B000U5KFIC EBOK (28 page)

See's is a slow grower, but its growth is steady and reliable-and best
of all, it doesn't take additional infusions of capital.

"We've tried 50 different ways to put money into See's," explained
Buffett. "If we knew a way to put additional money into See's and produce
returns a quarter of what we're getting out of the existing business, we
would do it in a second. We love it. We play around with different ideas,
but we don't know how to do it."

Munger added, "By the way, we really shouldn't complain about this
because we've carefully selected a bunch of businesses that just drown in
money every year."12

Munger told Berkshire shareholders that there are a large number of
businesses in America that throw off lots of cash, but which cannot be expanded very much. To try to expand would be throwing money down a
rat hole, he said. Such businesses don't stir acquisition desires in most
corporations, but they are welcome at Berkshire because he and Buffett
can take the capital and invest it profitably elsewhere.'3

Incidentally, that is the same reason Berkshire pays no dividends.
Berkshire holds on to cash when Buffett believes retained earnings can
produce more in market value for shareholders than would likely be possible if the earnings were not reinvested within the company.

From Sees, said Munger, "We've learned that the ways you think and
operate must involve time-tested values. Those lessons have made us buy
more wisely elsewhere and make many decisions a lot better. So we've
gained enormously from our relationship with Sees."' +

Despite See's place of honor in the Berkshire crown, it now represents only a tiny portion of Berkshire's value to its owners. Even if See's
were now worth $1 billion, which is conceivable in light of its sales, that
is less than 2 percent of Berkshire's market capitalization.

Charlie has no enemies in the sense of fighting or confrontation. He has enemies in the larger sense-generated from
envy. His personality is unique, but it does not appeal to everyone. I know women who don't want to sit next to him at
dinner parties.

Otis Booth

NGLANI's KING GEORGE CALLED THE American colonist Benjamin
' Franklin the "most dangerous man in America," though Franklin was
well received when he first arrived in England in 1757. Soon after establishing himself in London, Franklin realized that the British knew very little about the colonies. Often the wag, he took it upon himself to set the
British straight. "To read the English papers," Franklin wrote, "one would
think America didn't produce enough wool to make it pair of stockings a
year; whereas the tails of American sheep were so heavy with wool, little
wagons had to be tied under them for support."'

During his 16 years there, Franklin dazzled the British with his originality. He invented bifocal eyeglasses, a 24-hour clock for navigation,
and urged the adoption of daylight-saving time. But he shocked Londoners
by swimming in the Thames and working out with dumbbells totally in
the nude. Finally, largely because of political differences but partly
because some were jealous of his popularity, he was expelled from
England.'

When Franklin sailed to France in 1776 to become the American ambassador, America's most famous citizen again was given a hearty welcome. According to the French Ambassador to the United States (in 1999)
Francois Bujon de I'Estang, Franklin had qualities that "French people
revere: He was cheerful, witty, and humorous.... The story goes that he
had not been allowed to write the Declaration of Independence for fear
he would hide a joke in it."3

Warren Buffett often teases Munger about how often he quotes Poor
Richard's Almanac and preaches Franklin's moral messages:

Buffett: "Charlie overdosed on Ben Franklin early in his life, and he believes that a penny saved is a penny lost."

Charlie: "I can tell you a lot about Warren, he reminds me of Ben Franklin,
I can tell you a lot about Ben Franklin."

'Jam a biography nut myself," said Munger, "and I think when you're
trying to teach the great concepts that work, it helps to tie them into the
lives and personalities of the people who developed them. I think that you
learn economics better if you make Adam Smith your friend. That sounds
funny, making friends among the eminent dead, but if you go through life
making friends with the eminent dead who had the right ideas, I think it
will work better in life and work better in education. It's way better than
just giving the basic concepts."'

Munger has studied the lives and scientific writings of Albert
Einstein, Charles Darwin, and Isaac Newton, but his favorite eminent
dead person has always been Franklin, a passion that he shared with
Warren Buffett's first serious mentor, Benjamin Graham. Munger admires
Franklin for being the best American author of his time, the best investor,
scientist, diplomat, merchant, and greatest contributor to educational and
civic causes. Though he admits that Franklin had a lusty side to his personality, and perhaps neglected his wife, Munger says that stories of how
badly Franklin behaved reflect a shallow understanding of Franklin, his
situation, and the tines in which he lived.

It was from Franklin that Munger gleaned the concept of becoming
wealthy so that he could be free to make a contribution to humankind. "I
always cared more about being useful than dying rich," said Munger, "but
sometimes I drift too far away from this idea."

Franklin was the son of a candle maker who had too many children,
and at an early age Ben made his way from Boston to Philadelphia to escape an apprenticeship with a cruel brother. From an early age Franklin
strove to be it better person and build a better life. After the phenomenally successful Poor Richard's Almanac made Franklin both famous and
rich, he devoted his life mostly to public service.5

Like Franklin, Munger has learned that his ideas about a good and
proper society do not always coincide with the beliefs of others. Though
most of the French continued to find Franklin interesting and entertaining during his sojourn in Paris, the king became so jealous that he put
Franklin's picture on the bottom of a chamber pot he gave to his mistress.

As SEVERAL HUNDRED FANS OF Warren Buffett and Charles Munger crowded
the front entrance to Gorat's steak house in Omaha on the Sunday
evening before the 1998 annual meeting, they confronted a disturbing
sight. About a half dozen protestors trudged back and forth on the sidewalk, carrying lurid placards showing fetuses floating in bottles and proclaiming Buffett and Munger baby killers because they have been
longtime supporters of human reproductive rights. One sign attacked
Buffett's charitable foundation for its funding of tests for the RU-486 abortion pill.'

When asked at Berkshire's annual meeting about the company's
contributions to pro-choice causes, Buffett explained that under the corporate contributions plan, shareholders are allowed to designate a charity of their choice and then gifts are given in proportion to the number
of Berkshire shares owned. "The policy is designated by shareholders.
There are a number of shareholders who designate Planned Parenthood.
The Buffett Foundation contributes to Planned Parenthood. Charlie
gives to Planned Parenthood. Put Charlie's name on the signs."

Charlie demurred: "I am perfectly willing to have that limelight
passed."

Most of the protestors knew only that Buffett and Munger are longtime and generous contributors to Planned Parenthood and to other organizations committed to population issues. They were largely unaware
that Charlie and Warren were pioneers in the abortion rights movement.
Thanks to Munger, they were influential in getting the right to abortion
legalized in California, a pivotal legal decision that preceded the Roe vs.
Wade case in the U.S. Supreme Court.

"I would say 99 percent of Charlie's friends are Republican or very
right wing. He's generally regarded that way. Most of Charlie's friends
also were unaware of his pro-choice activities," observed Buffett.

Munger confounded other conservatives and irritated the religious
right by his admiration and financial support of Garrett Hardin, author of
the well-read 1993 book, Living Within Limits. Hardin was among the earlier scientific writers to warn of looming population problems. He and
others point out that it took civilization until 1804 to reach one billion
people, but only 12 years to jump from five billion to the current global
population of six billion. In the next one hundred years, the population
of the United States alone will double from 275 million to 571 million.
Experts estimate that before world population growth stops or reverses,
there could be 10 billion people on earth. Such a large population already is putting stress on the earth's resources, including production and distribution of food. At the end of the twentieth century, an estimated
800 million people were malnourished due to difficulties of growing or
buying enough food.

A professor emeritus of human ecology at the University of California
at Santa Barbara, Hardin has written extensively on biology, ecology, and
ethics. During the 1960s, Hardin was known as "Mr. Abortionist" because
he championed abortions in hundreds of speeches around the country.

Roderick Hills, who helped start the Munger, Tolles law firm, says the
reproductive rights issue first came to Charlie's attention when he read
an article in the newspaper about a criminal case that would be appealed
to the California Supreme Court. He promptly persuaded his law firm
members to help out on a pro bono basis. The case was that of Dr. Leon
Belous, a doctor who had been convicted of referring a woman to an
abortionist.

"You can go back to the Belous case, 1972 or so. We would talk about
it all the time, Charlie was totally immersed in it," recalled Buffett.

As unusual as it may seem for a devoted family man with eight children, especially one with a conservative political bent, to support legal
abortions, Munger made the decision to go forward.

"It was emotionally hard for me to become pro-choice because I do
have reverence for human life," said Munger, "but when I thought through
the consequences, I found it necessary to overrule that part of my nature."

Once Munger decided that it should be a woman's right to decide
whether or not to become a mother, he went about seeking change with
energy and resourcefulness. He convinced Buffett, who is fiscally conservative but socially liberal, to join him in helping to pay the legal defense
of Dr. Belous. Munger and his law partners, particularly Rod Hills and
Jim Adler, organized themselves and did the rest.

"Charlie took over the case, got one amicus brief from a blue ribbon
group of legal luminaries and another brief from medical school professors," said Buffett. "Charlie made an enormous effort on that."

Hills was among the lawyers who helped assemble the two friends-ofthe-court briefs. One was written by Munger himself and signed by 17
prominent lawyers. The other was signed by 178 medical school deans
and professors.