the real estate most of the stores occupy) and that paying employees cheap keeps the food cheap and employs lots of high schoolers and entry level folk who really are in no position to demand a “living” wage…yet.
    I am a union retail worker and I do not like Walmart either, but it stepped into Middle America when Corporate America was bailing on it, at least.