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Comment by jimnotgym | Hacker News Reader

[flagged]

Please don't post cynical or curmudgeonly comments to Hacker News. We're trying for something different here.

https://news.ycombinator.com/newsguidelines.html

Hi Dang. I will admit to being suprised that crossed the line. I have reread the guidelines and I will try and modify the tone in my responses

Appreciated!

Classic debate: labor theory of value, adding physical manipulations into the world is true value, the works of bankers, marketers, etc. are not “true” work creating true value.

This ignores the enabling and empowering effect of those actions. You wouldn’t have many companies without banks to loan money for capital investment. How could a new but better product make headway without some form of marketing? In our world, Physical workers need some help to get their products made.

It’s like saying the goal keeper, midfield, and defense aren’t valuable since only the striker scores the goal.

Very few companies producing physical goods make the kind of money that companies producing meta-physical goods do. They produce more money at a fraction of the cost. Value is always an issue of culture and the west in particular values money above all, so all inefficient labor relative to the task of making money is devalued. It's easy enough to point the finger and say "wall st bad" but we enshrined it collectively as a culture.

I'll play along, so here is the counterpoint. The article remarks on end of an era during which he transformed a failing textile mill into a global conglomerate valued at over $1 trillion. So he never made anything? Wrong, textile mills make things.

Elsewhere in the comments someone links BuffettsAlpha.pdf This explains that they used a 1.6-to-1 leverage refers to the estimate of the average amount of borrowed capital Warren Buffett uses to magnify the returns. This level of leverage means that for every $1.00 of equity, Buffett manages approximately $1.60 in total assets. It explains why Berkshire experiences high volatility (roughly 25%) despite investing in relatively stable, low-risk businesses. A significant portion of this leverage—estimated at 36% of liabilities—comes from insurance float. This is essentially a "loan" that costs Berkshire an average of only 2.2% annually, which is more than 3 percentage points below the average T-bill rate.

So why does this matter? Unlike many investors who might face forced liquidations during market downturns, Buffett's unique access to stable, low-cost financing allows him to maintain this leverage even during significant drawdowns.

So yes, he chose the right "cronies" because during inevitable downturn the money was still there to be used to run these low risk stable business.

Do people idolise him? No need to debate that but power corrupts and absolute power corrupts absolutely. Why did he continue to live a simple life while he has pledged that 99.5% of his wealth will go to philanthropic causes either during his lifetime or at the time of his death.

So I do think you "got that right", however you may have missed that he started with a factory that makes things, invested in a way that survived adversity, and then plans to deliver on the principle that his wealth belongs to society rather than to a "family empire."

I do wonder how you or I would handle running a business. To me that work does not sound easy.

> I do wonder how you or I would handle running a business. To me that work does not sound easy.

I think all of the hardest times in my management career have been dealing with investors/owners etc. 'Professional Investors' and PE have been some of the worst, because they tend to be extremely opinionated, whilst simultaneously demonstrating their contempt for the people doing the actual job, and their naivety in how things are actually done. Perhaps that has made me jaded. I never had the same problems with staff, customers and suppliers.

> Rich guy has a job so easy he works until old age.

How would you know how difficult his job is? It's not easy to run a company, let alone a hugely successful one responsible for a vast amount of assets.

> Never made anything, just leant money to companies that weren't as rich as him and his cronies, to get a share of profits for doing nothing.

Providing capital to companies helps them grow which in turn helps add value to an economy. And it's not even like it's easy to lend money because this is an inherently risky process so requires a lot of hard work and intelligence to perform sustainably.

I'm curious as to why you're so judgemental of him and presumably by logical extension of your arguments: capitalism in general.

> I'm curious as to why you're so judgemental of him

Not particularly him. It annoys me that people go on about how amazing it is that certain people can do their job for so long. Yet his job is not hard on his body, like a labourer. It doesn't carry the same pressure as a business owner who has remortgaged his house and must succeed. If BH went bankrupt, I'm sure it would be embarrassing, but he would still be rich, housed and be able to eat. I am honestly suspicious why these people can't let go and let someone else have a go

Dang, I hope you don't mind me explaining myself a bit? It was meant to explain my earlier comment, since you obviously found it rather bitter

I'm not dang, don't necessarily agree with all of your views, but do appreciate the explanation!

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