A Conversation with Charlie Munger and Michigan Ross - 2017

Charlie was born in Omaha Nebraska on January 1, 1924, graduated from Omaha Central High School and 41 attended the University of Michigan for one year and Caltech for one year. I believe also under the auspices of the Air Force he served as a second lieutenant as a meteorologist in the Air Force in World War II he received a Juris Doctor degree magna laude from Harvard Law School without having a bachelor's degree. He practiced law in Los Angeles from 1948 to 65 and during that time helped found an incredibly successful law firm called Munger Tolson Olsen. Since the age of 65 he has been involved in a wide variety of businesses and after 1975 primarily as an officer and director of Berkshire Hathaway Charlie is the vice chairman of Berkshire Hathaway under Warren Buffett and is the president of the newspaper Corporation, of whose public companies he is a director or Berkshire Hathaway The Daily Journal and Costco Wholesale mr.

Munger became a trustee of Good Samaritan Hospital in '79 and served as president from November 1987. He was trustee and chief financial officer of Planned Parenthood Los Angeles from 1967 to 1993 and is the founder and president of the Alfred C Munger Foundation. the author of Poor Charlie's Almanac, which I think is a must read for anyone who wants to get into business, so please welcome Charlie and Scott, thank you John for those kind words and wonderful introduction, first of all I just want to give you welcome everyone. One of the luxuries of this job as Dean of Michigan Ross is the opportunity to travel the world and interact with our alumni, our students, our future students, our community at large, the people make the place and this place is really special because Our people are truly special and that's why I want to thank you all for coming tonight.

I have the privilege and honor of sharing the stage with Charlie, who needs no introduction. To all of you, he has been a true champion and defender of the University of Michigan. for many years if you went to law school you would live and study in the Munger residences, which is one of the most innovative in the country because what he does is take students from different disciplines and brings them together in living learning. environment and that really amplifies the strength of the University of Michigan, where it has 130 programs, 103 of which are in the top ten, that breath of excellence has no equal in the country, except for one school here on the west coast, so It's an honor to have it. here tonight and on behalf of the entire University, thank you very much for everything you have done, yes please, so Charlie, just as I was on the flight this morning, I was thinking and preparing for our

conversation

tonight. and as I was going through my notes I realized that we share an absolute admiration for a historical figure in Ben Franklin and Ben once quoted that there are two things you can do in life: you can write something worth reading or you can do something worth writing about and you've done both, oh, but not like Franklin, so a couple of hours ago I went on Amazon Books and typed Charlie Munger in the search field and over a hundred books have been written.

Charlie and my favorite title was Charlie Munger's Towel, which was quite interesting, so what I thought we would do tonight for our

conversation

is explore your life and many of the moments in your life that have shaped who you are. . think and what you've been able to accomplish and I'll ask a series of questions and at some point I hope we'll have time to open it up and ask some of the questions that you all are interested in as well. Up until now it was two for two on Bitcoin, so that gives you an idea of ​​what's on people's minds, but I'd like to go back to your early childhood in Omaha, Nebraska, so did you grow up in Omaha and what are some of the moments. on your experience in Omaha that you really consider memorable and that shaped you and who you are today and how you think, can you talk a little bit about growing up in Omaha?

Well, yeah, I really liked Omaha, it was a size that I knew. many people, no matter what they did, were not lost and it was a great metropolis and I was very lucky in my nature, my parents, my parents, friends and I was lucky in the public schools that I attended, they were quite remarkable by the standards of the time and of course most of my upbringing was in the Great Depression, but that means that I am one of the few people still alive who deeply remembers the Great Depression and that has been very helpful to me, it was so extreme that people like you have no idea what the hell it was, no one really had any money, the rich people didn't have any money, people would come and ask for food at the door and we had a jungle of homeless people not far away. from my grandfather's house and I was banned from walking by a good amount of people who walked by there all the time and I was safer in that hobo jungle in the depths of the 30's when people are practically starving and I'm walking through my own neighborhood now in Los Angeles at night, the world has changed, you would think crime would be less, but crime was pretty low in those days, so anyway I saw that I had a very unusual experience to go through civilization and various phases. including the biggest recession, well I say it's one of the biggest recessions and for 600 years in the English speaking world it was really something and it was very interesting to see and also to see it fixed, it was fixed by the accidental Keynesianism of the world war. ii very interesting and Hitler had solved the Great Depression in Germany through deliberate Keynesianism, but he was doing nothing to stimulate the economy, he wanted revenge on all the people he hated, but he borrowed all this money and created all these weapons in Germany of Hitler in 1939 was the strongest economic power in Europe, but no one else was around, so you wouldn't understand that, as well as me, they hadn't survived.

He could just watch the place gaining ground more and more. and very soon it was solved and of course, that was in those days, there were all kinds of people, most of my family, because they believed in hard money based on gold, without much welfare, and so on, so I they raised. among people who were quite backward by modern standards, but they were backward in a self-sufficient way that I think was useful. I have never regretted not having grown up in a more liberal system. I had a liberal aunt, my mother's cousin, but you. I went and she was the second dean of the University of Chicago and she did her thesis on coal mine emissions and of course she was a staunch leftist.

I would be an extreme leftist who looked at the way the coal miners of yesteryear were. You couldn't be a decent human being without feeling that it was deeply inappropriate to have such great misery and not have it been manipulated for the benefit of the Minoan race and so on, but she sent me all these lefts. Wing Bangs books one every Christmas and I always thought she was a little crazy, which shows that if sometimes a very vivid extreme act, you know, the evidence deceives you, I'm a deeper reality, you have to be on guard against all that .

In fact, in your life, the whole trick of life is to get your own brain to not fool you and I've found that it's just a fun game for life and I can't remember a time when I wasn't doing it. a prodigy or something, but I was a prodigy and I had adult interests and what worked and what didn't work and why and I got to see very eminent people that I loved and revered, we're crazy in some ways and I would say I certainly like dr. Davis, but he's a little naughty in a way and I'm not going to be like that, yeah, so I was very critical and I think that helped me and it also helped me that I kept changing my judgments as I learned that more were coming and More data. and that created lifelong habits that were very, very useful.

Another thing that really helped me is protection from my paternal family. My paternal grandfather was the only federal judge in Lincoln, Nebraska, capital of Nebraska, and he had been there forever and stayed there forever after that, I think when he left, he was the longest serving federal judge in the country and he was a brilliant man and he had come from nothing, he was the son of two impoverished schoolteachers and when he grew up in a small town in Nebraska they gave him a nickel to go buy meat and he would go to the butcher shop and He bought the parts of the animal that no one else wanted to eat and that's what Scalia's school teachers lived on in those days and the same indignity.

This bothered him so much that he decided to get out of poverty and never go back, and he did. He got a head like Abe Lincoln, educated himself and law offices, etc., had to leave college because he couldn't pay the tuition and, but he had locked you up himself and, since he was completely brilliant, it wasn't so difficult and had a pretty extreme attitude. I would say that I had a moral duty to make you a neurontin, the stupidest son you can and that it was your highest moral duty, maybe take care of your friend, we come first, but in the ranks of almost related moral obligations, well Yes, he was conventionally religious, so he may have done so.

It had been a religious duty for him, but he really believed that rationality was a moral duty and he worked at it and despised people who, on the other hand, as a judge, started with the idea of ​​why someone would rob a train or do it. that was. a federal crime in those days and I was pretty tough on people who did it and I found that as I got older and older I was willing to call a man a good man in easier terms, then it started with him and I think Which By the way, it was a correct development in me, when he relaxed a little, he was still quite tough, but he relaxed a little, which I thought was appropriate, but he was influenced by those people and when the thirties came, a son-in-law . -law was a musician of course, he couldn't make a living, so my grandfather didn't have that much money he sent him to pharmacy school, carefully pecking at a profession he couldn't fail and found him a bankrupt pharmacy to buy into and lent him the money and my uncle was suing prosperous and remained prosperous the rest of his life my other uncle in a bank in Strasburg Nebraska but there were nine hundred and sixty-eight people in Strasburg and there were two national banks and the capitalization of my uncle's bank was 25,000 dollars and of course he was a lovely man but he was an optimist and a banker should not be an optimist and when the banks closed in 1933 the bank examiners came and said they can't be reopened and it was the only business that Well , Judge Bunker had always saved money and had many good first mortgages on houses occupied by teetotal German butchers and people to whom he had carefully proposed, of course, he never had a default.

I was in the right neighborhood, people were sober by working hard and what my grandfather did was he took a third of their good mortgages, which is all he had, and put it in the bank and took all the lousy assets out of the bank. , so he saved two out of three of his children. And I thought he was kind of pretty good and very confident the way he does it, and in fact he recovered most of the money from him ten or fifteen years later from the bank's assets, when the World War was a good lesson for the other.

On my grandfather's side, on the other side, his main business had gone bankrupt in 1922 with all the other dry goods wholesale houses and what he did was his son went bankrupt and cut his house in half and moved in that family and the other family, the guy was a He graduated with honors from the Harvard School of Architecture and was very prosperous in the '20s in Omaha and had a wonderful life and in the '30s full building permits came and I Mahal with about 90 $25,000 a month and that was for boiler repairs or something like that. there was just no work, nothing, zero, he moved to California and lived for several years and finally got LA County to hire this great architect from Harvard and he got 108 Oh 8 a month after deductions and they asked him to do writing jobs. but they classified it as a laundry to save money and in fact he could rent a house for $25 and feed under an old car.

He could live on $109 a month. It's incredible how poor everyone was and what happened to that grandfather. The FHA arrived. and they had a competitive civil service exam. He was a very bright man, of course, he was first in the exam and that made him chief architect of the FHA in Los Angeles, where he spent the rest of his life, but I saw this whole family cope with the situation. With all the difficulties and I will say it sounds horrible, but they were not that unhappy. You can cope with it pretty well because you get used to it.

That's something good about the human condition. I mean, you get to be my age. There are a lot of horrible things to get used to It's just a new indignity all the time A friend of mine says that a good day when you're old is when you get up in the morning and nothing new hurts That's my experience in Omaha, but that background All these people were polite, civilized, generous and decent and many of them had a good sense of humor and it was a very good place to grow up and my memory is of beingsurrounded by many very good people and I think everything was a privilege.

I look at my background, it is absolutely privileged. I'm proud to be an Omaha boy. Sometimes I use the old saying they got the boy out of Omaha but they never got them all out of the boy and so on. all those old-fashioned values ​​family first be in a position to help others when problems arise prudent sense of moral duty to help being reasonable more important than anything else more important than being rich more important than being important a moral duty absolutely because none of my intelligent relatives suffered terribly because they didn't advance higher, right, yeah, one of the things that fascinates me is, I mean this was in the '20s and '30s in the level of detail that you remember about their experiences and how shape your experience.

I'm trying to give people an idea of ​​something that no one else can remember, I mean, it's you, it's you. You're a student of the people you're experiencing, so you grow up in Omaha, Nebraska, you find yourself in Ann Arbor, Michigan, how does that happen? Very simple. I wanted to go to Stanford and my father said. For me, Charlie, I was the only child of two sisters. He says I have two daughters who educated right after you. I don't have unlimited money. He says I'll send you to Stanford if it really means a lot to you, but I.

I would rather you choose a much better college in the Midwest than mine, which was the University of Nebraska and obviously it was going to be Michigan. What was I going to say? Well, damn, you sent me stuttering. Well, I didn't say I went to Michigan. so you come to me. I've never regretted that at Stanford people came to Stanford in the '30s with their polo pony series and it was a very exclusive fraternity sorority culture. I used to call it the mixed Princeton of the West and and people loved it and so on, but you literally call it a Stanford with a bunch of polo ponies, just say I'll bring you young people back to a time you can't remember, Did you ever know in college that it came with a series of Polo Ponies?

Not many people know that they go, they would be in ROTC but they had their own group of polo guys. You could earn better if you had your own group, so you come to Michigan and study math for a year, yes, but I. I don't get credit for that when I was young I could get an A in any math course without doing any work and that's why I always took math because that meant I literally never didn't solve a problem, I just did it. mathematics and therefore should not receive credit as a budding mathematician. I was choosing what for me was the easiest way to think about what I want to do instead of what someone else wants me to do and I found that it ended up being a topic that I think has paid great dividends, yes, but, but this will tell you will interest in this world where people have all these algorithms, computer science, fancy math and so on, and Warner's eyes have never used fancy math or business, and neither has Ben Graham, who talked to Lauren, everything I've done in business you could do with the simplest algebra and geometry, besides, visions of which I never used calculus for any practical work in my whole damn life, I was a perfect genius at it when I was taught it and, by the way, since I never touched calculus, not one after age 19 did I miss it, the symbols would baffle me, but I think you'll find it if you really know the basics.

It's enormously useful and only a few people will need calculus, so you study math at Michigan and then the war comes. Yes, you moved to California and study meteorology. Well, that was because I was too dumb to do what I should have done. With my background, I should have gone to Naval ROTC because I hated infantry or DC, I had done open high school for years all the way up to second lieutenant, which is a very low rank and of course I was about five feet tall. I got my growth. late, so I didn't, I wasn't your ideal of a manly soldier in high school, yeah, so when you went to Harvard Law, why, why, why right, well, my grandfather and my father had been lawyers and I knew I didn't want to do it. doing everything else is very simple I didn't want to be a doctor I didn't want all the blood and misery and stuff and the repetitive work I knew I didn't want to go to the bottom of a big organization and drag myself On my way up I'm a natural contrarian and that doesn't was going to work for me and I found that people could tell me when they thought they were idiots and that's not a way to move up in a big organization, so I couldn't. do that and now I'm left with the law.

I admired my father and grandfather and a good life for them, so naturally I went into it. I think people still go to law school for that reason, it's the least bad option considering their interests and abilities I guess people go to business school now, some of them, many of the people in this room I think going to business school is the least bad of their options and all I can say is that's how it worked for me and it probably works for you, it worked well, you were fine, so I had to leave the profession, well, It was a silly perversion to me, so that's what I want to ask, so you moved to California, started a law firm and then practiced law for a period of time.

I had no choice and then you had an army of children almost immediately. I cornered myself. Yeah, so the zero option is pretty powerful. Yes, sure. House, of course, so you practice law and then you leave. lawyer at the firm you helped found and transition well into investments, but that actually sounds miraculous, in fact, it was quite interesting. I was probably paid about $350,000 in my first 13 years of law total and I had an army of kids and I had no capital to start with and when I chose this alternative career I had over $300,000 in liquid instruments so I had and that was 10 years of living expenses, so he was neither a brave bank nor an admirable man.

I was a cautious little squirrel who saved more. nuts than I really needed them and not go too deep into my pile of nuts, so I wasn't so brave and kept one foot in the law firm while I tried my capitalist career, but as soon as the capitalist career was successful, I had the I intended to lift that second foot because I recognized the potential of legal practice as I saw it then. I did not anticipate the boom that would come to large firms. I just saw that this was more difficult. I wanted more independence, although I was going to have her as a lawyer, I hated sending bills to other people and needing money from richer people, I thought I was unworthy, I wanted my own money, not because I loved social prestige, I wanted independence, and when you founded a drug trafficking company, wheels so that was the investment firm yes and for a nobleman and I went and I v real estate projects I did both side by side for a few years and very few years I had three or four million dollars and for several years you outperform the market 2x 3x So , why did you leave Willer Monger and company and then move to what you are doing now?

He had three or four million dollars, which was a lot of money for them, and he also knew how to handle those three or four million dollars. very well at the time, so I knew I didn't need to charge fees or correct other investors and I found that when you got into things like this 70-64 7475 crisis, which was the worst since the '30s, I didn't suffer. I knew everything was going to turn out well, but the quoted prices of these things really went down to ridiculous levels and some of my investors that I knew were suffering, you know I needed the money and of course I have enough fiat gene that that hurt me a lot. and then I said it's like them my grandfather once asked you how you felt my aunt wouldn't get a divorce my uncle said I feel the same as when they left my carbuncle and that's how I had a carbuncle my producer The gene was causing me pain and it lasted anthrax.

I just lived on my own money, no fees, no write-offs, no celery, it just seemed more manly to do it when I knew it would work, and then at what point did you meet Warren and 1959? and where? Where did Berkshire Hathaway come from in terms of this partnership that you all have had for two decades? Well, Ben Graham had taught Warren to buy things for less than they were worth, no matter how lousy the deal was. lousy business than the New England textile mills because textiles are frozen electricity and electricity rates in New England were about 60 percent higher than TVA rates, so a certain liquidation was absolutely inevitable; no guarantee should have known better than to buy a company totally doomed to fail.

It was so damn cheap that we went bad with a huge discount to liquidation value, so he bought a big giant that burned down the whole business, but the business was going to die, so the only way to move forward from there was make enough money from this decay. tax small businesses to have more money than paid to go in and use it to buy something else, that's a very roundabout way to go and I wouldn't recommend it to any of you just because we did something stupid that worked, you don't have to repeat it our way and of course we eventually learned not to buy these cigarette butts when they were cheap and do these painful clearance sales and instead buy better deals, that's Bircher's main secret.

The reason Berkshire has been successful was the great This conglomerate is more successful than any other large conglomerate, as far as I know, any other large conglomerate in the world, the reason it has been successful is that we try to buy things that They are not going to require a lot of management talent at headquarters, everyone else thinks they have a lot of management talent at headquarters and that is a lot of arrogance if the business is bad enough you get a wonderful manager the business allows it the reputation of the manager has A good reputation is the business of the river, it is the reputation of the business that is going to remain intact, you cannot fix these really terrible businesses, you can take the money from whatever comes in liquidation and do something else with it, but most lousy deals can't be fixed, but at that time Warren was that's what he was doing and so yeah.

How did you convince him? I helped him. He bought a windmill company in a small town in Nebraska and Warren knew nothing about running a windmill company. Why, because it was cheap, he said: What do you do? Why can't you fix my windmill? Who can I turn to for help? I told you I had the right man for you, so one of my old colleagues in the transformer business, who was an accountant, I told him I would fix his windmill business and Warren was desperate and didn't do it. he just hired him on the spot and Harry walked on the first day into this little town, into this big collection of windmills and stuff and a whistle blew and the whole plant stopped for 15 minutes, what the hell is this?

Well, it's a respect for the time that passed. He has a funeral, we blow this whistle and we stop for 15 minutes there, he said it would be the last time and he just approached everything that way and of course nothing he did was cut out all the fat that he didn't need and then he found out that There were certain parts where we were the only supplier and the price of those parts went up. You can see what business geniuses we are. So how did you convince Warren to stop buying bad apples and start buying good apples?

Do you think Warren Warren, he gave me credit, he was going to learn it anyway, he just made a lot of money at this other stuff and Ben Grander had taught it to him, it was hard for him to quit when he was just cleaning money, but you see? The point and well you couldn't scale that business and I was kind of cheap and nasty when you fire people that's when everyone wants to do that so we just didn't run out of money and bought better businesses and I've been doing it since I came into the business, not as graduates of a business school, but as people who owned portfolios or securities, we thought like capitalists because we always had a shoulder mentality, many people who run companies think like careerists and, believe me, they are.

Thinking is a grace to some extent if you are in a career, but it also helps to see business strategy problems as if you were an owner, so my advice to you is to never become so much of a career that you don't see it from the beginning. owner's point of view, that's what General Motors did, they had a lot of races and an owner would have seen right away that the situation was hopeless and they just got through it with a lot of denial and Sue Petty and pompous and of course they went bankrupt, the most powerful company in the world went bankrupt and none of those prominent executives thought as an owner, they would have seen that it was useless, so Charlie, one of the things that has always fascinated me was It's maddening the way they were handling it well with Berkshire, the way you all manage both the headquarters and the companies you own, you are placing talents thatThey think like shareholders, not careerists, so how do you do it when you buy a business?

Do you or do you bring talent to an existing business? How do you evaluate talent to see if they are going to think more like a shareholder than a private equity? They often buy a business where the founder is leaving and then turn to our talent to run it. That's a hard way to make money and I don't like it. We generally buy with the talent available, not maybe with a guy in second place and put him at number one, but very rarely do we like a passionate self. I can't think of any place where we've bought something and put someone after Harry's bottle and no, we don't do that and it's surprising how long we have some of those people stick around.

Byrne always says we can't, we can't. teaching new dogs old tricks what and what is what is the implication of not being able to teach old dogs new tricks or old dogs new tricks when, if we look at what's happening in business today, what We see is exactly teaching old tricks to young dogs, that's what we find and when we keep the old dog in the works, but that's not the norm, I mean, if we look around us as the norm in life. It may not be our practice, it may not be the norm, but it's usually very difficult to get you an old, wise dog, to get a young dog that they can match, that's difficult by definition, it's survived a huge selection process. , I mean, it's unique and it is.

I have a track record to prove it and by the way, everyone thinks you can judge people by interview and of course you know who you like, you know you don't like them, but everyone overestimates how much you can say in prediction when meeting someone. I'd like to think we have that ability, but it's a tremendously stupid kind of overconfidence. The paper record has about three times the predictive value of your print interview, and of course, we're buying great paper records. It's very simple, but to me it's fascinating. We look at business in general, the movement of people between companies and there are always new dogs and you have taken a position contrary to that and run Berkshire differently.

Oh, he doesn't like the work, of course, we're still hiring young dogs and the end of these businesses, but it's surprising how much of Berkshire's track record comes from the old dogs that are in the business when we bought them, you can't believe how good What those people have been. There is one big exception in the new dog department that I almost despise. the executive search business because I found out that they really want to sell you the best that is available, even if there is nothing good and I don't like that, but the best expense Mercer has ever had since we pay a recruiting company of executives to find him.

We, a chain, come in a small insurance operation. You have some experience in insurance. He was an honors graduate of the head coach in India. He was a very intelligent man, but he came in and created our entire region. It's the only big business. we created from scratch and how he did everything of course he talked to Warren every night so it was like father and son getting married this is a very Confucian company and that was amazing so we heard an executive recruiter brings us here. In India, Dad, he doesn't have any experience in insurance, he talks about it, man, every night and now it's by far the biggest reinsurance business in the world which has been a gold mine.

There is at least $60 billion in net worth in Berkshire that Ajith has created. I wouldn't have created without it Wow and the value is much more than 60 billion. I mean, there's a lot of additional liquid net worth, but the value of the business is much more than 60 billion. Wow, so Charlie, I'm going to move on to some audience questions as we start to wrap up, probably half of my questions here are about Bitcoin and cryptocurrencies. I could answer them very quickly. I think it's perfect and I'll even stop to think about them. You know, it's one thing to think that gold has wonderful storage value because man has no way of inventing more gold or getting it very easily, so it has the advantage of rarity, believe me, man is able to create some way more Bitcoin, they tell you that "They're not going to do it, but they mean they're not going to do it and that's what they want, that's what they mean when they say they're not going to do it, they listen to their rules and They can't do it." I don't believe them when there are enough incentives.

Bad things will happen. They are bad people. Crazy bubble. Bad idea. Attract people to the concept of easy wealth without much internal work. That's the last thing you should think about. If it worked, it would be bad for you. Trying to do it again is totally crazy, and by the way, I just taught you a wonderful life lesson. You leave aside a lot of things, they don't exist, you know, criminals, crazy people, egomaniacs, people full of resentment, people full of self-pity people who feel like victims there are a lot of things that are not going to work for you find out what they are and avoid them like the plague and one of them is Bitcoin and the worst thing that would happen if you won because then you do it again, it's totally crazy and it's very easy to simplify life from all these things that are under you, yeah, not even I don't even know that people are crowding Bitcoin.

I don't want to know my address, so Charlie, I'm a guy, Charlie, I hear you say that you're not going to invest in Bitcoin, which is fair. I think you're harsh, so let me move on to an equally controversial topic. You know this, if you read the news recently, but there are a lot of taxes. There is a policy conversation both here in California and nationally, what do you think about where this ends in terms of policy? I think we'll get a tax bill. I think they will approve it and make adjustments as necessary. They have to do it to get the last votes.

I don't think it's a little crazy to give that extra two thousand dollars a year to all those people who make $70,000 a year and have a lot of children, which seems like good policy to me and is probably good policy. I also don't think it's crazy to reduce C corporation income tax and if you look at the world, many of the places where it worked best, including Singapore etc., have that policy and may even have a good policy. macroeconomic consequences a lot of people shouting about it and are so sure it won't work that they may not be right it may actually work quite well causes the capital values ​​of companies to increase and there is a wealth effect due to the increase of the market value of all companies, everyone recognizes that there is an effect, but some people say it is small and others say it will be large and I will tell you what they all have in common, none of them know that it is not totally inconceivable . war pretty well and with much of the world doing well with similar fiscal policy and of course the Democrats go crazy over this issue but I think they are wrong it can actually help them yeah so I don't.

No, I'm not sure it works, maybe not, but it's not crazy, well, it reminds me of some advice that you offered and gave me that you know people often give. a point of view and the danger of having that point of view is that you start to assume with certainty that you're right, absolutely crazy and I think what your point of view is is that you need to have a point which I have. just Deven, here is a very important topic that I am thinking about my whole life, yes, in my opinion, I really don't know how well it will work.

I don't think anyone else knows either. I think it will work to some extent, but how? I don't know much now if it's unfair. Well, the corporations are largely owned by a group of charitable foundations and a group of pension plans and the whole world is entering a world where they are trying to have business interests. of the company that supports its huge pension obligations may be higher every time China is trying to do exactly what Republicans are China wants major companies in China to be owned by pension plans and stocks to do well I don't think China is crazy to have that.

I don't think you are Republicans either. It could work out pretty well and it's not just something evil that people are up to, it's a disagreement between people and both sides who have violent hatreds and contempt for the other side are wrong it's a disagreement about a policy that should be civil when I see Congress on my TV and the level of hatred they have is total contempt, I mean, much more serious than usual, it is bad to hate so much it is a mistake to hate so much that so much hate will become it has always been true when anger enters reason is leaving is a truism so do you want to take a political point of view or are you angry all the time if you are welcome to the house of misery and pretty worldly achievement LOI to begin with so if that's what you want I just if I find out how to do it, behave like those people you see on television, well the other thing that is both parties, by the way, the other thing that is True, going back to any previous comment, is the difference between a careerist mentality and a of service or shareholder.

We are in politics, we have the rise of a careerist mentality that is shaping how people behave because they are trying to survive just because having groupthink just like the Moonies go crazy because they hang out together, kind of like our politicians, yeah , yes, what you want to drive crazy is that whatever your ambition in life is, you start with some advantage, just become a politician who violently believes in either side. I will turn your brain into cabbage. You know I have a brain. Why would you want to turn it into cabbage? So, Charlie, I have a question.

What's the amazing new technology you're most excited about? Well, I couldn't understand it. No no. to get really excited, I think technology changes the world, that reminds me of the other thing, if I asked you what was the biggest, worst mistake in Adam Smith's work, you know, I know he would understand, oh, I don't see. all with big eyes illuminating the biggest mistake in Adam Smith's work, he was absolutely right about markets and so on, and the advantages of the commercial division of labor, etc., what was lost was how much the constant advancement of technology would improve wealth and standards. of life, he in the 18th century didn't live much different than the way they lived in the Roman Empire and he just missed it, but in fact there were great improvements in technology, but he just missed that he wasn't very technically minded and it was really stupid and now I ask you a more difficult question.

What was the worst mistake David Ricardo made? I bet the dean can't answer this question. I'm not going to ask you to try. I'll tell you the answer. I'll tell you the answer that David Ricardo missed. He perfectly understood the first-order consequences of trade and it was not an obvious idea and it was a great achievement, which is true, but he didn't think about the second-order consequences that he was. I wasn't a mathematician enough to see it and I wasn't a mathematician enough to think that what would happen in one country had much higher standards of living in another like Adam Smith he missed the main point in a place like the United States if you have an advanced nation . and some other nation that is numerous, but the people of any of them are, on average, better than yours in terms of their innate quality, which I think is more or less true in the case of China and they are in poverty , they live in caves and are caught in a Malthusian Trap and you have an advanced economy and suddenly you enter free trade.

What is going to happen is the Ricardo program. Both sides are going to live better, right? But the people here who are assimilating all the big economies in the world and say they are going to disappear faster, then you go up two percent a year and they go up twelve and very soon the other dominant nation in the world and you are not well, are you really better? Well, the answer is no and we are left without cars. I never discovered any of that so I'm telling you so you can correct your inadequate knowledge of Ricardo and one of the interesting problems is that you can't understand Ricardo correctly and think about US Visa Fee Free Trade with China without think about the tragedy of the Commons because if we had the only nation in the world except China we could say we won't trade with them, we'll just leave them in their fucking agricultural poverty and we'll just know and we probably could have done well, the rest of the world will trade or increase anyway so we have power to stop China's rise by not trading with it so we had to do what we did and once you do it there will be a power greater than us and we will both be big enough that we can pretty smoothly accomplish whatever we both want to do, so we have to be friendly. with China, so you can imagine how I like that Donald Trump complains about these Chinese, actually it is like that, but it is a mandatory friendship, it is a mandatory friendship, you think you are crazy to do anything else, whyWouldn't you want to have an intimate and friendly relationship? but the other biggest power in the whole damn world, particularly when they have atomic bombs, is just bad, we have no choice but to do this and when that happens you're going to get a certain amount of misery for the people competing. with the Chinese as a race of poverty with trade and so on, that was inevitable, that's not the way to go once you have evil republicans who don't love the poor, that's total nonsense, it just happened and we didn't have all these options, so Charlie To conclude, Retton we have, I don't know, approximately 250,300 people in the room tonight and many of them are looking at their future, their careers with many decades ahead of them.

I wish I had many decades that I would change. trade some big numbers if you could buy more I think spectrums what as you look back on your life experience what is the most important advice you would offer everyone in the room tonight as you look forward and toward your future or some obvious ones, all are old Ben Franklin has gotten married just like the most important decision he has ever made in his business career, it will do him more good or harm than anything else Ben Franklin had the best advice ever given about marriage, you said keep your eyes wide open open before marriage and half closed after, it's amazing how if you get up every morning and you keep trying, you have some discipline and you keep learning, and it's amazing how well it works and I don't think, I don't think.

It is wise to have the ambition of being present in the United States or being a billionaire or something because the odds are too stacked against you, it is better to aim low. I didn't intend to get rich. I wanted to be independent, I just went overboard and by the way, while you applaud, some of the overshots were accidental. There is something, there is something great that you can do. be very deserving and very intelligent, very disciplined, but there is also a factor of luck that comes into this and people will obtain the good, the results that seem extraordinary through people who have discipline, intelligence and good virtues, in addition to a lot luck, why wouldn't the world work like that?

So you shouldn't give credit for the unusual. A lot of people that my friend of mine said about a colleague of his in his fraternity, he says that old George was a duck sitting in a pond and they raised the level of a pond, there are a lot of people who just walked to the right place and went up, and then There are many very eminent people who have many advantages and have a little defect or a little bit of evil. lucky and are mired in misery all their lives, but that makes it interesting to have all this variation.

Well, Charlie, on behalf of everyone here, thank you for your wisdom. I often say that as an educational institution, we can not only give people knowledge, but also The most important thing we can do is give them wisdom and judgment, and their feedback, I know this for myself and I hope that everyone in this room is night, have contributed to our wisdom and our judgment and, at the same time, are inspiring. Thank you so much.