Economy

What If Warren Buffett Were Peruvian?

In the race to succeed, talent can certainly play a role. But not everyone competes on the same playing field.

Llamazing!
Llamazing!
Farid Kahhat

-Essay-

LIMA — As noted in my previous column, the United States — compared with some other developed countries — has low rates of social mobility. In other words, an American will find it harder to emerge from poverty than, say, a German. Relatively low social mobility rates also mean that high wealth and income levels are more likely to be inherited or patrimonial, rather than earned through work or personal merit.

Legendary U.S. investor and billionaire Warren Buffett added his own two cents to this issue when he stated once that, "society is responsible for a very significant percentage of what I've earned." Context matters, he argued. "if you stick me down in the middle of Bangladesh or Peru or someplace, you find out how much this talent is going to produce in the wrong kind of soil," Buffet added. "I work in a market system that happens to reward what I do very well — disproportionately well."

The quote underscores an obvious but often overlooked truth: that not all countries afford people the same personal and property rights, guarantees or public facilities. These rights and services, like healthcare and education, are fundamental to creating private-sector wealth.

Researchers Daron Acemoglu and James Robinson have illustrated Buffett's observation by comparing how Bill Gates and the Mexican magnate Carlos Slim made their respective fortunes. Gates got his through innovation in computing programs and exploiting efficient patenting for products that have won near-universal utility. He also used the courts to block challenges to this patenting. Slim, in contrast, made his money through opaque and monopolistic practices in a Mexican telecommunications sector under state oversight.

Buffett has a habit of noting that his personal secretary pays more than he does in taxes.

This means that state institutions can create varying incentive structures for those making economic decisions. At the same time, different forms of acquiring wealth can act as motivators for institutions, with differing consequences for wealth distribution in society. While many of us still benefit from the operating system created by Bill Gates, an OECD study found Slim's monopoly to have cost the Mexican economy some $130 billion between 2005 and 2009.

When asked why he thinks his country's economic system rewards his investor talents so "disproportionately well," Buffett has a habit of noting that his personal secretary pays more than he does in taxes. And that, he explains, is due to fiscal reforms enacted in the United States since 1980 that favor the wealthiest sectors and allow them, for example, to register most of their earnings as capital gains, which are taxable at 15%. Again, context matters.

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Society

Dutch Cities Have Been Secretly Probing Mosques Since 2013

Revelations of a nationally funded clandestine operation within 10 municipalities in the Netherlands to keep tabs on mosques and Muslim organizations after a rise in radicalization eight years ago.

The Nasser mosque in Veenendaal, one of the mosques reportedly surveilled

Meike Eijsberg

At least ten Dutch towns and cities have secretly used a private agency to probe mosques and other local religious organizations, Amsterdam-based daily het NRC reports in an exclusive investigation.

The clandestine operation — funded by NCTV, the National Security Services, the Netherlands' leading counter-terrorism agency — was prompted by the social unrest and uncertainty following multiple terror attacks in 2013, and a rise in Islamic radicalization.


The NCTV, which advises and financially supports municipalities in countering radicalization, put the municipalities in touch with Nuance by Training and Advice (Nuance door Trainingen en Advies, NTA), a private research agency based in Deventer, Netherlands. Among the institutions targeted by the investigations, which came at a cost of circa 500,000 euros, were the Al Mouahidin mosque in the central Dutch town of Ede, and the Nasser mosque east of the city of Utrecht, according to NRC.

Photo of people standing on prayer mats inside a Dutch mosque

Praying inside a Dutch mosque.

Hollandse-Hoogte/ZUMA

Broken trust in Islamic community

Unlike public officials, the private agency can enter the mosques to clandestinely research the situation. In this case, the agents observed activity, talk to visitors, administrators, and religious leaders, and investigated what they do and say on social media.

All findings then wound up in a secret report which includes personal details about what the administrators and teachers studied, who their relatives are, with whom they argued, and how often they had contact with authorities in foreign countries, like Morocco.

Leaders of the Muslim organizations that were secretly probed say they feel betrayed.

It is unclear whether the practice is legal, which is why several members of the Dutch Parliament are now demanding clarification from the outgoing Minister of Justice and Security, Ferd Grapperhaus, who is said to be involved.

"The ease with which the government violates (fundamental) rights when it comes to Islam or Muslims is shocking," Stephan van Baarle, member of the leftist party DENK, told De Volkskrant, another Dutch newspaper.

Leaders of the Muslim organizations that were secretly probed say they feel betrayed. Hassan Saidi, director of one of the mosques investigated, said that the relationship with the local municipality had been good. "This puts a huge dent in the trust I'd had in the municipality," he told the Dutch public broadcaster NOS.

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