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Lower tax rate fuels record profit for Buffett’s Berkshire Hathaway

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Warren Buffett’s Berkshire Hathaway on Saturday reported a record quarterly and annual profit, benefiting from a lower U.S. corporate income tax rate.

Fourth-quarter net income increased roughly fivefold to $32.55 billion, or $19,790 per Class A share, from $6.29 billion, or $3,823 per share, a year earlier.

Quarterly operating profit for the Omaha, Nebraska-based conglomerate fell 24 percent to $3.34 billion from $4.38 billion.

Berkshire attributed roughly $29.11 billion of its net income to the reduction of the U.S. corporate tax rate, to 21 percent from 35 percent, that President Donald Trump signed into law in December.

Book value per Class A share, which reflects assets minus liabilities and which Buffett considers a good yardstick for Berkshire’s intrinsic worth, was $211,750 at the end of the year, up 13 percent from three months earlier.

This also benefited from the tax law change.

For all of 2017, Berkshire’s net income rose 87 percent to $44.94 billion. Operating profit, however, fell 18 percent to $14.46 billion, hurt by a rare loss from insurance underwriting.

Berkshire’s Class A shares closed at $304,020.01 on Friday, and its Class B shares closed at $202.76. Both are up a little over 2 percent this year, but are down nearly 7 percent from
their record highs set on Jan. 29.

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First COVAX vaccine shipment arrives in Ghana as developing world hopes to catch up

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A shipment of Covid-19 vaccines from the COVAX global vaccination program arrives at the Kotoka International Airport in Accra, Ghana, Feb. 24, 2021.

Nipah Dennis | AFP | Getty Images

The first shipment of Covid-19 vaccines delivered through the World Health Organization’s COVAX program arrived in Ghana on Wednesday, a hopeful turning point for developing countries that risked being left behind in the global race for vaccinations against a virus that has killed nearly 2.5 million people worldwide.  

The flight brought 600,000 doses of the AstraZeneca vaccine, one considered far easier to distribute to developing nations since it doesn’t require extremely cold storage temperatures like the PfizerGenTech and Moderna vaccines.  

The vaccines delivered Wednesday will be prioritized for front-line medical workers, people over 60, and those with preexisting health conditions, according to Ghana’s Information Ministry.  

“Today marks the historic moment for which we have been planning and working so hard,” UNICEF Executive Director Henrietta Fore said in a joint statement by her agency and the WHO Ghana. 

“With the first shipment of doses, we can make good on the promise of the COVAX Facility to ensure people from less wealthy countries are not left behind in the race for life-saving vaccines.” 

COVAX is a global plan co-led by the WHO, an international vaccine alliance called Gavi, and the Coalition for Epidemic Preparedness Innovations.  

As wealthier nations push ahead with costly vaccine development and procurement, poorer countries are being left behind. Mark Suzman, chief executive of the Bill & Melinda Gates Foundation, said in December that it may already be too late for equitable distribution of the vaccines because of the massive deals already brokered by rich nations.

Wealthy nations, which constitute 14% of the world’s population, had secured 53% of the world’s supply of the best-performing coronavirus vaccines by December, according to a group of human rights campaigners called the People’s Vaccine Alliance. 

COVAX was established to pursue equitable vaccine access globally, aiming to vaccinate 20% of people in the world’s 92 poorest countries by the end of 2021 through donations. Several other middle-income countries are set to acquire vaccines through COVAX on a self-funded basis. The plan aims to deliver 2 billion doses this year that have been approved as safe and effective by the WHO.  

The shots themselves were produced by India’s Serum Institute, which is expected to supply 400 million Covid vaccine doses to Africa. The continent aims to have 60% of its 1.3 billion-person population inoculated in the next two to three years, the African Union said in December.

‘By far the fastest ever’ 

“This is amazingly significant. We want the gap between when rich people and poor people get vaccinated to be reduced to zero,” said Hassan Damluji, deputy director for global policy and advocacy at ‎Bill & Melinda Gates Foundation. 

“We know that it normally takes decades between a vaccine being developed and used for the first time in rich countries and then getting to the poorest people in the world. So for Ghana to receive their first shipment, only three months from the very first vaccine rollouts in the world, is beyond exceptional. It’s by far the fastest ever.”

The Gates Foundation has spent $1.75 billion on efforts to counter the coronavirus and has focused its efforts on vaccine development within COVAX. 

Damluji noted that the program’s vaccine procurement for poor countries has been entirely funded by donors at a time when every developed world economy is in recession. “So it’s pretty remarkable,” he said.

Vaccine inequality will plunge countries into deeper poverty

The exclusion of poor countries from vaccination programs being rolled out in wealthier nations will have a devastating toll, many economists and public health experts warn, dramatically widening inequalities, hampering social and economic development, and leaving scores of countries in significantly more debt.

These inequalities mean that the pandemic’s long-term economic damage will be twice as severe in emerging markets as in developed ones, according to Oxford Economics. And a study by RAND Corp. predicts that the global economy will lose $153 billion a year in output if emerging countries don’t gain access to vaccines.

Countries on the COVAX donation plan are set to get doses proportionate to their populations: Afghanistan will get 3 million doses, for instance, while Namibia receives just under 130,000.

The Palestinian territories are expecting to receive vaccines through COVAX in March; Iran and Iraq are also part of COVAX, as are many lower-income Middle Eastern countries. Wealthier Gulf states have procured their own vaccine shipments directly from manufacturers, while some are also contributing to the COVAX donation pool despite suffering their own recessions: Saudi Arabia has contributed $300 million and Qatar has donated $10 million.  

The U.S. had not contributed to the COVAX facility under the Trump administration, but the Biden administration has pledged the largest donation yet — $4 billion.  

Damluji noted the challenges of COVAX’s effort, executing nationwide inoculation campaigns in countries with faulty infrastructure, limited logistics and transport options, remote populations and in some cases, war.

“This stuff is a moving target. Rightly, the world’s attention is on this and wants to make sure that it goes well. But a couple of months ago, we didn’t even know which vaccines would work. And now people need them on their doorstep.”

“There will be some complications that also come up,” he added. “It’s the largest health procurement effort ever.” 

 

 

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CIA nominee Burns calls China an ‘authoritarian adversary’

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William Burns is sworn in to testify before a Senate Intelligence Committee hearing on his nomination to be director of the Central Intelligence Agency (CIA) on Capitol Hill in Washington, February 24, 2021.

Tom Brenner | Reuters

WASHINGTON – President Joe Biden’s nominee to run the CIA told lawmakers Wednesday that if confirmed he would intensify America’s national security approach to counter China.

“Out-competing China will be key to our national security in the days ahead,” Will Burns said in his opening remarks to the Senate Intelligence Committee. “That will require a long-term, clear-eyed, bipartisan strategy, underpinned by domestic renewal and solid intelligence,” the former career diplomat added.

Burns, 64, who worked under both Republican and Democratic presidents, described Xi Jinping’s China as “a formidable, authoritarian adversary.”

He added that China was “methodically strengthening its capabilities to steal intellectual property, repress its own people, bully its neighbors, expand its global reach, and build influence in American society.”

Burns, who was introduced to the Senate committee by former Secretary of State James Baker and former CIA director and Secretary of Defense Leon Panetta, previously served as the U.S. ambassador to Jordan and Russia.

His confirmation is expected to easily pass with strong bipartisan support similar to the majority of Biden’s national security team.

Earlier this month, the Senate confirmed Alejandro Mayorkas to lead the nation’s Department of Homeland Security, making him the first Latino to hold the role. The Senate voted 56 to 43.

Last month, the Senate confirmed Avril Haines as the director of national intelligence with an 84 to 10 vote, making her the first official member of Biden’s Cabinet. Haines is also the first woman to lead the nation’s 18 intelligence agencies.

The Senate voted 93 to 2 to confirm Lloyd Austin as the next Pentagon chief, making him the nation’s first Black Defense secretary. The Senate confirmed Biden’s top diplomat Antony Blinken in a 78 to 22 vote, making him the nation’s next secretary of State.

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Tech pessimism founded on ‘real concerns’

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Mike Schroepfer

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Facebook’s Chief Technology Officer Mike Schroepfer believes the pessimism surrounding technology in the world today is “founded on real concerns of the negative impacts of technology.”

In an interview on Tuesday with the president of the Oxford Union, the Oxford University debating society, Schroepfer said that in some cases “we haven’t really always done the homework upfront” and thought about what a “bad actor” might do with a particular product before releasing it.

A Facebook spokesperson told CNBC on Wednesday that he was talking about the tech industry as a whole as opposed to Facebook specifically. The social media giant has been widely criticized for a range issues including the spread of hate speech and misinformation, influencing elections, being addictive, and failing to keep children safe on its platform.

“The thing that’s often true of new technologies and advancements is they often have very clear, acute examples where things change or are disruptive,” said Schroepfer. “It may be a loss of jobs or a new form of scammer abuse. It’s something that’s really easy to understand as ‘bad.’ And then they have very generalized improvements in the quality of life. So if I say I’ve increased the GDP overall by 3%, I’ve made everyone slightly more prosperous, but it’s harder to weigh against these very acute, specific harms.”

Schroepfer said it’s up to technologists to try to minimalize or eliminate these harms from the beginning, adding that he wants to help people understand the world wouldn’t be what it is today without technology.

“If you go back, 50 years, 100 years, 300 years, and you look at how life was different then versus now, the biggest change in my mind is technology,” he said. “300 years ago, most of us would be subsistence farmers. Our average life expectancy would be half of what it is today.”

Schroepfer added: “It’s important for us all to be real about the risks, but still be optimistic about the better future we can build.”

A.I. push

Schroepfer said one of the main areas that Facebook is investing in is artificial intelligence, which has been hailed as a technology that could bring about a new industrial revolution.

Facebook set up a dedicated AI research lab around the same time that Google acquired London AI research lab DeepMind in 2014. Facebook AI Research, as the lab is known, is now spread across multiple offices around the world.

“In the first five years or so at Facebook, honestly a lot of our focus was just trying to keep up with scaling the site,” said Schroepfer. “There was a lot of technology and infrastructure work that had to be built to make sure that as millions, or tens of millions, of new people use their products the whole thing didn’t crash and burn.”

Once Facebook had grappled with scaling, Schroepfer said the company was able to start thinking about the next 10 years, adding that AI was making a breakthrough around the time.

“We realized we didn’t want to be reading other people’s (AI) research papers and trying to reimplement them,” he said. “We wanted to be pushing this at the frontier. We looked at a lot of technological areas and made a very explicit choice to build a research lab focused exclusively on AI, rather than a generalized research center, because we just felt like if we put all of our energy there, there’s so much that AI could do to Facebook and to the world.”

AI software now underpins many of Facebook’s products and Schroepfer said the company’s push into AI has worked out better than he hoped.

He pointed out that Facebook’s Oculus headset doesn’t work without computer vision, which is a field of AI that allows computers to “see” the world around them. AI software also allows Portal, Facebook’s video chat device, to automatically pan and zoom the camera. On the main Facebook platform, AI is used to translate languages and remove content that violates its policies. However, it doesn’t spot everything, and humans still play a significant role.

Artificial General Intelligence

AI keeps on advancing but Schroepfer isn’t as concerned as Tesla CEO Elon Musk about it being a serious danger to humans any time soon.

“I am in a very particular spot here,” said Schroepfer. “There are narrow AIs and there are generalized AIs.”

Narrow AI can excel at specific tasks whereas generalized AI can do multiple things well. Developing artificial general intelligence is often seen as the holy grail in AI.

“Generalizability and transfer learning is an unsolved problem in AI research in general,” said Schroepfer. “We’re quite a way away from a generalized intelligence,” he continued, adding that “this is what the worst of the worst fears of AI is.”

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