“My wealth has come from a combination of living in America, some lucky genes, and compound interest.” Multi-billionaire Warren Buffett

Geography

Buffett claims being American was a necessary condition to his success. He’s wrong. In America racial identity helps define life opportunities and especially in the southern states. In Mississippi, annual household income is $49k, with a top 1%er needing $361.5k. In Buffett’s state, Nebraska, the figures are, respectively, $66.5k and $745.3k.¹ Mississippi wrecks black-American human capital and weaken everyone’s economic well-being.

Buffett was born in 1930, in segregationist America. Higher education for black-Americans was a dream. Buffett attended three universities and each had overt barriers to entry. “For a century after the abolition of American slavery in 1865, most colleges and universities in the Southern United States prohibited all African Americans from attending.” ² Entry barriers existed for Jewish and black-American students in northern states universities.³

A Mississippian black Buffett, born in 1930, wouldn’t be a multi-billionaire now.

Genetics

Buffett is nonagenarian with ‘lucky’ genes. If he’s making a wider point about a genetic disposition to become rich he’s wrong again. A black Mississippian Buffett would have had vanishingly few opportunities for business success. He’d have been excluded from critically important loans because of racist banks. Winning the genetic lottery and becoming a world-class sportsman might have leveraged him into sustained wealth. But probably not.

Let’s take the case of elite black athletes at the Nazi Olympics. When they returned, “the 18 African-American Olympians of 1936 understood that their dreams had to be limited. None of them were invited to the White House, or shook the hand of President Franklin Roosevelt.”⁴ Jesse Owens, despite winning four gold medals and poking Hitler in the eye, was snubbed.

Professional sport was segregated in the 1930s and 40s. Super-stars couldn’t stay in team hotels. Nor eat in restaurants, or travel easily on public transport. There wasn’t a professional black middle-class to protect their financial interests, leaving them vulnerable to expoiltation.⁵

Buffett’s comment is a coy way of claiming he’s a ‘chosen’ one.

Capital accumulation

Buffett says compound interest is a key factor in his mega-wealth. By this he means leaving capital untouched to accumulate. His motto is: savings then spending. Buffett is hostile to conspicuous consumption. His principal business, Berkshire Hathaway,⁵ focuses entirely on capital accumulation. It doesn’t pay dividends or offer ‘share splits,’⁶ which denies investment opportunities for retail investors.

Buffett is a parasite. He invests in successful businesses. His only contribution to the investment world is his concept, ‘moats’. A moat is an advantage, which denies entry to competitive alternatives. Buffett’s Berkshire Hathaway is worth $700billion and features five shares with a handful of make-weight investments.⁷

Buffett rides on the coat-tails of business genius.

Conclusion

Warren Buffett comes from a white middle-class family who supported his multiple university educational experiences.⁸ His military draft⁹ was in the New York National Guard as a pay clerk and he avoided (evaded?) the Korean war, giving him time to build wealth. Buffett’s billions come from intelligence and an insatiable desire for money. His investment policy horizon is ‘forever’. His reward for staying focused for 93 years, is that he’s a multi-billionaire.

Addendum one: The global top 1%ers

But the threshold required to make it in to that elite group is lower than you might think – just $34,000 per person.¹⁰

This illustrates the deflator from the ballast of the non-developed world’s grinding poverty. Correcting for inflation and converting $34,000 into 2023 £££s this becomes £39,605 per person for household income in the UK. Inflation calculator | Bank of England

Addendum two: What it takes to be a top 1%er in various countries

Notes

1 U.S. Census Bureau QuickFacts: Mississippi compared to U.S. Census Bureau QuickFacts: Nebraska Buffett comes from Nebraska. This is 58 years after so-called equality between the races brokered by Lyndon Johnson.

2 Historically black colleges and universities – Wikipedia

3 How I Discovered Stanford’s Jewish Quota (substack.com)

4 Black U.S. Olympians Won In Nazi Germany Only To Be Overlooked At Home : The Torch : NPR

See also this summary of the career of boxer Joe Louis Joe Louis – Wikipedia

5 See basketball player Earl Lloyd – Wikipedia and for a selection of other potted biographies 10 Black Athletes Who Changed the World (historycollection.com)

6 Apple Stock Splits and What It Actually Means for You – History-Computer Apple is the most valuable company in the world. Buffett owns about $150billion in shares in Apple Apple Is Better Than Any Berkshire Hathaway Business: Warren Buffett (businessinsider.com)

7 77% of Warren Buffett’s Portfolio is In These 5 American Stocks (msn.com)

8 Warren Buffett – Wikipedia and see Warren Buffett Talks About His Experience Serving in the Military (businessinsider.com)

9 Like presidents Clinton, George W Bush, Donald Trump and Joe Biden who all avoided the unpleasantness of the draft one way or another.

10 We are the 1%: You need $34k income to be in the global elite… and half the world’s richest live in the U.S. | Daily Mail Online For a family of four this means that $34,000 has to be multiplied by four = $136,000 p.a. This article is from 2012.