2015: What did Buffett learn from The Wealth Of Nations?

CAROL LOOMIS: This question, which is a little bit offbeat, comes from Jordan Shopof (PH) of Melbourne, Australia.

“Mr. Buffett, in the forward to the sixth edition of Benjamin Graham’s ‘Security Analysis,’ you identified four books that you particularly cherish.

“Three of these books were authored by Graham himself, and their influence on you is well-known.

“The contributions of the fourth book to your thinking, however — that book was Adam Smith’s ‘The Wealth of Nations,’ published in 1776 — what that book meant to you is seldom discussed.

“So my question is, what did you learn from “The Wealth of Nations” and how did it shape your investment and business philosophy?”

WARREN BUFFETT: Well, it doesn’t shape my investment philosophy, but I certainly learned economics from it. And my friend Bill Gates gave me an original copy of it. I was able to study this.

Adam Smith wrote it in 1776. It’s — you know, there’s just — if you read Adam Smith and if you read Keynes, Ricardo, and then — and if you also read that little book we’ve got out there called “Where Are the Customers’ Yachts?” you will have a lot of wisdom.

I forgot to mention, I was supposed to mention, too: we didn’t want to put it on sale earlier because it would have given away the movie, but we do have “Berkshire Bomber” underwear out there, or sweatshirts, or whatever it may be, so Fruit of the Loom has those.

And we have Fred Schwed’s “Where Are the Customers’ Yachts?” book, which contains an incredible amount of wisdom and very few pages and very entertaining.

But if you want to go for — if you want to not only get a lot more wisdom but appear more erudite, you should read “The Wealth of Nations,” also.

Charlie?

CHARLIE MUNGER: Adam Smith is one of those guys that has really worn well. I mean, he is rightly recognized as one of the wisest people that ever came along.

And, of course, the lessons that he taught way back then were taught again when communism failed so terribly, and places like Singapore and Taiwan and China, and so forth, came up so fast.

The productive power of the capitalist system is simply unbelievable, and he understood that fully and early, and he’s done a lot of good.

WARREN BUFFETT: I took an idea of his on the specialization of labor, you know, and he talked about people making pins or something, but I applied that, actually, to philanthropy.

You know, I mean, the idea that you let other people do what they’re best at and stick with what you’re best at, I’ve carried from mowing my lawn to philanthropy, and it’s a wonderful thing to just shove off everything and say somebody else is better than I am at that, and then work in the field that’s most productive for you.

CHARLIE MUNGER: Yeah. You didn’t do your own bowel surgery, either.

WARREN BUFFETT: No. (Laughter)

I’m not sure I have any reply to that. (Laughter)