How 2 CEOs see things in the Trump era

Buffett, Immelt investor letters view big picture

WASHINGTON •Twoofthe most closely watched letters in American business — the annual missives penned by Berkshire Hathaway CEO Warren Buffett and General Electric CEO Jeff Immelt to their shareholders — were released in recent days. But while addressed to investors, they also may have had a second audience in mind: President Donald Trump and his administration.

The two letters were both largely optimistic, and neither one mentioned Trump explicitly by name. But they also took on different policy themes and at times, a different overall tone. Buffett touted the dynamism in the U.S. economy, taking pains to point out the value of immigrants and entitlements, while Trump campaigned on stalled growth and building a wall on the Mexican border. Meanwhile, Immelt delved into trade, saying the United States will be “less of a leader in trade.” And he warned that the country is “diverging from the rest of the world” while saying he was “hopeful” about some Trump policies. “We are stripping away years of bad regulatory and economic practices to promote competitiveness,” he said.

Buffett called the achievements of the U.S. economy during its history nothing short of “miraculous,” expressing confidence the market system will continue building wealth for Americans well into the future. “You need not be an economist to understand how well our system has worked,” Buffett wrote, with no reference to the “American carnage” or “rusted-out factories scattered like tombstones” Trump mentioned during his inaugural address.

He included immigrants in a list of key factors in the American system’s success. “From a standing start 240 years ago — a span of time less than triple my days on earth,” Buffett wrote, “Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.”

He seemed to point away from there being something unique about Americans themselves — “early Americans, we should emphasize, were neither smarter nor more hard working than those people who toiled century after century before them.” He praised what they created: “But those venturesome pioneers crafted a system that unleashed human potential and their successors built on it.”

Buffett also highlighted the role of entitlements, writing that “America has, for example, decided that those citizens in their productive years should help both the old and the young,” not only in benefits that help the old but in a “societal commitment” to the four million American children “born each year with an entitlement to a public education.”

Immelt, meanwhile, sought to position GE as a company that will grow despite changes in trade policy and that is global while still being American. “To be clear, our preference is for multilateralism and free trade,” Immelt wrote, drawing a line between the industrial giant and Trump, who has promised more “one-on-one” trade deals and “none of these big quagmire deals.” Immelt said GE’s “global footprint” will give it an advantage amid rising nationalism and protectionism, even while writing of “an era when trust in big institutions is so low that the most valued ‘strategy’ is simply change in any form.”

Yet Immelt also clearly aimed to depict GE as a company that’s not a “stateless multinational,” one that has kept U.S. factories humming because of its global reach and that stands to benefit from many of the changes Trump seeks. He said he believes “it is the end of the ‘global elite,’ those who see the world only from financial centers or a website,” even if he doesn’t think it’s the end of globalization. He granted that “some American workers lost in the game of wage arbitrage” and complained about exploding regulations, poor infrastructure and tax policies that favour imports, all of which Trump has vowed to address. He said he hopes the administration will “level the playing field.” He also acknowledged the role business must play: “We cannot merely blame a dysfunctional government. While tax reform can help, it is unlikely to be the only answer. American business needs to invest more.”

Immelt was also careful to express his allegiance to diversity. “Leadership, now more than ever, is about embracing the new and bringing people with you,” he wrote, noting American GE employees “like” their colleagues in Brazil and China. “We act like a single company, a meritocracy that doesn’t discriminate or fear the future.”

In a sense, Immelt seemed to say, the company is approaching the Trump era pragmatically: “GE is filled with business leaders, not philosophers. We understand that the best companies don’t make decisions based on what they hope for, but rather on the facts they see.” General Electric CEO Jeff Immelt tells investors in a letter that he is “hopeful” about some Trump policies.