There has been a lot of talk on TV about both Trump and Buffet about who is he best "business man". I will try to answer that in this blog.
First, we need to define a few things and agree on an "objective function". Business is too big of a term and needs to be better defined. It could be the business that makes the most money for its owner or it could be the business that is best for the US economy. Even that is a little too wide. The "objective function" that I think is best is the business that increases the "median family income". Based on that definition, let's go.
What Buffet does and he does it well is to "bet" on different stocks going up. It is like betting on horse races at the track. The fact that Buffet owns or doesn't own stock in a particular company has no affect on the companies sales, profit or hiring. If Buffet makes money by betting on stock prices, where does his earnings come from? Ever think of that? I did not think so. Did it come out of the pockets of employees of that company? No! It came from other people who were betting that the stock would go up and who purchased the stock. Do you think anyone who worked for the company knew or cared what Buffet and this other gambler where up to? No! In the end, Buffet has ended up with earnings, but not directly from the companies he owned stock in. Are you following this?
Now, look at Trump. He notices that a run down hotel is for sale and he thinks that he can renovate it and make it more valuable so he buys it. He hires some workers who did not have jobs to renovate the hotel. Now some workers have jobs who did not have jobs before. If they did have jobs that paid less than what Trump paid, some would quit their old jobs and go to work for Trump. The jobs that they left would be filled by others who were willing to work at that rate. When the hotel was renovated and operating at a profit, Trump might sell it and use his profits to build another hotel. This next one might be even bigger since Trump had more money, now, to work with. Are you starting to see that Trump is helping the economy more than Buffet.
Next, look at the taxes paid. Buffet does make a lot of money and does pay a lot in tax, he is the only one paying more tax. In the case of Trump, he also pays a lot of taxes, but he also created a lot of jobs for others who now pay taxes. I think that Trump employees several thousand workers who all pay some tax. If it worked out that both Buffet and Trump paid the same amount of individual tax then when those employed by Trump were added in, Trump's businesses paid much more tax!
If the objective function is as I stated above, isn't it clear that we need more business men like Trump than like Buffet? You tell me.
First, we need to define a few things and agree on an "objective function". Business is too big of a term and needs to be better defined. It could be the business that makes the most money for its owner or it could be the business that is best for the US economy. Even that is a little too wide. The "objective function" that I think is best is the business that increases the "median family income". Based on that definition, let's go.
What Buffet does and he does it well is to "bet" on different stocks going up. It is like betting on horse races at the track. The fact that Buffet owns or doesn't own stock in a particular company has no affect on the companies sales, profit or hiring. If Buffet makes money by betting on stock prices, where does his earnings come from? Ever think of that? I did not think so. Did it come out of the pockets of employees of that company? No! It came from other people who were betting that the stock would go up and who purchased the stock. Do you think anyone who worked for the company knew or cared what Buffet and this other gambler where up to? No! In the end, Buffet has ended up with earnings, but not directly from the companies he owned stock in. Are you following this?
Now, look at Trump. He notices that a run down hotel is for sale and he thinks that he can renovate it and make it more valuable so he buys it. He hires some workers who did not have jobs to renovate the hotel. Now some workers have jobs who did not have jobs before. If they did have jobs that paid less than what Trump paid, some would quit their old jobs and go to work for Trump. The jobs that they left would be filled by others who were willing to work at that rate. When the hotel was renovated and operating at a profit, Trump might sell it and use his profits to build another hotel. This next one might be even bigger since Trump had more money, now, to work with. Are you starting to see that Trump is helping the economy more than Buffet.
Next, look at the taxes paid. Buffet does make a lot of money and does pay a lot in tax, he is the only one paying more tax. In the case of Trump, he also pays a lot of taxes, but he also created a lot of jobs for others who now pay taxes. I think that Trump employees several thousand workers who all pay some tax. If it worked out that both Buffet and Trump paid the same amount of individual tax then when those employed by Trump were added in, Trump's businesses paid much more tax!
If the objective function is as I stated above, isn't it clear that we need more business men like Trump than like Buffet? You tell me.
