I.O.U.S.A. (50 page)

I could say, “ Why should people have to go to Egypt to see one of these things? So, I ’ ll spend all of these claim checks I ’ ve got and we ’ ll have thousands of people in loincloths, like the original cast c14.indd 191

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in the Cecil B. DeMille production, and they ’ ll haul these blocks of granite and we ’ ll build a pyramid and make people forget all about Egypt. ” And that would command the services of other people. So you can exchange these little pieces of paper for other people ’ s goods and services in the future. And the wisdom with which you do that depends very much on the individual.

And some people build pyramids, and I hope other people engage in cancer research.

Q:
Early in the Lowenstein book, which you didn ’ t cooperate
with, he makes the statement that when you were 26, you
were already trying to fi gure out what you were going to
do with the money that you hadn ’ t made yet. I think that
leads to, later in your life, an idea of progressive taxation.

I believe you just donated a large sum of money to the Gates
Foundation. Could you just speak a little bit about your
beliefs on making money, and your obligation to your family
and society?

Warren Buffett:
I didn ’ t cooperate with Lowenstein, but I didn ’ t block him either. There ’ s a woman writing a book now that I ’ m cooperating with. As I said, I was lucky in being in the right place at the right time with the right equipment, and a market system that had enormous amounts of capital assets. Just the crumbs falling off the table would make me very rich. And the question is, what do you do with all of those claim checks? My family and I have had everything we could possibly need, you know, for the last 50 years. But, also 50 years ago, my wife and I decided that, beyond taking care of ourselves, there was no reason to set it up so that the next 25 generations of little Buffett kids could keep using these claim checks so they didn ’ t have to do anything to contribute to society. There were better uses for those claim checks. One way or another, the money was going to go back to society. Philanthropy is the logical way to do it. The question is, who would be best at using those claim checks to benefi t the six billion people around the world? I decided that the fi ve foundations that I ’ m allocating the claim checks to do a fi rst - class job of that, and so far I ’ m very pleased with them.

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Q:
What does life look like in a country where there isn ’ t a
strong economy, where they haven ’ t fi gured out how to get the
horsepower out of the horses?

Warren Buffett:
Well, the world went no place economically for centuries and centuries and centuries. And fi nally along came a system that really unleashed and enhanced human potential.

We started fi guring out how one person could get an awful lot accomplished in terms of turning out goods and services for other people. The ratio was one to one between the individual and the output. We learned how to make people far, far more productive, whether it was Henry Ford in developing the assembly line or all kinds of things that happened in this country. When you think of what one person could deliver in the way of agricultural output 200 years ago compared to what they can do now, just think of the human capacity that ’ s been freed up by the various developments in agriculture and manufacturing. You know, it ’ s been a marvelous time to be alive. It really wasn ’ t a whole lot better to live in the fourth century B.C. than the fourth century A.D., but it ’ s been a lot better to live in the year 2007 than it was in the year 1807.

Q:
What do you say to someone who says, “ Well, sure, there ’ s a
lot of winners with capitalism, but boy, we ’ ve created so many
losers ” ?

Warren Buffett:
Well, there are enormous disparities in terms of how the benefi ts of this society have been distributed. The disparities have gotten wider and our tax system has favored enormously the rich. But even those on the low end are doing far better than people on the high end were doing 100 years ago.

There ’ re many, many things that a person earning a normal wage in this country can do and enjoy that John D. Rockefeller couldn ’ t do and couldn ’ t enjoy. So a rising tide has lifted all the boats, but it ’ s lifted the yachts a lot faster.

Q:
Is that a good thing or a bad thing?

Warren Buffett:
I think it ’ s a bad thing. Our tax system has gone very much awry, particularly in the last 10 years. It wasn ’ t this c14.indd 193

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way 50 years ago, but I am now treated as sort of an endangered species by the government. They want to make sure nothing bad happens to me, so I get a tax rate of 15 percent, counting payroll taxes, virtually, on a very large income. The average American is paying a higher tax rate than I and most members of the Forbes 400 are paying, if you count payroll taxes.

Q:
Do you think that the pendulum might swing back the other
way for the benefi t of the country?

Warren Buffett:
Well, we ’ ll see. That depends on political developments. I don ’ t think there ’ s any urge in the present administration to have the tax system change and tilt away from fellas like myself, but the world has changed many times on taxes over the years. If you read the history of the tax code, for the last 90 years or so, there have been a lot of swings in both public opinion and activities in Congress. The one thing I can promise you is it ’ ll be different 20 years from now.

Q:
Do you think supply - side theories are 100 percent effective and
effi cient, or does it depend on where we are in the world?

Warren Buffett:
I think that the market system generally works pretty well. And I think a rule of law helps enormously, and I think equality of opportunity is enormously important. You ’ ve got to have a way for the Jack Welches or the Bill Gateses or the Andy Groves to get into the positions that they should be in, where they ’ re very good at using resources. And we have had a system in this country that ’ s done a far better job in that respect than around the world. So you want a system where Mike Tyson is fi ghting for the heavyweight championship and Jack Welch is running General Electric, but you don ’ t want Mike Tyson to be running General Electric and Jack Welch in the heavyweight ring. Government allocation of resources has tended, too often, to misallocate, and I think a market system does a pretty good job of allocating. But I also think you need a better distribution of the magnifi cent amount of goods and services that are turned out by the system.

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Q:
Do you think your grandchildren are going to live in a great
country 50 years from now? What do you hope for your
grandchildren and what do you see?

Warren Buffett:
Well, 50 years later, I really hope to be around myself and be the world ’ s oldest living man. I would love the idea of living 50 years from now if we can somehow solve the dilemma of weapons of mass destruction.

Q:
And what does life look like for your grandchildren do you
hope, and what do you really honestly think?

Warren Buffett:
Economically, my grandchildren will live better than I lived, even if they earn a tenth of 1 percent of what I earn now. The average American is going to live better 10 years from now, 20 years from now, and 50 years from now.

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