1997: Can American manufacturing compete with low wages overseas?

WARREN BUFFETT: The other question about the low-cost industrial — you know, how does the industrial society evolve, I — you know, the world evolves in a way, in a market society, so people do what they’re best at. And this country’s done very well in recent years — something like, you know, software that — where a Microsoft has been leading or an Intel or something. I mean, we have done very well.

Ten years ago the American public was sort of down on itself, or 15 years ago, in terms of what the economy could do.

But here we are with our unemployment rate — in Nebraska it’s under 3 percent.

And you know, you look at the countries of Europe that were supposedly going to beat us into the ground, or you look at Japan.

I think the American economy encourages adaptation. I mean, Singapore may be better, but in terms of major large economies, I think the American economy does awfully well in encouraging adaptation to what people want, and delivering it to them in ever-increasing amounts. And you know, I view that as all to the good.

So I don’t regard any industry as sacred. I regard innovation and freeing up the able people to — able, in terms of production of goods in a market economy — to spend 12 hours a day all the time — I don’t see Andy or Bill letting up at all, in terms of where Intel and Microsoft are now.

I don’t see Roberto Goizueta at Coca-Cola, or Michael Eisner at Disney, or any of those people.

They don’t work 40-hour weeks, they work 70 or 80-hour weeks. And I think that system works very well in this country, and I don’t worry particularly about the specific products that are turned out.

Charlie?

CHARLIE MUNGER: I would not like the conclusion that both Warren and I have reached, that issues of fairness are properly to be considered in the tax laws, to cause anyone here to believe that I have a great respect for Harvard University’s philosopher John Rawls.

He is perhaps the world’s best-known living philosopher. And personally, I think he’s had a pernicious influence on human thought.

He doesn’t know enough science. He doesn’t know enough economics. He doesn’t know enough about how systems work to be really good at figuring out what’s fair in systems. And he studied too much philosophy and too little of everything else. (Laughter)

If anybody thinks we love John Rawls, well, you can count me out. (Laughter)

WARREN BUFFETT: No — I wasn’t endorsing his conclusions, I was endorsing his thought — his original construct.

Charlie, how about the industries part of the question that Patrick asked?

CHARLIE MUNGER: Well, if Patrick isn’t the smartest person in the room, there can’t be many in his class.

You are getting questions from a very able man, and he’s deliberately made them very difficult. (Laughter)

And that whole issue is too complex for me to usefully discuss here. There are also certain limitations on ability that enter the equation. (Laughter)