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2013: What should leaders focus on to preserve US competitiveness?
AUDIENCE MEMBER: Hi. My name is Kelly Morrell (PH) from New York, and I have a question.
You’ve been both very outspoken on corporate and personal tax rates, as well as the trade deficit.
And I’m wondering if you can elaborate on what the top two or three things you think both business leaders and policy makers should be focused on to preserve U.S. competitiveness?
WARREN BUFFETT: Well, I would say health care costs would be a big item.
We’re spending — we’re a country that’s spending, we’ll say — you get different figures — but call it 17 1/2 percent or so of GDP. And most of our rivals in the world are paying anywhere from, probably, 9 1/2 to, maybe, 11 1/2, or thereabouts.
So, you know, there are only 100 cents in the dollar, and if you give up 6 or 7 or 8 points of that dollar, I mean, it’s just like having a raw material that costs you more, or something of the sort.
So, that will be a major problem in American competitiveness. It is right now, and it will — all signs point to the fact that it will become more so.
And it doesn’t relate to the Medicare problem, which is a huge problem, obviously, but the real problem is health care costs, whether it’s in the private system or whatever payer system you have.
We have a big, big disadvantage in cost versus the rest of the world.
People used to talk about how General Motors had $1500 a car in health care costs that Toyota didn’t have. Well, if they had $1500 a car disadvantage in steel costs, I mean, you know, the management would be focused on that.
If they had $150 — if they had $15 — difference in steel costs, but health care costs, which are sort of beyond the control of any one company, promise to be a huge competitive disadvantage.
Overall, though, incidentally, I mean, the United States — since the crisis of 2008 — we have done very well, compared to most countries, and our system works.
But if you asked me the number one problem for American business, I would say it’s that health care cost disadvantage.
CHARLIE MUNGER: Well, I would add that I don’t think it does our competitiveness any good to have this grossly swollen securities and derivative market — markets. (Scattered applause)
And the young men from Caltech and MIT going into high finance and derivative trading, and so on, I think this is a perfectly crazy outcome in terms of its effect on the country.
WARREN BUFFETT: Anything further? (Scattered applause)
CHARLIE MUNGER: Well, I agree with you about the health care, but I find the other more revolting.
WARREN BUFFETT: Charlie’s very Old Testament. And he’s right.