Berkshire Hathaway hoarded cash. Why do they deserve to be rewarded when the economy reopens by being able to pick up the dead bodies (i.e. crashed businesses) that were forced to fail? Why should they be able to use their hoarded cash to buy up those airlines, cruise lines and theme parks for near nothing?
Those businesses may have been forced to shutter by the state, but they also would have had more or less the same effect on their business regardless of state intervention. I oppose state intervention, but it’s a silly gotcha to act like airlines, etc. would have been fine during this covid outbreak even without a state shutdown. They clearly wouldn’t have been fine.
Berkshire has lots of cash because its investment managers were talented and insightful enough to slowly but steadily build a cash reserve while foolish boards rushed into buy their own increasingly expensive stock. Imagine if airline CEOs had held onto that cash for a type of rainy day that seems to hit their industry more than any other, instead of spending all of it, and then some to buy their stock at every new 52 week high.
These airlines didn’t just spend all of their cash, they also borrowed heavily to do it. If you think Berkshire is somehow the villain for being prudent and patient, but airlines are the good guys, I don’t know what you’re talking about.
Government shut-downs aside, there are tons of businesses that fail by their own hand. Not being prepared for some kind of business disruption is one of those things that might cause a business to fail. Is it fair? I don’t know. I don’t think the concept of fairness exists outside of strict games that involve no chance.
Where was the due process in government forcing businesses to shut down? Are the executive orders closing businesses in order to prevent the spread of COVID-19 not a taking of private property for a public (non) use?
“We the people” employed government to take private property for the protection of the public and we did so without any due process. Why don’t those who had their property taken “deserve” just compensation?
The airline industry has been in bed with the state for decades. They did so freely and gleefully because it meant they got on the gravy train of being practically guaranteed bailouts no matter what they did. And the people running these businesses acted exactly like you might imagine anyone would if they had no responsibilities for screwing up but got to keep all the proceeds if they profited.
The shutdown is very troubling from a civil society point of view, but from a business perspective, these companies were all going to be in trouble — airlines especially. I’m not crying any tears for airline CEOs who blew up their balance sheet to get a bonus only because they knew they would get bailed out. That moral hazard is such an immovable set-piece that it’s weird to act like Berkshire buying cheap airlines after the government failed to bail them out would be a 1) possibility or 2) a bad thing if it ever did happen.
