Entretien · 2011

Une conversation avec Charlie Munger (Université du Michigan, 2011)

2011 1 h 10 min vidéo

Source : Université du Michigan / YouTube · intégré depuis l'original ; nous ne l'hébergeons pas.

Munger passa un an à l'Université du Michigan avant que la Seconde Guerre mondiale n'interrompe ses études, et ce retour à Ann Arbor en 2011 a le ton libre et autobiographique d'un homme qui s'adresse à sa propre école. Cela dure plus d'une heure et part dans tous les sens, à dessein — de la façon dont il a appris à penser, à la manière dont Buffett et lui prennent réellement leurs décisions, jusqu'aux conseils sans détour qu'il donne aux étudiants sur le caractère, la patience et l'art d'éviter les bêtises.

Pourquoi la regarder. Parce qu'elle est longue et sans hâte. Sans une salle pleine d'actionnaires pour orienter les questions vers les marchés, Munger a la place de raconter des anecdotes et de suivre ses digressions, et il en résulte l'un des meilleurs portraits en format long de sa manière de raisonner.

La vidéo proposée est la conversation à l'Université du Michigan. Pour le même format dans une autre université six ans plus tard, voir la séance de 2017 à Michigan Ross.

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Généré automatiquement à partir des sous-titres YouTube et légèrement nettoyé — la ponctuation et les noms propres peuvent comporter des erreurs. Nous n'en détenons pas les droits ; tous les droits appartiennent à l'Université du Michigan / YouTube. Source ↗

and on behalf of the law school along with uh Dean Dolan and the RW School of Business we'd like to welcome all of you to the beautiful Blau Auditorium for this very special event today we have the rare and special opportunity to hear from Charles T Munger one of the Towering figures in American Business who is also one of the most principled leaders in American Business he's going to share his views about many things including how the economy got into its present State and where it might be going and in a few minutes I'll tell you a little bit more about Charlie and our wonderful guest moderator Financial journalist Becky quick but first I would like to introduce president Mary Sue Coleman who has led the university since being appointed as 13th president in 2002 president Coleman as you know has launched several major initiatives that will have a lasting impact both on current and future generations of students for the intellectual life of the campus and even for Society at large these include the interdisciplinary richness of the University student residential life the E economic Vitality of the region ethics and society and important reforms concerning the delivery of healthc care under her leadership the university conducted the most successful fundraising campaign ever for a public university she is a national spokeswoman on the educational value of diverse perspectives in the classroom and has held many impactful leading leadership positions in higher education a biochemist with a distinguished research career Mary suan is a fellow of the prestigious American Association for the advancement of Science and the American Academy of Arts and Sciences please welcome president Mary suan well thanks to Evan and welcome to students and guest and faculty and our special guests Charlie Munger and Becky quick I really appreciate the opportunity to share few Thoughts with you because I've had the privilege to work with both Charlie and Becky many years ago Charlie was a student here at Michigan he studied mathematics much has happened in those days before World War II and today in recent years we have reconnected I so pleased that for both Charlie and for our students particularly our law students that he has taken an interest in the University of Michigan through his work his advice his resources he has enhanced the Beauty and the function of our law quadrangle with a gift that brought about new lighting and as Charlie says there are not many donors who would fund a lighting project but Charlie saw what light can do both aesthetically and intellectually when you're engaged in academic Pursuits light brings Clarity and Charlie Munger is one of the clearest sharpest thinkers of our time he relies on evidence and data and he uses them to make extremely astute decisions he is legendary in the investment World many of you have seen a book that he has co-authored with uh Peter Kaufman his friend poor Charlie's Almanac which is now in its Third Edition the wit and wisdom of Charles T Monker and if you haven't read it I suggest you go look at it's filled with gems about insights into the business world and in life and it is a wonderful volume I'm so pleased that he is with us today to share his most valuable of Commodities advice Becky quick has the task of managing this afternoon's conversation a year ago at this time I had the pleasure of taking part in a council on competitiveness panel discussion on energy that Becky moderated and I got to know what great Insight she has as we know from her work in television and CNBC she is smart she's always well prepared and I anticipate a lively conversation welcome again to all to the University of Michigan Evan thank you Mary Sue I'm now pleased to more formally introduce our program pres uh participants beginning with Becky quick she is the co-anchor of squat box which is the signature morning program on CNBC she previously covered the Wall Street beat for the network which she joined in 2001 before joining CNBC she was a reporter for the Wall Street Journal where she covered retail and eCommerce and various internet issues ranging from online privacy to domain name disputes she also played a crucial role in the launch of the Wall Street Journal online in 1996 and served as a site's international news editor focusing on Foreign Affairs coverage she earned her ba in political science at ruter University where she served as editor-in chief of the newspaper please join me in welcoming Becky quick and our special guest today is Charles Munger who for more than three decades has been the vice chairman of Berkshire Hathaway the Diversified Investment Company chaired by Warren Buffett born in Omaha Charlie entered the university as an undergraduate uh as the president said as a math major attracted to that field I Believe by the logic and reasoning required at Michigan he took a science class in which he encountered physics and ever since then he has held physics like problem solving in the highest regard he left the university to serve in the Army Air Corp in World War II and after military service earned a degree from the Harvard Law School Magnum Lai and then went to California to practice law in 1962 he co-founded The Firm that is now known as Monger TOs and Olen during this time he became a serious investor first running a successful investment Partnership of his own and then joining forces with Warren Buffett the success of Berkshire half the way is well known but behind the headlines are the values by which Charlie has conducted his own professional life patience hard work and rational thinking in short the principles of his personal hero Benjamin Franklin and like Franklin Charlie has sought to use his own self-made resources for the good of others and has had many long-standing charitable involvements in Education Health Care and the Arts as president Coleman indicated we at the law school are extraordinarily grateful to Charlie for his $3 million gift that allowed us to transform the lighting in the public areas of the building most notably the outstanding reading room another interest that Charlie shares with Benjamin Franklin is that of lifelong learning he reads several weeks books a week he remains passionate about learning teaching and always problem solving I suspect that if you're looking for the secret of Charlie's success you might find it right there an ongoing quest for knowledge and wisdom that remains Central to his life and I might add that one of Charlie's favorite quotes applies to himself as well ability will get you to the top but it takes character to keep you there please give a warm bichigan welcome to our great friend as well as a great character Charlie Munger Dean thank you very much and thank all of you for coming out today as well it's uh great to see so many people here Charlie and I have talked about this and we'd like to make sure that you have a chance to get in on this conversation as well so we are going to have times where we'll go through the audience and uh if you have a question you can raise your hand throw something at me try and get my attention uh but we thought we'd just start off and talk a little bit about the economy um obviously it's a it's a very difficult economy to try and gauge but Charlie you've got a very good perspective as the vice chairman of birkshire with so many different companies what would you say that your best guess is right now when it comes to the economy well let me start with the qualification Warren and I have not made our way in life by making successful macroeconomic predictions sure and betting on our conclusions our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us but by and large we don't much bother with trying to predict the tides because we plan to play for the game for a long time I recommend all of you exactly the same attitude can you it's kind of a snare and a delusion to out guess macroeconomic Cycles very few people do it successfully and some of them do it by accident when the game is that tough why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides and so and with that qualification of course everybody has some ideas on the economy but I want you to understand that these ideas do not have the credibility of anybody who's successfully made macroeconomic predictions in other words they may not be worth very much but I will be surprised if employment bounces back with the wonderful speed that it did after previous economic dis disappointments of the one we've been through I just see business after business after business which is rationalized so that it can do creditably in terms of protecting its balance sheet and its earning power while utilizing fewer people so this is a bad market for easy employment compared to the conditions which have existed most of the time in recent decades and some of you are going out into a bad Market my attitude toward that is very simple I think you should all just say so what there are good tides and there are bad Tides I have a long way to go and we know from the example of other people that if you constantly stand well by your own generation and cope with competency and Grace with whatever Life deals you and just keep doing it your share of the honors and emoluments of the civilization in due time are very likely to come if you deserve the emoluments and of course that's the other advice the best way to get what you want in life is to deserve what you want how could it be otherwise it's not crazy enough so that the world is looking for a lot of undeserving people to reward well let me and so you just you keep plugging so I wouldn't be discouraged I told a group this morning about an example of what I call a real bad employment Market my uncle Fred graduated from the Harvard School of Architecture with great distinction and in the 20s he had a very successful architectural practice in Omaha where he did churches and little buildings and houses and so forth and he made8 or $10,000 a year which was an enormous amount of money to make from incredibly performing the architectural profession in the 1920s when the 30s came the architectural permits building permits in Omaha would sometimes go down to $30,000 per month for the whole city of Omaha and some of those were furnace repairs there was exactly zero work for Architects including my distinguished architect Uncle Fred he moved to California and in California he took drafting work at low rates for few Architects that still had some work and when it got worse than that he went to the County of Los Angeles in the agony of the county they classified him as a laundryman to save money but had him do drafting work which after all was exercising his skill he didn't think it was beneath him he coped his best he could he never complained to anybody and his pay after deductions all through 31 32 33 34 one 10808 per month now that wasn't as bad as it seems cuz he rented a whole house in Glendale for $25 a month when they created the FHA in 1936 he could take a civil service exam and which he was first so for the rest of his life he was the Chief Architect for the FHA in Los Angeles a responsible and interesting and civilization benefiting lineup work and he had a long and happy career doing that he never got discouraged he never thought what he had to do was something he should wail about I never heard him complain about anything uh wo was me generally speaking there are two things I found in my long life when you never do one is never feel sorry for yourself if your child is dying of cancer don't feel sorry for yourself never ever feel sorry years old and the other thing you never want to have is Envy that's the only one of the deadly sins you're never going to have any fun at all pick one of the others and so but if you go through life just everlastingly plugging away at these bad times you know Kipling has gone totally out of Vogue because it's not politically correct to write lines like a woman is only a woman but a good cigars a smoke it's and of course so nobody is familiar with Kipling but Kipling's if is still great poetry if you can keep your mind all about you are losing theirs just think of what good advice that would have been on Wall Street in a lot of other places recently and treat the little fluctuations in fate he said treat those two imposters success and failure just the same and in the end he says well if whatever else happens you'll be a man my son good message good message I mean why not take these opportunities the hardships and so forth to make a man of yourself or a person of yourself to use the modern lingo and so I know how you should cope with whatever the difficulties are of the Pres are just keep your head down and do your best and do some of the people who had the best careers in my age cour cohort of the age cohort just before mine were the ones who had the worst clobbering in the 30s because they were there when the Great boom came if you just kept plugging why the favorable tide came in due course well so much for current passing troubles economically I do think that the job market is likely to be fairly lousy for a long time and I do think that the worst of our troubles in certain markets are not over which markets do you think well I think the universities that thought they were making successful investments in Timber because they were all buying the same Groves are still in from some disappointment and I think that the worst in a lot of real estate Ventures is still ahead of us and so I think there's plenty of pain out there still to come that doesn't mean we won't pass through it just means that there's plenty of unpleasantness still ahead do you think that the job market is as difficult or is going to be as difficult now as it was back in the 30s how do we put this on it's nowhere near as bad as it was the 30 this is Hog Heaven compared to the 30s this is no that was unbelievable I lived in the 30s we didn't have the social safety net you know what people did in the 30s what they moved into other's houses that's what families were for it was a confusion system my grandfather cut his house in half and moved one of my uncles in and my other grandfather saved his son-in-law's Bank using a third of the only good assets he had on Earth and it was just pain and trouble and without a family system it was it was difficult but the people who plugged well and just kept going eventually did fine and so but I but I think there's still plenty of trouble ahead I don't think it matters if you're going to live a long life yeah but why it may be an advantage to have some trouble why do you think that the job Market's going to remain lousy for some time to come is it just that there's not demand that's built up is the is it that companies of downsize they can see they can get by with less well Tom frean said it's like the car that has to run across 3 miles of hot desert and it doesn't have a spare tire we've kind of used all the standard tricks that it's safe to use and now we still got the damn desert to go across and we don't have the spare tire so it's of course it's but why fret too much about what you can't fix just keep your head down and do your best you know a lot of the students that are in this room could be here from the business school and there's a real sense uh around the country at this point that uh Wall Street is a bad place there was column today in the New York Times that Andrew Ross sorin wrote where he sat down with Oliver Stone who's got his new movie coming out Wall Street too and he asked he said you know I don't think wall Street's an evil place maybe Goldman Sachs but he does think that there are some serious bad guys who populate Wall Street what do you think about that well if you're in a miasma of competition and they use the word that is so popular greed and you attract very competitive people and they're thrown into this miasma of course there's going to be more regrettable Behavior than you might find in a monastery or at least than we thought we might find in monasteries before we understood them better and the and so of course Wall Street is going to have more regrettable behavior and you know Lord Acton had this law you all taught that power corrupts and absolute power tends to corrupt absolutely well the longer version of that is that easy money corrupts and really easy money tends to corrupt absolutely and I don't think it was good for Wall Street that they had this absolute torrent of really easy money when idiots and naves were making a fortune selling shotty mortgages with ridiculous theories and it was it was very regrettable behavior and it was the easy money that allowed it and of course the adults who could have fixed it like the accountants who had ridiculous standards without which a lot of the bad behavior wouldn't have worked the accountants utterly failed us and by the way there's practically no sign of any intelligent reversal of that failure of that profession I have yet to meet many accountants who are the least bit ashamed for their contribution to our recent troubles but it was immense imagine when Enron comes down to the SEC and says we want to write a little contract with a and a little contract with b and take all the profit we're going to make from these complicated contracts over the next 20 years into earnings immediately and put an asset on our balance sheet of $28 million from signing two pieces of paper and the SEC led by wonderful accountants that study in great places why of course you should have that kind of accounting what the hell were they thinking how could anybody have any respectable understanding of human nature without realizing that the kind of people who are going to be tempted by that accounting were not going to be able to resist the Temptations it was disgusting and they're not ashamed yet so how many people have you heard lately talk about how ashamed our accountants ought to be at our recent troubles nobody's blaming them they assume it's like addition it isn't like addition the system accounting for the bad debts of banking Banks is carefully set up so the top of every Boom the bad debt rate goes to zero who would a nutcase would have that kind of an accounting system I mean I'm not making this as a joke this is not a parody these are the accepted accounting principles of your nation why do you think that has not been the focus and do you think finreg and bosel 3 are a joke well partly The Establishment accountants want to please the people who were writing the checks and partly the academic accountants get full of people whove overdosed on mathematics and they want everything to be in balance and they don't think that really isn't rational in creating rules for a human behavioral system they're too mathematical and not and not rational enough in dealing with their fellow humans you can't give the average Wall Street CEO really leading in standards of accounting and expect the figures to be good the accountant is like the referee in soccer the accountant has to be the adult that prevents the Mayhem the accountants don't want to be the adults because it caus liability it caus responsibilties difficulty in right they have to be good at things they not sure they know there are a lot of reasons why they shrink from it but it's their Duty under God and they failed us terribly that makes s we lost the referee that makes it sound like those CEOs are inherently bad people but they won't follow the rules themselves unless there's someone there with a stick to beat them back in line well I do think the CEO culture is likely to promote people who are very competitive and very driven and very aggressive in accomplishing what they want to do and that means if the guy down the street is doing something that enables him to report more they want to be like the guy down the street they can't help themselves they're that competitive I don't believe in being that competitive I believe it's part of human Merit to know like Kipling you don't lose your head when everybody else is losing theirs if somebody else makes a lot of money or reports a lot of money let them you know I it's it's this empty thing I it's pernicious and this has caused a huge problem and a huge danger for our Republic to have all these people competing to report fony earnings do you think they were really earning this money from this mortgage trading look at the writeoffs are you really earning money when you put something on your B ology that really isn't there when you reach for it will fade away like Mist what the hell kind of a system is that it's an utterly irresponsible system you can't blame the miscreant as much as you can the adults who were whose Duty it was to prevent the misc greeny it's somebody said you can't blame the tiger for behaving like a tiger you got to have a gamekeeper does that mean we should also look at Washington and The Regulators well if you think the accountants pay poorly Washington said a new record I have a rule for politics which has served me well in making predictions and that I quit claim to you the politicians are never so bad you don't live to want them back so all of the drama that we've watched unfold over the last years all of Washington's attempts to try and figure out what happened and to prevent it from happening again you think it's all been for not no what we have is way better than nothing in particular if you take the rules which most people in my political party object to for making the commercial Banks behave a little better in dealing with fisol who can't really handle things like checking accounts I think that the changes that have been made her all to the good and my only objection to Elizabeth Warren who is not in my political party is that she isn't Tough Enough why do you think that is something you feel but your party doesn't why do you think your party doesn't agree with you on this well I think all politicians tend to behave badly Under The Peculiar pressures of their trade so I think they've chosen a profession where it's hard to behave well and it's hard to behave well and you're in a May Asma of wrong incentives so you get a lot of bad behavior I think we're lucky the system has worked as well as it has in my state we have a thoroughly gerrymandered legislature so if you have to be an extreme nut on the right or an extreme nut on the left you're not allowed in the legislature and there are 10 same people that creep in and every decade at the end of the decade the right and the left agree and throw them out this is the biggest state and the biggest country and the this is a very regrettable set of circumstance how well are you going to behave in that kind of a system you get so you hate the other people in your chamber you need this ever growing tide of money you can't really tell the truth as it is because you'll offend various people that are important to you it's a miracle it ever worked as well as it did I suppose it's better than absolute despotism but sometimes it's a little close did you see the news today that Cuba said it will be laying off about half a million people from the government jobs there pushing them back into the private sector is this an admission that maybe despotism doesn't work either oh well no this is we're way better than Cuba I mean talk about dysfunction the in East Germany where they the best five million people left because they were allowed to and because the conditions are so bad and their remainder were put under communism communist police state for 60 years I always say about that will even ruin Germans which it did and know if the system's bad enough it will ruin the people in it and there two things work beautifully to ruin a aggregation of people all the best people leave that's a sure source of huge failure then you have the remainder under a total crazy bunch of people like say the nutcase that runs North Korea and of course that'll ruin anybody you seen those pictures of North Korea at night it's dark work they have starvation in the year of Our Lord 2010 you have people starving in the dark that's what communism will do for you if you work at it hard enough under a desate why don't we talk a little bit about some solutions there is a huge push right now to try and figure out how to fix the economy and more importantly how to fix the job market the president has unveiled his plans over the last week um in terms of some tax cuts that he's put out some incentives do you think those are the right plans well again I'm sort of against my own party I think my taxes are a little too low and I don't think we needed the last round of tax cuts nor do I think that hedge fund operators deserve to pay lower taxes than taxi drivers is a percentage of income I think when you're that crazy it's serious and so no I'm not wild about the taxes in terms of the jobs of course you remember I lived through the 30s and I was a very observant boy and young man and I found it very interesting to see how the that economy which had 25% unemployment for a long time and real underemployment I mean the architect doing drafting work classified as a laundryman he was a fortunate one and I watched that thing being pulled out by this accidental keynesianism of World War II and it was a very interesting thing to watch but there we had a spare tire we had centuries of reputable financial behavior on which to draw we could print money we could do whatever we damn pleased to solve the problem now we've used those weapons so aggressively that it's dangerous to keep using them whenever increasing amounts and of course that's what makes me that's what makes me afraid if you ask what I would do if I were the benevolent desperate of the United States I would have the biggest infrastructure program you ever saw to uh go to Power from renewable SP sources and by that I don't mean corn that was one of the most asinine ideas in the history of the world is to use corn for Mo motor fuel I mean you can argue that the people that come up with that kind of stuff don't deserve hardly to be at the table at all but the idea of rapidly going to the to the sun basically and creating a vast infrastructure that will do it is a thoroughly Sound Idea and we now know how to do everything that we need to know how to do and I think the country would get behind it if people had the sense to concentrate on something large and important and sensible I think you could have gotten the country behind such a vast program and I think not only we need the stimulus I think we're going to need the whole infrastructure to use all this Renewable Power so I think we had a chance to turn our lemon into lemonade and we still have it and so but if but if I were running the world boy would we be playing that card hard and the people who weep about oil and gas one of the interesting things of about oil and gas is that the entire growth rate of China which has been utterly remarkable in recent decades has been achieved when their percentage of GDP spent on oil and gas is three or four or five times hours so the idea there's something terribly to fear because we have to spend a higher percentage of GDP on oil and gas is so much twaddle and the guy who says it is twaddle is not in the economics Department it's Dyson the physicist who's as old as I am but Dyson is right it does not make a big difference in the economy of the United States it would in the short term no if you look at it as a tax on the consumer at this point when they're already in a difficult situation I think it would be a net plus if we were plainly doing the right thing if we borrowed the money and created the infrastru rure I think when we just borrow the money and shovel at people it's dangerous but I think it is less dangerous when there's something really meritorious you're doing with the money I think the infrastructure is sure to be very useful it's sure to be needed it's going in the right direction of course global warming I think is not the main problem in other words to me the main problem is using up the hydrocarbons too fast in order to feed the current population of the Earth we need lots of hydrocarbons for insecticides lots of hydrocarbons for uh weed control and lots of hydrocarbons for fertilizer primarily nitrogen fixation and we don't have good substitutes for those even the plants that already know how to fix nitrogen like alphaalpha we gooing the hell out of with petroleum based fertilizers and so I think it's irresponsibly unconservative not to slow down on the use of the hydrocarbons and the right way to do that is to just Gear Up massively and I think it's a very legitimate kind of stimulus I don't see way we all can't agree on it and uh I mean who's against using the with a lot of clean energy and so forth well there still are questions aren't there about being able to store the sun's battery this the sun's power in a battery wow it's night time well of course there are problems of time shifting power if you're going to create it from the Sun of the wind but they are solvable problems if you take the most expensive difficult way which is pumping water uphill and taking it back even that is not technically infeasible given a willingness to commit enough of GDP to it and we may get batteries which are amazingly effective in fact I think we will I think the big lithium battery we do not go to the big lithium battery because lithium is such a light element number three in the periodic the reason we go to lithium is it will take an ungodly number of charges and discharges which is what we have to have from these Battery Systems and lithium is better than that better at that than any other thing we know of so I think all this stuff is in a sense the long-term picture is the best it's ever been because the main technical problem of mankind you know whether it's 9 billion or 12 billion or whatever it's going to be is energy with energy there's no shortage of water as we sit here there sometimes Israel go 6 months using half of half of their water comes from the Mediterranean with enough energy there's never any shortage of water and we are looking at a technical solution to the main problem of mankind which is this energy problem and the cost of it considering our need is not that great and so well I'm getting way away from but you can see at least what I would do and I don't know why everybody doesn't agree with me are you okay with the president's plan though to take some of this money for infrastructure he's got a six-year plan he says $50 billion in the first year which is this year to build Bridges tunnels Light speeed Rail other things like that is that a decent idea too even though it's not your idea generally I'm in favor of needed infrastructure okay but the one that really turns me on is changing the power source for mankind in a really massive way and you see take Burlington Northern in order to carry all this Freight at this much lower cost per ton mile they double decked all the trains means every tunnel had to be raes had Ang we've done all that was a hugely desirable thing for the civilization to do there if there's more of that can be done I think you're going to find that the stuff that really needed over the long pole is pretty massive and is located in the energy sector and I personally want to keep the hydrocarbons I don't want to use up all the hydrocarbons the rest of you may be so smart you think you're sure that man can grow all the crops we need and solve all the problems without the petrochemicals I'm not so sure I think that might be quite difficult at anyway why take the risk it's not that big a deal to do what we ought to do if we didn't if we hadn't got so diverted by going into these miasmas where there were enough crazy people on both sides you couldn't get a rational solution no matter what if we if we deferred some of that stuff and saved our energy for the big one we might have got the big one done one area where you've put your money working MTH is on this front is with byd um which is looking into battery powered cars at this point too how close are we to actually finding solutions that can be rolled out not only across our country but other nations as well I think that solar power is obviously going to get considerably cheaper it's obviously technologically feasible it doesn't matter that much as Freeman Dyson has pointed out if it cost an extra five points of GDP or something now that's two years gross if you get the system working right growth I mean it's it's nothing and so no I think all this stuff is coming I just wish it had come faster with more rationality and I think we've been distracted a lot by people who bleeded about the wrong things and you think I'm not sure somebody as technologically ignorant as Al Gore is entitled to speak on this subject you think there's any hope I think you should have punched your ticket in a few better places before you open your mouth do you think that there's any hope though that we get past the idea where everybody is pushing their own agenda or their own idea and even when you get to energy you've got people who think it's wind or people who think it's solar or people who think it's natural gas or people who think it should be nuclear power well I think we'll end up with more of practically everything you can think of but in the end you have to go solar there's not an endless supply of uranium nor is it totally desirable every little crazy Hamlet have its own nuclear capability there's a lot to be said for going directly to the to the Sun and thank God it's as copious and as reliable as it is and as a source I mean think of how lucky we were people in Easter Island didn't have any son to solve their problems they basically perished and they used up their resources this is one where our pracy leaves us with a wonderful option that's never going to run out for us this is a huge benefit and the young people in the room ought to be rejoicing that the main technical problem of their civilization is basically solved I don't mean it isn't a lot of work to work out the details but we know how to create high voltage transmission lines with transmission losses of less than 10% we know how to how to do all this stuff and the time shifting of power we know how to do expensively and I think we're about to figure out how to do it more cheaply but if we had to do it expensively it's doable there's nothing that's impossible and that is a blessing to all you people with a with a long run ahead of you Charlie what's it what's it been is it 69 years since you started here on this campus well I left here 70 years ago so you left here 70 years ago it came at 69 years ago yes and I must say that and I must say that I'm very impressed with this campus and I'm very impressed with I like the culture as I found it then and I think that the successors of the people who were then here have made it better and they created all this hugely huge success while the civilization 60 mies away was sinking into a swamp and of difficulty not its fault by the way I think that was just the Fate but uh Michigan is just amazing you go into to the University of Hospital of Michigan and somebody makes a mistake nurse doctor anything there's nobody trying to avoid blame for the mistake they come to the patient and say gee you came in for a simple procedure and we screwed up and you got a pretty bad result and we're terribly sorry and we want to make amends you know what percentage of the hospitals in the United States handle their malpractice responsibilities the way the University of Michigan hospital does it's a tiny person I'm chairman of a big hospital in my Hospital the lab the insurer for the doctor and the insurer of the hospital are trying to blame the other one in Michigan they just admit they screwed up and they first thing they want to do is make a fair adjustment with the patient and then thereafter they look as to how to prevent the next one without a lot of recommendation Now isn't that wonderful system who wouldn't be proud of being part of a culture like that which is not the standard culture of the world the culture of the University of Michigan University hospital so there's a lot that's good here and so I feel very good about coming back particularly after I've just visited Wall Street or some other place but just different you know it's it's hard to tell stories of Wall Street that sound like my story about the University of Michigan hospital they value a different thing there they're more interested in financial gain yeah I'd like to open this up a little bit and get some questions from some of you as well and I have seen a few hands that have already gone up I see one right here I know we have some microphones in the room so if you'll just wait for one second and right here gentleman in the green shirt if you just raise your hand Charlie a lot of the problems that we've been discussing so far um from Wall Street to um these bigger long-term energy initiatives and politics even are rooted in the fact that our country set up on a shortterm incentive system managers are always looking at what the earnings are going to be next quarter at the top of companies politicians are always looking at what the next political point is going to score and then setting programs to develop well past their term in office how do you propose to get past that and to shift our system from these short-term incentives and planning to a more long-term perspective not just in our Focus but in how we act as well of course of course we have a terrible problem with this these very short-term incentives and if you combine short-term incentives with very little moral reticence of course you have a problem and it's hard to fix human systems without fixing human incentives so you're absolutely right to focus on the incentives uh and I think the existing system as it's evolved is quite perverse a system is perverse when good people go bad because of the way the system is structured if you run a big chain of stores and you make it easy to steal by your own sloppiness you will cause a lot of good people to go bad you will have created an irresponsible system and a system with these irresponsible incentives of course is geared to cause trouble and you point out that it does and has and uh no if I were I would change the whole system but nobody's going to do it Monger style and you people young people are going to have to live it the way it is and attack it piece by piece but you were right that is a that is a very serious problem both for the politicians and for the executives and everything else I don't think it is required because the rest of the world cares terribly about the next quarter's earnings Berker doesn't care so it isn't everybody that cares now you can say we carefully structured our system and our lives so that we didn't have to be under crazy incentives I do not trust myself well enough and I behave better than most to have a lot of perverse incentives on myself to do bad things much better to set yourself up so that the Temptations are low and so yes we should structure the system differently I don't think it works at all to pay the directors a lot of money and write a big long thing like s sarban Oxley the more you pay the directors the more they'll pay the CEO the ordinary rules of social psychology require that result and at Burkshire UK directors nothing practically nothing right because we don't like the culture so it's our quiet form of rebellion we say we've examined your procedures and everybody's out of Step but Charlie it's like the old story about the man who's out in the freeway and the wife looks and she's oh my God and she calls him on the cell phone and she says oh it's terrible there's a car going the wrong way on the freeway and the guy answers a car he says there are thousands of them well anyway everybody's on a step at Charlie and but I think we should change all these incentives but I don't think the nostrums that we're using are going to change things the idea enough to put in your eye the idea that you are not near Wall Street berkshire's offices are not near Wall Street does that make a difference is it easier to operate to on your own manner if you're not as near your competitors well we like to think that being middle western boys we had a better culture but that may be a conceit uh I do think if you get in a crazy place with a lot of competition and a lot of perverse incentives it's hard to keep your own sanity my father used to tell a story on himself which was a very good story that I never forgotten he was a graduate of the Harvard Law School and practicing law in Nebraska and he went up to shoot pheasants in South Dakota and everybody he was with was signing up as a South Dakota resident to save $5 on the hunting license but the crowd everybody was doing it and it was $5 a lot of money back then and he said he almost signed the damn thing and they said my God this is some kind of perjury and I've practicing lawyer and he stopped himself but he came close so when the culture starts to go wrong we're all susceptible to be dragged along and therefore it's a very good habit in life to develop what Kipling you know to keep your head when all about you were losing theirs it's not I've been doing it all my life everybody's wrong but Charlie it's caused me some trouble but it's also created a lot of huge advantage and it's not that bad averaged out and the trouble you avoid think of the people that went along with Enron and committed suicide and got disgraced and it just it I think that this whole business of if you avoid it yourself you try and seek out the right places to work you're very unlikely to go south and what's important in life if you work in the University of Michigan hospital you know that's likely to work you don't have to go all the way to the slums of India helping Mother Teresa you know you had a more convenient place right here where there's not a lot of crazy temptation but if you go to a place where everybody is Stark raving mad and pushing and crazy and it's very hard to not get sucked along as my father was almost sucked along into signing a some kind of perjured application for a hunting license in South Dakota we can all drift into that stuff but we don't watch it we I think I have seen two College presidents in my life go down from too much laxity in the expense accounts I've seen quite a few ministers go down from various Miss gry and we're all subject to this stuff it's easy to drift in the wrong direction and I have a rule in life which is adopted from going down a river with big whirl pools and there's a big whirl pool you don't want to come within 20 ft and just make sure you can barely miss it you want to go around by 500 yards or something and so I think this stuff where the culture is crazy you don't have to enter and if you find you've accidentally entered you can leave you know and but even better than that if you're shrewd you can see where the culture is not going to tempt you where you're working with people you admire and the values are sound and it's fun to do and by and large you can worm your in way into that place and I will give you a tip as to how to do that and the first decent matter I brought in as a piece of lawyer as piece of legal work as a young lawyer was for a guy who's been fired by a bunch of venture capitalists and I got him rehired and we bought the company and it was a huge success and I never heard from them you know they were glad to do it but they were busy and so one day I said well I'm being too damn shy and I just about to enter the freeway and passed and I made a uturn I went back and I walked in and I said well I really like working for you guys and just the kind of people I like to be associated with and I like to work for and sure enough they had another big problem that I could solve and but if you if you figure out the people you really want to be with and work for and you tell them so and why it is likely to cause a favorable result anyway do we have other questions as well I see a hand right here the for those sitting in the back room the question is what happen to the accounting profession and what can be done to try and fix it well partly they sold out partly legitimately fear the liabilities that would come if they had to make more difficult judgments it's a very difficult problem you know it could be done by changing laws and rules very easily and it would cause an enormous up evil In America which would be hugely to the plus 99% of the troubles that threaten our civilization come from too optimistic accounting and yet these damn accountants with their Desir foric medical Purity want to devote exactly as much attention to accounting that's too pessimistic as they devote to accounting that's too optimistic which is crazy 90 way more than 99% of the problem is from being too optimistic and therefore we should have a system where the accounting is way more conservative and we're an account at the SEC when Skilling came in with this crazy scheme for Mark to Market accounting I don't call it Mark to Market I call it Mark to myth and that accounting was blessed by an accounting firm which perished and deserved to and so but that's another subject that's something I'm I'll be 87 years old in January you know if I make it and you're going to have to fix the accounting I'm like Moses I'm pointing the way and you guys yeah you guys have to do the fixing yeah I see a question right here there's a microphone right behind you much easier um given that you think the system is still rapidly bro uh rather broken your outlook for the unemployment is still rather dire and given the last 10 years of returns and what we've seen would you recommend someone who's young to put their limited savings into the market even given the longterm time Horizon well long term I'd rather own Common Stocks I pick than government bonds at the present rates so that's an easy question for me what you should do with your own life depends on your own opportunity cost How likely it is you're going to need the money Suddenly at An Inconvenient time on a lot of other subjects uh generally speaking I would say that if in the last look at what happened in the last years well say the say the 20th century 1900 to 2000 GDP cap hard to measure because what's it worth to have your children live instead of die because of vaccines against epia and so on so I mean but the net increases in living standards and then human options between 1900 and 2000 were simply awesome when you take the big picture view instead of the short picture of view think what came widely distributed Electric Power television and radio the ability to get in your own car and move around where you wanted cheap travel by jet all over the world air conditioning in places that are unendurable in the summer widely distributed information it's just unbelievable what happened in no previous hundred years did anything remotely comparable happen are all those forces gone I don't think the next hundred years is going to do as much because those are such huge achievements given human needs once you got the right temperature and the right you know you're getting into fru when you get into the improvements from that point but do I think there will be more improvements and more options yes do more tragedy big tragedies you know big death rates occasionally I don't think I think the next 100 years going be very interesting for some of you people and but I think it's a good time to be alive I think there's a lot of good that will happen and when you look at this enormous big picture gain in longevity and behavior the liberal Liberty for people in the under class Liber more Liberty for a whole sex half the population it was just incredible what happened so I think to look back on that in a big picture way and be terribly discouraged is to sort of underestimate your species in your civilization I even supposed to the 25% death rate it'll be a big deal if it affects you or your family but apart from that the Black Death was good for the survivors other I think they I don't think it's a time to be at all discouraged yeah I see another question right here and I think we can get the microphone um by the way oh right here's a microphone would you just tell us what year you are maybe which school you're in sure I'm a 2L at the law school uh and my question is you suggested that you're pointing but that it's our problem to solve and I was curious I've read a number of recent editorials that have suggested that our generation my generation is not up to the challenge that we've invested uh and sent our smartest people to Wall Street into law school instead of investing in math and science and I'm just curious if you think my generation Our Generation is up to the challenge well I think your generation will be up to handling a lot of the challenge now more of the people who handle the challenge may look like lelu than look like you in other words the mix may change I think we're getting more Asian contribution to Solutions than we had in my generation but your generation will be up to it and uh the talent that comes along I love to tell a story about Caltech has a Rubik's Cube Contex test and one year a guy won it he asked for three cubes and he juggled them like this and as they went by in his hands while he was juggling he sobbed all three and people thought that was a hell of an achievement it would be hard to top and the next year Along came a slender young woman and she said give me two Rubik's cubes and she just held them in front of her and looked at them for a long time then she put one on her left hand one on her right and put both hands behind her back and twiddled and took them out soft nobody has stopped that yet so there's a lot of competition in your generation but it's only gone that far if you can handle that much why do we have other questions I see Hands how about right here and again if you can just tell us your year and what school you're in um I'm a BBA sophomore and uh Charlie you have talked about high tides and low tides in the very beginning and we are now in the low tides and the government and the FED have used well their weapons really aggressively so what would prevent us from getting into a station stagnation that uh Japan faced in the last 10 15 years and would it be a good idea to not to hold stocks but to hold more gold or other Commodities and what do you think about that well what I think is I can't follow it there was a little echo or something he was asking about you mentioned the high tide the low tide where are we right now would it be a better idea to jump into equities at this point or something like gold which by the way hit a record high to oh I don't have the slightest interest in Gold I like working on understanding what works and what doesn't in human systems to me that is my that's not optional that's a moral obligation if you're capable of understanding the world you have a moral obligation to become rational and I don't see how you become rational hoarding gold even if it works you're a jerk so I advise you to get concerned with equities uh let me rephrase the first part of my question uh would we would the United States follow the path of Japan in the last 10 or 15 years the long term of almost zero economic growth well the answer to that is of course we could it's like the man said about baptism I believe in it because I've seen it done Japan has proved that an advanced Nation can have a long period of utter stasis following a bust now are we going to be like Japan or are we going to do better I think we're going to do better but I don't think if we have trouble I don't think we'll handle it as well as Japan is a very courteous submissive amazing place if they were going to have a long period of stasis you could hardly find people who would handle it better if you selected over the whole earth they have the right behavioral ethos to here I think we'd have a lot more tension if we had a long period of no growth at all and so I hope we aren't in for that but if we did have it in the big scheme of things is that a tragedy at the current living standards of the United States would it be a tragedy if we held level for a considerable period by the scale of the big time scale of human tragedy that is not way worse threatens but yes could that happen of course it could happen it did happen and remember Japan paid every fiscal trick known to man and every Keynesian trick known to man and when it was all a sudden they got 20 years of stasis now it's a different place different system we're different it doesn't mean you can but is it conceivable of course it's conceivable it's conceivable because it happened all right other questions uh how about we go here and then here right here in the front row first uh I'm not currently a student but I am a Burkshire shareholder and West Coast shareholder so uh it's it's nice having you here in Michigan it's always great to be out in Pasadena seeing you as all in mean the groupies have followed me here I thought I was kind of an old group uh my question as it relates to the economy and as it relates to some of the issues uh longer term issues we obviously have significant pension liabilities and significant healthc care liabilities but more so to the pension liabilities how do we go about trying to fix them and how given how underfunded a lot of municipalities are how do we even come close well of course it's a terrible problem and of course there was some deep moral and Behavioral failure those plants were abused by various man manipulative tricks where people got very unfairly High pensions and of course that's what human nature does you make it easy to steal people will steal and that's what it amounts to when somebody gets $600,000 a year from some poor Community full of uh latinos with low employment a man in those circumstances is stealing that's doesn't we don't call it stealing because he hires lawyers but he's he's stealing and of course that's a big problem and it happens all over and of course the unfunded liabilities they talk about our national debt as a percentage GDP the unfunded liabilities of the United States for medical care and pensions in terms of present value are far greater than the national debt that we report so if we get into an a Japan type situation with no growth we're in for a hell of a lot of social tensions isn't that wonderful for you young people you get all these interesting problems to live through and but of course it's a serious problem I personally would not touch Social Security in terms of its present promises I think net that's been a credit to our civilization and it's worked with low administrative cross and low fraud and it's given a lot of people their main dignity and old age and I think as long as we're as rich as we are we should find a way to afford it and I don't think the world comes to an end if we end up supporting Social Security promises with a value added tax personally I don't expect to live to see ev valuated value added tax because I'm so old but I think it's a very desirable able tax it subsidizes exports which of course we need with a big T balance of payments deficit and that's the one legitimate way that's permissible to subsidize exports is to have a value out of tax which exempts export that's what everybody else has we have a disadvantage now in terms of trade because of not having a value added tax it's a regressive tax though and you said you wouldn't mind if your taxes were higher well I don't know how regressive it is if you if you if you use more of if you're a low-income person you probably use more of your earnings you're forced to spend more of your earnings to take care of yourself no but there can be exemptions and credits and so forth or maybe the maybe the low-income people pay only the value added tax and the other people pay a value added tax plus an income tax but there's some different way of organizing the tax system and so I don't think in a modern democratic civilization that it's feasible to do a lot to tweak Social Security we the hell down I don't think anybody's going to stand for it and I don't think it would be a good idea would you be okay if they slowly if they if they gradually and slowly raise the retirement age would that be okay well reasonable Minds could disagree I personally wouldn't do it I would leave the basic Social Security alone and deal with all the rest of the things we got so much trouble in all the rest and it's so large and the unfunded promises are so great and there's so much misbehavior that to take on the political ill will from tinkering for some guy was only got three years to live anyway and take away $30 a month or I just don't want to do it's to me it's a stupid allocation of Goodwill and time and no I would save my effort for what really matters and uh and of course we're going to have to tackle the unfunded promises and I think we're going to have to change our system of Taxation uh basically you know I live through the period of 90% income taxes and the Crooked lying tax shelter salesman and all I hated it we do not want that back I think a 50% tax if a guy's a busy surgeon is plenty for the man to pay I don't care how much he's making so I think the existing income tax rates are pretty close to right when you put the state and federal taxes together on earn income I do think that we went way too far in favoring people who manage hedge funds I mean the idea and by the way they don't just get a 15% tax they play tricks with foreign they have all kind the tax of our successful oneism class is really trivial and I don't see any reason why it should be tolerated I think it's unfair and the man who said are you disatisfied to have all these Math and Science people going into derivative trading of course I'm disappointed I have a letter I just got this week the guy has all these Advanced degrees in computer science and math and so forth he works for a hedge fund and he has 300 million long and 300 million short he's allowed to deviate but between size of the total long and short position by no more than 2% I think he has to have 300 stocks on each side or something and he's using computer algorithms sort of devised by codebreaking skills and for six years he has made money without knowing a damn thing about the companies or Rel any to what happens in capitalism and but he's a brilliant man and he knows he's in a sick lousy system so wres me this letter he says I'm in the sick lousy system and this what I do say what I want you to know I only bought one stock and it's byd and I'm glad You' bought it too he said isn't it wonderful what we're doing together well that's my kind of a fruit cake if he's at least he regrets what he's doing which he should and but is it bad for our civilization to have this particular man doing that and he's capable of figuring out which company is likely to contribute to the civilization and handling re real high-tech problems like byd of course it's a huge misuse of talent and if I were running the world I would pass laws that would get all those people either selling apples on the street or doing something more productive we had another question right here I told you uh the microphone is over here right now sorry thanks I think it's turned off first I'd like to say thank you for coming here my name is Anita and I'm a secondy year MBA student I'm a student I'm part of a student run social Venture fund and I'm interested to hear your thoughts on impact investing so a few of your colleagues are part of the giving challenge the giving pledge excuse me which is aiming to solve societal problems through charity on the other hand there are those who are investing in these issues of energy education and Health Care through Investments That expect a financial and a social return what are your thoughts on these type of investment activities well that hasn't been my particular pathway generally speaking I believe Costco does more for civilization than the Rockefeller Foundation you know I think it's a better it's a better place so you get a bunch of very intelligent people sitting around trying to do good I immediately get kind of suspicious and squirm in my seat so that may be a Prejudice of mine which isn't quite fair but I've seen so much good in the world by people who really created better systems and I've seen so much Folly and stupidity on the part of our major philanthropic groups including the World Bank that I really have more confidence in building up the more capitalistic Ventures like Costco that may be just a crotchet of mine and you may be right that your way is better on the other hand if I'm right and you're as promising as I think you are I think you'll end up like me uh other questions I see in the very back of the room right here sorry I'm keeping the microphone people running okay that's fair enough questiones ofs do you think we've entered just a series now because of technology that all we're going to have bubbles in big bu I think you can count on more booms and Buss over your remaining lifetime how big and with what cyclicality I can't tell you I can tell you the best way of coping which is just to put your head down and behave creditably every day and I will say something about life generally I was very lucky and I had an ancestor that I never met my mother's grandfather was a Pioneer he came out to Iowa and he lived in a s sod house with his young wife that's a cave through two Winters and he literally was a Pioneer from nothing and he rose finally to where he controlled the leading Bank in the town and was a very reputable Citizen and a very charitable man he joined Andrew Carnegie and gave the town library to Alona my grandfather made him do it my grand great grandmother he never would have done it by himself and he made him put his giant Tarpon in the library as part of the gift he so always amused me to go by that library and see this giant Tarpon so eccentrics come naturally in my family but any rate having rested the success from hardship and danger and trouble and he was a captain in the Blackhawk Wars I mean he was literally so and part of this he had this Theory looking back at his long life was this unusual success and he owned a bunch of farms at the end that he leased the Germans well you couldn't lose money leasing a farm to a German in Iowa naturally was successful and but what he said over and over again to his grandchildren including my mother was the real opportunities that come to you are few it's a very fortunate life that is just bathed an opportunity all the way most people just get a few times when they can make a huge difference by seizing a huge activity and he said when you find one my dear grandchildren and you can clearly recognize it he says sees it boldly and don't do it small and my mother who wasn't interested in finance but liked to talk the family she like to transmit the family quirks but of course this guy was my soulmate the great-grandfather I never knew and of course I totally adopted his point of view and I must say it's worked wonderfully and so I quit claim my great-grandfather Ingam rule to you assume that your really major opportunities in life are going to be few and when you get a laaloa for God's sakes don't hang by like a Tim little rabbit don't hang back they aren't that many of the really big good ones if you take the whole history of birks your hathway if you take out the 20 best transactions our record is a joke well 20 best transactions over 40 some years that's one every two years and we work at it all the time life is not just bathing you in unlimited opportunities even if you work at being able to find them and seas them I saw another hand right herey well of course you're talking about a really important phenomenon the rise of Asia is an awesome force and it's a title force and if you're going to have free trade which I think we have to have with a fellow nuclear power and the complex world we live in you're talking about something that is very hard on a manufacturing place like Michigan if you think about what happened to Michigan think about the automobil business of Hyundai when they created it in Korea for the first many years of Hyundai's manufacturing and competition with Michigan the workers who were all Korean and for some weird reason were better on average than American workers whether it's the Confucian ethos or their poverty or whatever it was these were very reliable workers and the terms of their engagement was as follows come into our Factory you work 84 hours a week there is no overtime you just keep doing it and doing it and doing it and doing it well of course that's going to be hard and a guy that's manufacturing a competitive product and just when the Koreans start to get rich a billion 300 million Chinese and I don't know how many there are in Vietnam tens of Millions oh and they're all doing it this is a tital force it's seriously disruptive I don't see what we do about it in terms of changing the educational system I live in California in objective standards it's better than ever but the faces are way more Asian in percentage than I see here Berkeley engineering school I think is more than 75 repr Asian I mean it is just amazing how California is rising on the backs of these talented Asians I am chairman of a big hospital a bad location it's a losing hand I play the hand on purpose because I played so many winning hands I thought I owed it to wear one hair I owed it a civilization to carry one hair shirt and keep it on no matter how much it hurt and I must say it's worked perfectly but Good Samaritan Hospital is still standing and still reputable and there's much that's good at it but I look down the faces that are doing it and the guy who's doing all the programming of the gamma knife which is very complicated physics he's a PhD in physics from China and there's Dr Ho from Harvard and Dr Chung it's just boomy boom Andy boom and I've got a sea of Asian faces so California is not going down these Asian faces are going to help us stem the tide in other words so and I see a lot of Asian faces in this room and so don't you have Toyota here in Michigan and you're getting some of it too but not like California but I just think you're in for a rapid change of the world where the Asians get way more important and we become less important and I somebody says we don't you worry about the competition for the mongers and I said no if the mongers can't handle the Asian competition let them lose I don't feel I'm here in life to guarantee the MERS win against the Asians I like the meritocracy it's particularly when there's so much achievement you know if you when I was young everybody that shoved a camera in my face it was German well this morning they were shoving cameras in my face they're all Japanese they earned the right to shove those cameras in my face wasn't easy to displace those Germans it wasn't like the Germans weren't good at it so I welcome all this stuff but I do think you're going to have to adjust to a world where this title force in manufacturing with this cheap labor and this vast easy adaptability to modern capitalism that exists in Asia just keeps Rising as a title of force and I think you have to get used to it and wherever you turn around you're going to find it looks more like the Good Samaritan Hospital where more of the faces that are rising are Asians I welcome it I know how much better my Hospital works with all these Asian faces and what the hell do I care the guy's name is Wilson or Chung you know I like all these Asians and when I go down to that hospital 8:30 I'll sometimes go down to the guy who's programming the gamma knife for the next day my Chinese physicist there he is 8:30 in the evening he comes in early in the morning and a gamma knife is a very hard thing to correctly Pro program so I'm all for this change but I do think all of us face it and we just better get used to it and I think part of enjoying life is to just see it like it is and face it like it is and adapt to the reality as it is whether you like it or not and the reality as it is that Michigan is not going to dominate the world in Autos the way it once did the Baton has been passed Athens is never again going to be the lead leader of all civilization nor is Rome nor is London the baton passes the iron rule of life in an historical sense is that if you're lucky enough to be in a leadership position eventually you have to pass the Baton that's the rule of human systems biologically we all have to die and as successful systems we eventually have to pass the Baton those are the rules and if you don't like them you're on the wrong Earth yeah could I ask someone what time it is because I didn't wear a watch okay we have more time for questions so why don't we go ahead I have seen some more hands up and I see people up here and I'm sorry I've been ignoring we always excuse the people who can't stand anymore or have pressing other engagements and then we leave the groupies and you know I'd still be in Oma answering questions if I let them run my timetable I see question up here from the upper deck yeah my name's John I'm a faculty member at the law school and also a shareholder and um you speculated that Japan might be better to weather long periods of stagnation more equably than we would socially in the United States sure and I wonder do you think we're starting to see some of the social fracturing in this country I'm thinking sure of course Party Movement is an anger that's unusual or have you seen this a million times over Europe no of course we're seeing more trouble there's a guy at Harvard that is there's a Harvard Professor he's famous he's so famous I can't remember his name but who has study this and he says these homogeneous societies like Japan of course it's easier to run a mogeneous society than a one with a whole bunch of people with different religions different attitudes different cultures different backgrounds and so forth so the nature of our situation means that handling politics in a society like ours and handling reverses is going to be more difficult than it was for Japan I think that's obvious and I think what we're already seeing is just part of it and you know in France they strike against the Atomic plants and it's it's there are all kinds of crazy cultures of resentment and I think the that is another problem you're going to have to adjust to that if we are in for some it looks more like economic stasis they going to be a lot more social tension how could it be otherwise take a rich family in a prosperous business that ever grows they may hate each other but they get along the ever growing tide of money submerges the natural antagonisms of The Sibling rivalries now let the business start having reverses I've seen this a thousand times and the family business the hatreds and troubles that come when the Great Fountain of ever Rising prosperity for all goes in reverse are simply awesome of course something like that tends to happen in the body politic if things get tough but it gives you one more interesting thing to think about yeah well I think you've got it exactly wrong I think those bailouts were absolutely required to save your civilization and to give you the best chances of solving the housing and student loan and other problems I think that was absolutely required and we were lucky that both administrations were as wise and bold as they were so I you shouldn't resent that you should thank God they did it and I think if you understand the system and the dangers it was in you would recognize that's the least of that was your blessing what would have happened potentially we don't know what it could have been awful I don't even want to think about how awful it could have been and it is not completely crazy D the Germans were pretty civilized people I always point out that Albert Einstein got a highly subsidized primary school education in Germany from the Catholic church this whole primary institution of little Albert Einstein was subsidized by the Catholic church that is a pretty civilized place and we ended up with Adolf Hitler get the economy with enough misery get enough disruption destroy the currency God knows what happens so I think when you got troubles like that you shouldn't be bitching about a little bailout you should have been thinking it should have been bigger I mean those people were working for you and they were in both parties they were a credit to both of us that all that happened and now if you talk about bailouts for everybody else there comes a place if you just start bailing out all the individuals instead telling to adapt that the culture dies I don't know where it is but a certain place you got to say to the people suck it in and cope buddy suck it in and cope and in the 30s with my family as these families would move into the same house and they'd wear the same clothes for a while and they you know just they coped and that was part of how the civilization got through we do not want a civilization where with every hardship we go to the government and say give me some money the world's not what I expected so I think there's danger and just shoveling out money too much on the people who say my life is a little harder than it used to be of course it's a little harder than it used to be this is normal worldly life and I think it is very dangerous to assume that what people did to say the whole banking system was wrong and that is clearly right to shovel out a lot of money to people who are now short of money I think we come to a place where we where everybody has to suck it in and cope yeah uh other questions do I see Hands how about right here is it a Ponzi scheme when Holland which 30% of which is below sea level creates a gigantic public work that creates 30% of their arable land and supports the whole civilization are people going to think less of Holland as a credit when they're borrowing money to prevent the North Sea from inundating Holland I don't think so I think if we're doing if we're just shoveling the money at people will think we're a bunch of jerks like Greece and that is dangerous because partly you need credibility in the world but if we're issuing a lot of IUS to do something any fool can see is highly desirable to do and we're doing it through competent and honorable people I think we're way safer I think how you're spending the money matters greatly I think reputation matters greatly and I'm quite confident the United States reputation would stand a major use of credit to do something everybody recognized as has a wise course of action competently done and uh so I think the danger is shoveling out money to people who say they need it without limit and the other thing is safe and the other thing will solve hugely important problems I don't know why everybody doesn't think the way I do to me it's obvious I see a question in the back right here uh my name is Joe I'm a Ross MBA and I'm doing a due degree at the UN Michigan medical school so I like to I'd be glad to know what you think about the future direction of the health care sector in the United States and in some Asian countries like China than you well of course China is spending a tiny percentage of GDP on health care and we're spending a high percentage in an aging affluent POS civilization where GDP Rises at two or 3% per year per capita I don't think it matters at all if we spend 20% of GDP on health care I don't think it matters that much if 20% of the health care is no damn good that we're buying you know like botox for women for whom intervention is hopeless and so Healthcare is a whole different can of worms but I don't think it's our main problem at all and I think it is quite natural in our particular civilization to uh have a fair amount spend on health care if you live to be as old as I am I'm surrounded by people who their joints hurt so much the pain is unendurable they're like the 10 Woodman one hip one hip one knee one knee you know they got a big infection 30 days in the hospital this is expensive and but if that's the way the civilization wants to spend the money I don't consider it a crazy choice and so I don't I am not we do have a crazy system for health care and they're perverse incentives there's many a hospital in this country where the doctors are fishing the people out of nursing homes and bringing them into the hospital so they can walk by the bed and build a government $45 a day and if they' got 10 patients in the hospital that's $450 and the fact that they're using up resources which patients which could be improved by their services aren't able to get in my hospital I have a little list and so does the hospital and those jerks are on their way out and they should be and so there's a lot of abuse in health care and one of the ways you fix it is to is so the people who have the power they exercise it to prevent the abuse a lot of places you have live and get live in a hospital just nobody really wants to criticize anybody that's a huge mistake it's a huge mistake in our leading academic hospitals I'm sure this isn't happening in Michigan but I have a friend who's daughter is had of infectious diseases in something in some medical school Hospital great Hospital and of course the doctors there are fishing the people out of the nursing homes and bringing them in so they can walk by the beds and Bill and they're bringing in these terrible infections and that takes a lot of treatment and a lot of walks by the bed and so on and so on and of course the parents of this particular doctor recogniz that she's sort of risking her life going through medical school because of the abuse of the system by some of the doctors in a hospital where no nobody is stopping the abuse you know it's like Burke said for evil to Triumph in the world all that is necessary is the good men do nothing and but all over America some people are intervening to stop some of these abuses and you have to identify them you have to rational and you have to be willing to take the ill will I have a friend this is another wonderful story on human nature chief of the medical staff southern California hospital and a bunch of non-board certified anesthesiologist who came out of I forget the sub branch of medicine but it's not it's not Chiropractic but it's anyway they got in control the anesthesia Department of the hospital and he could see that they had created three totally unnecessary deaths and covered up every single one and he knew he was just going to ruin his life so he got rid of them all changed the whole system he ruined families he ruined incomes he cleaned house and he told me the story 20 years later and I said what happened and he said to this day none of the people I cleaned out and none of their friends has ever spoken to me he was willing to take all that ill will to do the Lord's work and do it right and you can say why did he wait for the third death well maybe he thought he needed that much horror to accomplish the fix but all over America there are stories like that's a good story about human nature that's a story about wisdom and virtue triumphing and of course they don't always win even though both fight the ball sometimes wins I'd like to give one more chance if there's anybody up top who wanted to ask a question because I realize I haven't looked up there all that often is there anyone upstairs who wants a question if not I do see some hands I thought down here all right you guys lose uh how about right back here in the back hi I'm a seconde student at the law school so thanks for the lights and I'd like to follow up a question by a two uh sitting over there was posed earlier um I have also sometimes felt oh why did I go to law school why didn't I study science you know had that liberal arts regret uh but in a more positive sense uh since we're still young and optimistic I think we have questions about what useful role we can play as well and so I'm wondering uh the legal profession as a whole uh specifically directed to kind of our group of soon to be uh new attorneys any ideas for how to change the legal profession for the better to avoid crises like the recent one or just to make it a better system well the legal profession has always been a way up for people who know they don't want to gr grind through the problem of science for six years or who don't like the sight of blood and so welcome to the club makes one to no one and it's always been a ression that allowed a certain amount of flexibility you can start in the legal profession you can go in a lot of different kinds of activity within it and you can leave the legal profession and go into something else and that's what's going to happen to your class too the legal profession has been bifurcated in America in a very peculiar way now the ordinary little lawyer in a small town makees $60,000 a year doing divorces and Collections and minor wills and so forth It's a pretty demanding difficult way to make a living and the lawyers and the really big powerful firms were willing to work 70 or 80 or hours a week for nine years and punch their ticket and rise to become partners and then when you get to be a partner you get to keep doing it that's your reward you get to keep doing it and those people make a lot of money are there abuses in a culture that gets that money mad about billing hours of course there are I see bankruptcy cases that remind me of a bunch of hyenas going at a carcass on the plains of Africa it doesn't look to me like a learned profession at all it looks to me like hyenas at work and so there's lots wrong with legal profession but there's lots right with it and there's enormous opportunities within it to live a very constructive life and to make a good living in a reputable fashion and to have various options to leave if that's what you desire to do but of course there are abuses I do not see a lot of abuses in the Judiciary I think we have an amazingly clean judiciary in America and it's a blessing for us all and every judge I ever knew behave better on the bench than he did before and they were usually pretty good people before and so I think their legal system is really a pretty reputable system I do think when you get into the part of the legal profession that's most closely intertwined with Wall Street that you did get excesses and that were unpleasant and you know Enron did not lack for enabling attorneys and nor will a future Enron lack for enabling attorneys and uh but that's always been true too but net I think it's a very interesting career I started in it myself I was born into it my father and grandfather were both in my grandfather was the only federal judge in his City for 37 years and boy was that an efficient system he was the only judge and people knew what judge Munger would put up with and what he wouldn't just all kinds of things were not even presented to the court because they knew the answer already and they didn't want to make points for being a horse's ass in front a judge moner because he's going to be there next year too so and I now in Los Ang you spend a wheel and if you're lucky if you have a wrong case you'll get some nut case who sympathizes with you in Lincoln Nebraska you had no such chance if you wanted to go to the federal court he was Judge Monger you were in the wrong world so I like that system and I like I always like the systems where really good people get a lot of power and exercise at well I like it when one guy makes all the orders for maintenance and domestic relation cases he gets very good at it and the lawyers know what they can't get by with it's very efficient I hate a world where everybody's just spending all these hours and hoping to God they get an ignorant judge or an ignorant jury I think the idea of trying these big patent cases before juries is obscene it's it's a dishonor to the civilization and it's it's it's it's not a legitimate human activity basically you do you don't not want a system where people form shop hoping to get an ignorant decider you want a system that's different and so you a lot of things to fix if you get out into the legal profession if you even if you don't fix them you can have a highly creditable life St think Abe Lincoln was a lawyer John Adams was a lawyer there's a lot of good models how many cases AB Lincoln had personally handled writing the pleadings and 5,000 he was a active practicing lawyer Charlie how would your career have been different if you went to business school instead of law school well we don't get to live life on Al alternate career paths at the same time and obviously if I drifted into my present line of work at a younger age I'd have more money now but so what you know I always say there's they'll say when I die how much did Charlie leave and the answer will be I believe he left it all in the end you're piling it up is not such a big deal when you have to part with it in the end and so uh I do not regret generally I don't think regret is a good it's like envy and resentment a lot of other things it's just it's to be generally I don't have a lot of regrets that I could have done it differently or that I had a failed marriage uh I don't second guess the past I try and learn from the past and making decisions of the future but I don't Nash my teeth I expect that any human being is going to make a lot of dumb decisions and I've certainly made a lot of dumb decisions in my life but not as many as most people uh we have time for one more question how about right back here in the back hi thanks for being here I'm a dual Master students between the business school and school of natural resources and uh I have a question regarding rationality and behavior you've talked a lot about it and also how systems are set up to encourage perverse uh well with perverse incentives and if you could design a system how would you uh take into consideration human nature uh so that it enables rationality well I'm glad you saved that easy question for the last Plato failed at this question you know I mean why can't some man well along in his 87th year describe a perfect civilization it's a very interesting problem that our founders coped with and just how Democratic you wanted the system my favorite political system in terms of being adapted to its particular circumstances successfully is Singapore I think Singapore is the single most successful governmental system that exists in the world they've taken a small swamp from no to a very creditable place they're doing the Lord's work in a number of very important ways I'm sorry they're bringing in derivative trading Even Heaven makes mistakes but I that is doesn't mean I want Singapore tomorrow in the United States but uh I think the Singapore's habit of stepping hard on things that will grow like cancer is the correct way to govern and in America we tend to wait till they're unfixable and then we want to fix them how well are you going to if you want to attack a problem while it's solvable and wait till it's unfixable you can argue that you're so damn foolish that you deserve the problem and we have a system that is pretty irresponsible in many ways and I think our Central cities get to be the hardest ones to govern on average and I think that's very awkward and finally they reach a Tipping Point where you get this the better people leave and then I don't think you can solve the problem any normal way certainly not for a civilization as large as previously existed there or if you solve it's 100 years in the future or 50 years in the future or something but no I can't I don't think it's a pure democracy with the I think our system has worked well I should tell the story on myself I come to the University of Michigan I take political science I'm an unusual kid I don't mean I'm unusual looking or unusual dressing or something but I unusually think often that I know better than the professor this is not a social winner and I take political science from a leftist but lovable political science professor and everybody teaches the more people that vote the better the systems will work and having a contrarian streak I'm not so damn sure that Civilization doesn't work better when a lot of people don't vote and so I write a paper it couldn't have been more politically correct I got an A the University of Michigan not only does right in the hospital it handles wise ass kids pretty well and so anyway the I can't if you want to study you take Singapore a terrible malaria problem it's a swamp he drains the swamps he does not care if some little fish dies no he has a drug problem he searches the world over for the right solution to the drug problem he finds it in the United States isn't that an interesting thing imagine somebody in Singapore reading books and deciding the United States was the answer to Singapore's he copied the military's drug bottle policy that anybody in Singapore will pee in a bottle instantly on demand and if they flunk they go immediately to a tough compulsory rehab away went the drug problem just Time After Time After Time he made these winning decisions he wanted the place to be prosperous he figured figed out who he wanted to come in and he made the civilization very user friendly to what he wanted to attract and it worked then it's 70% Chinese and 30% Mal and every Chinese thinks that the Chinese are superior to the males and he thinks that's terribly counterproductive if anybody should ever say so he passes a law you can't say if you're Chinese in Singapore that you think there's any super I ority in the Chinese I think that's a very sensible law for Singapore to have but of course it has some infringement of free speech and but anyway just Time After Time After Time he's done this thing his approach to marriage was interesting the average very successful man in the Asian culture marries an exceptionally good-looking woman who's somewhat dumber than he is this is the system well this guy was so smart that he was a second rank school student in his high school and the student that was on10th of a percentage Point hire was female so he didn't follow the Asian rule of hiring the beautiful woman with the big boobs is a little dumber than you are he married this one that was a tenth of a point higher and who is now the prime minister of Singapore their son I me this is a very unusually successful man it's a very usually successful history so while I can't answer your question if you will make a study of the life and work of Lewan Yu you will find one of the most interesting and instructive political stories written in the history of mankind this is better than Athens better than this is this is an unbelievable history and you will learn a lot that will be useful in your old life so my answer to you is don't ask Charlie Munger study the life and work of leuan you're you're going to be flabbergasted all right on that note uh I'd like to first of all thank president Coleman for inviting us here uh and having all of us Charlie like to thank you for your time and answering all these questions and of course everyone here today for staying with us uh we really appreciate all of your time and uh that's it thank you

Enregistrements liés

20171 h 10 min

Une conversation avec Charlie Munger (Michigan Ross, 2017)

Une seconde conversation au long cours organisée par la Ross School of Business de l'université du Michigan en 2017 — un événement réservé aux anciens élèves, enregistré à Los Angeles, où vivait Munger. À 93 ans, il parle de la qualité des entreprises, de l'allocation du capital, du genre d'erreurs qui ruinent les gens et de la manière d'envisager une carrière — couvrant en grande partie le même terrain que la séance de 2011, mais avec six années de recul supplémentaires.

201930 min

Charlie Munger sur l'investissement (CNBC, 2019)

Le vice-président de Berkshire, alors âgé de 95 ans, sur ce qui détermine réellement les rendements d'un investissement sur le long terme — la patience, le tempérament, et une courte liste d'entreprises dignes d'être possédées. Du pur Munger : cinglant sur les fonds indiciels, le culte de l'activité, et la différence entre investir et parier déguisé en finance.

2019 texte seul

Charlie Munger, sans filtre (WSJ / Jason Zweig, 2019)

La transcription éditée d'un entretien-dîner de six heures que Munger a accordé aux journalistes du Wall Street Journal Jason Zweig et Nicole Friedman à son domicile de Los Angeles en 2019, à 95 ans. Foisonnant et sans réserve — sur sa communauté mondiale d'admirateurs « nerds » en quête de progrès personnel, sur ce qu'il se refuse à appeler de l'investissement, sur le regret, la mortalité, et l'art de mener une vie rationnelle.