Thursday, May 27, 2010

Will Warren Buffett Play The Role Of Hank Rearden?

ZeroHedge is carrying a report by Fortune of Warren Buffett's subpoena by the Financial Crisis Inquiry Commission to appear before them and provide testimony in Washington:
On May 12, Buffett, the CEO of Berkshire Hathaway (BRKA, Fortune 500), received a letter from the FCIC's executive director, Wendy Edelberg, saying that his views on a variety of subjects would be of "great value" to the Commission. The subjects, the letter said, would range from (but not be limited to) "the use and misuse of derivatives instruments, regulatory shortcomings, too big to fail, rating agencies and the shadow banking system."

To start the process, the letter said, the commission would like first to arrange a "private interview" where Buffett's views could be explored. And then, it continued, "we may request that you appear before the Commission at a hearing."

The letter said that arrangements for all this could be worked out with the general counsel of the commission, Gary Cohen.

Buffett had by that time watched some of the Commission's hearings and knew that the witnesses had mainly been people implicated in the crisis -- bankers, notably -- or charged with regulating it out of existence.

Knowing that he was in neither camp and doubtful that his testimony would indeed be of "great value," he decided to say no to this surprising invitation.

So, at his request, his assistant, Debbie Bosanek, called Cohen and said -- as she paraphrases it -- that "Mr. Buffett appreciates the invitation and is flattered by it, but he has a full plate with Berkshire and just can't do it."

Cohen was not pleased, to put it mildly. Ignoring the word "request" in the first letter, he told Bosanek sternly that "this was not an invitation but more of a command performance." He said that another letter -- "worded differently" -- would be coming.

There followed two more rounds of letters from Cohen. The first, on May 17, was indeed worded differently but signaled its general conciliatory tone by a heading that said, "Re: Renewed Request of the Financial Crisis Inquiry Commission."

Only at the letter's end did the threat come through: "We would prefer not to use compulsory process to secure your cooperation, and are sure that it will not be necessary."

But ah, it was. Buffett could by then see the likely end of this argument. But he was also determined to stick to his belief that the "private interview," followed by hearings, would neither be beneficial to anyone nor a good use of his time. So Buffett told Cohen in a phone call that he would not be volunteering to testify -- and if that meant a subpoena was in the cards, let it happen.

The subpoena -- that command in capital letters -- came on May 25. But the continuing, urgent wish of the commission to avoid coercion was contained in an accompanying letter, also dated May 25, that "respectfully" requested Buffett's testimony at a hearing on June 2 in New York City.
A silly little game of a farce, as the FCIC attempted to dance around the issue of forcing Warren Buffett to appear before them, Star Chamber-style. We wouldn't want anyone to catch on that force is the way the government operates on a day-to-day basis, now, would we?

In a perverse kind of way -- perverse because Buffett is far from a hero in this story but something of a political capitalist himself -- I am reminded of one of the best scenes from Atlas Shrugged, when the protagonist Hank Rearden is called to answer for his "crimes" and makes a mockery of the court's attempt at serving "justice" in the process. Watch as these villains dance around the issue of compulsion and force (transcription of the relevant section provided by blogger Shankar Mani):
One of the judges, acting as prosecutor, had read the charges.
"You may now offer whatever plea you wish to make in your own defence," he announced. Facing the platform, his voice inflectionless and peculiarly clear, Hank Rearden answered:
"I have no defence."
"Do you --" The judge stumbled; he had not expected it to be that easy. "Do you throw yourself upon the mercy of this court?"
"I do not recognise this court's right to try me."
"I do not recognise this court's right to try me."
"But, Mr. Rearden, this is the legally appointed court to try this particular category of crime."
"I do not recognise my action as a crime."
"But you have admitted that you have broken our regulations controlling the sale of your Metal."
"I do not recognise your right to control the sale of my Metal."
"Is it necessary for me to point out that your recognition was not required?"
"No. I am fully aware of it and I am acting accordingly."

He noted the stillness of the room. By the rules of the complicated pretence which all those people played for one another's benefit, they should have considered his stand as incomprehensible folly; there should have been rustles of astonishment and derision; there were none; they sat still; they understood.
"Do you mean that you are refusing to obey the law?" asked the judge.
"No. I am complying with the law - to the letter. Your law holds that my life, my work and my property may be disposed of without my consent. Very well, you may now dispose of me without my participation in the matter. I will not play the part of defending myself, where no defence is possible, and I will not simulate the illusion of dealing with a tribunal of justice."
"But, Mr. Rearden, the law provides specifically that you are to be given an opportunity to present your side of the case and to defend yourself."
"A prisoner brought to trial can defend himself only if there is an objective principle of justice recognised by his judges, a principle upholding his rights, which they may not violate and which he can invoke. The law, by which you are trying me, holds that there are no principles, that I have no rights and that you may do with me whatever you please. Very well. Do it." "Mr. Rearden, the law which you are denouncing is based on the highest principle - the principle of the public good."
"Who is the public? What does it hold as its good? There was a time when men believed that 'the good' was a concept to be defined by a code of moral values and that no man had the right to seek his good through the violation of the rights of another. If it is now believed that my fellow men may sacrifice me in any manner they please for the sake of whatever they deem to e their own good, if they believe that they may seize my property simply because they need it - well, so does any burglar. There is only this difference: the burglar does not ask me to sanction his act."

A group of seats at the side of the courtroom was reserved for the prominent visitors who had come from New York to witness the trial. Dagny sat motionless and her face showed nothing but a solemn attention, the attention of listening with the knowledge that the flow of his words would determine the course of her life. Eddie Willers sat beside her. James Taggart had not come. Paul Larkin sat hunched forward, his face thrust out, pointed like an animal's muzzle, sharpened by a look of fear now turning into malicious hatred. Mr. Mowen, who sat beside him, was a man of greater innocence and smaller understanding; his fear was of a simpler nature; he listened in bewildered indignation and he whispered to Larkin, "Good God, now he's done it! Now he'll convince the whole country that all businessmen are enemies of the public good!"

"Are we to understand," asked the judge, "that you hold your own interests above the interests of the public?"
"I hold that such a question can never arise except in a society of cannibals."
"What ... do you mean?"
"I hold that there is no clash of interests among men who do not demand the unearned and do not practice human sacrifices."
"Are we to understand that if the public deems it necessary to curtail your profits, you do not recognise its right to do so?"
"Why, yes, I do. The public may curtail my profits any time it wishes - by refusing to buy my product."
"We are speaking of ... other methods."
"Any other method of curtailing profits is the method of looters - and I recognise it as such."
"Mr. Rearden, this is hardly the way to defend yourself."
"I said that I would not defend myself."
"But this is unheard of! Do you realise the gravity of the charge against you?"
"I do not care to consider it."
"Do you realise the possible consequences of your stand?"
"It is the opinion of this court that the facts presented by the prosecution seem to warrant no leniency. The penalty which this court has the power to impose on you is extremely severe."
"Go ahead."
"I beg your pardon?"
"Impose it."
The three judges looked at one another. Then their spokesman turned back to Rearden. "This is unprecedented," he said.
"It is completely irregular," said the second judge. "The law requires you submit to a plea in your own defence. Your only alternative is to state for the record that you throw yourself upon the mercy of the court."
"I do not."
"But you have to."
"Do you mean that what you expect from me is some sort of voluntary action?"
"I volunteer nothing."
"But the law demands that the defendant's side be represented on the record."
"Do you mean that you need my help to make this procedure legal?"
"Well, no ... yes ... that is, to complete the form."
"I will not help you."
The third and youngest judge, who had acted as prosecutor snapped impatiently, "This is ridiculous and unfair! Do you want to let it look as if a man of your prominence had been railroaded without a --" He cut himself off short. Somebody at the back of the courtroom emitted a long whistle.
"I want," said Rearden gravely, "to let the nature of this procedure appear exactly for what it is. If you need my help to disguise it - I will not help you."
"But we are giving you a chance to defend yourself - and it is you who are rejecting it."
"I will not help you to pretend that I have a chance. I will not help you to preserve an appearance of righteousness where rights are not recognised. I will not help you to preserve an appearance of rationality by entering a debate in which a gun is the final argument. I will not help you to pretend that you are administering justice."
"But the law compels you to volunteer a defence!"
There was laughter at the back of the courtroom.
"That is the flaw in your theory, gentlemen," said Rearden gravely, "and I will not help you out of it. If you choose to deal with men by means of compulsion, do so. But you will discover that you need the voluntary co-operation of your victims, in many more ways than you can see at present. And your victims should discover that it is their own volition - which you cannot force - that makes you possible. I choose to be consistent and I will obey you in the manner you demand. Whatever you wish me to do, I will do it at the point of a gun. If you sentence me to jail, you will have to send armed men to carry me there - I will not volunteer to move. If you fine me, you will have to seize my property to collect the fine - I will not volunteer to pay it. If you believe that you have the right to force me - use your guns openly. I will not help you to disguise the nature of your action."
The eldest judge leaned forward across the table and his voice became suavely derisive: "You speak as if you were fighting for some sort of principle, Mr. Rearden, but what you're actually fighting for is only your property, isn't it?"
"Yes, of course. I am fighting for my property. Do you know the kind of principle that represents?"
"You pose as a champion of freedom, but it's only the freedom to make money that you're after."
"Yes, of course. All I want is the freedom to make money. Do you know what that freedom implies?"
"Surely, Mr. Rearden, you wouldn't want your attitude to be misunderstood. You wouldn't want to give support to the widespread impression that you are a man devoid of social conscience, who feels no concern for the welfare of his fellows and works for nothing but his own profit."
"I work for nothing but my own profit. I earn it."
There was a gasp, not of indignation, but of astonishment, in the crowd behind him and silence from the judges he faced. He went on calmly:
"No, I do not want my attitude to be misunderstood. I shall be glad to state it for the record. I am in full agreement with the facts of everything said about me in the newspapers - with the facts, but not with the evaluation. I work for nothing but my own profit - which I make by selling a product they need to men who are willing and able to buy it. I do not produce it for their benefit at the expense of mine, and they do not buy it for my benefit at the expense of theirs; I do not sacrifice my interests to them nor do they sacrifice theirs to me; we deal as equals by mutual consent to mutual advantage - and I am proud of every penny that I have earned in this manner. I am rich and I am proud of every penny I own. I made my money by my own effort, in free exchange and through the voluntary consent of every man I dealt with - voluntary consent of those who employed me when I started, the voluntary consent of those who work for me now, the voluntary consent of those who buy my product. I shall answer all the questions you are afraid to ask me openly. Do I wish to pay my workers more than their services are worth to me? I do not. Do I wish to sell my product for less than my customers are willing to pay me? I do not. Do I wish to sell it at a loss or give it away? I do not. If this is evil, do whatever you please about me, according to whatever standards you hold. These are mine. I am earning my own living, as every honest man must. I refuse to accept as guilt the fact of my own existence and the fact that I must work in order to support it. I refuse to accept as guilt the fact that I am able to do it better than most people - the fact that my work is of greater value than the work of my neighbours and that more men are willing to pay me. I refuse to apologise for my ability - I refuse to apologise for my success - I refuse to apologise for my money. If this is evil, make the most of it. If this is what the public finds harmful to its interests, let the public destroy me. This is my code - and I will accept no other. I could say to you that I have done more good for my fellow men than you can ever hope to accomplish - but I will not say it, because I do not seek the good of others as a sanction for my right to exist, nor do I seek the good of others as a sanction for my right to exist, nor do I recognise the good of others as a justification for their seizure of my property or their destruction of my life. I will not say that the good of others was the purpose of my work - my own good was my purpose, and I despise the man who surrenders his. I could say to you that you do not serve the public good - that nobody's good can be achieved at the price of human sacrifices - that when you violate the rights of one man, you have violated the right of all, and a public of rightless creatures is doomed to destruction. I could say to you that you will and can achieve nothing but universal devastation - as any looter must, when he runs out of victims. I could say it, but I won't. It is not your particular policy that I challenge, but your moral premise. If it were true that men could achieve their good by means of turning some men into sacrificial animals, and I were asked to immolate myself for the sake of creatures who wanted to survive at the price of my blood, if I were asked to serve the interests of society apart from, above and against my own - I would refuse. I would reject it as the most contemptible evil, I would fight it with every power I possess, I would fight the whole of mankind, if one minute were all I could last before I were murdered, I would fight in the full confidence of the justice of my battle and of a living being's right to exist. Let there be no misunderstanding about me. If it is now the belief of my fellow men, who call themselves the public, that their good requires victims, then I say: The public good be damned, I will have no part of it!"

The crowd burst into applause.
Will Warren Buffett assume the role of Hank Rearden and receive the applause of the long-suffering masses in the process? It's doubtful, but it would nonetheless be a true privilege to witness if he did.

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