07-13-2011, 09:35 AM
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#23
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Experienced Starter w/First Big Contract
Join Date: Aug 2010
Location: Western Mass
Posts: 5,412
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Re: I could end the deficit in 5 minutes
Quote:
Originally Posted by PatsFanInVa
I might think this particular quote's a lemon, but I think Buffet more often than not has a very good sense of what's actually going on, including his understanding that the very rich are skating on taxes. He's a capitalist I can respect and usually eschews the pettiness of saying "wahhhh you'll kill jobs" when confronted with taxation issues. He's also a hell of a lot more optimistic about the U.S. than most of the American right, but realistic that we can't expect to repeat the period from the birth of the stock market to 2000 in the present century.
Last coda, I'd usually rather read one of his letters to shareholders than most op-ed pieces on "the economy." And I'd way rather read them than the stuffy "Message from the Board" section of most annual reports, the thing his annual letter pretty much replaces.
PFnV
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There has been some discussion on the board over the last six months or so about public corporations and the issues with them. I am of the opinion that the "agency problem" inherent in having managers who are not shareholders running corporations (i.e. executive management) is the primary source of corporate malfeasance and undeserved over-compensation. Buffet's holding company appears to have addressed that issue, which might be one of the secrets of their success. From the 2010 letter to shareholders (page 7):
http://www.berkshirehathaway.com/letters/2010ltr.pdf
Quote:
Our final advantage is the hard-to-duplicate culture that permeates Berkshire. And in businesses, culture counts.
To start with, the directors who represent you think and act like owners. They receive token compensation: no options, no restricted stock and, for that matter, virtually no cash. We do not provide them directors and officers liability insurance, a given at almost every other large public company. If they mess up with your money, they will lose their money as well. Leaving my holdings aside, directors and their families own Berkshire shares worth more than $3 billion. Our directors, therefore, monitor Berkshire’s actions and results with keen interest and an owner’s eye. You and I are lucky to have them as stewards.
This same owner-orientation prevails among our managers. In many cases, these are people who have sought out Berkshire as an acquirer for a business that they and their families have long owned. They came to us with an owner’s mindset, and we provide an environment that encourages them to retain it. Having managers who love their businesses is no small advantage.
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Alignment of interests works. With that you don't need a million other mechanisms to make sure that the execs aren't screwing the shareholders. You still need to make sure they aren't screwing employees and customers, but at least they won't be raiding your 401k! |
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