2019: How will automation affect employment?

AUDIENCE MEMBER: Hi. Hi Warren, hi Charlie. My name is Carrie and this is my daughter, Chloe. She’s 11 weeks. It’s her very first Berkshire meeting. (Laughter)

We’re from San Francisco, and we have a question on employment for you. As both a major employer and a producer of consumer goods, what do you make of the uncertain outlook for good full-time jobs with the rise of automation and temporary employment?

WARREN BUFFETT: Well, if we’d asked that question 200 years ago, and somebody said, “With the outlook for development of farm machinery and tractors and combines and so on —” meaning that 90 percent of the people on farms were going to be — lose their job — it would look terrible, wouldn’t it?

But our economy and our people, our system, has been remarkably ingenious in achieving whatever we have now — 160 million jobs — when throughout the period ever since 1776, we’ve been figuring out ways to get rid of jobs. That’s what capitalism does, and it produces more and more goods per person.

And we never know exactly where they’re going to come from. I mean, it — I don’t know if you were whatever occupation — well, if you were in the passenger train business, I mean, you know, you were going to — that was going to change.

But we find ways, in this economy, to employ more and more people. And we’ve got now more people employed than ever in the history of the country, even though company after company in heavy industry and that sort of thing, has been trying to figure out, naturally, how to get more productive all the time, which means turning out the same number of goods with fewer people, or turning out more goods with the same number.

That is capitalism. I don’t think you need to worry about American ingenuity running out. I mean, if you look at people in all kind of businesses, and they like to make money, but they really like to be inventive, you know. They like to do things.

And this economy, it works. It will continue to work. And it will be very — it’s very tough in certain industries, and there will be dislocations. You know, we won’t be making as many horseshoes and that sort of thing when cars come along and all that.

But we do find ways now to employ whatever we’re employing — 155, whatever it is — million people, and supporting a population of 330 million people when we started with 4 million people, with 80 percent of the labor being employed on farms.

So, the system works and it will continue to work. And I don’t know what the next big thing will be. I do know there will be a next big thing. Charlie?

CHARLIE MUNGER: Well, we want to shift the scut work to the robots to the extent we can. That’s what we were doing, as Warren said, for 200 years.

Nobody wants to go back to being a blacksmith, or scooping along the street, picking up the horse manure, or whatever the hell people used to do. We’re glad to have that work eliminated.

And a lot of this worry about the future comes from leftists who worry terribly that the people at the bottom of the economic pyramid have had a little stretch when the people at the top got ahead faster.

That happened by accident because we were in so much trouble that we had to flood the world with money and drive interest rates down to zero. And, of course, that drove asset prices up and helped the rich.

Nobody did that because they suddenly loved the rich, it was just an accident, and it will soon pass.

We want to have all this productivity improvement, and we shouldn’t worry a little about the fact that one class or another is a little ahead at one stretch.

WARREN BUFFETT: Charlie and I — (applause) — we worked in a grocery store. And when people ordered a can of peas, we had ladders that we climbed up to reach the can of peas, and then we placed it in a folding box, and then we put it on a truck. And if you looked at the amount of food actually transferred between the producer and the person who consumed it, and the number of people involved in the transaction, you know, it was — I don’t know whether it was one-third or one-quarter or one-fifth as efficient as the best way now to get food delivered to you. And —

CHARLIE MUNGER: And the food was worse.

WARREN BUFFETT: (Laughs) And my grandfather, you know, was distressed about the fact that this particular credit and delivery kind of store would be eliminated. And it was eliminated, but society —

CHARLIE MUNGER: It’s coming back.

WARREN BUFFETT: —addressed the — pardon?

CHARLIE MUNGER: It’s coming back.

WARREN BUFFETT: It’s coming back, but more efficiently. (Laughter)

Anyway, we’ve seen a little creative destruction. And frankly, we’re glad that it freed us up to go into the investment business. Worked out better for us.