- Pope Francis did not follow Warren Buffett in a letter to the bishop of the Catholic Church on Sunday addressing rising inequality in growing markets.
- The pontiff stated “theories of magic” such as trickle-down economics would not solve all society’s problems.
- Buffett argued earlier this year that markets reward some skills but not others, increasing inequality in the absence of government intervention.
- “It’s not some satanic conspiracy or anything,” the billionaire investor told Yahoo Finance. “This is due to the market system.”
- For more stories visit the Business Insider homepage.
Pope Francis on Sunday echoed Warren Buffett in blaming capitalism for growing inequality in a letter to the bishop of the Catholic Church titled “Fratelli Tutti”.
The pope wrote, “The market, by itself, cannot solve every problem, although we are asked to believe in this dogma of neoliberal faith.”
“Neoliberalism reinvents itself only by resorting to the magic theories of ‘spillover’ or ‘trickle’ – without using the name – as the only solution to social problems,” he said, “trickle-down economics”. Or referring to the idea as the rich have accumulated wealth, the money will automatically go into the pockets of the poor.
The pope pointed to an epidemic, including a massive unemployment surge around the world, which was proof that “market freedom cannot solve everything.”
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Buffett, a billionaire investor and CEO of Berkshire Hathaway, expressed a similar view in a Yahoo Finance interview earlier this year.
“There is no question that capitalism, as it becomes more advanced, will widen the gap between the people that market skills, whatever the market demand, and others, unless the government does nothing in between ” They said.
“It’s not some satanic plot or anything,” Buffett continued. “This is due to the market system.”
The so-called “Sage of Omaha” proposed two ways of dealing with the issue: a more generous earned income tax credit to reduce the tax burden of working people, and the Styer tax on the ultra-rich.
Buffett, who plans to give more than 99% of his wealth to philanthropy, has repeatedly called on politicians to raise taxes on the super rich. Current laws allow him to pay a lower rate than his secretary.
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Buffett has referred to the Pope over the years.
The Berkshire boss stated that his 2006 letter to shareholders criticized the Efficient Market Theory (EMT), or the idea that share prices reflected all available information.
“There was a huge possibility of Galileo being named pope as a finance instructor who questioned the EMT,” he quipped.
Buffett in his 1986 letter referred to a fictional narrative underlining the obsessive attention of Berkshire managers.
“Our prototype for business enthusiasm is the Catholic tailor, who has used his small savings of many years for his pilgrimage to the Vatican,” he said.
“When he returned, his parish held a special meeting to receive the Pope’s first hand,” Buffett continued. “” Tell us, ‘said the curious loyalist,’ what kind of fellow is he? ‘
“Our hero wasted no words: ‘He’s a 44, medium.”
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