In 2019, Berkshire Hathaway Inc. CEO Warren Buffett articulated his belief that affluent nations, especially those with a significant gross domestic product (GDP) per capita, owe a profound duty to their citizens in distress.
During an event in Grapevine, Texas, while conversing with CNBC's Becky Quick, Buffett said, "We are prosperity. We should take care of people who've become roadkill because of something beyond their control. … I think that's the obligation of a rich country.'"
He explained his belief that prosperous nations should not neglect those adversely affected by unforeseen circumstances.
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Buffett also drew attention to the U.S.'s notable GDP per capita at that time, which hovered around $65,000. He was firm in his stance that nations of such wealth had a responsibility to support people who, not by their own doing, found themselves in challenging situations. He described these people as "roadkill," underscoring the duty of nations to ensure their well-being.
The GDP per capita is a key indicator of a country's economic health, reflecting the average economic output per person. For a powerhouse like the United States, it's especially illuminating. In 2020, the U.S. experienced a decline in its GDP per capita, partly because of the economic repercussions of the COVID-19 pandemic. This metric has stayed around $63,500, which, while impressive, was indicative of the challenges the nation faced during the pandemic.
Such economic fluctuations underscore the importance and benefits of investing. While downturns can be unsettling, they frequently serve as gateways for keen investors. Historically, post-economic downturns have paved the way for recoveries. Smart investments made during or immediately after downturns can lead to substantial returns as the economy makes its resurgence. With projections indicating that the GDP per capita is on track to reach approximately $64,639 by 2024, there's a sense of optimism.
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Investing in startups, in particular, brings its own set of advantages. Unlike traditional investments, which often move in tandem with the broader market, startups provide an avenue to invest in innovative ideas that aren't necessarily tied to market fluctuations. This means that even during broader economic downturns, a startup with a disruptive idea or product can thrive, providing the potential for big returns.
Buffett's support for free trade was evident. He acknowledged its vast benefits to the country and highlighted the often-overlooked nuances. He pointed out the intangible nature of free trade benefits, using Walmart Inc. as an example to explain that customers often remain unaware of the savings they accrue because of such trade practices.
He also acknowledged the other side of this coin. Free trade, while largely beneficial, had repercussions for specific demographics, particularly for people in their 50s who might find their roles obsolete in a changing global economic landscape. Buffett believes that while these people might not easily adapt to the evolving economy, affluent nations should not abandon them. They have a responsibility to ensure that broad policies for the greater good do not overshadow the needs of those facing challenges.
Reflecting on his company's history, Buffett shared how Berkshire Hathaway, which had its origins as a textile enterprise in New England, underwent significant transformation over the years. The company, which once employed a diverse workforce with half of its 2,000 workers being Portuguese speakers, witnessed the closing of its mills, a testament to the ever-evolving economic scenario.
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