Why Warren Buffett Is So Positive About America’s Future

Warren Buffett announced in a letter to shareholders that the presidential candidates’ negative drumbeat was dead wrong, and America’s children have much to look forward to in the future. The unusually positive message is rooted in the U.S. economic trends over the last century and the idea that betting against America has never been, and will never be, a good idea.

Warren Buffett starts out his letter by being cynical of the politicians cynicism.

“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.

That view is dead wrong: The babies being born in America today are the luckiest crop in history.”

The thesis of Buffett’s letter is a controversial issue. A number of economists and publications conjectured that millennials would be the first American generation to do worse than the previous generation (an especially popular theory at the height of the 2008 great recession).

In 2014, Time Magazine cited four ways millennials have it worse than their adult counterparts in 1980 — income, employment, poverty, and not leaving home. In real terms, the generation famous for its addiction to technology and entitlement is relatively poor.

The commonly cited causes include crushing student loan debt, bleak job prospects, and a growing wealth gap.

But Warren Buffett isn’t talking about millennials, he’s talking about children born today into a still unnamed generation. Those children will only know about the 2008 financial crisis from downloadable textbooks and stories from their parents.

So what evidence does Warren Buffett provide to support his positive claims? The first is the current percent percent real GDP growth rate.

“America’s population is growing about.8% per year… Thus 2% of overall growth produces about 1.2% of per capita growth. That may not sound impressive. But in a single generation of, say, 25 years, that rate of growth leads to a gain of 34.4% in real GDP per capita.”

Buffett is quick to acknowledge that who will get those gains depends on a number of things, including the politicians and election cycle he mentioned in the beginning of the letter. As previously reported by The Inquisitr, the investor has long been an advocate of a tax system that takes more money from the wealthy. He’s famously said his secretary pays a higher rate than he does and that is not right.

Still, he says even the economic losers of the next generation will have a better life.

Warren Buffett used John D. Rockefeller Sr. as an example, saying that for all of his wealth and power, Rockefeller could never have hoped to have lived as well as the current residents of a middle-class neighborhood thanks to technology.

Innovations in virtually every major industry have not only improved people’s lot in ways they could never have imagined just a couple generations ago according to the billionaire. But ultimately, Warren Buffett’s belief in America’s future comes down to its great success so far.

“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honored and perhaps made more generous. And, yes, America’s kids will live far better than their parents did.”

The full letter from Warren Buffett to his shareholders can be found here.

(Photo by Paul Morigi/Getty Images for Fortune/Time Inc)