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2005: Does the US economy have a moat?
AUDIENCE MEMBER: Good afternoon. My name is Carlos Lock (PH). I’m from Lawrence, Kansas.
The U.S. has had a dominant role in the world economy for about a hundred years. This dominance resembles that of an economic monopoly.
Would you say that the U.S. is a quote- unquote, “a castle with a moat?” And if so, how can we make the moat any bigger? Thank you.
WARREN BUFFETT: Yeah, well, the U.S. has been pretty remarkable, as I indicated in my earlier comment. I mean, you know, essentially, the same population pool pretty much, and they’ve garnered over this 215-year period, a remarkable share of the world’s wealth.
And it’s an interesting question as to just why this group of people here have been able to do so much better than the rest of the world, considering we’re not any smarter or anything of the sort.
It’s not an economic castle anymore. I wouldn’t call it that.
What we do is no secret. And I think that the relative importance of America — I mean, we have been a dominant factor in the world, and post-World War II — and I think it will decline somewhat, although I’m not an alarmist on that.
But I think to some extent, the rest of the world, or much of the rest — or some of the rest of the world — is catching on and adopting, you know, sort of best practices, as they say in industry.
And our castle will grow in size, but there will be more castles around it. And I basically think that’s a very good thing for the world.
I think the more prosperous, generally, the rest of the world is, you know, the better, generally, it will be for us. And, you know, I’ve talked about our trade problems. The more trade we have, the better.
We had 1.1 trillion of real trade last year in the country. We would’ve — with the world — and then we had another 600 billion — 6/10ths of a trillion — that, unilaterally, we bought.
Well, I would love to see the 1.1 trillion grow and grow and grow. It’d be good for us and good for the rest of the world. But I don’t think that our prosperity will come — in the future will come at the expense of the rest of the world at all.
I do think that there were parts of the world that will grow economically from a lower base, but much faster than the U.S. And basically, I think that’s a good thing.
I mean, there are six billion people in this world, and a lot of them don’t live very well. And I would hope that 20 or 50 years from now that it’s a higher percentage of them would live well and that — but I don’t think it comes out of our hide at all.
CHARLIE MUNGER: Well, I don’t think it comes out of our hide in that sense, but if we are now the richest and most powerful nation in the world and 50 or a hundred years from now we’re a poor third to some country in Asia, sure, we’re richer, but it’s a peculiar type of richness where you’ve lost your relative position in the world.
It’s not all — I think if I had to bet, I would bet that the part of the world that does best is Asia, in terms of percentage gains per annum.
And I think it might do amazingly well if it doesn’t blow up in some way. And if it does amazingly well, it will eventually be a much richer place than ours.
WARREN BUFFETT: Mm-hmm.