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Warren Buffett, Favorite Son

13 Jun 2015
Warren Buffett has been liberals' billionaire cuddle-bear for a decade or longer. It's hard to track back to when it all started, but I do know he was currying favor among the media and political intelligentsia as early as 2007, when he scored Brownie points by complaining to the media that his $60,000 a year secretary paid a larger percentage of her taxes than he did on his $46 million income from the same year. While the media picked up the income inequality meme that he was going for, in truth he was just another billionaire complaining about taxes in his own sly way.

If that disingenuous behavior was his only sin he would be a saint indeed, but the truth is that many of Buffett's business practices are no better than those of the Koch brothers - and it is no accident he is worth as much as the two of them combined. But through years of coy remarks and calculated alliances he has skillfully created an image completely out of sync with his business activities. Now, even as his trains carry the fracked oil that the Keystone XL Pipeline wanted to carry, he heartily endorses Hillary Clinton for president. For our latest shark in sheep's clothing, meet Warren Buffett, the most successful stock investor of all time.

Buffett's business practices, as personified by the actions of his Berkshire Hathaway companies, are based entirely in the profit motive and are antithetical to broader social, economic, or environmental interests. While the average gigacapitalist may consider these points bragging rights rather than complaints, Buffett clearly has a different agenda, as underscored by his repeated support for Hillary Clinton's presidential candidacy. Whether his business practices become a problem for her remains to be seen, but the issue implications are extensive. For now I will restrict myself to practices in three distinct industries prominent in his portfolio, practices completely opposed to the progressive/Democratic agenda:

His Mobile Homes are financed with Predatory Lending Practices Although all the items I am reporting are serious offenses, if you are concerned about the collapse of the middle class you will be shocked to hear the accusations about Clayton Homes, a wholly-owned subsidiary of Berkshire Hathaway. Clayton is the country's largest builder of manufactured - "mobile" - homes. Stories abound of usurious interest rates for loans, last minute surprise fees, and aggressive collection practices more at home on The Sopranos or Sons of Anarchy than in the penthouse suite of America's most storied softie. Clayton's average finance rate is 7.0% above national averages for home loans. Such practices are exactly what consumer watchdogs have come to expect from gigantic companies that dominate an industry, especially those with the reach of a David Koch or a Warren Buffett.

His Railroads are Plan B for fracked oil and gas - after the Keystone pipeline. Few people realize it, but every time the Obama Administration has refused to permit the building of the Keystone XL pipeline, Warren Buffett's BNSF railroad has struck oil - $15 billion dollars since the 2009 purchase - as the sole transportation outlet available for the fracked oil and gas of Canada and North Dakota. Normally Republicans would scream about such a sweetheart deal between a Democratic president and his favorite billionaire, but they hate it the way Br'er Rabbit hated being thrown in the briar patch - laughing, winking, and nudging while protesting too loudly. To further underscore this point, the downturn in oil prices in the last year has meant a downturn for BNSF's profitability as well - the only dim star in the Berkshire Hathway galaxy of supernovae. But Buffett stands by the investment, because he is confident it will be transporting fracked oil and gas at record rates again soon. Read more about the BNSF deal here. And be sure to send Buffett an e-mail thanking him for keeping the fracked oil flowing!

His electric utility, NV Energy, is fighting the expansion of rooftop solar panels for homes. When Berkshire Hathaway bought Nevada's own NV Energy last year progressives were almost giddy over news of their commitment to close coal plants and put more resources into solar power instead. What we didn't realize is the Buffett's boys are committed to making a monopoly of the one resource we thought was untouchable: the power of the sun itself. And now NVE is trying to back off its commitment to more solar electrical production, via last-minute legislation that passed last week.

But wait, there's more! NV Energy recently revealed in filings to the Public Utility Commission (PUC) that it has failed to pay at least $126 million to the IRS - money already collected but never passed on.

The solar issue has revolved around the ability of ordinary homeowners to use solar panels on their homes to defray electricity costs, but be connected to the grid for times when the sun is down, which seems to happen almost daily, or otherwise unavailable. I discussed this in last week's column, Billionaires Battle for Nevada's Solar Dollars. Until SB 374 passed last week, NV Energy's obligation to provide net metering was capped at three percent of the marketplace. Now that issue will be handled by the PUC, which is mandated by the bill to create a new customer class for net metering customers. Supposedly this will keep that class of customers from raising the rates for other classes, but in truth it all comes out of the same pot. NV Energy's lobbyists - Warren Buffett's lobbyists - fought tooth and nail to keep the cap at three percent. Now they only have to lobby three people, the members of the PUC. They like solar power, but only if they have absolute control of it. Who would have thought they could monopolize the sun? Apparently they do.

Compared to the Koch brothers Warren Buffett may seem warm, fuzzy, and comfortable, but don't be fooled. Buffett and the Kochs arrived at the same place, professionally speaking, by being the same kind of people. While one may be better than the other, don't be fooled into thinking that either are our friends.

You may also like this related article: Billionaires Battle for Solar Power Supremacy (215)
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