I spent several hours recently with Warren Buffett in Sing Sing penitentiary, the notorious maximum security prison “up the river” from Manhattan. Until the financial crisis of 2008, Buffett was the richest man in the world, and now is ranked No. 3, according to Forbes magazine. His Berkshire Hathaway stock is worth at least $50 billion, making him the most successful investor in the world.
What was the Sage of Omaha doing at Sing Sing Correctional Facility? His sister, Doris, had invited him to attend the Sing Sing graduation ceremony being held for prisoners who have completed their college degrees inside the prison. Doris Buffett is a major donor of the college program.
For the past two years, my wife Jo Ann and I have been teachers in this four-year college degree program at Sing Sing through Mercy College. She teaches English literature and writing, I teach economics. The program is privately funded and has been so successful that it has attracted the interest of Mr. Buffett and a number of celebrities and Hollywood stars. Previous commencement speakers have included the singer Harry Belafonte, rap singer Ice T, and actor Tim Robbins.
News about the criminal justice system in America has been largely negative: Two-thirds of all prisoners released into society return to prison within three years. America is now No. 1 in the world in terms of prison population (over 2 million). Two years ago at the Sing Sing graduation, Harry Belafonte said, “We’re building more prison cells in America than school classrooms.”
So it’s nice to see some good news come out of Sing Sing. In 1995, New York Gov. Pataki eliminated public funding of college education at state prisons. A few years later, a non-profit organization called Hudson Link was organized to begin a privately funded college degree program. In ten years, nearly 200 have graduated, and of those 42 have left prison life to reenter the outside world. None have returned! All are living productive lives, working and supporting themselves.
Before coming to Sing Sing, Buffett spent several hours being grilled by a congressional committee about the failure of the Moody’s rating system during the financial crisis of 2008. Buffett is the majority shareholder. He admitted being taken by surprise by the size and negative impact of the real estate bubble when it popped. It was “the greatest bubble I’ve seen in my lifetime,” he said.
Buffett was surprisingly energetic at the graduation ceremony and told me how impressed he was with the college program at Sing Sing. “I’m blown away,” he said. “This is a great program that nobody knows about.” That’s about to change. A New York Times reporter was there to tell the story, and a documentary is being filmed to be released later this year.
I showed him a chart (see below) which I dubbed “Reaganomics vs. Obamanomics.” It shows employment trends during the recession of the early 1980s under Reagan compared to the current recession under Obama.
Reaganonomics vs. Obamanomics in One Simple Graph
For more information, please click here.
Being a big fan of President Obama, Buffett immediately objected to my comparison. “The recovery in the early 1980s was due to Paul Volcker, the Fed chairman, more than Reagan,” he explained. He expressed optimism about employment and the recovery now. “It’s bound to go up,” he said. Despite the recent European crisis, and sell off on Wall Street, he told me he was quite bullish about the markets now.
“What about the growing deficits? Doesn’t that concern you?” His sister, Doris, expressed deep concern about this debt crisis, but Warren was less worried. As for massive unfunded liabilities of Social Security and Medicare, he told me he favors means testing as a way to reduce the costs of these entitlements. “I get Social Security and Medicare,” he said, “But I don’t need it.”
Buffett entertained the prisoners and their families with some antics. Inmates took pictures of him “stealing” his wallet, or he would pretend to whisper a stock tip in their ear. He was very funny.
I had some fun with him too. I pulled out a gold coin from my pocket, and said, “Are you a believer in gold?”
“No,” he said, “I’ve never invested in gold.” He said his father was a gold bug, but he preferred to invest in well-run businesses. His father, Howard Buffett, a conservative Republican congressman from Nebraska, believed in the gold standard and gave him some gold coins, which he still has, but “only as a keepsake, not as an investment.” Buffett believes that investing in free enterprise does more social good than investing in gold. He wasn’t interested in gold even as a speculation, although he did take a position several years ago in silver (not as a monetary metal, but as an industrial metal).
“Are you a collector of anything—stamps, cars, art work?”
His response: “I collect businesses and friends.”
Important Note: The House Democrats just pushed through a massive tax increase on professionals (doctors, lawyers, authors, etc.) with a sub S corporation—all dividends will now be subject to FICA taxes! That’s another reason why we are holding a special “emergency” meeting at FreedomFest, July 7-11, in Las Vegas, to learn how to fight back. Join Steve Forbes, John Mackey, Steve Moore, and hundreds more: www.freedomfest.com, or call Tami Holland, 1-866-266-5101. Hurry, over 1600 have already signed up, and is likely to sell out. Sign up today!