into that, because we can uplift them for such small amounts of money and get them to be self-sufficient, get those economies to be stable.
So that’s now my full-time work and I hope this younger generation starts at an earlier age than I did thinking about these things, whether it’s their full-time work or just part-time or even volunteer activity. There’s so much that can be done.
CLAMAN: Bill, Warren, what do you think?
BUFFETT: Well, when Bill talks about full-time, he means full-time. And Bill — Bill is putting in a back-breaking schedule around the world in terms of attacking these problems and I really, I salute him for that. And he’s done a great job also of enlisting government’s aid in the endeavor.
So when you’ve got people like Bill working at it, I think that’s a great plus for humanity.
CLAMAN: That’s why you’ve given all your charity money to him. We want to thank Georgetown, by the way. Wake Forest is going to come up in a minute with some questions.
Business schools, obviously, are just founts of real intellect, which is great, but let’s get to undergrad and both of you have been interested in education. But, Bill, looking at what’s going on in the landscape right now, what is your best advice to parents who right now are struggling very hard to help their kids, A, to decide what college to send their kids to, and B, how to pay for it? It’s a huge issue.
GATES: Yes, there’s a great book called, “Why College Costs So Much” that goes through some of these trends and how they might change in the future. State schools are still quite reasonably priced and so if that’s a fit for you, you know, you can get a great four-year degree from a state college. It’s unfortunate that a lot of people aren’t able to go to the private college because the tuition has gotten so high.
We need to make education more affordable because we want more people to have that degree, certificate. The wage differentials have gotten very high.
Technology is promising in raising effectiveness, but we’re in the early stage of proving that out. It’s a big area for our foundation is trying out the on-line approaches.
CLAMAN: Online approaches to university. That wasn’t even in existence when we went to school, but you’re also very supportive of public education and the role it plays. Your entire family went through the public schools here in Omaha. But is the answer more money for public schools, Warren?
BUFFETT: Well, it’s probably smarter money
CLAMAN: Smarter money?
BUFFETT: Yes, for both public schools and a whole variety of innovation coming into education. We’re spending a lot of money on education and we’ve probably — we probably really aren’t getting for our dollar what we should be getting.
CLAMAN: Well, your dollar or your Bitcoin, right? We need to talk about Bitcoin in a minute. I can’t wait to hear what Charlie Munger has to say about this. Let’s bring in Charlie Munger, the Vice-Chair of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B). Bill’s going to move over so you can come sit in. Good morning, Charlie.
CHARLIE MUNGER, VICE CHAIRMAN, BERKSHIRE HATHAWAY: Good morning
CLAMAN: I just had to get your thought on Bitcoin, this digital currency that’s out there that people say, oh, it might be the next big thing. What do you think?
MUNGER: I think it’s rat poison.
BUFFETT: Put him down as undecided
(LAUGHTER)
CLAMAN: Do you understand what they’re trying to do with it?
MUNGER: No, but I record it as deeply flaky
CLAMAN: Deeply flaky. OK, Bill, what do you think
GATES: I think it’s a techno tour de force. But that’s an area where governments are going to maintain a dominant role.
CLAMAN: Bill? Warren?
BUFFETT: I think that either Bill or Charlie is right
CLAMAN: Either one of those guys.
Charlie, one of the things I noticed during this weekend meeting was that you and Warren disagreed on a couple of issues, but the one that struck me the most was your issue on corporate tax rates. Warren feels that corporations should be taxed more; they have the money. You say no. Why?
MUNGER: Well, I think it’s a disadvantage to have your tax rate less than the tax rate elsewhere in the world. And so I don’t think we’re in total control of our own tax rates, meaning I think we should — I think it would be crazy to have a tax rate in the United States 50 percent and have it 20 percent generally throughout the rest of the world
CLAMAN: Do you think —
MUNGER: I’m all for higher taxes, but I think they should be on individuals and consumption and so on. I don’t think we — I like a low corporate tax rate.
CLAMAN: Do you think it should be considerably lower than what it is now in the U.S.?
MUNGER: No, no.
CLAMAN: Just slightly?
MUNGER: Somewhat, yes.
CLAMAN: Somewhat slightly. Warren, you disagree?
BUFFETT: Yes, I think that — incidentally, Charlie and I have disagreed on a lots of things. We’ve never had an argument in over 50 years, but we do disagree sometimes. And U.S. taxes are — corporate taxes are 1.7, 1.8 percent of GDP. Frequently, I mean, if go back some years, they were 4 percent. We did well under those conditions. Businesses are doing extraordinarily well, and since we have to raise the money from someplace and I see these returns on equity and business compared to interest rates being at incredible levels, I just think that if you’re looking for who to tax more, I think that corporations should be part of that.
CLAMAN: Well, the banks sure have moaned a lot about how they feel they’re overtaxed and that they’re overregulated. You both disagreed on that a little bit. You actually feel on the entire banking issues that banks look healthier nowadays.
You feel very comfortable about your investments in Wells Fargo, MM&T, U.S. Bancorp as well.
But Charlie, you’re less optimistic in the long-term about banks. What worries you?
MUNGER: I think too many bankers go crazy. And there is too much damage when that happens,
so I’m for more bank regulation, not less.
CLAMAN: What form should it take?
MUNGER: I would deny their ability to have huge derivative books and all kinds of things.
CLAMAN: Do you think the derivatives are still too large a position on some of their books?
MUNGER: Sure.
CLAMAN: How do you recognizance regulate something like that?
MUNGER: Well, if you let me do it, it would take about a week.
(LAUGHTER)
MUNGER: What’s lacking is the will, not the power.
CLAMAN: The will, not the power. Let’s talk quickly about the Fed. You had a great quote during the shareholder meeting where you said that, back during the first bubble, Alan Greenspan, that instead of taking the punch bowl away before people got totally drunk, they increased the alcohol proof.
MUNGER: I think so that’s right. And I think he’s regretted it since, which is to his credit.
CLAMAN: But what are we doing? Is there a punch bowl? Is the alcohol proof too heavy right now? How do you see it?
MUNGER: Well, what I said was if you’re not confused by what’s happening now, you don’t understand it. Even the people in the economics profession are confused. We’re sort of in uncharted waters in terms of –
BUFFETT: Yes. We had a huge, huge problem, so it undoubtedly required a lot of medicine, but we have not yet seen medicine like this dosed out and then the aftereffects.
CLAMAN: A little bit of agreement that you
