One could argue that it’s easy to be an optimist if you’re a billionaire, and indeed one of the richest people on Earth, but Warren Buffett nevertheless makes a case for long-term optimism about the U.S. economy in his latest letter to Berkshire Hathaway shareholders, which was released over the weekend.
Referring to the noises made by various candidates for the presidency lately, Buffett notes that “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.”
The Oracle of Omaha argues, among other points, that the roughly 2 percent annual growth in U.S. GDP isn’t that bad after all. “We would all like to see a higher rate. But let’s do some simple math using the much-lamented 2 percent figure. That rate, we will see, delivers astounding gains.” In the long run—25 years, for example—that delivers a net gain of 34.4 percent in real GDP per capita, or $19,000 per capita.
Buffett acknowledges that the largess of the future will not be shared equally, because it never has been, but nevertheless the pie itself will be far larger than today’s. “How it will be divided will remain fiercely contentious… Clashes of that sort have forever been with us—and will forever continue. Congress will be the battlefield; money and votes will be the weapons. Lobbying will remain a growth industry.
“The good news, however, is that 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… For 240 years it’s been a terrible mistake to bet against America, and now is no time to start.”