Human ingenuity. Market system. Rule of law. To the list of drivers of America’s economic dynamism, Warren Buffett added a fourth in his annual letter to shareholders of Berkshire Hathaway: “a tide of talented and ambitious immigrants.” Those factors, Buffett writes, combined “to deliver abundance beyond any dreams of our forefathers.”
Buffett’s folksy style can make such insights seem commonplace. But he clearly felt it important to weigh in on the matter of the moment: the contribution of immigrants to the U.S. economy. The Trump administration is moving on multiple fronts to crack down on illegal immigration and to restrict the flow of legal immigrants.
Buffett’s stance is more aligned with fellow billionaire, Michael Bloomberg, who has been recruiting Republicans as well as Democrats to make the positive case for immigration in congressional districts across the country. “In community after community and industry after industry, immigration is helping America and American workers,” said Jeremy Robbins, head of Bloomberg’s Partnership for a New American Economy (see, “Bloomberg recruits Republicans to stake out a different immigration policy”).
The 40 million immigrants in the U.S. represent 13.3 percent of the population. They generate nearly 15 percent of the U.S. economy. In the 15 years between 1996 and 2010, immigrants accounted for more than half of the U.S. labor force increase. They account for 50 percent of startup founders for companies valued at more than $1 billion and 31 percent of software engineers (see, “Immigrants and the American Economy: A Love Story”).
Venture capitalist Fred Wilson noted Buffett’s formula for American success and concurred. “Sadly one of those four pillars is at risk,” Wilson wrote on his own blog about the tide of immigrants. “We can’t allow that to happen. There is too much to lose by turning off that tide.”
Buffett is a longtime Democrat who supported Hillary Clinton. He told CNBC this morning that it’s “unlikely” he would support Trump’s reelection in 2020. He said he would judge the president on how broadly shared is any continued American prosperity, “how wide the participation in a better economy extends.”
If the President follows his precedent for dealing with critics, he may complain that the 86-year-old Buffett is “overrated.” Buffett seems prepared for that. The letter details Berkshire Hathaway’s 52-year record of approximately 20 percent annual returns. That compares to under 10 percent per year for the S&P 500 over the same period. With compounding, that’s the difference between an overall gain of about 12,700 percent for the S&P — and a gain of closer to two million percent in the per-share market value of Berkshire.