Buffett Takes A Bow

The Oracle of Omaha is Also an Enigma

Warren Buffett surprised his flock at the Berkshire Hathaway annual shareholders’ carnival (meeting) with both his announced retirement date (year-end) and his recommendation to the “independent board of directors” for his successor, Greg Abel.

It was a historic event for American capitalism, marking the 60^th anniversary with Buffett (94) at the helm of the company he created. Safe to say Warren is one of a kind, both for his long-term investment philosophy and prowess, his “ah gee shucks” common man approach—don’t let him fool ya’ would be my view, for his blistering Wall Street critique, and for his terrible junk food/no exercise, but refreshingly down to earth lifestyle. But most of all, he stands out in today’s business world for the quality of his character and his simple and masterful way of truth telling.

On the other hand, Buffett has been widely criticized for not embracing sustainability aggressively enough. He is critical of what he sees as wasteful reporting, that’s clear. And he seems to believe that it is the job of government to set the rules, while it’s the job of capitalists to maximize returns to shareholders. If nothing else, Buffett is an owner’s owner, looking out for his shareholders’ interests above all. That’s how the system was designed, and he appears to believe anything else is naïve at best, and perhaps even an immoral use of shareholder’s capital. I suspect he genuinely believes it.

Now Berkshire Hathaway has made some progress on sustainability and is quick to point out their significant investments in renewables for example. But Buffett’s ownership of names like Chevron and Occidental Petroleum and decades of championing his five cans of Coke a day and his McDonalds’ for breakfast diet raise questions. Coca Cola is one of his long time “great” investments and he has said he regrets selling his McDonalds’ shares. While the diet worked for him that’s for sure, the products of Coke and McDonalds are ground zero for the chronic disease epidemic in the United States and increasingly around the world. It has also delivered Americans the lowest life expectancy among so called “developed” economies.

Buffett’s resistance to non-financial metrics and “externality” concerns gives him some strange bedfellows among the newly enraged “anti-woke” crowd. I’m virtually certain that gives him discomfort.

Here’s the enigma part for me. Buffett is obviously very smart and has access to the best minds in the world with a phone call. He certainly knows all about what we now call the polycrisis, the series of interconnected social and environmental crises cascading out of control.

Outwardly Buffett remains ever optimistic, especially about America’s prospects, with an attitude that we have seen plenty of challenges before and we find our way through them again. “Yes, climate change is real, but it will happen slowly so businesses can adjust” (I paraphrase). Really? Is that the only concern? His partner Charlie Munger said before he died, “there is no water crisis, so long as we have energy” (again I paraphrase). Really? Are there not some dots left unconnected by such a shrewd investor?

Yet Buffett has been vocal about our tax structure, repeatedly asserting that it is not right that his secretary pays a higher tax rate than he does. And he scolds CEO’s for extracting exorbitant pay and stock options from companies they are charged to steward. He is similarly critical of independent boards that are far from independent (not that his is by the way), and has lots of criticism for investment bankers and hedge fund managers who he sees for the most part as parasites.

So why criticize investment bankers and not Lee Raymond who was raising oil rigs in the Gulf of Mexico while funding climate change denial as the CEO of Exxon back when we still had time to avoid a catastrophe? Why invest in expanding our oil and gas infrastructure today just because there’s a profit in it if you understand the risk of cascading feedback loops within the complex systems of the biosphere? Why not use your platform to demand government action to save us from ourselves if the system prohibits such self-discipline?

My guess is as simple as it is challenging. For Buffett, the personification of free market capitalism success, to question its system design that defines who he is as a man but also the GOAT is simply not possible, certainly not at 94 years of age.

It’s his identity, and we are learning how important identity is to us all. As the CEO of a very big bank once said to me in response to my laying out the thesis of limits to growth, “It’s too big John. I can’t go there.” Same identity crisis a wildly “successful” man by our culture’s standards is unwilling to confront.

But there is more to it than this. To be Buffett, one’s mind must be of the extreme analytical type of genius, rational, cool and calculating, free of emotion, at least with respect to business decision making. In a phrase, he is left brain dominant. As is his major philanthropic and bridge partner Bill Gates (seemingly formerly partner). As is much of finance, and even more the rising cadre of audacious tech elite, with names like Musk, Bezos, Zuckerberg, Schmidt, Andreesen, Thiel and now Altman. The world is a puzzle to solve, a series of problems to exploit, new mountains (and planets) to conquer. But, with enough brain power (and now AI enhancement) all problems are fixable using our superior analytical minds.

Here’s the catch. The left brain of reductionist logic is brilliant for making things, from microchips to rocket ships. But it is incapable of seeing the complexity of the whole, of the interconnections, the interdependencies, and the complexity that gave rise to the very problems that need to be solved in the first place.

British psychologist and neuroscientist Iain McGilchrist’s The Master and His Emissary spells this out brilliantly. The Master in McGilchrist’s story is our right brain centered holistic, creative, intuitive mind, while the Emissary is our left brain dominant analytical, competitive, logical mind. The Emissary is “good at getting” its prey, while the right hemisphere is where wisdom lies, providing our connection to reality, enabling empathy, understanding the bigger picture context, and maintaining our sense of self in relation to the greater whole. Einstein understood this with his famous line, “Imagination is more important than knowledge” and his appreciation for the interconnection of all things. Today’s analytical geniuses appear to hold a different, stunted, and uniquely dangerous worldview.

McGilchrist’s message is a warning to us all, including our modern day left brain dominant, hyper-competitive analytical geniuses and the fans at the annual Berkshire jamboree:

“The left hemisphere, ever optimistic, is like a sleepwalker whistling a happy tune as it ambles towards the abyss.”

Are we not sleepwalking, whistling a happy tune as we amble toward the abyss? How might the next generation of investors see the world differently? At Capital Institute, we believe as Einstein did, in the primacy of the interdependent whole which demands integrating our essential logical thinking within the more intuitive and imaginative wisdom we each possess on the other side of our brain. Our existential threat at this moment is this: we have allowed it to atrophy, by design, and by what we value.

Regenerative Investment is not just a theory of investment. It is a practice of becoming whole again, first within ourselves, then within our families, communities, and enterprises, and finally within the systems within which they all operate. It’s a paradigm shift, rooted in consciousness.

Regenerative Investment is more art than science, more intuitive than analystical. It will never be reducible to an algorithm such as return on capital much less a stock price. No living system survives by optimizing a part. All parts must work in dynamic balance, in service to the greater whole.

If you sense we are ambling toward an abyss, come join us for our upcoming Regenerative Investment course and engage with a community of like-minded courageous and conscious pioneers using their agency to explore a different and more hopeful path. The Great Work is to contribute to the paradigm shift that this moment demands.

We are not living in an era of change. We are living in a change in era

First published at www.capitalinstitute.org