Ilargi: Warren Buffett is Everything That’s Wrong With America

Yves here. I’m sure readers can add to this antidote to the pervasive Warren Buffett hagiography in American media. For instance, Buffett lavishes praise on the executives of Wells Fargo, when Wells engages in abusive servicing (see here and here for examples). So Buffett is part of the cohort that has held bank leaders as competent and deserving of their leadership roles, which serves to hide the fact that a big chunk of industry profits rests on predatory behavior, like gotcha terms in checking accounts and credit cards.

By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth

I think I’ve never understood the American – and international – fascination with money, with gathering wealth as the no. 1 priority in one’s life. What looks even stranger to me is the idolization of people who have a lot of money. Like these people are per definition smarter or better than others. It seems obvious that most of them are probably just more ruthless, that they have less scruples, and that their conscience is less likely to get in the way of their money and power goals.

America may idolize no-one more than Warren Buffett, the man who has propelled his fund, Berkshire Hathaway, into riches once deemed unimaginable. For most people, Buffett symbolizes what is great about American society and its economic system. For me, he’s the symbol of everything that’s going wrong.

Last week, Buffett announced a plan to merge a number of ‘food’ companies in a deal he set up with Brazilian 3G Capital. For some reason, they all have German names (I’m not sure why that is or what it means, if anything): Heinz, Kraft, Oscar Mayer. Reuters last week summed up a few of the ‘foods’ involved:

His move on Wednesday to inject Velveeta cheese, Jell-O, Lunchables, Oscar Mayer wieners, and Kool-Aid into his portfolio, stuffs an already amply supplied larder. The additions came from the acquisition of Kraft Foods Group Inc by H.J. Heinz Co, which is controlled by 3G Capital and Buffett’s Berkshire Hathaway. His larder already included everything from Burger King’s Triple Whopper burgers, Coca-Cola soft drinks and Tim Horton donuts to See’s Candies and Dairy Queen icecream Blizzards, as well as such Heinz brands as Tomato Ketchup, Ore-Ida fries, bagel bites and T.G.I. Friday’s mozzarella sticks.

Isn’t it curious to see that once people have more than enough to eat, they sort of make up for that by drastically lowering the quality of their food, like there’s some sort of balance that needs to be found? Give them more than plenty, and they’ll start using it to poison themselves.

The key term here, the one that tells you where this goes awry, is what in economics is called ‘externalities’. Something large industries are very good at circumventing. The larger the are, the better they get at it. Mostly this has to do with environmental destruction as a result of resource extraction, but the razing of large swaths of natural habitat for the construction of highways and suburbs that make people use more products provided by the oil industry, is a good example too. That and the direct effect these products have on people’s physical health.

Buffett, the supposed genius, can only do these deals because nobody demands anybody to pay for the externalities that arise as a result of Warren pushing crap posing as food upon the American people. And then when he’s done getting even richer off of poisoning your kids, he’ll donate billions to their well-being.

But in a better and wiser world, Warren should pay into the health care system right now, he should pay for the obesity and diabetes costs his ventures and investments are going to cause. And he should do so in advance, not just after the fact in some warped and distorted kind of philanthropy. Warren Buffett kills American kids for profit. Huge profits.

The ballooning waistlines of America can be traced back, in a very simple and straight line, to the sorts of ‘food’ that Buffett’s new conglomerate produces. That’s where type 2 diabetes comes from. This is not some vague future scare scenario, it’s here and it’s now. As someone in a poor black community said a few years back: ‘we’re raising a generation of blind amputees’.

And it’s of course not just Buffett, the poisoning and degradation of America’s food runs across and through industries, both vertically and horizontally. The insanity of corn syrup and processed food ranges from Monsanto to Cargill to McDo’s to a zillion other companies and products. Who, as an industry, have managed to keep any responsibility, let alone litigation, at bay.

Who would even dream of taking McDonald’s to court for poisoning American kids? In the present set-up, it would be an impossible and unwinnable case. But that’s not because the accusation is absurd or even far-fetched. It’s because the narrative is that, even if it could be proven, people still have the right to choose to eat what they want.

The companies get the profits, society at large gets the damage. It’s the ultimate form of the Tragedy of the Commons. If you allow people – and companies – to dump the negative consequences, and the costs, of their undertakings on the public, they will, and they can get very rich off of that.

Yeah, Warren has Coke and Utz Potato Stix for breakfast. What a great story… But does that mean he is too thick to understand what happens in America? Does he not see the bulging waistlines? Or is his own bottom line simply that much more important? Does Warren Buffett consider his own profits way more important than the future of America’s children?

You could be forgiven for thinking so, couldn’t you? Warren Buffett is revered all over the place, but in reality, he’s the schoolbook example of everything that’s wrong with America. That whole money before and over anything else (including people’s health and well-being) mentality.

It makes people stupid, and it makes for stupid people. And sick ones, too. It’s their own choice, though, and their own responsibility, advocates of the model will say. All the industry does is help them make that choice by bombarding them with endless feel-good ads. But is that really a good idea if and when it means the world’s health care systems threaten to implode because of it?

Like many other industries, Buffett’s crap-for-food enterprise would not nearly be as profitable (probably not even viable) if it were to be charged for the damage it does to society and the people living in it. That’s what’s wrong with the current American economic model, and Warren epitomizes this.

This Tragedy of the Commons abuse is so engrained in the economy that it’s hard to see how it can be changed. And that does not bode well for anyone except the Warren Buffetts profiteering from it.

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  1. Sean0

    Wow. Get to go first.
    I’m lovin it. Have it your way

    This country worships Mammon. All hail the golden calf & arches.

  2. PAT

    I used to love this blog, but now I’m unsubscribing from it. This article was the absolute worst. No economic points of view at all. I would’ve expected to read this at an Occupy Wall Street rally but not here.It just sounded like a personal vendetta rant. FYI I’m not being paid by Warren Buffet to say any of this.

    1. Yves Smith Post author

      I checked and you are not a subscriber, so while you may not be in anyone’s formal employ, you do appear to be a troll who wandered in to influence the thread. The other tell is that you showed up early in the thread, in the middle of the night. I wonder what keywords brought you in. If not Warren Buffett, some of the product names?

      If you are going to do this sort of thing, it would behoove you to up your game. You missed that we have an Occupy Wall Street banner in the upper right corner of this site, so treating the post as being in keeping is a plus with the readership, not a negative. And you have also made clear that you do not understand that an argument about the commons and externalities is an economic argument.

      1. alex

        Actually, I tend to agree with the views NC tends to espouse, and I nevertheless must agree with PAT. This is the most lazily and sloppily argued case against unaccountable plutocracy I’ve read in a while. Vapidly inflammatory comments such as “Buffett kills kids for profit” do not serve to further any sort of sober analysis. You can do better.

        1. Yves Smith Post author

          Ilargi may have gone over the top, but diabetes most assuredly over time kills people. It’s unusual for someone with Type 2 diabetes to live more than 25 years after onset. The UK stats say it shortens life expectancy by an average of ten years, but until recently, most people who got Type 2 did not include young adults and children. There is not much experience with Type 2 diabetes in kids, but the incidence has risen rapidly. With most serious ailments, the health outcomes of getting it before you have matured physically are much more serious than getting it as an adult. So Ilargi is not as off base as you depict him to be.

          1. scott

            Let’s look at the larger picture. The disappearing middle class can less afford brand-named food, and immigrants either have little brand loyalty or loyalty to other brands (been to a Fiesta mart lately), so demographically this whole deal does not make sense. If SNAP purchases or school lunches had to be on Kraft/Heinz/etc products then it makes sense.

            Warren doesn’t do deals like this unless there’s a wink and a nod from the administration that the taxpayer has his back.

            1. susan the other

              It’s runway foam for sure. But this raises a big question. Why should we eat so many crapified calories when we don’t work it off? It used to take 5000 calories to sustain a farm worker every day. 3 hearty meals a day. When you see the old photos of soup lines in the 30s you really don’t see a single pot-belly among them. People used to burn their calories. There was a landmark study in Denmark (it was even on PBS, which I always cite but fail to bring home, that looked at a surplus of calories (a good wheat year) which, when 2 generations later (grandchildren) was correlated with a rush of diabetes. Interesting. We should get rid of fast food just on undeniable principle. And Warren and Charlie should donate their billions to science to understand diabetes and just how food works. Or doesn’t work. Maybe Bill Gates should also participate.

              1. John Yard

                Whoa ! Susan ! Before you get nostalgic about the lack of potbellies in the 1930’s – reflect that manual labor in the field and factory without automation was brutal , even killing. My father did it from 1930 to 1940 and he never regretted leaving it behind for a second. I worked in a warehouse for 10 years hauling by hand 60-80lb boxes 60hrs/week, and it was murderously hard. I was thin, and exhausted.
                Leaving anecdotes behind, the automation of labor has been a great advance. Yes, we need fewer calories . That’s a benefit, not a negative. It’s called progress. Life is better for it.

                1. susan the other

                  Absolutely. I do agree with sustainable labor. Sustainable everything. So this idea now makes me wonder just what efficiencies could we use to make manual labor tolerable and sustainable and not gobble up the planet & energy so fast. The Japanese have little exoskeleton vest things that orchard farmers wear to help them keep their arms raised to prune their trees and pick their fruit.

                2. Yves Smith Post author

                  There is considerable evidence that strength and muscle mass are highly and negatively correlated with biological age, as in the stronger and more muscular you are, the lower your biological age (with the caveat that steroid users don’t count!). I would hazard that hard physical work where you control your pace AND the motion is not repetitive (factory workers with specialized tasks are subject to repetitive stress injuries) is good for you, but yes, there is lots of hard labor which assuredly is not.

              2. Santi

                According to Robert Lustig it is all in the sugar, or rather fructose, though some people think that sweeteners are also guilty. Alcohol behaves mostly like fructose in our liver, BTW. Some of them mess the circuits that control satiation and this makes us more hungry even when we have already taken too many calories.

                This plus, I guess, that our bodies need a minimum of exercise to be alright. I left all sugar (and was forc) and I started loosing weight, even if I don’t control what I eat apart from it being healthy. Since I stopped eating industrial and started making my own bread (In Spain it is quite common that they use dairy proteins in bread) I lost 20kg and now I weight the same than I weighted when I was 35.

                1. Santi

                  What got deleted accidentally was something like “was forced to stop most eating processed food after I got diagnosed the sensitivity to dairy protein and lactose”.

                  Processed food contains typically lots of sugar (Lustig explains well the reasons why). The dietary intervention is quitting added sugar such as sweets and soda drinks and stop adding sugar to coffee or tea. This is NOT about removing foods that contain sugar, like fruits or cereals. It is about ADDED sugar. The change provokes a slow weight lost, due to less appetite in the long term. In my case it also changed my blood analytics from “high triglycerides” to “normal” in a few years.

            2. MyLessThanPrimeBeef

              Two keys to a long-life span:

              1. low caloric intake
              2. weight lifting

              I would like a third:

              3. Being happy (being an easy going person is healthy).

              For a society to last long, similarly, we have

              1. Low consumption, low GDP
              2. a manufacturing base
              3. Equality (because inequality correlates with unhappiness).

              Now, the billionaires have money to buy the most fancy treatments from the latest genetic and medical discoveries, and the healthiest foods. The wealth is concentrated towards them, instead of the 99.99% (thus the inequality). This inequality makes them happy. So, now, you and me are unhappy (due to inequality), and we subsist on their non-food or GM food stuff.

              In effect, the elites are living longer by making the rest of us dying sooner.

              That is, delta (a rich person’s lifespan) + delta (your lifespan) = zero.

          2. JCC

            My younger brother died within 5 years after being diagnosed with diabetes – in his mid-fifties with an otherwise relatively healthy lifestyle.

            As for “PAT”‘s comment I have to assume this particular android has “unsubscribed” from ZeroHedge, too. Every time Buffet’s name comes up there are pages and pages of commenters crying “off with his head” (not necessarily the best example considering the maturity level of most of the comments, but there it is).

          3. Lambert Strether

            I don’t think it’s over the top. Michael Pollan’s rule is “Eat food. Not too much. Mostly plants.” The product lines Buffet has purchased don’t have much to do with that rule.

            “Food” may give one pause, but Pollan is making a distinction between “food” and “food-like substances” (like those produced by Kraft, et al).

            No time to go into the health effects, but there’s a reason the first startling thing one will see on coming to America from anywhere else is the enormous number of obese people, many of whom are being killed, quite literally, by their diet.

            1. optimader

              When was the last time you ate a Kraft product? I assume a long time. I cant even tell you when I did. Kraft’s existence is a two way street, People do not have to buy their products. Its that simple. I don’t buy into the “convenience” meme. There is plenty of basic food that is at least as convenient as any crap Kraft foil wraps and puts in a box. At some point there is personal responsibility to not poison yourself/your family.

              People simply are not obliged to drink two liter bottles of carbonated highfructose corn syrup while washing down melted Velveeta cheese on chips.

              1. Lambert Strether

                Well, I’m not terribly poor — and I did eat those twenty-five cent boxes of Kraft macaroni when I was — and I don’t live in a food desert, so I have options others do not. (I have also read that from a caloric standpoint, bulking up on food that’s otherwise bad for you is rational, though I’m too lazy to find the link.)

                As far as the “personal responsibility” talking point, I was waiting for it to appear. Frankly, I think it’s a crock, at least from a whole systems standpoint. For one thing, yes, often if you’re poor, food-like substances are all that’s available to you (in food deserts. And please don’t say “They can go to a better store and shop there”; being poor is extremely time-consuming). Second, the people who push this point seem to think that marketing and public relations have no impact on people’s behavior at all, when all the data (say, cigarettes) point to the massive effects it does have. So, “people are not obliged” is a bit of a straw man; they may not be forced, but they are certainly impelled, and by experts in the field of getting people to do things that are bad for them, for profit. Finally, there’s a whole constellation of attitudes combining people being trusting, not having the time to figure out the right choice, and so on.

                1. optimader

                  Food deserts are an issue in certain urban areas for sure. These are absolutely a problem. Is it a public policy issue that explains bad nutrition across a good part ( % to be defined) a population of 320MM? no I don’t think so.

                  My historical familial perspective is my fraternal grandmother and her family. She cleaned office buildings in Chicago as a single mom (husband abandoned the family). She worked two jobs as a cleaning woman. They ate simple, but decent, if not enough. Her recipe book is a master work of simple recipes unfortunately according to my sister, some are unreproducable due to her “unique” weights and measures techniques). Some concoctions started early in dutch oven, some stuff my dad would start when he got home from school.
                  They were not eating food from foil envelopes because “they didn’t have time”. They were CERTAINLY eating basic food and stretching because they were a paycheck away from being on the street. Frankly I attribute some of my dads present physiological aliments to insufficient nutrition as a kid.

                  On the fraternal side, my gfather’s dad was crushed in a railroad coupling in the a switch yard, consequently he and his bother lived in and out of a catholic charities orphanage (mostly in) depending on their mom’s resources. Educationally he made it to middle school (but always kept a dictionary, he was a very literate guy).
                  When he was a young adult his wife was bedridden sick– died young and In spite of his modest circumstance he raised five kids that eat reasonably nutritiously enough albeit from very basic commodities.

                  I point these situations out because they were NOT unusual hardships of the day in depression era to prewar urban Chicago neighborhoods. People got along, literally, in spite of the details of their own modest circumstances.
                  With the notable exception perhaps of Food Deserts (which is an eminently solvable and morally wrong problem today) the notion that things have somehow become so difficult that eating fast food crap is a necessity is just BS from my perspective.

                  Second, the people who push this point seem to think that marketing and public relations have no impact on people’s behavior at all,
                  Sure commercial marketing has influence, that’s why it exists. Personally I think the notion that people have no free due to marketing/public relations is a strawman argument. How much commercial impression time are you exposed to on TV? Oh that’s right, you don’t watch TV! Who has time to? I guess people that don’t have time to cook-eat real food

                  ..the time to figure out the right choice, and so on.

                  I am more optimistic about people having “time to figure it out”. More to the point I guess is what will motivate them to “figure it out”.
                  Understanding and embracing decent nutrition as well as education are the big societal (class) bifurcations as we go into the future.

                  Lastly, when I was a student it wasn’t kraft macaroni and cheese, it was Raman noodles in the back pack. the hot water was free in the cafeteria. When I was living it up , I would chop up a hot dog into it! In retrospect, man that was toxic stuff..

                  1. PQS


                    It seems easy (and perhaps a little high horse) to sniff at people today who don’t know how to cook, don’t have the resources to cook, or don’t (REALLY DON’T, like working two or three jobs and trying to go to school, and commuting for hours on a bus, etc.) have the time to cook. Many poor people live in less than ideal places (with bugs, poor kitchens, etc.) Cooking is a luxury of time as well, and when kids are hungry and ready to eat, it’s not hard to justify opening a package or a frozen item and popping it into the microwave.

                    I think it is a better course of action to advocate for better food for all – even if it comes out of a box. There’s nothing wrong with packaged foods that aren’t full of weird ingredients or come from sustainable practices. The problem with the producers is that none of that has been baked into our financial/economic system, and incentives do not lean toward healthier options.

              2. OIFVet

                Sure, there is always room for personal responsibility. But let’s not forget the economics of food: real food calories are expensive and food like calories are cheap. Given that so many Americans are losing ground, how exactly can they have the financial means to exercise personal responsibility? Then there are the food deserts of the inner cities, where real food is extremely hard to come by and those who want it have to travel some distance to get it (assuming they can even afford it). I think that it behooves those of us who can afford real food and have access to it to remember that not everyone is as fortunate.

                1. optimader

                  Agree 100% on the food desert issue. Bad nutrition as a kid is a huge societal burden going into the future. I think public schools should have at least one free nutritionally solid meal for all kids. A trivially cheap investment going forward when just considering the physiological and neurological potentialities

                  On the other hand, I don’t buy into the premise that “real food” calories are necessarily more expensive, particularly when factoring the more obvious externalities of highly processed food.
                  People don’t want to cook, don’t understand how to cook efficiently, have messed up palates and sensory conditioning.
                  Rice, beans, carrots, onions, sweet potatoes, squash, EGGS, OAT MEAL in season fruit. Whole cuts of meat on sale. Pound for pound calorie for calorie far more affordable than a McRat sandwich w/ special sauce and a fructose beverage.

                  1. OIFVet

                    About externalities, the problem is that those costs tend to appear later and though I hate to quote Obama, poor people live with “the fierce urgency of now”. At the cash register, most real food is indeed more expensive than food-like substances. The expensive externalities appear later, as in bad health leading to high medical expenses and ultimately, death. My father died from Type 2 diabetes so I am only too aware of the high costs of low prices, but I am also aware that thee costs don’t appear at the cash register in the checkout lines either. I understand what you are saying in your reply to Lambert above, but the example of your relatives back in the day hardly applies today IMO. Back then food-like substances were not nearly as prevalent as they are today, so poor people still had to buy real food for the most part. They just bought fewer calories than they do today. Anyway, given what happened to my dad the issue of affordability of and access to real food is rather important to me, more so than most other issues, so discussing this is definitely a good thing to do.

                  2. Yves Smith Post author

                    I am extremely time stressed, so I suspect I can relate to the parent juggling multiple jobs and trying to care for kid level time pressure. I don’t have time to cook any whole grains or dried beans and I don’t have time to learn to cook. I couldn’t follow your program.

                  3. binky bear


                    Typical misunderstimation of what the real world is like for people coming from poverty and aspiring (as we are all trained) to Branded Ecstacy. All the media we consume is training us to a set of social norms and attempting to control the limits of reactionary opposition.

                2. jrs

                  But even that makes this essay weak, sin taxes and moral approbation of warren buffet rather than redistribution of income downward (via raising the minimum wage, via unions, via direct transfers – but that starts to sound almost B.I.G.ish etc.).

                  Will job guarantee workers be unionized by the way? They darn well better be! Otherwise it’s an exploitive relationship for sure, all labor is without a union voice or worker ownership.

              3. Iron Butterfly

                Isn’t the “personal responsibility” argument based on the neoliberal position that people are rational actors and have perfect information?

        2. Santi

          Externalities that are not properly accounted are a big issue in economics. I actually became “anticapitalist” due to my personal experience of developing, like so many people in Europe, a strong sensitivity to dairy protein. This was (forensically reconstructed after some years) due to the mix of Big Pharma (excess prescription and use of proton pump inhibitors) plus abuse of this byproduct of the cheese and butter production by Big Food in the European Union.

          When I studied the issues of processed food industry and advertising versus health I understood that unregulated capitalism is bound to be a disaster. It is much of the same for the ecological externalities, or even the financial externalities so close to my current experience of “austerity is good even if it kills”, but I think Warren Buffet is “Naked Capitalism” at its greatest.

          I mean, I would say that this blog is about the contradictions of the capitalism, and Big Food is a big one. The fact that Warren Buffet is patronizing and a media figure adds even one contradiction more.

          1. susan the other

            I agree, this take by Ilargi is a scale model of what’s wrong with capitalism. “Externalities” is just about the dirtiest word on the planet.

              1. JTMcPhee

                Maybe not. But SOMEbody gets stuck eating and living in sh_t that somebody else excreted. For a Holy Sacred Profit.

                  1. JTMcPhee

                    Yeah, and you and I are breathing atoms and molecules that were inhaled by Stalin and Hitler and Pol Pot and other predecessors, and drinking water molecules that have been processed through the kidneys, bladders and out the urinary meatuses of a whole lot of bad and good other humans and creatures. And the atoms were mostly produced in the death of some star, if you roll the tape back far enough. There is a moral measure here, there is no reason why other people get to force me and my loved ones to eat others’ shit and drink their piss, in its immediate raw form, or breathe their cigarette smoke or watch the world become increasingly uninhabitable with fewer and fewer species, so those others can enjoy the knowledge that they “own” a dozen estates and billion dollar yachts and can impoverish and poison the rest of us

        3. diptherio

          He’s trying to make the point that WB, along with plenty of others, is concerned first and foremost with obtaining as much personal wealth as possible. If that happens to involve selling artificially-flavored poison to children, then so be it! And then he turns around, gives away some of his ill-gotten gains, and calls himself a philanthropist. It’s sickening.

          So this analysis is a little more impassioned and less mathy than what we often get around these parts–so?… I prefer this to milquetoasty, incrementalist tripe about how we need to do some polishing around the edges of our rotted system, even if the tripe includes more graphs.

          1. Jim in SC

            By his account, at least, Buffett eats his own cooking. His diet consists of Cherry Cokes and hamburgers.

        4. Bart Fargo

          Then I take it you are also uncomfortable with the notion that big tobacco “kills people for profit”? Because a lifetime of liberally consuming the products of big food has effects on health that are just as disabling (and costly!) as a lifetime of liberally consuming tobacco. If you know of a stronger economic criticism of big food than to point out the many “hidden” externalities of their business model, which include setting kids up for a lifetime of disability followed by early death, then I’d like to see it. With 17% of US GDP spent on healthcare already, this is a model which simply cannot continue for much longer even if healthcare is competently reformed. So all those who willingly invest in big food (even if their activities aren’t on the same scale as WB’s) need to be held accountable for getting rich off this model, just as we (theoretically) hold accountable those who get rich by destroying the environment.

          1. Jim in SC

            There are hidden externalities that result from the minimum wage, too. If kids don’t have jobs when they’re young, they may never learn to really work. I don’t think you can start working at twenty-five and ever get the hang of it. This ‘externality’ combined with ever decreasing real retirement ages (by ‘real’ retirement age, I mean the age at which one’s income and job prospects peak; the slippery slope to retirement starts then), has as big an effect on our lives as the food we eat. No one talks about it, because we get wrapped in politically correct topics like raising the minimum wage, which sounds great, but doesn’t do very much that is good for people in the long run.

    2. susan the other

      Well zippo for you PAT and at least plus a zillion for Yves. This piece by Ilargi is killer and true to every word.

    3. jrs

      I’m kind of with you, and btw I’m no conservative. But if we don’t distinguish between externalities that involve no element of choice (pollution) and those that do (fast food) have an element of choice *not absolute choice* don’t get me wrong – it seems rather sloppy. Although at least there’s some nice fat bashing in there. /sarc

    4. PAT


      Posting here to confirm that I am not a troll.
      I subscribe to this blog from Feedly.
      I replied at the “middle of the night” cuz I’m not from America!

      Also, good news is I will not be unsubscribing. Found the next batch of articles a fun read. But as you can see, many other commenters hold the same view about this lazy article.
      The comment was meant to provide positive criticism not to be unproductive trolling. I apologize, and wish you would take it in the right spirit.

      1. Yves Smith Post author

        Thanks but Feedly is not a subscription service we host, but I understand that some people use that term for sites they read via RSS.

        And since we have a pretty open (as in only lightly moderated) comments section, if you read the entire thread, you will see far more readers approved of the article than disapproved. Ilargi is more guilty of hyperbole here than being wrong.

        1. PAT

          Agreed. But hyperbole is an intellectually dishonest debate technique and that takes away any point that the article makes. Buffet’s involvement in Big Food is an interesting angle, but I’d be closer to blaming him for your country’s ruin if he did something incredibly devious to gain market share. Being rich with lots of money to indirectly influence people, should have you writing equally sinister articles about Larry Page/Sergey Brin. The amount of data and control they have on us is far worse than some rich billionaire selling trans fats like drugs.

          In any case, thank you for replying and having a cool comments section. I hope you don’t make loose and accusatory “ad trollinem” comments in the future just cuz someone has a different view than yours.

  3. paul

    If only financial obesity had the same side effects as nutritional, how many US states would the excess flab of global megafauna like buffet smother?

  4. Felix

    I like Ilargi……but really? Blaming food makers or fast food for obesity makes no sense at all. The problem is low wages… a mother has no time to raise her kids and cook for them because she is working two fast food jobs……and for our next generation it looks like most of the mothers will be single…..and when one is working two fast food jobs about all one can do is get take out for the kids……How about a guaranteed annual income so mothers can stay home and raise their kids? We don’t require marriage to have kids. We don’t require economic stability to have kids in the US. We require nothing at all and one can have as many as one wants……so is not the responsible thing to provide for raising these kids? Single poorly educated mothers can’t do it without money. The US needs a guaranteed annual imcome……and a generous one…….and if the kids learn to read and think they will not be so obese……because they will learn and understand what metabolism is and how it works…….eating junk is a choice and we all have to face it…….as Kanye West says in his “Workout tape” “eat your salad…..skip dessert” and you will get the NBA star you deserve!!!

    1. kimyo

      there’s plenty of upper and middle class obesity. there is a streak of racism throughout your post which i see as an attempt to argue against guaranteed income, by implying that only the poor (ie: obese people of color) will benefit.

      many former members of the middle class are unable to pay for the basics today. we’ve provided trillion$ for the banks, that didn’t work, and it introduced distortions galore. i’d prefer a return to capitalism, but as that seems impossible, let’s give guaranteed income a go.

      1. Yves Smith Post author

        Where is the racism in the article? I see you’ve never been to the Upper Midwest, which is disproportionately Caucasian and where overweight is rampant. And pray tell what does this article have to do with a guaranteed income? Ilargi happens to be a proponent, while this blogger has argued a job guarantee is the better way to go, since past income guarantees wind up allowing companies to pay even lower wages. Ilargi called for the Buffetts of the world to pay for the externality of the effects of the foods they sell via contributing more to health care.

        1. kimyo

          it’s felix i accuse of racism, not ilargi. this is based on his use of code words like ‘nba’, ‘kanye’, and ‘single, poorly-educated mothers’.

          i have only respect for ilargi. i admit, some of that is due to my unswerving adoration of stoneleigh. but he has earned my trust many times over. it’s the commenter felix who is framing the conversation in terms of race.

          1. Yves Smith Post author

            Oh, apologies! I approved and replied to your comment from the moderation queue (in the backstage) and thus could not see that it was a reply.

          2. Felix

            Sorry to offend you. I like Kanye’s “tape” and I listen to it and it helps me gut out the last mile…..I know he can be offensive to some but you might want to listen to some of his lyrics…..there is a lot of truth to be found in them…..I should have put the entire verse in quotes……It is a big part of American culture……maybe not Beethoven but amusing. And yes, a lot of white people are fat too but study after study shows wealthy people are not as fat as poor people no matter what color they are. It is money……high carb crappy food is cheap and available….it takes time and effort to cook well… rather than rail at Warren how about redistributing a little income. There are simply not enough well paying jobs in the US and there will not be in the foreseeable future. All Americans should pay for that lack together. It is a problem of the commons. Either we are a nation together or we are a conglomeration of greedy pigs from all over the world with no sense of unity. We carry the same responsibility for a child born in Ferguson as we bear as a nation for some kid born in San Mateo or Atherton.

        2. jgordon

          Who gets to decide what a good job or a bad job is for a job guarantee? If I had to take a guess, it’s not going to be Ralph Nader doing the deciding–but rather Warren Buffet. It’s not ideal, but a basic income guarantee at least allows people the opportunity to (somewhat) opt-out of the nasty, corrupt mess that our unsustainable market economy is.

          Even better, it’d be great if we had a system where people weren’t forced to interact with the official commercial economy at all to get by, but I’ve already acknowledged that only the collapse will make that a reality.

          1. Lambert Strether

            You didn’t have to guess, you could have done some research, but as it happens, no, it’s not Warren Buffet. There are JGs where the jobs are determined democratically and locally.

            Sick of the straw manning and laziness of so many BIG advocates, as illustrated on this thread. Puts me off the whole project, frankly, even if that’s fallacious. (The selling point for me is that BIG would pay for housework, which is currently, and very unfairly, unpaid labor. So, because I’m really a middle-of-the-road, compromising kinda guy, I’m perfectly willing to combine the two. Now I’m rethinking.)

        3. B. Examiner

          this blogger has argued a job guarantee is the better way to go, since past income guarantees wind up allowing companies to pay even lower wages. Yves Smith

          So then the point of a job guarantee is to tie up, actually likely waste*, 8 hours of the employee’s time so as to preclude her/him from working for the private sector for that period? To prevent her/him from bidding down wages? And that’s a solution? Paying people to waste their time?

          *Because if useful work is done the private sector will complain of unfair competition on their turf.

          1. Yves Smith Post author

            Are you seriously telling me there is a shortage of productive work to be done? Let’s start with better day care and elder care. Better landscaped and maintained parks. More public art.

            A job guarantee is NOT a requirement to work. It is an option in addition to taking private sector work and is meant to set a floor for wages to force the private sector to pay more. Would you rather work as a burger flipper for McDonalds at erratic hours, or have a regular schedule reading to the blind?

            People should always prefer having more employment choices, PARTICULARLY with so many long term unemployed frozen our of the job market.

            1. B. Examiner

              Are you seriously telling me there is a shortage of productive work to be done? Yves

              Not at all. But the reason the work you mentioned (and likely many more other kinds (not to mention styles) of productive work than you, I or any JG proponent can even imagine) are going undone is because the population has neither the time/energy or money to do the work themselves or pay someone else to do it.

              And why should we care if a financially independent population chooses to work for low wages or even for no wages at all? Shouldn’t we be seeking to end wage slavery rather than perpetuate it?

                1. B. Examiner

                  People with sufficient resources do not need to work for others, ie. they do not need a job. The question then is WHY so many need a job? And the answer is injustice, eg. many farmers now work as employees on land they once owned but which was stolen by the banking cartel and their boom-bust cycle (“by a process of inflation and deflation … shall wake up homeless on a continent their forefathers conquered”)

                2. B. Examiner

                  Then have you ever heard of the rich not needing to work, much less for anyone else, ie. a job?

            2. B. Examiner

              A job guarantee is NOT a requirement to work. Yves

              Prove it then by having the JG jobs pay NOTHING, ie. be directed voluntary work, for those who like that sort of thing and by supporting a BIG and/or asset redistribution that makes it unnecessary for citizens to have a job at all to have a decently comfortable life.

              1. B. Examiner

                That is, a decently comfortable life where they (the population) get to decide, as largely as possible, what IS productive work and how it shall be done.

                And please, no more conflation of work with having a job – neither requires the other.

                1. skippy

                  Semantics is not an evidenced based argument, but a framing of ones biases.

                  Yves already stated quite clearly that it was completely voluntary, as does the proponents of an JG [BIG lite or not]. So your complete argument is one big fat play of words, with an additional demand that its offered for free, just to set up a impossible hypothetical scenario.

                  The best part is your assuming the voice of the entire an population, off the cuff, with actually zero proof, yet demand that burden of others.

                  Skippy…. years ago when you were soft peddling your ridged ideological beliefs, you once muttered, but skippy were afraid you’ll put us all in a pit…. guess what… noone has to do it…. you put yourself in one… must be free will….

                  1. jrs

                    If you have to work for money you do have to work (and not pre-capitalist work either but WAGE SLAVERY).

                    Funny we have a thread where people are “forced” to consume fast food, but the very necessity to live (money) is something they are somehow not forced to labor for. But in reality of course while both are pressured, the latter is a lot stronger force, if we’re going to talk “forced”.

                    1. Lambert Strether

                      I agree. Human rental is an evil, as is human ownership. It would be best if labor were a human gift. However, I don’t see that on the horizon, and so all we can do is ameliorate, and create the space to experiment.

                    2. skippy


                      From a sociological stand point work can be viewed as the discharge of responsibility – too oneself and the group. Well over 50K years of human history observed is quite hard yakka to refute with clever reductive reasoning semantic games. Especially when their foundation is premised on esoteric beliefs which are confabulated as time marches on.

                      This is why some engage in the metaphysical credit – debt – money deliberations, to tease out the social connection – we – call money, for if it was not money it would be some other substitute.

                      Beardo’s entire world view is shaped by an antiquarian narrative over social incongruities from BC – middle – dark ages, 17th – 18th C England – Europe – to present day. Which comes from reading the text used by the authoritarians of each successive epoch, laid – constructed – defined the sociopolitical boundaries. Yet to a fault the said commenters resolution is to go back in time and live as if the “Garden of Eden” was an anthropological dig site…. sigh.

                      Skippy…. Slavery you say…. try mental slavery… standing in the door way and piercing your frontal lobes so the whole village can witness your “Free Will” in action…

                    3. B. Examiner

                      Being forced to work for money is also debt slavery since private money is almost entirely debt, though it need not be .

                    4. skippy

                      “Being forced to work for money is also debt slavery since private money is almost entirely debt, though it need not be.”

                      Beardo – this statement would also hold true for your previous opinion on equity substitutes.

                      In fact equity is already a form of money as its used in capital funding and mergers i.e.

                      “because within business your stock valuation is the currency that you use in the market. typically if you want to borrow (for expansion) or try to do an acquisition your stock is your currency if you do not wish to take on debt then then you can simply issue more stock through this process you transfer wealth from stock holders to the company’s balance sheet (as in they accept equity dilution so that the company has increased working capital). Look at most commercial bond T&C’s and you’ll see a clause about maximum Debt-To-Equity ratios. So maintaining your Marketcap is essential to maintaining your borrowing capacity.
                      Most acquisitions involve some newly issued stock in my company for all of your company, cash buy-out’s are not unheard of, it’s usually part of the mix, but 100% cash takeovers are unusual for acquiring growth companies. There are a number of reasons for this not the least of which is that the acquiring company normally wants the acquired team to still have some skin in the game post deal.”

                      Skippy… So… per your opinion on debt equity’s are debt and as such a form of forced slavery.

                2. Lambert Strether

                  Loaded with straw. The proposals I have seen for JGs are local and democratically controlled.* If they wanted to have a job that offered nothing, I presume that would be possible, if some sort of case could be made for that.

                  * That’s the whole point, d’oh.

                  1. B. Examiner

                    Democracy means up to 49% of the voters disagree and the ultimate in local are individuals with enough time/energy or other resources to do the work themselves (eg. babysitting rather than daycare) or pay others to do it for them.

                    1. Lambert Strether

                      Yes, I was wondering when your problems with democracy would come out.

                      So you propose to have your BIG check written out to you by a minority then? How does that work?

              2. JTMcPhee

                Yaas, we live by choice in an economy of choice, whether to work or eat pesticides or expect to be GIVEN little bits of money for our expenditures of personal choice energy. And every morning we cheerfully get to exercise the Existential Choice, right? And facilitators of choosing will sell us a length of rope, a pistol or shotgun or round of ammunition in a dizzying plethora of caliber choices, OTC and prescription pills in a huge variety of faster or slower and more or less painful chemical species, or we even have the choice to select among a huge number of Branded plastic bags into which we can place our heads. And there’s the ever more available and effective option (and often unintended optional choice of having the police shoot us, empty their magazines into our unresisting carcasses).

                Yaas, a world dominated by choices. How fortunate we should consider our lucky selves to be!

            3. B. Examiner

              Please don’t get me wrong; we should have generous infrastructure spending including for very high speed internet. (But let’s build roads, for example, or high speed rail with bulldozers to get the job done, not shovels (or teaspoons as Friedman quipped to the Red Chinese) to maximize the number of jobs.)

              But as for social spending, most people simply need money and perhaps their own home and land to work or work on.

          2. jrs

            All jobs are to waste 8+ hours of people’s time a day, to prevent them from thinking, and being fully human.

            1. Yves Smith Post author

              I don’t agree at all. Even the jobs I found hard to do because of the organizational dynamics were interesting, even the ones most people would consider to be tedious, like when I did survey research or sold newspaper subscriptions door to door.

              I don’t see how you relegate “being human” to your private time. Frankly, I find most social interactions, like parties, to be far more fake, rigid, and empty than work.

            2. optimader

              This perspective has presumably limited your job prospects when you have interviewed?

            3. Lambert Strether

              Hmm. Presumably, then, one becomes fully human while resting in a hammock, gazing up at the sky?

              I had a ton of blue collar jobs, and then a ton of professional and technical jobs, and all of them demanded thinking, and all of them were interesting (“Happy workplaces are all alike; every unhappy workplace is unhappy in its own way”).

              Now, I grant that today’s labor market is different, and much more crapified than it was back in my blue collar days. But your comment doesn’t say that.

              1. jrs

                That was before my time. I’ve been in the full time job market maybe since about 1998. So if this was before 1998 it was. But I could read about previous job market situations I suppose. The thing is I don’t really believe you can know about working (or sometimes even about a particular job) unless you have worked it (kids who have never worked full time yet, trust funders, etc. they don’t know about working). So it’s hard to know what it would be like just from reading a bunch of stuff (though I take as given of course working conditions improve somewhat the more power workers have).

                But I can’t see, no matter how fulfilling full time work is, how it’s not a massive time suck allowing little time for much else regardless. Part-time work much less so of course.

              2. JTFaraday

                I generally consult Jean Jacques on matters of such consequence as gazing up at the sky, and he recommends the rowboat not the hammock for that particular preoccupation.

                Although, if I recall, when the idea for the Second Discourse came to him, he was merely lying under a tree. The First Discourse struck him as he was walking along a road, (as if like Paul, on the way to Damascus).

                He seems to have suffered some sort of breakdown when bowled over in a street in town by a great dog. Nietzsche broke down sobbing on the neck of a whipped horse.

                This concludes my free association for the day. Time to go get my daily dose of kawaii.

              3. B. Examiner

                Presumably, then, one becomes fully human while resting in a hammock, gazing up at the sky? Lambert

                You still do not see that doing work does not require a job? A housewife might brain you with a frying pan if you told her that because she has no job that she therefore does no work.

                1. Lambert Strether

                  Actually, I believe that housework should be paid for (as I said elsewhere on the thread).

                  I’m afraid I don’t view the distinction between work and a job as the overpowering trump card that you seem to. At some point, the work needs to be organized by some institution, however lightly; from factories or warehouses on down. At that point, it becomes a job. If I got my local JG to define gardening as worth paying for — which would make a lot of permaculturists happy — then it would be a job, no matter my level of autonomy in doing the work.

                  1. B. Examiner

                    If I got my local JG to define gardening as worth paying for — which would make a lot of permaculturists happy — then it would be a job, Lambert

                    Then why not define meditation as a job, as MLTPB might suggest, and then we’re just back to paying people “wages” (a BIG) and letting them find their own work to do EXCEPT, as in your example of gardening, additional resources such as land, tools, training etc might be required.

                    So let’s reverse the theft of the commons, farms and businesses engendered largely by government-subsidized private credit creation, and then most people should be able to work successfully for themselves. Remember, it was the theft of the commons (Enclosure Acts) that drove people into the cities to find jobs, when previously they could support themselves with their own labor WITHOUT a job.

                    As for bread and circuses, it wasn’t the free bread that was the problem but that Rome’s citizens had little else to do but go to the circus, since work, including agricultural work, was largely done by slaves?

                    1. skippy

                      This supposition is a pejorative projection used as a rhetorical device to evoke a negative emotive connotation [the defining of term “work”] through anecdotal observations as conducted in a vacuum, and refracted through a passel of collected environmental biases… is a ridged ideological mugs game.

                      Lets take a actual look at how your philosophy plays out in reality…. eh.

                      ” It was a good idea, in theory anyway. The plan was to form a sustainable community made up of people who believed in capitalism, limited government, and self-reliance. The site was already picked out: 11,000 acres of fertile land nestled in the valleys of the Chilean Andes, just an hour’s drive away from the capital of Santiago, to the east, and the Pacific Ocean, to the west. Residents could make money growing and exporting organic produce while enjoying Chile’s low taxes and temperate climate. This was no crackpot scheme to establish a micronation on a platform floating in the middle of the ocean (a common libertarian dream)—this was a serious attempt to build a refuge where free marketers and anarcho-capitalists could hole up and wait for the world’s fiat currencies to collapse. They called it “Galt’s Gulch Chile” (GGC), naming it for the fictional place where the world’s competent capitalists flee to in Ayn Rand’s Atlas Shrugged.

                      The project was conceived in 2012 by four men: John Cobin, an American expat living in Chile who once ran unsuccessfully for Congress in South Carolina; Jeff Berwick, the globe-trotting founder of the Dollar Vigilante, a financial newsletter that preaches the coming end of the current monetary system; Cobin’s Chilean partner; and Ken Johnson, a roving entrepreneur whose previous investment projects included real estate, wind turbines, and “water ionizers,” pseudoscientific gizmos that are advertised as being able to slow aging.

                      That initial group quickly fell apart, though today the principals disagree on why. Now, two years after its founding, the would-be paradise is ensnared in a set of personal conflicts, mainly centered on Johnson. Instead of living in a picturesque valley selling Galt’s Gulch–branded juice, the libertarian founders are accusing one another of being drunks, liars, and sociopaths. GGC’s would-be inhabitants have called Johnson a “weirdo,” a “pathological liar,” “insane,” a “scammer,” and other, similar things. Some shareholders are pursuing legal action in an effort to remove him from the project, a drastic measure for antigovernment types to take. Johnson, who remains the manager of the trust that controls the land, claims all the allegations against him are false. So what happened?” – snip


                      Skippy…. as always… paradise envisioned by bolting together a bunch of biased linear ex nihilo reasoning exercises…. never actually works out in reality.

    2. Yves Smith Post author

      You need to look much harder at the role of the big food processors in this country. The use of sugars and fats in packaged food, and not just in fast food, is pronounced in America. And portion sizes are way bigger than in other countries, even at McDonalds stores. This is much more of a “sell side” issue than you want to think it is.

    3. Bart Fargo

      Who should be blamed for the obesity epidemic doesn’t really have anything to do with it. Looking at the large scale picture, you could say there have been two major parallel consequences of Americans consuming so much processed food: 1) the producers and marketers have made a bundle because processed foods with high sugar and fat content are not only more convenient and ubiquitous than real food but also addictive in a very real sense, and 2) someone will have to pay for the healthcare of millions of Americans whose illnesses are a consequence of subsisting on such foods, plus for the social costs of such widespread morbidity. The corporate taxes on the big food corps are nowhere near enough to compensate for #2 (even before considering the massive subsidies enjoyed by big agriculture). Were those costs factored in, suffice to say you could no longer buy a McDonald’s double cheeseburger for a dollar. So it’s a case of privatized profits and socialized costs, and this is true no matter whether you prefer to “blame” the consumers or the food industry for the obesity epidemic. The state is never going to be able to afford anything like a guaranteed living income by allowing entire sectors of the economy to shift such massive costs onto the public, and take-home pay will languish as the cost of healthcare for so many chronic illnesses continues to rise. As with environmental costs, holding large corps to account for the true social costs of their business models – whether intended or not – is vital to improving Americans’ quality of life to a point where all can afford to eat and live healthily. And if a business can no longer afford to operate when all the costs of their business model are factored in, then it really should never have existed in the first place.

      1. vidimi

        i like the idea of a fast food tax, or a more general processed food tax. that way, you could get future bypass recipients and diabetics to pay for their eventual medical needs and make the junk more expensive, making it less appealing.

        1. James Levy

          In NY and Massachusetts unprocessed foods are not subject to sales tax but many processed or prepared foods are. This does not, in my case, make much of a difference. My problem when I shop is the cost of quality fruits, vegetables, and local meat that is raised on fields and not in animal factories. In fact, such meat is beyond my ability to pay for. Raising the cost of bad food doesn’t lower the cost of good good–it just puts the squeeze on the poor and the lower middle class. Somehow we have to increase the supply and lower the cost of whole grains, organic fruits and veg, and humanely raised animals. That’s where I see the problem.

          1. jrs

            No I don’t really think we need to lower the cost of good food (I’m not sure it’s even entirely doable without subsidy, although we could change what we subsidize), I think instead we need to increase the amount of money going those who don’t’ have enough money now to buy good food.

        2. Bart Fargo

          Except that many of the “future bypass recipients and diabetics” can hardly afford to eat anything but processed junk, or hardly have access to real food (food deserts), or lack the facilities necessary to prepare healthy meals (a working kitchen, and time to spend in it). Greatly subsidizing and extending access to healthy foods and the means to prepare them would need to occur alongside any such tax. People are (knowingly or unknowingly) already severely punishing themselves by eating poorly, and so I can’t see how further punishing them for their mistakes without extending a helping hand could be the solution.

        3. human

          Forget corporate taxes. Corporations don’t pay taxes.

          Institute mandatory collective bargaining for any wage position. Pay a livable wage, about $20.00 per hour. Provide truly universal benefits of health, education and welfare. Tax us at 40 to 50% of income and we will still be taking home more than we are now and the “government” will have OUR backs.

          1. Generalfeldmarschall von Hindenburg

            That makes more sense. But people have to want it. They’ve got Americans convinced unions are Sovietism and that minimum wages just cause higher prices.

          2. vidimi

            it wouldn’t be a corporate tax but similar to a VAT, except instead of taxing value added, it would tax value extracted. call it a vet.

            it would be taxed at the point of sale so that offending products would be made more expensive, like cigarettes. the higher price alone would be enough to get people to cut down and, as bart suggests, revenue from the tax could be used to subsidize organic produce.

            of course, this being america, that could never happen.

            i like your idea, too, of french-style mandatory collective bargaining for wage workers.

  5. Ensign Nemo

    There is a purely financial reason to hate this merger, regardless of the culinary value of the food.

    A special dividend of $10 billion dollars will be paid as a bribe to Kraft shareholders. Buffet’s company will loan the new company the money used to bribe them to permit the merger.

    That’s about four years of anticipated earnings for the combined company, if estimates of $2.5 billion per year are accurate.

    They are borrowing four years’ worth of earnings to allow shareholders to cash in. That’s a huge hit to the ability of the new company to invest in things that create real value, such as product development or manufacturing improvements.

    They also expect $1.5 billion per year in “savings”, which translates into lots of workers losing their jobs. This might boost earnings to $4 billion, which would then mean that the bribe was “only” two and a half years’ worth of earnings.

    So, the fat cats get an unexpected $10 billion payout, thousands of workers must lose their jobs to get to $1.5 billion a year in “savings”, and Buffet gets to collect interest on $10 billion in debt. The new company will be in debt up to its eyeballs, and Buffet will own the debt as well as the company.

    This sort of financial obesity is typical of crony capitalism, where the rich and well connected get to manipulate the rules of the game to transfer wealth from the 99% to the 1%. Oh, the dividend allows Buffet to keep control of the new company – paying it in stock would send his share of stock below 50%. The shell of Kraft will be kept as a tax dodge. Kraft also changed its bylaws to force lawsuits to be filed against it in Virginia – a clear case of shopping for friendly jurisdictions.

    Isn’t it ironic that a fat cat named “Buffet” is gorging himself on two huge food companies?

    Well, no, it’s quite sad that he gets away with this at the expense of thousands of impending job cuts, and manages to dodge taxes, and gets to pick and choose the judges for lawsuits against him, and gets to collect interest on the debt issued to bribe others to approve the deal in the first place.

    It’s cronyism, not capitalism.

    1. Jim in SC

      I think Buffett is a great deal smarter than the average person. So is Bill Gates. Sorry, but it’s true.

      1. B. Examiner

        Buffet is an atheist. How does one prove God does not exist? Is it smart to think one can?

        1. Kurt Sperry

          An atheist is no more obligated to prove the non-existence of gods than a non believer in the tooth fairy is to proving there is no tooth fairy. Extraordinary or supernatural claims obviously require extraordinary proofs, the burden of proof falls on the person making those claims, not on the person skeptical of them.

      2. JTMcPhee

        At a slightly different scale, cancer cells and tapeworms and retroviruses are smarter than the tissues and organisms they drain, too. There’s a value statement implicit in the notion that predators and parasites and disease organisms in the human political economy are smarter than the average person. The guy who runs ISIS on a business model that Forbes admires is a smart and successful cookie, by some people’s measures.

      3. jrs

        So what, does it follow that if he’s smarter (by the way can smart really be measured, a lot of people don’t think so – multiple intelligences and so on) he should be allowed to be vastly vastly richer than the average person? Why? Some kind of social darwinism?

  6. Robert dudek

    I would like to see a hefty sugar tax on anything that has any kind of sweetener added.. We can start at 30% and see how that works.

    Fats are not the problem. Refined carbs are. Watch some Gary Taubes lectures on you tube to get a sense of how the Hunan metabolism responds to high levels of carb intake.

    1. susan the other

      From everything I have read and practiced, I also think sugar is our nemesis. When you are young and active, you don’t notice it too much, but at some point, you put two and two together and realize that that pastry for breakfast is making you very sick. Then not long after that you notice that you cannot eat much bread for lunch. Then pasta. Then you realize desert is borderline suicide. Etc. So it is a picture of the gradual inefficiency of our metabolism as we age. imo. Some people are born with an accelerated manifestation of this: serious diabetes. And the incidence is increasing. You can’t tell me it isn’t the environment. And I’m intuitively sure it is amplified down the generations. I hope all our metabolisms don’t go haywire at once.

      1. optimader

        I was talking to my sister –who’s medical background is relevant on the subject of sugar. The riff went down the path of tying out diabetes to consequential micro vascular damage caused by free molecular sugars behaving like glass shards. The brain response to the vascular damage being to form amyloid plaque as a repair mechanism. Ergo, Alzheimer’s disease, Type 3 Diabetes.

  7. amateur socialist

    “Don’t buy any food you’ve ever seen advertised” – Michael Pollan

    The principle seems sound. Rather than let the lobbyists wrangle for years over what constitutes “junk” food to institute a reasonable tax on it, move upstream and tax all advertising on food products.

    1. Carla

      Pollan’s rule is good. I also like: “Don’t buy any food item with more than 5 ingredients listed on the label.”

    2. dannyc

      There’s a bumper sticker out there that says: Eat organic . . . what we used to call food.

  8. upstater

    And don’t forget Warrent Buffet owns BNSF railroad, the largest coal hauling and Bakken oil hauling railroad, taking more carbon to market than anyone besides the Chinese government. Buffet wants to cram down new oil and coal terminals in Washington and Oregon to insure the carbon gets put into the atmosphere.

  9. paulmeli

    Not to mention all of the wealth he has extracted from the system, distributed to a relative few. He’s an engine of inequality.

  10. Carla

    Interesting that so many commenters seem to have focused on the “food product” component of IIargi’s post, rather than the “blind worship” (of those who have accumulated huge amounts of money) aspect.

    1. ScottW

      Bingo. These same worshipers also love the way he drives an older car and lives in Omaha. The accumulation of wealth for wealth’s sake. A pretty empty life when all is said and done. My guess is he will be doing a deal on his deathbed.

    2. jrs

      It’s been said we blindly worship those who accumulate money because we have nothing else in this empty culture to worship as a human aspiration. Not to deny that money is useful, of course. But of all the archtypes of human achievement/flourishing humans have worshiped besides money do we worship any? (besides toughness of course as it is an F-ist culture).

    3. Jim in SC

      Buffett has a very carefully crafted public persona. There is a basis of reality–his corn pone humor–but the rest is very carefully arranged in a way that helps him in his business. For example, being the ‘white knight’ in contested takeovers. He’s really not a better stock picker than many other people, but he understands tax law, and the insurance business, and the value of the conglomerate format. And from the ’50s through the ’80s, he was an extraordinarily good arbitrageur. Being a good stock picker, when combined with the leverage inherent in the insurance float, allowed him to compound his returns at rates higher than the returns on the stocks he bought. He borrowed heavily to do merger arbitrage. So his is really a story of good and diverse skill base combined with leverage intelligently applied.

  11. Moneta

    Better living through chemistry. Wasn’t a lot of that stuff created to circumvent the absence of fridges? LOL!

    It is quite obvious that corporations EXCEL at getting people to buy unhealthy foods using heuristics, yet the general population still clings to the concept of free will. As if someone decides to be obese!

    As long as Americans can not separate the role of the individual vs. that of the commons, nothing will change. And by looking at many of the responses here, getting a change in paradigm in the American way of life is going to be a really tough slug.

  12. Michael McKay

    Any number of studies have shown that the ingredients in snack and fast foods are in fact addictive; the companies’ research is geared to perfecting the combinations of ingredients that produce the greatest dependence. So, even if taking MacDonalds to court for ‘poisoning’ America’s kids were “an impossible and unwinnable case,” legislating such behavior, as was done with the cigarette companies, would not, theoretically, be out of the question. And, for litigating purposes, proving companies’ intent to make addicts of their users would not be impossible. Should be disgruntled whistle-blowers aplenty.

  13. vegeholic

    The Archdruid had a good column a few weeks ago about externalities. The point there, and here, is that many successful businesses simply find a way to capture profits and dump costs, in a way that is not obvious, onto society. If companies had to pay, in real time, for the costs that they incur, they would not be profitable. This tells me that capitalism has a fatal flaw which needs to be addressed. In a growing economy on an empty continent you could get away with this. Another example: fracking companies are only profitable (if they are) because they can inject their waste fracking fluids into injection wells rather than cleaning the waste. Eventually society will have to deal with these dumped wastes, but by then the company executives and shareholders will have absconded with the money and the rest of us will have to pay.

  14. Mel

    Buffet seems to have a reputation as the Good, Wise Financier, but I don’t think that’s up-to-date. Listening to Buffet now I keep thinking I hear Wells-Fargo, and watching Buffet I see the same buy-it-up/shut-it-down that every corporate raider’s been doing for at least a half-century. I don’t see the brilliant fund manager we thought we saw in the 20th century. If this new company defaults and WB loses the lot he will be ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him. Just like Keynes recommended.
    Maybe somebody who knows can point out on the timeline just when Buffet stopped being remarkable.

    1. Irene Rogers

      As a long-time admirer of Buffett’s financial acumen — and of the “old” Buffett — I would say that his “shift” began in in 1988. He was able to sell stocks and dodge the 1987 crash. (He did however hold onto his wholly owned insurance and candy businesses, and his large interest in the Washington Post Co.)
      When he started to buy Coke thereafter, more and more of his positions became too big to sell, and so he shifted to “buy-and-hold-forever” because he had to. At that point he began shifting to being “all-in” with the business establishment. The shift completed in 2008 when he authored the infamous Public-Private Investor Partnership (PPIP) proposal that would have allowed investors to buy distressed mortgage securities but have the Treasury take the risk. While PPIP got hooted down, the Federal Reserve put a similar program into practice, the Term Asset Backed Loan Facility (TALF). I have trouble believing that the “old” Buffett would have acted as an architect of the bank bailouts. Then again, the old Buffett would have been small enough to quietly dump his stake in Wells Fargo in 2007.

      Having said this, while Buffett ran the original Buffett Partners in the 1950s and ’60s, Buffett was quite willing to engage in activist tactics to unlock the value of his investments. He just did so on a smaller scale, and didn’t expect or need taxpayer help. James Altucher’s “Trade Like Warren Buffett” traces the old history.

      1. Irene Rogers

        Mel, Just to be clear. It’s next to impossible to make the kind of high percentage returns Buffett made in the early years, when you are managing tens of billions. While big size allows access to deals the little guy doesn’t have, and power to bully others, it gives up the ability to get in and out of positions quickly, and that is a performance killer, relatively speaking. There is absolutely no reason to suspect that Buffett’s financial skills have in any way declined, and the very sharpness of of the Heinz dealmaking would seem to support that.. Furthermore your suggestion that Hieinz/ Kraft is in any financial danger is also risible — it’s got powerful brand names, consistent cash flow, and is about to benefit from merger efficiencies (brutal as they may be).

        The real question is about a decline in Buffett’s ethics. I’d argue that he has always been one of the smartest, toughest operators out there, and that includes the p.r. he gets. But we’ll never know if in the early days he would have bent the rules the way he does now. Back then, he didn’t need to, and didn’t have that power, anyway.

        Btw, the Seattle Times and the Center for Public Integrity have found that Berkshire subsidiary Clayton Homes turns out to be one vicious, predatory lender. Maybe Yves needs to look at manufactured homes?

        1. John Jones


          Is it possible to repeat what buffet did in his early years in today’s financial world. I mean the high returns and to do it in a moral way?

          1. Irene Rogers

            Sure. The point is, the opportunities to do that usually come in much smaller size. Buffett now has to do billion, if not deca-billion, dollar deals, just to move the needle. Berkshire is too big to bother with an interesting $50 million dollar investment. Not worth his time. But if you are running a small fund, you can find interesting things every now and again, of the sort Buffett used to feast on. In a bull market like this, of course it is harder. And to your point, when Buffett started out, very few people really knew how to read a 10-K. Now lots of people comb every SEC filing… so even in bear markets the opportunities are scarcer.

            To the point of other commenters: an under appreciated side of Buffett’s genius is his adaptability. Entrepreneurs now understand that if they sell to Berkshire, the deal is going to be really good– for Berkshire. Now Buffett has to pay up like everyone else — of course he would rather buy some family owned company cheap and let management continue to run it as he used to do. So these days he buys Heinz, Kraft, pays more than he would care to… and has G3 do the dirty deed of firing enough people to make the deal work.

  15. Steven Greenberg

    There is this feeling, partly myth and partly real, that Warren Buffet has a unique management style that lets companies that he buys continue to excel. He picks companies with good managers, and he lets them continue to do their thing. He only offers advice and direction moderately when asked.

    Some or all of that may be true, but there is the other side of Warren Buffet which Ilargi highlights in this article. He is ruthless at times. The bargains he gets can only be achieved because his wealth is what gives him great power to drive hard bargains.

    I admire Warren Buffet for the part of the myth that may be true, but that doesn’t stop me from seeing the negative side. When I used to watch Nightly Business Report on PBS, it used to drive me batty to see how Suzy Gharib would fawn all over Warren Buffet. You know you aren’t getting straight news when you see behavior like that.

    1. lyman alpha blob

      That’s why the bank bailouts were so egregious. Buffett put the screws to Goldman Sachs when he extended financing to them but for some reason the US government couldn’t get the same terms…..

  16. geoff

    Not kidding, but whatever happened to antitrust legislation? I know it’s not being enforced (just as financial crimes are not being prosecuted), but in a better world, shouldn’t deals like the Kraft- Heinz merger be looked at by the Justice dept. before just going forward?

    Also, what Ensign Nemo said. Corporate mergers = big job losses. Why is this not illegal?

  17. R. Seckler

    Maybe Warren is onto something here: the eventual legalization of marijuana. Stocks ought to rise with the munchies.

    On a more serious note, I don’t think capitalism necessarily jibes with altruism. In seeking profit, resources are usually directed to the tantalizing profits of low-lying fruit. And that fruit is represented my mankind’s weaknesses.

  18. cnchal

    Buffett, the supposed genius, can only do these deals because nobody demands anybody to pay for the externalities that arise as a result of Warren pushing crap posing as food upon the American people.

    That’s the genius part. Doesn’t Warren own some pharma to profit off sick people? Get it coming and going.

  19. Fool

    I like Coke for breakfast. That having been said, I probably would stick to coffee or tea if I wasn’t at a sub-10% body fat. This is because I am an adult, and therefore I can make responsible decisions for myself.

    Now, if you said that perhaps I wouldn’t be able to make that decision if I were impoverished and thus incapable of affording a proper diet then that would be a different story. But you didn’t, and instead you whined about Warren Buffett being a capitalist. I’m confused.

    1. susan the other

      Externalities. Those things that the ledgers of capitalism shuffle off to the side and after a time let drop off the bottom line. You are lucky, so far, to have a coke-for-breakfast metabolism. Most of the world does not. Capitalism should include all those externalities – capitalism could tighten its own belt. But no, no, no. It doesn’t want to do that.

      1. Fool

        That’s a fair argument, in theory, but it’s onus that principally falls (or should fall) on politicians.

  20. Phil

    Profits gotten from legal enterprise tend to make profiteers feel OK about their haul – and there’s the rub. In America, we have created a culture that uses the law to create pain and suffering, and at the same time protect the perpetrators. We ARE a nation of laws; that’s almost an understatement, but what KIND of laws?

    Buffet, up close, may be a good person, but many “good people” are often blinded by convention. This is what happens when the various myths associated with extreme accumulation become embedded in the culture at large. Myths, when believed in, discourage thinking, which leads to the outrage of over processed and unhealthful foods. Look at how much money these companies plow into advertising their poisons – unreal.

  21. Calgacus

    This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.
    Adam Smith, The Theory of Moral Sentiments Section III, Ch. 3

  22. skippy

    If kids were not psychologically attacked from birth by the incessant stream of branding corporatist spent billions on, maybe they could be allowed to grow up without induced behavioral conditioning.

    “The childhood obesity epidemic is a serious public health problem that increases morbidity, mortality, and has substantial long term economic and social costs. The rates of obesity in America’s children and youth have almost tripled in the last quarter century. Approximately 20% of our youth are now overweight with obesity rates in preschool age children increasing at alarming speed. According to the Centers for Disease Control and Prevention, the prevalence of obesity has more than doubled among children ages 2 to 5 (5.0% to 12.4%) and ages 6 to 11 (6.5% to 17.0%). In teens ages 12 to 19, prevalence rates have tripled (5.0% to 17.6%). Obesity in childhood places children and youth at risk for becoming obese as adults and associated poor health such as diabetes, cardiovascular disease, and some forms of cancer. Prevention efforts must focus on reducing excess weight gain as children grow up.

    Today’s children, ages 8 to 18, consume multiple types of media (often simultaneously) and spend more time (44.5 hours per week) in front of computer, television, and game screens than any other activity in their lives except sleeping. Research has found strong associations between increases in advertising for non-nutritious foods and rates of childhood obesity. Most children under age 6 cannot distinguish between programming and advertising and children under age 8 do not understand the persuasive intent of advertising. Advertising directed at children this young is by its very nature exploitative. Children have a remarkable ability to recall content from the ads to which they have been exposed. Product preference has been shown to occur with as little as a single commercial exposure and to strengthen with repeated exposures. Product preferences affect children’s product purchase requests and these requests influence parents’ purchasing decisions.”

    “Every year, food and beverage companies spend billions (link is external) to convince kids that it’s cool and fun to consume products that are high in calories, added sugar, saturated fat and sodium—products that contribute to weight gain and long-term health risks like type 2 diabetes, heart disease and cancer.

    The worst offenders: fast food restaurants.

    In a recent report by the Yale Rudd Center for Food Policy & Obesity (link is external), Fast Food FACTS 2013 (link is external), we document the myriad sophisticated ways that the fast food industry targets children and teens. The numbers are enormous. In 2012, the industry spent $4.6 billion on advertising; McDonald’s alone spent almost $1 billion. On average, preschoolers under age 6 saw almost three fast food ads on TV every day, while older children and teens (12-17 years old) saw almost five ads daily.

    Fast food companies also frequently advertise to children and teens on the internet, in social media, on mobile devices, in schools, community centers, and just about every other location they frequent. Furthermore, much of this marketing is targeted to black and Latino youth, who suffer disproportionately from obesity and diet-related diseases.

    But aren’t fast food meals getting healthier? Not really. Despite 50% increases in the number of possible kids’ meals combinations (including a main dish, side and drink) and regular menu items offered, the proportion of healthy items on restaurant menus did not improve. In 2013—as in 2010—99% of kids’ meals did not qualify as healthy meals for children and 75% of regular menu items exceeded recommended fat, sugar or sodium limits for teens.

    Recent studies (link is external) have demonstrated that exposure to fast food marketing is related to consumption of fast food and sugary drinks and restaurant visits. Substantial reductions in unhealthy fast food marketing to children and teens are needed.

    The Rudd Center report does note some improvements in fast food marketing targeted to children 6-11 years old, including a 10% reduction in TV ads viewed in 2012 versus 2009. However, there were no comparable improvements in marketing to 12- to 17-year-olds. On the contrary, we found considerable evidence that some restaurants—including Taco Bell, Starbucks, Dairy Queen and McDonald’s—specifically target this age group with marketing for some of their least healthy menu items, including high-calorie high-sugar snacks.

    This marketing may be even more harmful when directed to older children and teens. Unlike younger children, middle and high school students have the means and independence to consume fast food on their own. And they do—as much or more than any other age group. On a typical day, 41% of teens eat fast food (link is external), consuming 310 more calories than on days they don’t eat fast food. One-quarter of teens’ visits to fast food restaurants are for an afternoon snack. Furthermore, 18% of middle schools (link is external) and 30% of high schools serve branded fast food weekly, while 19% of high schools serve it every day.

    Despite high levels of skepticism about advertising in general, adolescents remain extraordinarily susceptible to the influence of food advertising. Recent neuroimaging research (link is external) shows that adolescents demonstrate more reward responsivity and attention to food advertisements (including fast food ads) compared to other television advertisements, with similar neural responses to food logos alone.”

    Relation of obesity to neural activation in response to food commercials

    “Adolescents view thousands of food commercials annually, but the neural response to food advertising and its association with obesity is largely unknown. This study is the first to examine how neural response to food commercials differs from other stimuli (e.g. non-food commercials and television show) and to explore how this response may differ by weight status. The blood oxygen level-dependent functional magnetic resonance imaging activation was measured in 30 adolescents ranging from lean to obese in response to food and non-food commercials imbedded in a television show. Adolescents exhibited greater activation in regions implicated in visual processing (e.g. occipital gyrus), attention (e.g. parietal lobes), cognition (e.g. temporal gyrus and posterior cerebellar lobe), movement (e.g. anterior cerebellar cortex), somatosensory response (e.g. postcentral gyrus) and reward [e.g. orbitofrontal cortex and anterior cingulate cortex (ACC)] during food commercials. Obese participants exhibited less activation during food relative to non-food commercials in neural regions implicated in visual processing (e.g. cuneus), attention (e.g. posterior cerebellar lobe), reward (e.g. ventromedial prefrontal cortex and ACC) and salience detection (e.g. precuneus). Obese participants did exhibit greater activation in a region implicated in semantic control (e.g. medial temporal gyrus). These findings may inform current policy debates regarding the impact of food advertising to minors.”

    Skippy…. Good Grief… its not like its some ambiguous debate about the chicken or the egg… its not even a question of externalities…. its a clear case of cause and effect with intent… for extractive profit…

  23. ptup

    Always thought my grandmother was a saint, but, now I appreciate her so much more. I mean, how in the world did a penniless Polish immigrant fresh off the boat raise three boys and clean houses at the same time, all the while cooking delicious meals, day in and day out? And it’s not as though she was the only one in the neighborhood. All during the depths of the depression. I guess if she arrived today, she and the boys would be fat and stupid, but the intellectual class would have a shopping bag of excuses for that, right?

    I have my issues with Buffet, for sure, but, this little essay comes off a a very mean spirited screed against a man who rates pretty low on the satanic scale of financiers today. After all, he is going to give his massive fortune away to charity, not establish a multi generational 1% clan for the future. And I really don’t think he’s doing it to buy our approval. That has to count for something, right?

    1. jrs

      Yea and at what point was buffet morally to blame, when he was a stock trader who didn’t morally evaluate every single trade in and out? As if any stock traders do. Isn’t that a case of you should hate the game and not the player in that case then? Or only when he accumulated some actual power himself?

  24. participant-observer-observed

    This helps to disprove the meritocracy fallacy.

    It is evidence that just having a lot of money, or more than anyone else, is not enough to make someone a leader or attribute to them leadership qualities. I.e., the fact that such a senior person in his profession has no power to incline others (such as Wells Fargo) to be ethically accountable to him, as the way other professions operate, shows dereliction of leadership and ethics all around.

    Even when the foxes are running the hen house, there is no sense of propriety even toward the most senior foxes! As long as hens are bleeding and dying, but still reproducing and bowing at the altar of the foxes, the macabre hagiography will continue.

  25. different clue

    Once again the question arises: if the Global Overclass wanted to arrange for the death of about 6 billion people over the next hundred years and make it look like an accident, how might they go about engineering the conditions in which that mass die-off could occur?

    1. jrs

      The only thing is it’s really hard to imagine THEM surviving (escaping the planet and so on, yes but I’m not convinced it’s actually feasible as opposed to just a pipe dream). And if you want to engineer the death of 6 billion and end up killing everyone including yourselves and your descendents instead, that’s moral culpability but beyond the point where it matters, it’s just a dead planet.

      1. different clue

        I think they think they will survive and outlive the rest of us on THIS planet. Certainly they are making plans that appear to anticipate a sort of “sub-autoclave event” which they will hide from. And then when
        the largely vacated earth is re-terraformable to their liking, they imagine they will have the resources to re-terraform the de-terraformed parts and systems and have it all to themselves.

        Here is a Global Research Engdahl article about the “real reasons” for the Doomsday Seed Vault at Svalbard Island.
        Yes, it is a tinfoil masterpiece. But just because it is tinfoil, does that mean it is wrong?

  26. Jim

    There is a substantial correlation between IQ and economic success in the US economy. Rich people in the US are on average more intelligent than non-rich people. Warren Buffet is almost certainly more than one standard deviation above average in IQ in the US population.

    1. Yves Smith Post author

      1. Evidence? Do you have the results of Warren’s IQ test? Do you have any proof of your correlation in general?

      2. Even if true, correlation is not causation. Economic success is highly correlated with the income level of your parents. Bill Gates is rich because his mother sat on a not for profit board with a guy from IBM. That’s how Microssoft got the OS license for PCs. Higher income parents feed their children better which has a big impact on IQ.

  27. Min

    Except for his riches, Buffett is fairly typically American, Midwestern variety. That means that he does not chase the almighty dollar, he does not think that greed is good. He is very good at investing and, IIUC, takes the same approach that Keynes did. Buffett is pretty much Midwestern virtues, Norman Rockwell, Mom, and Apple Pie. He believes in self-reliance, the core American virtue. Buffett is not out to change the system, and in that he is also like most Americans. Ilargi targets Buffett, but I think that his real target is Americans.

    It is true that if business and industry had to pay for externalities, the system would collapse. Profiting from externalities is the prototypical business model today. But Coke and “American cheese” are not the main culprits. How about Big Coal? For starters.

  28. Xelcho

    While this article concerns it self only with the current “deal” that WB is putting together I would like to open up the set a bit more to include some of the work that David Cay Johnston (Free Lunch) did in the early 00s. His investigative work showed that WB is an extreme opportunist who tends to generate his own opportunities through bribing/lobbying (gov credits/tax abatement/gov financing) or super duper deals on paying tax that was collected by companies he owns/controls. Some of them are for billions at 0% interest for a minimum of 9 years.

    I see no brilliance only opportunism and old fashioned corruption lubricating it. In reality he casts a shadow that fully engulfs turds like Willard Romney. Far from supporting the 99% he has taken complete advantage of their condition and use it to generate $ a simple example is his Geico call center in buffalo, NY. All hail the power of marketing and sales!

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