America is said to be the land of capitalism and then you have Berkshire
“In effect, I have depended on the success of American businesses and I will continue to do so”
...a mantra repeated over and over in Mr. Buffet’s letters to shareholders, and stated plain and simple one more time in his latest message, February 22
Leading by example since 1965, Mr. Buffet has been quoting successful business acquisitions repeatedly in folksy vignettes of their founding owners
Their entrepreneurial spirit has been nurtured as the true ‘gem’ of Berkshire’s sprawling interests and perennial success, an ode to freedom and democracy, the American way…
What stood out in the careers Mr. Buffet has been describing, year after year, is a sense of responsibility of these entrepreneurs, to the firms they founded, to their employees and to their customers
Serving a wider purpose which Mr. Buffet spelled out with all the clarity he could summon, their careers achieve economic success enshrined in a higher order, one of honesty, fairness and humility
In the twilight of his life, Mr. Buffet puts American business on notice and raises the bar for American society – promising rich rewards to Americans saving consistently and to businesses deploying capital wisely…
And the message with which Mr. Buffet at age 94 prepares to take his leave will be quoted extensively in this note because it matters…
Model capitalism supported by Berkshire is alive and well… in Japan …but some of the more egregious American businesses practices first needed to be pointed out to the firm’s shareholders
From the 2024 Letter to the Shareholders, February 22, 2025
Bluntly, Mr. Buffet charges large public U.S. managers of “aggressive management compensation” (p.11), savaging board meetings and analyst calls at which “mistake” and “wrong” were forbidden words (p.2), implying a most improbable “perfection” and, taking the opposite stand, showcases his preference for “innate business talent” over great school diplomas
A fair wind from Japan
The Japanese conglomerates owned by Berkshire are discussed in the theme 'Japan - Sōgō shōsha rising'
And in his letter, Mr. Buffet highlights a successful investment strategy in the country since 2019, with a market value of the holdings totaling $23.5 billion at an aggregate cost of $13.8 billion
However, there is more to the full page (out of 10) in his Annual Shareholders letter dedicated to Berkshire’s investment in 5 Japanese sōgō shōsha conglomerates - Itochu
Compliments showered on the management of the five companies, which “increase dividends when appropriate, repurchase their shares when it is sensible to do so, and their top managers are far less aggressive in their compensation programs than their U.S. counterparts”, go to the heart of Berkshire's ‘model’
Showing the direction of responsible capitalism, the ‘double-entendre’ regarding American business practices is unmistakable
. "And then what?”
Quoting Mr. Buffet two days ago, on March 2, in an interview with CBS News' Norah O'Donnell
"You always have to ask that question in economics. You always say, 'And then what?" - at 7mns 17 seconds
The answer to that question – which, ultimately, goes to the heart and meaning of capitalism – is just straightforward
….“propelling an ever-growing societal output of desired goods and services. This system is called capitalism”
Berkshire
This same company became in 2024 the largest contributor to the U.S. Treasury, totaling $26.8 billion
However spectacular the success Mr. Buffet shared with Charlie Munger, it might be worth to ponder the stark terms which allowed capitalism to “work wonders”
Faults and abuses notwithstanding
...consistent savings by the Americans and wise deployment of the capital made available are the not-so secret ingredients of America’s economic success
In Mr. Buffet’s words – p.7 & p.8
“One way or another, the sensible – better yet imaginative – deployment of savings by citizens is required to propel an ever-growing societal output of desired goods and services. This system is called capitalism. It has its faults and abuses – in certain respects more egregious now than ever – but it also can work wonders unmatched by other economic systems.
America is Exhibit A. Our country’s progress over its mere 235 years of existence could not have been imagined by even the most optimistic colonists in 1789, when the Constitution was adopted and the country’s energies were unleashed.
True, our country in its infancy sometimes borrowed abroad to supplement our own savings. But, concurrently, we needed many Americans to consistently save and then needed those savers or other Americans to wisely deploy the capital thus made available. If America had consumed all that it produced, the country would have been spinning its wheels.
The American process has not always been pretty – our country has forever had many scoundrels and promoters who seek to take advantage of those who mistakenly trust them with their savings. But even with such malfeasance – which remains in full force today – and also much deployment of capital that eventually floundered because of brutal competition or disruptive innovation, the savings of Americans has delivered a quantity and quality of output beyond the dreams of any colonist.”
And, almost as an after-thought
“So thank you, Uncle Sam. Someday your nieces and nephews at Berkshire hope to send you even larger payments than we did in 2024. Spend it wisely. Take care of the many who, for no fault of their own, get the short straws in life. They deserve better. And never forget that we need you to maintain a stable currency and that result requires both wisdom and vigilance on your part.” - p.8
When asked about the current state of the economy in the quoted CBS interview, Mr. Buffett answered
"Well, I think that's the most interesting subject in the world, but I won't talk, I can't talk about it, though. I really can't" at 6mns 48 seconds