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(originally published by Booz & Company)


Best Business Books 2009: Biography

It is when explaining derivatives and other technical issues, such as the shortcomings of the “efficient-market hypothesis,” that Schroeder shines as a writer. A former staffer at the Financial Accounting Standards Board, she displays profound financial expertise and the ability to employ that knowledge to clarify and simplify complex concepts for the benefit of readers. She is also good at explicating the many contradictions in Buffett’s personal life. For example, while he keeps his modest house in Omaha and hangs out at the local diner, he has hobnobbed throughout most of his adult life with the richest and most powerful people in America. He has been a jet-setter par excellence (with his own jet), most often in the company of his closest friend (and, possibly, more), Katharine Graham, the now-deceased publisher of the Washington Post and one of the nation’s leading socialites and power brokers. And it wasn’t his wife who was in that ol’ house. For decades, he had a most unconventional marital relationship with, in effect, two wives: Susie, the one he was legally married to, living in San Francisco and seeing him regularly, and the other, Astrid, Susie’s good friend, living at the Omaha house. After Susie’s death, he married Astrid. Shades of Harriet and John (and John)!

Buffett’s life and career actually resemble Vanderbilt’s: Each man was an eccentric stock speculator, competitive in the extreme, sure of himself in business matters to the point of arrogance, and fixated on moneymaking. Both were mavericks in their business dealings, often willing to swim against the tide of conventional investment wisdom. (Buffett has said, “You can’t do well in investing unless you think independently.”) Other similarities are striking: Both men were incapable of expressing emotion to their wives and children, and both habitually retreated behind a hand of cards to compensate for being socially maladroit.

But there is also a crucial difference: Unlike the Commodore, the Oracle has a sense of humor about himself and understands his own limitations. Buffett truly seems to appreciate that good luck was a major factor in his success. Although he is proud of the fact that he has worked hard for what he has rightly earned — Munger calls him a “learning machine” — Buffett is quick to point out that he also was a winner in “the ovarian lottery.” He notes that had he been born the son of an Alabama sharecropper or in an underdeveloped nation, he doubtless would not have become one of the richest people on the planet. Hence, he has adopted a Millian philosophy of political economy, believing that the “ideal was a world in which winners were free to strive, but narrowed the gap by helping the losers.” His belief in meritocracy, coupled with his sense that winner-take-all capitalism is unjust, has led him to take a principled, vocal stand against the repeal of the estate tax (“I am not an enthusiast for dynastic wealth”). In this regard, at least, his words have matched his deeds: He has insisted that his own children largely make their own way in the world. And the philanthropic act that has capped his unconventional career is indicative of virtuous character: Instead of funding monuments to himself, he has chosen to give the bulk of his vast fortune to the Bill & Melinda Gates Foundation, with the proviso that the entire sum be spent quickly on the major social problems that his friends and protégés the Gateses have targeted for aid. Buffett came to the honest and humble conclusion that the couple were far more skilled philanthropists than he would ever be. Doubtless, Mill would have approved.

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