1. What do you believe are the greatest successes of capitalism?
Of the clear successes of capitalism, a greater abundance of things we want and need, and considerable improvements in the standard of living are good candidates. The standard of living in the U.S. has increased almost seven fold in the last century. One century is a speck on the greater timeline, and such an increase in productivity in the standard of living is surely unprecedented. Another noteworthy success of capitalism is that it is surely better than any alternative system at allocating resources and getting the best people to their most appropriate places. Consider this: in 1790, the first global census was conducted; there were 290m people in China, 100m in Europe, and 4m in what is now the U.S. Now the U.S. holds 4.5% of the world's population but is responsible for 30% of global GDP. I believe the great American book is yet to be written and will be the one that manages to capture how spectacular this growth has been; again 214 years is just an instant. When we think about such growth, I don't believe the causal factors are the people; it must be the system. The smartest people in Guam are as smart as the smartest people in Iceland are as smart as the smartest people in the U.S. Being born in the U.S. is more important to my success than anything that has happened since.
来源：Source: 2005 Tuck School of Business Trip to Omaha ；URL: http://www.thinkfn.com/wikibolsa/Visita_a_Warren_Buffett ；Time: 2005
2. What do you see as the shortcomings of capitalism?
Capitalism, like any system, is imperfect, but it's getting better and we're getting closer to goals such as equality of opportunity and learning how to deal with those that are hurt by the system. But capitalism is surely a free marketplace, a dog-eat-dog marketplace in many ways. And a marketplace implies losers. Early in my career, I bought a textile mill in New Bedford and the vast majority of the mill workers were Portuguese and could not speak any English. Over time, textile mills in other parts of the world were able to operate more efficiently and we simply could not compete. I had to shut the plant down and fire everyone; the workers were casualties of the system. You can't retrain or save those people; they'd had it. So the real challenge with capitalism is that you can't throw sand in the gears of greater output but you also want to care for the casualties. If you look around, it's clear that most people are burdened with real fear; fear is terrible and people shouldn't have to live with it. We should want to reduce societal fear of the things that they should never have to worry about - fear of going hungry, fear of going without medical care. These are the problems you should be thinking about solving.
来源：Source: 2005 Tuck School of Business Trip to Omaha ；URL: http://www.thinkfn.com/wikibolsa/Visita_a_Warren_Buffett ；Time: 2005
3. How should we take care of those who are harmed by the system, like your former textile mill workers?
I would start with the tax system. It would not be easy to implement, but some form of a steeply progressive consumption tax for the wealthy makes a lot of sense to me. For instance, when I fly my private jet I use hundreds of gallons of jet fuel but I'm not taxed at a higher rate. Flying in a private jet is usually unnecessary, excessive consumption and I should be taxed appropriately via a higher consumption tax. Here's another example: I could easily hire 20,000 people and pay them $50,000 per year to sit here and paint portraits of me all day in search of the perfect one. Not only would that be ridiculous, but it would pull 20,000 productive contributors out of system and I should pay highly for that. Other than figuring out ways of reallocating money to the 'bottom 20%,' we need to focus on finding ways to help people be useful and feel useful. This means finding people jobs, keeping them involved in society, and the like.
来源：Source: 2005 Tuck School of Business Trip to Omaha ；URL: http://www.thinkfn.com/wikibolsa/Visita_a_Warren_Buffett ；Time: 2005
4. With the recent changes in the global political economy and surges in terrorist activity, some would argue that uncertainty is increasing for all types of global markets. Where do you think things are heading and how should we deal with this heightened uncertainty?
Human beings don't change very much over time. But until recently, most dangerous people had limited ability to harm others in scale…. I think the terrorism issue is one problem to which there is clearly no solution. I'm confident that we'll solve everything else out - we making progress on cures for major diseases and all that - but terrorism, it seems to me, is impossible to solve because there will always be troubled people seeking to do harm to large masses of people. The intent is surely there. And knowledge of how to inflict terror is spreading. If you have intent and knowledge, the third aspect of terrorism is 'materials and deliverability.' This is harder to come by for the terrorists and what we should be working to prevent. If I knew we could devise a solution to terrorism, I would dedicate 100% of my foundation's funds to this effort; but I'm just not sure there's a solution.
来源：Source: 2005 Tuck School of Business Trip to Omaha ；URL: http://www.thinkfn.com/wikibolsa/Visita_a_Warren_Buffett ；Time: 2005
5. What kind of impact will the demographic shift (i.e. baby boomers) have on the United States?
We aren't big on demographic trends. It's difficult to translate that information into profitable decisions. It is hard to figure out what businesses will prosper in the future, based on macro trends. See's candy is for anyone and Fruit of the Loom is for people who need underwear today. We want to be right on something that will work right now, not something that might work in the future. I doubt that Wal-Mart spends a lot of time on demographics. They instead focus on where to put the store and what to put on the shelves. I've never found those kinds of stats useful. People were all excited to go into stocks 6 years ago, but it wasn't because of demographic trends.
[Warren then referred to a recent WSJ article written by Jeremy Siegel that discussed funds flowing out of investments because baby boomers will need to cash in their investments during retirement. He said he respected Siegel, but he doesn't find fund flows data useful.]
来源：Source: Student Visit 2005 ；URL: http://boards.fool.com/buffettjayhawk-qa-22736469.aspx?sort=whole#22803680 ；Time: May 6, 2005
6. Do you believe that the Federal Reserve is fostering moral hazard thereby leading to the misallocation of capital and subsequent asset bubbles? If so, what are the long term risks?
There is always some introduction of moral hazard when government decides to act in favor of the common good versus letting someone fail. There was moral hazard with the bailout of LTCM and there is some aspect of that with the current situation. But it’s hard to measure because the consequences are 15-20 years out. During the 1987 market crash, Greenspan was new to the job and unsure of what would happen. The specialist system got hit, most of them operated on very little capital and were broke. The Fed provided them with more capital. Will that change future behavior? Maybe, but at the time it was the right call. It’s also resulted in the “Too Big to Fail” doctrine. The big banks, Freddie Mac, and Fannie Mae figured the US Government wouldn’t allow them to fail and the managements of those companies knew that. I would be disinclined to second guess the Fed, they have more information and are trying to do what’s right.
来源：Source: Emory's Goizueta Business School and McCombs School of Business at UT Austin ；URL: ；Time: February 2008
7. Could you comment on the current rise of sovereign wealth funds from theMiddle East and Asia and how they are playing an increasing role in how corporations raise capital. Is competition from these sources for the cash flows of corporations affecting your investment strategies or opportunities?
Any competition is competition. The situation of sovereign wealth funds is interesting. A lot of it is China bashing, OPEC bashing and plays right into politician’s hands. Today, the US will buy $2 billion more from the world than they buy from us. In exchange we give them little pieces of paper and they have to buy assets. As long as we consume more than we produce we have to let the rest of the world invest in us. We created sovereign wealth funds and that $2 billion gains interest. US funds feel they can get the best terms from these foreign investors and lately, enticed them into buying equity. China wanted to buy Unocal, a 3rd rate oil producer with production overseas in places like India. US Congress went ape and 395 representatives signed an anti-Chinese resolution to block the deal. For 100 years the US companies went around buying the world’s assets and bribing officials, but told China they couldn’t buy Unocal. The Chinese took it, but they didn’t like it. It doesn’t make sense that we are buying foreign assets, and giving them pieces of paper and then telling them what they can’t do with that money. We have created them and I have no objection to them. I recommend an index fund for these sovereign wealth funds. It gives them exposure to the US market, but they won’t get taken by salespeople with bad deals. In economics you always want to say “And then what?”
来源：Source: Emory's Goizueta Business School and McCombs School of Business at UT Austin ；URL: ；Time: February 2008
8. It seems that the worldwide trend is towards lower corporate tax rates. Do you think that the US risks becoming less competitive if it maintains its current corporate tax rate?
Relative to GDP, government taxation is 18.5% and spending is 20%, so we borrow the balance. The national debt should not be a scary topic and the fact that it’s gone up is fine as long as it’s proportional to GDP. Where do we get that 18.5%? There’s 2.7 trillion in government revenues. 2.2 trillion comes from individuals, and less than 1% of that comes from the estate tax. 1.1 trillion comes from income taxes, with payroll taxes consisting of 900 billion, but it’s capped at the first $100,000 of salary. We want a tax system that encourages greater prosperity, but it needs to take care of the family.
We did an informal office survey by looking at the total tax footprint versus the total income. I earned 46 million and paid a tax rate of 17.5%. My rate was the lowest, the average was 33%, and my cleaning lady paid 40%. The system is tilted towards the rich. The Forbes 400 total net worth has gone from 220 billion to 1.54 trillion, an increase of 7-to-1. You see in legislature that there is lobbying carried on by the powerful over issues such as the estate tax and carried interest for private equity investments. We need to flatten income and payroll taxes, and those making under $30,000 shouldn’t be bothered.
Let’s imagine that 24 hours before you are born, a genie comes to you and tells you devise a social and economic system. The only catch is that after you designed the system, you would choose a paper from a barrel which would determine your demographics. What objectives would you want? You need to devise a system that creates prosperity. It needs to be a meritocracy, to put the right people in the right place. It needs to have a strong education system, and throw off lots of goods and services. It also needs to not discriminate against women or minorities. Even though the per capita GDP is $47,000, 20% of the population makes less than $20,000. We need to eliminate that fear of sickness or old age. A tax code is the codification of a country’s values. But you can’t kill the golden goose of prosperity.
来源：Source: Emory's Goizueta Business School and McCombs School of Business at UT Austin ；URL: ；Time: February 2008
9. Do you feel that the might of America has changed?
You can bet against the dollar, but I would never bet against America. The system in the U.S. has allowed the country to unleash more for the world than any other country. Since 1776, the U.S. had a different system than the rest of the world and that system unleashed the human potential. We were not the smartest nor did we have the best resources. This is the same system we have in place today with people of similar intelligence. I have and would bet against the U.S. currency, stocks, etc. but the United States prevails over time. There are all kinds of rocky roads but we have rule of law, equality of opportunity, and a meritocracy. We have a market system and people apply energies and imagination to come up with things someone would want. Everyone in this room is working far below his/her potential.
Overall, I’m an enormous bull on the United States. In 1790, we had a population of 3.9 million people vs. 290 million in China and 190 million in Europe. We’ve all had roughly the same conditions since then, yet 215 years later, we have 30% of the world’s GDP. This is one of the great all-time success stories.
[CM: I believe that we are at or near the apex of a great civilization.]
I don’t feel that way. You’ll know who’s right in 20 or 30 years.
What we do is no secret. The relative importance of America will diminish. The rest of the world is catching on and adopting our best practices. But our castle will grow. It’s good for us if the rest of the world does well, and they’re growing from a lower base. I don’t think their success comes out of our hide.
[CM: In 50-100 years, if we’re a poor third to some countries in Asia, I wouldn’t be surprised. If I had to bet, the part of the world that will do best will be Asia.]
来源：Source: Q&A with 6 Business Schools ；URL: ；Time: Feb 2009
10. What are the biggest challenges that this country faces?
The biggest problem is probably weapons of mass destruction. We have always had people who were ill-fitted to society and wished harm on others. In 1945 we unlocked the atom, and that changed everything. The human animal hasn’t changed, you still have the same percentage that are maladjusted. The problem is knowledge, materials, and deliverability. What you could do with the wrong kind of infectious disease is incredible. You can transmit things much faster today. Governments, individuals and organizations can’t control security. It’s what I would spend all of my money on if I could fix it. Everyone here in this room won what I call the ovarian lottery. You were born at the right time and we were all very, very lucky. We are in the luckiest 1% of humanity.
来源：Source: Q&A with 6 Business Schools ；URL: ；Time: Feb 2009
11. What do you think about the U.S. trade deficit?
I talked to Barack back in August, and said: “I have good news and bad news. The good news is that the economy will be terrible, so you’ll definitely get elected. The bad news is that the economy will be even worse at inauguration.” He asked, “Do you think it’s too late to throw the election?” The trade situation is there and it causes problem and could exacerbate the situation. However, all issues go on the back burner until we solve the big problem.
We create sovereign wealth funds, buying more goods and services than everyone else in the world. The decline in the oil price has helped the trade deficit but nothing will get better until everyone feels better. Every day, we buy $2 billion of goods and service more than we produce and export. We give the exporting nations USD. The trade deficit creates claims on the United States. Sometimes we’re a little hypocritical. For example, three years ago, the Chinese wanted to buy Unocal (a small oil company in California) and Congress wanted to condemn China for wanting to buy the oil company with the money we gave them (through U.S. imports). That’s a little disingenuous. The trade deficit creates a situation because we give people claim checks, then we get upset when they want to use them. The Japanese bought Rockefeller Center in the 80’s. Did we think they were going to move it? It’s not useful to fan those flames in a nuclear world, and that’s what’s wrong with “Buy America.” The trade deficit will come up big time when we get past the current problems.
来源：Source: Q&A with 6 Business Schools ；URL: ；Time: Feb 2009
12. What's your opinion of oil? peak oil?
Oil is finite. It will eventually run out for practical purposes. America found oil early, and there isn’t much left here. We will see a plug‐in electric car. BYD is very smart. Doesn’t know if change to alternatives will be evolutionary or revolutionary. But oil will be higher and solar/electric will be more abundant. (A side note: Buffett went from average oil out of the ground down the value chain and into a personal consumption calculation in his head in about ten seconds.)
[Q - Oil will run out this century. Considering US policy is to do nothing until the last second, will we face World War III? Will oil companies go to zero?]
WB: Oil won’t run out - it doesn’t work that way. At some point the daily productive capacity will level off and then start declining gradually. There is the depletion aspect and the decline curves. We are producing 86 million barrels per day or so, more than ever produced. We are closer, by my calculations, to almost our productive capacity, than we have ever been. I think our surplus capacity is less, and quite a bit less, than in the past. Whatever that peak is, whether it’s 5 years, 10 years, etc., the world will adjust, and we will think about it. Adjustments will cause demand to taper off. I don’t know how much oil is there, but there are lots of barrels of oil in place. We never recover total potential. We may have better engineering recovery in the future. It is nothing like an on and off switch. You may still have enormous political considerations to get access to available oil since it is so important. There is nothing you can do over a short period of time to wean the world off oil.
CM: If we get another 200 years of growth dispersed over the world while the population goes up, all oil, coal and uranium will run out, so we will have to use the sun. I think there will be some pain in this process. I think it is stupid to use up the hydrocarbons of the world so quickly. It’s stupid when there are so few, and limited, alternatives. What should we have done? We should have brought all the oil over from the Middle East in the 1930s and put it in our ground. Are we doing it now? No. Government policy is behind in rationality. If we are to have a prosperous civilization, we must use the sun.
WB: Charlie, what is your over/under for oil production in 25 years?
CM: Oil in 25 years? Down.
WB: If that is true, that is a big number. China is doing about 10 million cars this year, so down in 25 years is significant.
[Q - You speak frequently about future prosperity. How about oil – when it runs out. Isn’ t it like trying to satisfy a drug addict with Coca-Cola?]
WB: Titusville 1853 changed the world. There are 500k producing wells in the US. It contributed to the prosperity of the world. The world will not be dependent on that windfall for next 100 yrs. There will be other free lunches available, whether it be solar or other. Don’t give up on humans’ ability to innovate to face problems that seemed insoluble. We haven’t really started. If you could a point in time to be born, I would pick today. CM will give you something more dire.
CM: 150 yrs ago they needed the oil to get ahead. We can get ahead without the oil if we have to, we are advanced civilization. We need gas, coal and oil for chemical feedstock, not warmth or motor vehicles. Freeman Dyson has pointed out that we could go off oil. It doesn’t mean because we couldn’t do it before that we can’t do it in future. If it doesn’t bother Freeman Dyson, it shouldn’t bother you too much.
WB: He’s always pulling that one on me too. [laughter]
来源：Source: John Reuwer ；URL: ；Time: Nov 19 2009
13. The current tenuous economic situation and interest rates? Where are we going?
I don’t think about the macro stuff. What you really want to in investments is figure out what is important and knowable. If it is unimportant and unknowable, you forget about it. What you talk about is important but, in my view, it is not knowable. Understanding Coca-Cola is knowable or Wrigley’s or Eastman Kodak. You can understand those businesses that are knowable. Whether it turns out to be important depends where your valuation leads you and the firm’s price and all that. But we have never not bought or bought a business because of any Macro feeling of any kind because it doesn’t make any difference. Let’s say in 1972 when we bought See’s Candy, I think Nixon put on the price controls a little bit later, but so what! We would have missed a chance to buy something for $25 million that is producing $60 million pre-tax now. We don’t want to pass up the chance to do something intelligent because of some prediction about something we are no good on anyway. So we don’t read or listen to in relation to macro factors at all. The typical investment counselor organization goes out and they bring out their economist and they trot him out and he gives you this big macro picture. And they start working from there on down. In our view that is nonsense.
If Alan Greenspan was on the one side of me and Robert Rubin on the other side and they both were whispering in my ear exactly what they were going to do the next twelve months, it wouldn’t make any difference to me what I would pay for Executive Jet or General Re or anything else I do.
[Q - your opinion on low interest rates?]
WB: Very difficult for many with such low rates. People talk about easy money, but it’s not easy on the people who have money. If you invested at these rates when Columbus landed, and didn’t pay taxes, you’d have doubled your money by now! It won’t go on forever, but I’m very sympathetic with people living on a fixed income. Purchasing power is getting eaten away. This will end at some point. I would not want to be Chairman of the Fed. It won’t work forever to run big budget deficits and have easy monetary policy. When we run into trouble the blame doesn’t go to the Fed, it goes to Congress.
CM: In some sense, the reality of our situation is depressing, stocks are up because running fixed income returns are so lousy. But if it does last, we won’t like it – just like Japanese. We will be mired in stagnation. This is a very easy message. [laughter]
WB: The pressure of extremely low rates can’t be underestimated. Afraid of everything else, pressure to put other prices back up will be enormous as fear gets resolved. You shouldn’t underestimate the degree to which the last year of stock prices is result of agony of very low interest rates. We have seen a lot of that, and we’ll see what happens when rates go up.
来源：Source: Lecture at the University of Florida Business School ；URL: ；Time: October 15th 1998
14. Can volunteering help the economy? If so, then why aren't people doing it? I stick to my motto if you see something that needs doing, do it.
Volunteering can definitely help the economy. Value is created in many ways and public service is definitely an important one. It is an investment in our society and country. Your attitude will bring positive dividends to not only yourself, but to others around you.
来源：Source: Secret Millionaires Club ；URL: http://www.smckids.com/ask-warren/all-questions/ ；Time: 2010
15. How do you hope to tackle administrative costs when it comes to Aids treatment in Africa?
Bill and Melinda Gates can tackle these issues better then I can. I work on giving them more money so they can have more to work with. I am better suited to raising the capital, letting others do the work they are good at. We can do a lot more with private charities than the government can. We judge our success on how intelligently we attack a problem rather than on success or failure. Bill Gates regards every human life as valuable; we in the US need the help much less then other countries do.
All material is from question and answer (Q&A) sessions with Warren Buffett. While I believe these notes accurately represent the views of Mr. Buffett, no recording devices were allowed, all notes were transcribed, often from memory, so please read critically.
Many thanks to Whitney Tilson for his kind permission to republish his excellent notes which make up the majority of the content.
Compiled by Nick Webb. Please contact me on nick[at]sweetspothomes.com.
来源：Source: Student Visit 2007 ；URL: http://buffettspeaks.blogspot.com/2007/01/permanent-value-teachings-of-warren.html ；Time: January 2007
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