2010: How can we educate children to avoid repeating the financial crisis?

AUDIENCE MEMBER: My name is Lucas Rineswell (PH) and I’m from Whangerei. And in case you don’t know where Whangarei is, it’s in New Zealand.

At the moment, it’s quarter past 4 in the morning in New Zealand, so I’d be safe to say that my wife will be sound asleep.

So I’m an idealist. What can be done to educate the children about the sage of Omaha’s philosophy of successful money management, and to prevent another reoccurrence of the financial mayhem that we’ve all seen and experienced in the 2007 and 2008 years?

WARREN BUFFETT: We will see financial mayhem, as you put it, from time to time. I hope we reduce it, I hope we reduce the magnitude, et cetera.

But people do crazy things, and it’s not a function of IQ, and sometimes it’s not a function of education.

In fact, I would argue that some of the problems, and not a small part of what’s occurred in the last 30 years, has been because of what became the prevailing conventional wisdom in the leading business schools.

So, I’m not particularly positive about modifying the madness of mankind from time to time.

The first part though, however, is the kind of thing in our movie. I really do believe that getting good financial habits — other kinds of habits, too, but what I’m thinking about here is primarily financial habits — getting those early in life is enormously important.

I mean, Charlie and I were probably lucky that we grew up in households where we were getting all kinds of unspoken lessons, even, in terms of how to handle our life, but in particular, how to handle finances.

And not everybody gets that. And Andy Heyward, who did a terrific job with “Liberty’s Kids” in teaching about the history of America three or four years ago, has come up with this idea of “The Secret Millionaires Club.”

And if we get through to 2 or 3 percent, or 5 percent, or whatever it may be, of the kids, in terms of giving them some ideas they might not otherwise have, and they build some habits around it, you know, it isn’t going to change the world, but it could be a plus in their lives.

It’s very important to get the financial habits. And really, Charlie’s a big fan, and so am I, of Ben Franklin’s. And he was teaching those habits a couple hundred years ago. So we’re just going to try and take Ben Franklin’s ideas and make them entertaining for children’s stories, in effect.

And I think that’s about what you should be doing. I don’t think — I think it’s much more important to have good learning at the elementary level than, frankly, to have it in terms of advanced degrees and graduate schools.

Charlie?

CHARLIE MUNGER: Yeah, there are other great educational institutions in America to help handle this problem. One of the ones I admire most is McDonald’s.

I had fun once at a major university when I said I thought McDonald’s succeeded better as an educator than the people in the university did.

And what I meant was McDonald’s hires a lot of people who are quite marginal at the very start of their working career. And they learn to show up on time for work and observe the discipline.

A lot of them go on in employment to much higher jobs. And they’ve had an enormous constructive effect about educating into responsibility a lot of people who were threatened with not making it.

So I think we all owe a lot to the employment culture of McDonald’s. And it’s not enough appreciated.

WARREN BUFFETT: I learned a lot from a paper manager at The Washington Times-Herald named John Daley (PH).

CHARLIE MUNGER: Yeah.

WARREN BUFFETT: And probably 13 years old or 14 years old, and I was lucky to run into him.

Basically, my life would have been somewhat different if I didn’t get those lessons from a guy that taught them to me in a very enjoyable manner. He wasn’t preaching them to me, he just told me I’d do better if I did this and that, and it worked.

So you’re lucky if you’ve got the parents to teach you that. But anything that brings it into a broader teaching environment, I’m for.

And like I say, I really think Andy has got a terrific project in this and we’ll see how it goes.