Leithner Letter No. 44
26 August 2003

We will be candid in our reporting to you, emphasising the pluses and minuses important in appraising business value. Our guideline is to tell you the business facts that we would want to know if our positions were reversed. We owe you no less. Moreover, as a company with a major communications business, it would be inexcusable for us to apply lesser standards of accuracy, balance and incisiveness when reporting on ourselves than we would expect our news people to apply when reporting on others. We also believe candour benefits us as managers: the CEO who misleads others in public may eventually mislead himself in private.

Warren E. Buffett
Berkshire Hathaway Annual Report (1983)

The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish squirting out ink. ... Political language – and with variations this is true of all political parties, from Conservatives to Anarchists – is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.

George Orwell
Politics and the English Language (1946)

Buffett, Business and the English Language

In August 1998 the U.S. Securities and Exchange Commission published A Plain English Handbook: How to Create Clear SEC Disclosure Documents (see also The Complete Plain Words by Sir Ernest Gowers). It addressed a conspicuous need. Mr Buffett wrote in its Preface that “for more than forty years, I’ve studied the documents that public companies file. Too often, I’ve been unable to decipher just what is being said or, worse yet, had to conclude that nothing was being said ... There are several possible explanations as to why I and others sometimes stumble over an accounting note or indenture description. Maybe we simply don’t have the technical knowledge to grasp what the writer wishes to convey. Or perhaps the writer doesn’t understand what he or she is talking about. In some cases, moreover, I suspect that a less-than-scrupulous issuer doesn’t want us to understand a subject it feels legally obligated to touch upon. Perhaps the most common problem, however, is that a well-intentioned and informed writer simply fails to get the message across to an intelligent, interested reader. In that case, stilted jargon and complex constructions are usually the villains.”

An excellent example of difficult-to-decipher commercial writing was published in USA Today on 14 October 1994. An article entitled “Buffett Decodes Fund Prospectus” reported that “the Securities and Exchange Commission warns mutual funds to write their prospectuses in plain English. To show mutual fund lawyers how to do it, SEC Chairman Arthur Levitt asked Warren Buffett, the legendary investor and CEO [sic] of Berkshire Hathaway, to rewrite a typical mutual fund prospectus paragraph. Here is the paragraph – and Buffett’s version:

The Original

Maturity and duration management decisions are made in the context of an intermediate maturity orientation. The maturity structure of the portfolio is adjusted in the anticipation of cyclical interest rate changes. Such adjustments are not made in an effort to capture short-term, day to day movements in the market, but instead are implemented in anticipation of longer term, secular shifts in the levels of interest rates (i.e., shifts transcending and/or not inherent to the business cycle). Adjustments made to shorten portfolio maturity and duration are made to limit capital losses during periods when interest rates are expected to rise. Conversely, adjustments made to lengthen maturation for the portfolio’s maturity and duration strategy lies in analysis of the U.S. and global economies, focusing on levels of real interest rates, monetary and fiscal policy actions and cyclical indicators.”

Buffett’s Version

“We will try to profit by correctly predicting future interest rates. When we have no strong opinion, we will generally hold intermediate-term bonds. But when we expect a major and sustained increase in rates we will concentrate on shorter-term issues. And, conversely, if we expect a major shift to lower rates, we will buy long bonds. We will focus on the big picture and won’t make moves based on short-term considerations.”

Mr Buffett’s version is much clearer and shorter (71 words versus 136 words) than the original. Yet clarity and brevity take time and effort. Voltaire once concluded a lengthy letter to his Mum with an apology and an explanation that he had not had the time to write a succinct one. Similarly, in 1995 Mr Buffett told an audience at the University of North Carolina “if you understand an idea, you can express it so others can understand it. I find that every year when I write the report. I hit these blocks. The block isn’t because I’ve run out of words in the dictionary. The block is because I haven’t got it straight in my mind yet. There’s nothing like writing to force you to think and to get your thoughts straight” (see also William Zinsser, Writing to Learn, Harper Collins, 1993, ISBN: 0062720406).

Ernest Hemingway once described how he wrote and rewrote draft after draft in order inexorably to achieve his trademark lean yet muscular prose. Recalling that he rewrote the first section of A Farewell to Arms fifty times, he aptly summarised his view: “the first draft of anything is shit” (Ernest Hemingway and Larry Phillips, editor, Ernest Hemingway on Writing, Touchstone Books, 1999, ISBN: 0684854295). Reflecting his gentle, avuncular but formidably intelligent style, in his Preface to a Plain English Handbook Mr Buffett offered a few simple, charming and valuable words of advice to writers. He suggested that one “write with a specific person in mind. When writing Berkshire Hathaway’s annual report, I pretend that I’m talking to my sisters. I have no trouble picturing them: though highly intelligent, they are not experts in accounting or finance. They will understand plain English, but jargon may puzzle them. My goal is simply to give them the information I would wish them to supply me if our positions were reversed. To succeed, I don’t need to be Shakespeare; I must, though, have a sincere desire to inform. No siblings to write to? Borrow mine: Just begin with Dear Doris and Bertie.”

Bad English Pervades Big Organisations

In at least three ways, then, Mr Buffett is remarkable: his ethics are exemplary, his results are phenomenal and his speaking and writing – given his breadth and depth of knowledge, intelligence and desire to enlighten – are insightful, concise and above all clear. His gem in USA Today is a specific response to a much more general, perennial and sinister problem.

Most notably, in Politics and the English Language George Orwell described the derelict condition of The King’s English (and, by extension, its American and other equivalents). Orwell’s real name was Eric Arthur Blair and he was born at Motihari, India, on 25 June 1903. The centenary of his birth and the prominence of his essay (since its publication in 1946 it has become one of the most frequently cited in the English language) provides a good excuse to revisit the problem Orwell diagnosed, his legacy of clear writing and his hostility to the destruction of language and liberty (see also Ron Paul’s We’ve Been Neo-Conned and Thomas Sowell’s The Vision of the Anointed: Self-Congratulation As a Basis for Social Policy, Basic Books, 1996, ISBN: 046508995X). Ironically, the centenary of Orwell’s birth also inspires us to apply his legacy to noble causes – namely the robust defence of laissez-faire capitalism and the sensible allocation of funds for productive investment – that he opposed throughout his life (see, for example, Orwell’s Why I Write).

According to Orwell, “modern English prose... consists less and less of words chosen for the sake of their meaning, and more and more of phrases tacked together like the sections of a prefabricated hen-house.” He denounced stale and pretentious images, imprecise meanings and meaningless words, dead metaphors, flabbiness and abstraction. Burdened with these loads, “the writer either has a meaning and cannot express it, or he inadvertently says something else, or he is almost indifferent as to whether his words mean anything or not. This mixture of vagueness and sheer incompetence is the most marked characteristic of modern English prose.”

This characteristic has, if anything, become even more evident since Orwell’s death in 1950. In the Old Country, for example, what do Accenture, Corus, Innogy, Invensis and Lattice have in common? Each is a large British organisation that during the past several years has succumbed to the indulgent, expensive and pointless fad of creating a nonsensical name to “describe” itself. The adoption of such names is worth millions to “image consultants” and “rebranding specialists” (whose job descriptions, not surprisingly, are as opaque as the names they devise for their clients). A change of name means a new logo, a large advertising campaign and (it is heroically alleged) a fresh “corporate culture.” In exchange for large fees paid to consultants, in other words, companies are abandoning clear labels (such as British Steel, Her Majesty’s Post Office and National Power) that plainly tell the world what they do – and are adopting monikers that resonate only in Alice in Wonderland. Quoth one consultant: “this fashion for five-to-seven letter names is about words that suggest without actually saying anything.”

Employees of the typical large organisation, whether in the private or public sector and particularly highly-paid and status-conscious employees, have mastered the habit of uttering without informing. Orwell quoted a well-known verse from Ecclesiastes: “I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to all of them.” He then drained the passage’s life blood and replaced it with the embalming fluid of modern English style. The result could easily have been written yesterday – and, sadly, something similar to it probably was written yesterday: “objective consideration of contemporary phenomena compels the conclusion that success or failure in competitive activities exhibits no tendency to be commensurate with innate capacity, but that a considerable element of the unpredictable must invariably be taken into account.”

Another example comes from the Commonwealth Department of Finance but could just as easily have been discharged from the bowels of any big business. “Given the within year and budget time flexibility accorded to the research agencies in the determination of resource allocation from within their global budget, a multi-parameter approach to maintaining the agencies [sic] budgets in real terms is not appropriate.”

It is unlikely that these words were written by someone who, as does Mr Buffett, “tap dances to the office every morning.” They cause Kate Jennings (BOSS June 2002), who cites a range of offending passages, to “wonder if business people have formed an unholy alliance with postmodernist literary theorists. The similarities in the tortured syntax and made-up words – verbs as nouns, nouns as verbs – can’t be coincidence.”

The Language of the Walking Dead

It is significant that the target of Orwell’s criticism is not the language of the farmer or grazier, skilled tradesman or small- or medium-sized business owner. Berkshire Hathaway’s subsidiaries employ more than 100,000 people and generate billions of revenue; but its headquarters, with fewer than 20 staff, more closely resembles a small business than a behemoth. Perhaps the dreary prose Orwell criticises lacks life because its authors (usually academics, public or private sector bureaucrats, management consultants and politicians) are themselves lifeless. Accordingly, “when one watches some tired hack on the platform mechanically repeating the familiar phrases ... one often has a curious feeling that one is not watching a live human being but some kind of dummy: a feeling which suddenly becomes stronger at moments when the light catches the speaker’s spectacles and turns them into blank discs which seem to have no eyes behind them. And this is not altogether fanciful. A speaker who uses that kind of phraseology has gone some distance towards turning himself into a machine. The appropriate noises are coming out of his larynx, but his brain is not involved as it would be if he were choosing his words for himself. If the speech he is making is one that he is accustomed to make over and over again, he may be almost unconscious of what he is saying, as one is when one utters a response in church. And this reduced state of consciousness, if not indispensable, is at any rate favourable to ... conformity.”Don Watson (“Verbs on the Run,” The Australian Review of Books) identifies this type of writing as the cause of “chronic headaches, neuralgia and bouts of dull-wittedness similar to a hangover. ... It is difficult to say where English of this official-corporate-political kind has come from. ... [Unmistakably, however, it is] hostile to communion, which is the purpose of language; it stifles reason, imagination and the promise of truth. Look at a block of 1960s Housing Commission flats and you have the shape and dysfunction of it. Listen and you can hear echoes of all authoritarian cant. It is a non-language, and it threatens society and the body politic far more than misplaced apostrophes or any other common grammatical error.”

The Language of Authoritarian Cant

Orwell anticipated this point by a half-century. Above all, he analysed and denounced the use of language as an instrument of sloppy thinking, self-deception, the deception of others – and, in extreme circumstances, inhumanity and mass murder. The crux of the problem is that language “becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.” Orwell identified bad habits of expression, described how they deface the language and demonstrated how their repeated and unthinking use can defend the indefensible. “Things like the continuance of British rule in India, the Russian purges and deportations [and] the dropping of atom bombs on Japan can indeed be defended, but only by arguments which are too brutal for most people to face. ... Thus, political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness. Defenceless villages are bombarded from the air, the inhabitants driven out into the countryside, the cattle machine-gunned, the huts set on fire with incendiary bullets: this is called pacification. ... People are imprisoned for years without trial, or shot in the back of the neck or sent to die of scurvy in Arctic lumber camps: this is called elimination of unreliable elements. Such phraseology is needed if one wants to name things without calling up mental pictures of them. ... [It] is designed to make lies truthful and murder respectable, and to give an appearance of solidity to pure wind.”

As an example, Orwell invited his readers to consider a comfortably-tenured academic defending Soviet totalitarianism. (Alas, many of these odious creatures existed during the 1930s; their descendants corrupted Western universities during the 1960s and 1970s; and their caustic legacy pervades campuses today. See in particular Alan Charles Kors and Harvey Silverglate, The Shadow University: The Betrayal of Liberty on America’s Campuses, Perennial, 1999, ISBN: 0060977728 and Roger Kimball, Tenured Radicals: How Politics Has Corrupted Our Higher Education, HarperCollins, 1991, ASIN: 0060920491). According to Orwell, “the academic cannot say outright, ‘I believe in killing off your opponents when you can get good results by doing so.’ Probably, therefore, he will say something like this: ‘while freely conceding that the Soviet regime exhibits certain features which the humanitarian may be inclined to deplore, we must, I think, agree that a certain curtailment of the right to political opposition is an unavoidable concomitant of transitional periods, and that the rigours which the Russian people have been called upon to undergo have been amply justified in the sphere of concrete achievement.’”

The Language of “Educated” Fools

During the First World War, writes Joe Sobran in Now They Tell Us, the British writer C.S. Lewis overheard a group of American soldiers. He was startled to discover that without exception they casually assumed that their government, the U.S. Government, routinely lied to them. They were not the least bit outraged; they simply took it for granted that “their” politicians and bureaucrats were incorrigible liars. Perhaps because the government was exposing the soldiers and non-combatants to mortal danger, and it feared that morale would suffer if they knew the true extent of this danger, the government did not trust the soldiers enough to tell them the truth. Realising this, the soldiers reciprocated: they did not trust the government enough to tell them the truth. Their distrust, as Thomas Fleming documents in his new book, was well-founded (The Illusion of Victory: America in World War I, Basic Books, 2003, ISBN: 046502467X; see also Fleming’s The New Dealers’ War: FDR and the War Within World War II, Basic Books, 2002, ISBN: 0465024653).

Lewis was shocked that the soldiers were not shocked. He should have been relieved rather than shaken: an “average” man such as the American soldier is more difficult to bamboozle than a refined Oxbridge academic such as Lewis. More specifically, people who have spent a large amount of time in educational institutions (and who almost invariably confuse this time with “education” and therefore regard themselves as “educated”) are far more susceptible to propaganda than people who left school early, got a proper job and joined the real world. As Thomas Staley corroborates in The Millionaire Mind (Andrews McMeel, 2001, ISBN: 0740718584), the most intelligent people I know tend to be self-effacing secondary school leavers, largely self-educated, who founded and own businesses. I have also been privileged to know and learn much from formidably intelligent academics; yet uni lecturers also number prominently among the most arrogant, dogmatic, gullible and stupid people whom I have ever met. Sobran conjectures that since most Americans now receive high school certificates and attend a post-secondary educational institution, propaganda may now influence Americans more than it did in the past (see also What’s Happened to America? by Sheldon Richman). People who have spent much time in schools, colleges and universities may flatter themselves that “education” creates a rational and sceptical outlook and hence an immunity to propaganda. In fact, says Sobran, “it may do just the reverse. It may create in us a disposition to settle for fancy words and high-sounding slogans instead of results.”

From the French Revolution and through the horrors of Hitler, Stalin and Mao, “intellectuals” have figured disproportionately prominently among the leading apologists and blind supporters of dictatorship and state-sanctioned violence (see Thomas Sowell, Knowledge and Decisions, Basic Books, 1996, ISBN 0465037380). Peter Jones reports in Language Barriers (The Spectator 14 June 2003) that today’s universities are factories that produce babble rather than scepticism, and rigidity rather than reason. “Turgid, repetitive, pompous, pretentious bombast is the order of the day. ... This is precisely what Orwell was complaining about – not thinking about what is being said but reaching for the pre-packaged words and phrases and letting them choose the meaning.” Not many years ago, élites mocked ordinary Australians’ grammar and accent. Today, the ruling language is laughable and its speakers talk rubbish. Or, as a politician, academic or bureaucrat would likely say, “at this juncture all issues are not progressed in the context of a transparent discourse that facilitates the proactive value proposition committed to the achievement of overall enhanced participative outcomes for the community.” Kate Jennings concurs: “paradoxically, we all know that business language is nothing but cuttlefish ink. We don’t expect corporate communications to be composed of anything but illogic, exaggeration, evasion and outright lies. But at the same time we allow ourselves to be seduced by its relentless optimism, its aggressively positive outlook. We don’t want the truth.”

Clear English, Liberty and Value Investing

Perhaps more powerfully than any other writer, George Orwell warned that pretentious and vacuous language anaesthetises thought and conscience. His insights set an alarm in the brain that rings when, for example, a politician or business executive refers to a prior public statement as “inoperative.” The warning prompts us to wonder whether he really means “don’t believe what I told you then; believe what I tell you now,” or “I didn’t know then and I don’t know now” or simply “I lied: what of it?” Orwell also alerts us that people who resort to officialese and corporatespeak tend to abandon scepticism and clear thinking and embrace orthodoxy, blind faith and coercion. At a minimum, then, the bastardisation of language gives rise to stultifying conformity. Much political and business writing is “bad” because, like propaganda, it renders language practically meaningless; and it is immensely damaging because it stifles critical thinking and weakens or destroys rational decision-making.

Hence Orwell’s legacy. It is not just about clarity, candour, active verbs
and short sentences; and it not just for inhabitants of large organisations. It is for all who strive to write and talk in order to inform rather than to evade; who read in order to learn rather than to affirm their allegiance to some orthodoxy; and who strive to learn in order to make better decisions. Minding Orwell has two final benefits. First, as Mr Buffett notes, “write as [A Plain English Handbook] instructs you and you will be amazed at how much smarter your readers will think you have become.” Second, you will realise just how mediocre Australia’s business and political class really is.

Chris Leithner


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