2013 年 Charlie Rose：Warren, Howard G., and Howard W. Buffett

Warren, Howard G., and Howard W. Buffett

Tuesday 10/22/2013

https://charlierose.com/videos/23762

Warren, Howard G., and Howard W. Buffett discuss the ways philanthropy can confront poverty.

Charlie Rose: and a longtime friend of mine and this program. His genius as an investor made him one of the world's wealthiest men. He pledged to give away most of his fortune and donated $31 billion to the Bill and Melinda Gates Foundation in 2006. He's also encouraged his children to engage in philanthropy. Warren Buffett's son Howard Graham is the Chair and CEO of the Howard G. Buffett Foundation. He's also the author of a new book, it is called "Forty Chances: Finding Hope in a Hungry World." His son, Howard Warren Buffett, is a lecturer at Columbia University and trustee of his father's foundation. He's contributed to the book with his own experiences in policy making and philanthropy. So I'm pleased to have all of them here together at this table for the first time -- grandfather, son and grandson. So how does it feel?

Warren Buffett: It feels great.

Charlie Rose: It really does.

Warren Buffett: Yes, yes, I am very proud of them.

Charlie Rose: You talk about that in your introductory remarks. So let me just start with the book. Clearly because I knew your mother and understood how -- what's -- what's involved here is what you have learned, but also what you learned in addition from them. Give me a sense of what it was that you were trying to accomplish with "Forty Chances".

Howard G. Buffett: Well, you know, both my mom and dad were phenomenal in terms of the opportunity they have given me and my brother and sister. And in my case, I spent a lot of time traveling around the world and met a lot of people, seen a lot of things and I just felt that, you know, those experiences are something that hopefully are worth sharing. I -- I start out with the idea of doing a textbook and Howie told me, he says "Dad you have to think a little bigger than that." So I -- I just thought that, you know, sharing some of the experiences and, you know, we have tried a lot of different things and we have failed at more than we've succeeded and I just feel like that's an important message.

Charlie Rose: You can learn from failures?

Howard G. Buffett: Absolutely, yes.

Charlie Rose: Why the title "Forty Chances?"

Howard G. Buffett: Well, I was going to something that most of your viewers will not get too excited about it's called Planter's School and it's a -- you go in the winter time and you go to the John Deere dealership and sit down and different speakers will try to tell you how to improve your -- how you do on the crop.

Charlie Rose: Right.

Howard G. Buffett: And you know, he kind of talked about how you only really have 40 seasons -- 40 growing seasons to do the best job you can. And I kind of then translated that into thinking about well you really have about 40 really prime years.

Charlie Rose: Yes.

Howard G. Buffett: I was joking and say he has 80.

Charlie Rose: Yes I know -- in this dad.

Howard G. Buffett: Yes, but, you know, a little Eveready battery but, you know, the truth is most people have, you know, in their prime they have about 40 years to really change things or achieve their goals or whatever it is they want to set their sights on.

Charlie Rose: You still consider yourself first and foremost a farmer.

Warren Buffett: I love it, yes.

Charlie Rose: Yes.

Warren Buffett: Yes, I would never want to give it up.

Charlie Rose: When you were last here and we talked with Warren, you said you were in the middle of a transition to impact decision makers more effectively, is this book the culmination of this?

Howard G. Buffett: This book is a big part of that. Yes, I learned a lesson particularly working in conflict areas and there is where you really have to have government engagement that you know if you don't -- if you don't impact policy, you know, if you are working -- you can have great people but if you are working under really poor policy they are not going to succeed. So we really started to embrace advocacy as part of our tool.

Charlie Rose: Yes and you believe that we can do a significantly better job at trying to eliminate poverty?

Howard G. Buffett: Absolutely. I think one of the things is we have been living too much in history and you know, technology has changed but also I think thinking has to change and thinking is changing, I mean you know, the younger people in philanthropy today think differently. They are more innovative I think they are more focused and those -- those people that are thinking and driving that way, I think have to help change some of the bigger organizations.

Charlie Rose: I'm amused at what Warren once said that it's better if you give away your money while you can make the decisions before you are 90 and drooling with a blonde sitting on your lap.

Warren Buffett: That's right. That's right. I try to try that one too. I think I got the drooling part down, where is the blonde?

Charlie Rose: There is also your mom. And as everyone I think knows, we did a wonderful conversation with her before she died, and here is an excerpt of that in which we see her and her impact on the family. Here it is.

Susan Thompson Buffett: I think he hopes that people remember how much he liked to talk about the ovarian lottery he does that. And I believe that so deeply like he does, and if he can make young people realize I'm lucky I was just going here and then take it a step further and what can I do for people that are not so lucky including people here, I know that means a lot to him.

Charlie Rose: So you say this, Warren, in the introduction, "In this ovarian lottery my children received some lucky tickets. Many people who experienced such good fortune react by simply enjoying their position in life and try to make sure that their children enjoy similar benefits. This approach is understandable but it can be distasteful if it's accompanied by a smug 'if I can do it why can't everybody else' attitude." Emphasize or help us understand the significance of the ovarian lottery, because, it says something about how lucky we are to be born in this country.

Warren Buffett: Charlie I was born in this country and the odds were 30 or 40 to one against it when I was born in the 1930. If I had been born some place else my life would have been nothing like it has been here.

Charlie Rose: It was the allocating capital.

Warren Buffett: I would be wandering around in Bangladesh saying I allocate capital and looking for a job.

Charlie Rose: And was sign up for --

Warren Buffett: You know I was -- I was fortunate with my parent. I was fortunate at the time I was born. You know, I happen to be wired in a way that works very well on a big capitalistic system. I've had all kinds of good luck. It could have been, you know, dramatically different.

Charlie Rose: But millions of other people haven't had that. They have not benefited from the ovarian lottery.

Warren Buffett: Obama got a certain amount of criticism when he said you know nobody does it alone. Well I -- I don't know about other people I did not do it alone. I mean there are -- there are 10,000 crosses over there at Normandy that -- and they will need to be where I am today. There are people of Gettysburg, I mean, it's -- none of us do it alone. And I have been very, very lucky to be sort designed for this time and this place. But a lot of people aren't lucky and the market system showers things on me and it leaves an awful lot of people behind.

Charlie Rose: I should take note of the fact that son and grandson are named Howard.

Warren Buffett: Yes.

Charlie Rose: Your dad is named Howard as well, your hero in life.

Warren Buffett: Yes. Absolutely. Yes.

Charlie Rose: The idea is that you can do what if our goal is to eliminate poverty, to a large extent? What's the step that we ought to take? And I will bring in your son in a moment.

Howard G. Buffett: Yes, I think part of what I try to write in the book is use our experiences and talk about some of those answers. I think when philosophy kind of clashes with reality, which what we've seen in our Congress recently you know reality with those people living in reality kind of lose. And so you know we need to have more serious leadership in terms of addressing this issue. So when people talk about cutting the SNAP program, you know, those people don't suffer the consequences from that action and they need to understand who does suffer those consequences. So really, awareness and advocacy are a key thing in terms of the policy. And then, you know, another thing we need to do is we -- I always say, you know, historically, business has been kind of the bad guy and in philanthropy people have looked at it and said well you know, I can't -- they are doing this or they are doing some things so I can't really partner with them. And the truth is businesses create jobs and jobs are what permanently bring people out of poverty. Now it's not that simple in a lot of cases but we have to have a different mindset about what some of the solutions are.

Charlie Rose: I -- tell me about you and what you've learned and your role in this book.

Howard W. Buffett: Well, I am just honored to be involved and over the last 15 years I have been able to travel with my dad around the world and take in so many experiences and that's a part of what we've tried to capture in "Forty Chances". But for me growing up I have had the two most incredible role models anyone could ask for and -- and you know, we sit around at Dairy Queen at family brunch and have conversations but they are -- they are still unbelievable individuals. You know my grandfather built what was one of the world's greatest fortunes and turned it into one of history's greatest gifts. And in doing that he empowered my dad to try and change the world and -- and that opportunity is what my dad has used to share with me to try and improve lives everywhere.

Charlie Rose: Tell me about your visit to Prague in 1969.

Howard G. Buffett: Yes, that was a -- that was a big change in my life and one of the best things I ever did and I wouldn't -- I wouldn't have gotten it done if it wasn't for my dad because my mother did not want me to go and we argued and argued.

Charlie Rose: At the time --

Howard G. Buffett: Yes, I had no concept of what was going on in Prague, I just know that Vera who stayed with us as an exchange student said come on over. So I said I want to go over and you know I am flying in, it's one of those kids where the mood changes quite -- quite quickly because I am flying in and I am looking at you know I love big -- big machines and you are landing and you've got all of these tanks and all of a sudden this is really cool and then when I am standing face to face with the soldiers who was looking for ID I am going boy this is not so cool. And so you know but I learned so much, you know, I didn't get three meals a day.

Charlie Rose: Yes.

Howard G. Buffett: We boiled hot water on Sundays to take a bath. I mean, you know, it was just so different and -- and you saw people who were subdued, people who were beat up by secret police, I mean I saw all this and to see it is different than reading a book and so it really changed, you know -- it is the first time I felt helpless. And then I felt like I really should be doing something but I can't do anything and I think you know later on in life that really stuck with me.

Charlie Rose: What is it that makes you proudest?

Warren Buffett: Well I am proud of all three of my children but they -- but that they don't have to do what they are doing. I mean they don't have unbelievable amounts of money but they have enough so they can -- they can spend their time in a country club or something of the sort.

Charlie Rose: Right.

Warren Buffett: And then Howie I don't know how many countries he has been in, but -- but he is -- he is trying to help his fellow human being. Unfortunately, I've got somebody that can help him do that but -- but the energy and the imagination and learning from mistakes and all of that belongs to him.

Charlie Rose: One other thing you have other than this sort of instinct for farming and agriculture and experience and learning is photography and we will see a couple of things here, several things. Tell me, your wife introduced you to cameras, yes?

Howard G. Buffett: Yes, yes.

Charlie Rose: And what did it do for you? What did it turn you into?

Howard G. Buffett: I think for one thing, she -- the first thing she would tell you is it taught me some patience. If you want to get a cheetah on a kill you have to wait. And --

Charlie Rose: Cheetahs are not about waiting for you.

Howard G. Buffett: No that is exactly right there is no remote control that you could like yes. So it did, it taught me some patience but I -- you know I just saw -- I started seeing things, you know, on the farm originally that I just kind of wanted to capture. And then when I started traveling and originally we did a lot in conservation so it was a lot of fun. You know, the elephants and cheetahs and lions and all of those things that kids like to see and we all love. But, you know, then I've learned that photography is a really powerful tool to change people's minds, to make them -- you can't -- if you've got a strong enough photograph, people can't turn away from it. You can't deny that it's happening and so to me, it's -- I think I write in the book if I remember right that it's look truth gun. I mean it just you know it -- it really forces people to deal with the reality.

Charlie Rose: As somebody said effectively a picture is worth a thousand words.

Howard G. Buffett: Yes, absolutely.

Charlie Rose: Ok take a look at some of these. These is a -- I want you to describe the photograph. This is an emaciated veteran saluting a flag.

Howard G. Buffett: Yes this is Everett -- this is Everett in West Virginia. Everett was one of those circumstances where I had not gone to really photograph Everett but we saw him and came out to get his mail and I saw his ribs and knew he was malnourished. And so we turned around and went back and that picture is really interesting because I was on the other side of a very busy road waiting to cross, my colleague had already gone off he's standing at the bottom of the stairs there and I yell across the street, I said ask Everett if he's a veteran because he had the flag and immediately what he did is he saluted. And then we spent quite a bit of time talking to him but he is an example of somebody who served this country and hasn't been treated fairly.

Charlie Rose: Here is a picture of a boy you photographed in Senegal who was in chains. What is this story?

Howard G. Buffett: Yes this is a -- this is where my camera almost got me in a lot of trouble.

Charlie Rose: Yes.

Howard G. Buffett: We got in, I was able to take one camera, it was amazing we got into this area of about 40 or 50 young boys in shackles and chains and they basically are caught in a religious system that their parents give a child to the who is the head of the religion there. And basically those children beg for money, if they don't get enough money on the street then they are treated like this.

Charlie Rose: Ok the third slide is a picture of a woman in Armenia, 82- year old Anna.

Howard G. Buffett: This is Anna. I think Howie should tell you this story.

Howard W. Buffett: Right you know we had been driving through the country side in Armenia for hours at this point and I think almost by happenstance we stopped at this house and we were invited in by Anna. And she told her story about her sister who was mentally ill that she had to lock up at night because her sister tried to kill her. And what you are seeing is you are -- you are seeing her standing in both her kitchen and her bedroom and her porch all at once there. And it was one time that I had an incredible difficulty with it, because whatever it was about the situation it just -- it hit me so hard emotionally and, you know, my dad and I have seen indescribable instances around the world and Anna's story just touched me in a way I was not expecting.

Howard G. Buffett: Charlie if I could add really quickly, I told Howie we are in south -- I said on the way home we are going to go Armenia. And he said Dad, I don't want to go to Armenia and what's in Armenia and he really didn't want to go and I said you know I was just there.

Charlie Rose: Generational difference there.

Howard G. Buffett: And you know, I said you are going to see something you've never seen. I have taken him to Bangladesh and India and all of Africa and central America and what I wanted him to see was a society that when you talked to people, you know, this is -- this was a situation where people had good jobs, we talked to professors who are out of work we -- you know, they have lost cars they've lost houses, they can't send their kids to school anymore. It is a very different environment than what we see in a lot of countries we work. And I wanted him to have that experience.

Charlie Rose: I think that's been one of the things that Bill and Melinda Gates have done is to travel and firsthand experience with their own eyes and their own you know visit.

Warren Buffett: Yes, yes you can't -- you can't sit in a building on Park Avenue and really understand this.

Charlie Rose: Yes. You believe -- what ought to be the debate about philanthropy now because the Giving Pledge has elicited some of that. People stepped up -- and they are having meetings as part of that in which they try to understand how to give more effectively. But do we need a bigger debate about philanthropy and how it can be applied and -- and why you should be engaged?

Warren Buffett: Well, philanthropy does not operate with a market system, I mean when we sell the Dilley Bars at Dairy Queen we still don't know why the people like Dilley Bars. The market system is wonderful in terms of the feedback it gives you on ideas and products and all of that and philanthropy you know if you are handing money to people, they are going to say keep handing it one way or another and they'll flatter you and do all kinds of things. So you get -- so you do not have a market system test and that -- that makes it much more difficult and you can do the wrong thing for a long time and nothing will stop it. So it -- it requires, it requires more ability than business.

Charlie Rose: Do we have -- it requires more ability to give money away than make it?

Warren Buffett: Oh, absolutely, absolutely. There is no comparison.

Charlie Rose: Yes. In fact that's why you gave the money to Bill and Melinda Gates because you --

Warren Buffett: And the children.

Charlie Rose: And the children because you were admiring of the fact that you could be effective --

Warren Buffett: The energy they would bring to it the intelligence, the lifelong commitment, I mean that's -- that's important.

Charlie Rose: So what's your role at the Bill and Melinda Gates Foundation?

Warren Buffett: Writing checks. Actually it is sending over stock certificates -- I just endorse them. But it is the same role I have with my children.

Charlie Rose: But you know, it's more than that.

Warren Buffett: No, no.

Charlie Rose: I mean you -- you have a sense of -- of wanting to inspire.

Warren Buffett: Well and -- but I wouldn't have joined with them if they didn't have the same goals there. Their philanthropy is grounded around the proposition that every life has equal value. And my children believe th same thing and -- and they are young and they are willing to devote their -- the rest of their lives to it as my children are doing. So I -- I've got these -- you know people working for me that do it far better than I would do it and I happen to love what I do. And fortunately that tends to increase the amount of resources available for philanthropy.

Charlie Rose: Still tiptoeing to work, are you?

Warren Buffett: Tap dancing, tap dancing to work, I am doing hand springs.

Charlie Rose: The Rockefeller Foundation was famous for the Green Revolution and its support of that.

Howard G. Buffett: Yes.

Charlie Rose: Are you, do you think that something like that in agriculture?

Howard G. Buffett: I think today where I call it the Brown Revolution, we -- we've got to start protecting our natural resources and soil is the key. I mean you can't -- you know, it is like if you want to go somewhere in a car you have to put gasoline in it or diesel fuel. You've got to -- you just have to have soil to grow anything and we've not done a good job of recognizing it. It's not sexy, soil isn't sexy so you know people don't think about it but --

Charlie Rose: You and Bill Gates thinks it's sexy.

Howard G. Buffett: Well I -- I gave Bill this book called "Dirt" I said read this and you will understand why soil is more important, but you know -- and you know, it's -- it's a challenge, because it's not what everybody thinks about but we -- we do have to pay more attention to how we're treating our natural resources and we want to be able to farm the way we farm in 100 years and then we've got to do it.

Charlie Rose: I want, one more time, because she was such a part of the shaping of the three of you, I mean you have said to me about Suzie, you know, that you once said to me you've got to meet her because I was a mess before I met her.

Warren Buffett: That's true, that is true.

Charlie Rose: This conversation took place not soon -- not later -- soon after this she passed away but here is her reflecting on the family and the values.

Susan Thompson Buffett: I think that's what made Warren a Democrat I take the credit for that, because both our parents were Republicans and we are not. And he would go with me to hear speakers, you know, Jesse Jackson and the man who wrote "Black Like Me" and Lewis. And he would go with me, and say -- oh I loved him, loved him, so without knowing it, step-by-step, I was infiltrating.

Charlie Rose: Yes.

Susan Thompson Buffett: And so -- and he is very much -- I find this a profound thing. I was talking to him one day about some racial issue and he looked at me and this, Charlie, would have been 40 years ago and he said to me, wait until women discover they're the slaves of the world. Now how many men are cognizant of that and even women?

Charlie Rose: Wow. Prophetic, huh?

Warren Buffett: Yes.

Howard G. Buffett: Charlie I watched that interview before I wrote this book.

Charlie Rose: Yes. It is throughout the book isn't it?

Howard G. Buffett: Yes. Yes.

Warren Buffett: I should point out she is just recovering from throat cancer and it affected her voice.

Charlie Rose: And this was June 2004. Let me talk about the world that you see now politically. We just went through a crisis in Washington.

Warren Buffett: A Washington-created a crisis.

Charlie Rose: Washington-created and demanding things before they would support not only a rise in the debt ceiling but also some other budgetary items. What is this doing, do you think, to the image around the world and people who either hold treasuries or, b, have looked to America for economic strength?

Warren Buffett: Yes. Well, I told my children and I think it's in the book that, you know, it has been 20 years building a reputation, you destroy it in 20 minutes. Well the United States spent 237 years building a reputation and that's why we have become the world's reserve currency, and people trust our full faith and credit. And for a Congress to threaten to destroy what took 237 years to build is just -- it's totally irresponsible. The debt ceiling -- it shouldn't exist, I mean, the way to have a ceiling on your debt is not to spend more --

Charlie Rose: My idea of a debt ceiling is negotiating over this.

Warren Buffett: It is not.

Charlie Rose: It's not.

Warren Buffett: But once you have it.

Charlie Rose: Yes.

Warren Buffett: If you're going to have it, it can't be used. I mean we have nuclear weapons but we're not going to use them, even if we get disappointed with other say. We don't say because this isn't happening not the way we want we are going to use a nuclear weapon. The debt ceiling is a political weapon of mass destruction and both parties should say it is off the table, you know. You know we can argue about abortion we can argue about immigration, we can argue about those things whatever it may be but we're not going to tie that to a threat to destroy a reputation that the United States has built up over 237 years. So I would ask both political parties to say it is off the table.

Charlie Rose: Do you think it's more likely that they will be listening because of the close call we had here?

Warren Buffett: I think maybe. You know, I -- I always have hope in humans and actually, Senator McConnell, who I don't agree with on many things, but he has -- he has introduced in the past, I believe, something that at least -- it will reduce the chance that the debt ceiling will be used as a weapon. And it should be eliminated entirely but if that's the best we can do politically you know more power to him.

Charlie Rose: Default would have been the weapon of mass destruction.

Warren Buffett: It just would have been plain stupid, it would you know, it would be -- it would be like using poison gas or something, I mean just because you weren't getting your own way. It is not something to be used as a weapon.

Charlie Rose: Ok. So now you have Democrats and Republicans and you have a commission, Patty Murray and Paul Ryan.

Warren Buffett: Yes right.

Charlie Rose: Are sort of chairing it.

Warren Buffett: Yes.

Charlie Rose: And they have --

Warren Buffett: And I think they are good people.

Charlie Rose: And they've got until -- and they know something about budgeting, because they are chairmen of their respective committees. You now have until December 13th, should they use Simpson-Bowles as a starting point?

Warren Buffett: Well, I think they can use that or something like it. I mean -- I mean their goal ought to be to get a lot done.

Charlie Rose: Ok and so what should they try to get done? Help me understand -- help them understand what a Buffett recommendation would be.

Warren Buffett: Well they are not going to get 535 people on board but they should do as much as they can toward both raising revenues where it won't hurt the economy and -- and I think looking at certain aspects of entitlement, if they want a means test of my Social Security I am all for it.

Charlie Rose: And a certain age too?

Warren Buffett: Yes probably. You can't look at one part of a program without looking at the whole program.

Charlie Rose: Right.

Warren Buffett: But -- but if they come up with a program that I am 80 percent in agreement with I will cheer them on. I mean nobody is going to be 100 percent in agreement. And that's their job. I mean whether within this time frame they can get it or maybe that will help get them done what's happened up somehow. But the job of the Congress, you know, is not to be putting up debt ceilings and shutting down governments and doing things like that. The job of the government --

Charlie Rose: They've got to find a budget now and they have to do that so that they don't have the debt ceiling crisis they had before.

Warren Buffett: Yes but they -- the first thing I would do if I were Patty Murray and Ryan -- Paul Ryan is, I would say, on behalf of our respective parties, you know, we are calling for absolutely taking the debt ceiling out of any future discussions, that tie up with anything else and I would say, we both said in the past, I would not get into this finger pointing stuff or anything of the sort. It doesn't make any difference who used it in the past, it is an inappropriate instrument to use.

Charlie Rose: And -- and you would say to Democrats we have to reform entitlements.

Warren Buffett: We should.

Charlie Rose: Because there is an article you saw in the "Wall Street Journal" a day or two ago saying, you know the liberal and Democratic Party saying no messing around with entitlements. The Republicans are saying don't cut taxes as long as you have those two positions.

Warren Buffett: It certainly has worked wonderfully so far taking that approach. Now I would say this, to the extent it can be done if I were -- if I were Murray and Ryan, I would try to do in this in private and come out with something of a package, because I think if you take it one by one, nobody wants to give on the individual points. So it is an enormous problem to have a debate in public when people are facing primaries in not that many months and that's what they are worried about. So I would try to come out with something close to a package that everybody just liked a little bit but overall we felt was good for the country.

Charlie Rose: So what is it you dislike that you would be willing to see in the package?

Warren Buffett: Oh, I -- I think that -- I think we have to make certain judgments about entitlements. I think we have to make certain judgments about taxes but how it's -- you know it's -- you can't really talk about one part of the package without looking at the whole package, that's why I would like them to come out with the whole thing.

Charlie Rose: Well let me just understand this too. I mean when you talk about we need to increase revenue, obviously, we do.

Warren Buffett: Yes.

Charlie Rose: You mean more than simply reducing deductions, you mean increasing rates?

Warren Buffett: Yes now the revenue has to go up to 18.5 percent or so of GDP.

Charlie Rose: Yes. Expenses -- that is a place it ought to be 18.5 percent of the GDP.

Warren Buffett: Yes expenses should be 20.5 or 21, we can take two -- 2.5 percent gap without GDP going up, without the debt going up as a percentage of GDP, there is nothing wrong with that. I have operated in a world like that, you know, since I was -- since World War II ended, it works. But it's not -- it's not impossible. We are richer than we've ever been, we're absolute -- you know, $50,000 of GDP per person, I mean, we are way richer than when I was working 30 or 40 or 50 years ago. So the problem isn't that the country has become poor, the problem is that we have over promised and we are unwilling in some cases to raise the revenues to meet some of the promises that we probably should have.

Charlie Rose: $50,000 means when we compare our per individual --

Warren Buffett: It's six times what it was when I was born.

Charlie Rose: And it's $50,000 thereabouts and in China it's what 7,000 or 8,000.

Warren Buffett: Yes. I think it was.

Charlie Rose: Maybe even 4,000 or 5,000.

Warren Buffett: We are the richest family on earth. Imagine when my dad was in the waiting room in 1930 and somebody said that your son is going to live -- when the average is six times per capita what it is today. My dad would have thought it would be utopia. I mean it is unbelievable what we have achieved in terms of learning how to turn out stuff, in terms of how we handle the stuff that we turn out. I mean we are enlightened a little bit.

Charlie Rose: Now I have to say that your son will have an income and a wealth larger than some -- a number of countries too.

Warren Buffett: Oh, things will -- this country has a wonderful future, Charlie and incidentally, 535 people can't screw it up. They may look like they're trying sometimes but they can't. They can't stop 315 million Americans. I mean America works, but it has certainly gotten gummed up in recent months.

Charlie Rose: But do the Chinese and people who own treasuries have somewhere else to go?

Warren Buffett: No, no. And America will pay its bills, I mean the full faith and credit of -- is still intact in the United States. I mean I think -- I think enough people have learned something from going up to the brink that we are going to -- it should just be ruled out entirely. Why worry about something that isn't going to happen? Why cause millions of people to worry about something that 535 know would be crazy and it won't happen? That doesn't make any sense. If I would say something on this show that I know isn't going to happen, and then cause worry for tens of millions of people that is irresponsible.

Charlie Rose: And the idea was that they're going to be able to defund Medicare, for example in the budget -- Obamacare.

Warren Buffett: They can say they want a new post office, you know, in Omaha and I'm not going to vote for this thing. It is just -- it's crazy.

Charlie Rose: But there is also this argument and tell me where -- how you see it because we have deficit hawks who talk about long-term debt that this country faces, and you have Larry Summers and others who are arguing that, you know, what we need to do is focus on growth and that the growth we will have will enable us to pay off the debt because that is not an immediate need and the immediate need is growth. Do you agree with Larry Summers on that?

Warren Buffett: We are having growth and we are going to continue to have growth.

Charlie Rose: But we need growth to meet the challenge of being

Warren Buffett: But we should not increase our debt over time at a rate that's faster than our growth. I mean we can handle the debt we have. We can handle the debt we have relative to our current output. But we can't keep getting debt grow at a rate that is faster than output, eventually that catches up with you.

Charlie Rose: What is an appropriate rate of debt to GDP?

Warren Buffett: Nobody knows exactly. But certainly --

Charlie Rose: What do you think?

Warren Buffett: -- but our net debt, people talk about close to $17 trillion but our net debt is -- knock $4 trillion off that. Our net debt is 70 odd percent of GDP. We came out of World War II with I think close to 120 percent -- I may be off a little bit on that. So nobody knows the magic level but you don't press them to the ultimate. I mean, you know. And if we stay at 72 percent or whatever it may be, of net debt to GDP that is perfectly ok, you know, it got down into the thirties not that many years ago starting from that 120 but we are fine. But it is a trend that should not continue.

Charlie Rose: How do you feel about sequestration?

Warren Buffett: Well, again, that gets into the, you know, sort of gets into the games that people play. I would just like them to focus on what this country needs, what they can do for the 315 million people. They are not all going to agree, you know. If they get a budget and you like 80 percent of it, I like 80 percent of it -- it won't be exactly the same 80 percent but we will feel ok. I mean we'll feel a lot better than having them play the games they have been playing the last few months.

Charlie Rose: But do you have a sense -- and I think you said yes -- that there may very well because of what Mitch McConnell has said and that others have stepped forward to say we cannot let this happen again. We just can't kick the can down the road.

Warren Buffett: It should be taken off. We used the atomic bomb twice in 1945. We faced all kinds of things since then. The Soviets have faced all kinds of things that really irritated them and they wanted to change in a big way. They did not drop nuclear bombs and this is a nuclear weapon of a financial sort. And it just does not belong in the repertoire of either party.

Charlie Rose: Do you believe we learned the lessons that caused the crash in 2008?

Warren Buffett: Well, we learned that bubbles will happen and when you get one in housing it can be a very big bubble. We -- people may get smarter in some respects. When it comes to fear and greed, I don't think they will change in the next few centuries, anyway. I will let you carry it out beyond that.

Charlie Rose: But interesting we just had a Nobel Prize in economic award and one man Fama, you know, believes that the markets can be ordered and that they are --

Warren Buffett: They are efficient.

Charlie Rose: They ar efficient. The other -- Shiller says, no, they are irrational and we will have more bubbles.

Warren Buffett: Yes.

Charlie Rose: Where do you come down?

Warren Buffett: Well, the markets are generally quite efficient but they are not efficient and I think probably Professor Palmer would say that.

Charlie Rose: Yes.

Warren Buffett: Shiller is right that we will have more bubbles.

Charlie Rose: Yes.

Warren Buffett: This was a particularly extreme one because it involved the biggest asset class in the country that almost everybody had -- housing. And it also was leveraged to the hilt in many cases; people have refinanced their houses and everything. So you had a huge asset class, margined to the hilt. And when that asset class fell in price, I mean it hit tens of millions of people and financial institutions all over the world that lent based on everything. It was designed to be a huge, huge crash and we got it.

Charlie Rose: And do you think we have learned a lesson?

Warren Buffett: We have learned a lesson about that kind of bubble, I mean, you know.

Charlie Rose: And wil Dodd-Frank help us next time?

Warren Buffett: I am not sure.

Charlie Rose: You don't think they have done the job that was necessary with Dodd-Frank -- -- to creating a regulatory structure that may be both a warning and preventing people from doing the kind of behavior that got them in trouble in the first place?

Warren Buffett: Fear and greed are pretty hard to control, you know.

Charlie Rose: Fear and greed triumphs over regulation.

Warren Buffett: After 1929, you know, we spent two or three years -- we had the FCC. We had the deposit insurance and did al; of these things, looking at 1929 and, you know, we got 2008. I don't think humans will ever behave in a way where you don't get mass fear from time to time.

Charlie Rose: One interesting thing is that Tim Geithner is now having some speeches and private conversations who said we could not have done what we did -- Bernanke, Paulson, and me -- without the emergency powers that were given to use by the Congress. And then some people in the present debate want to stop that kind of power.

Warren Buffett: If you look at Dodd-Frank, I have read all 20 -- however many pages there are, but Bernanke used something called Section 13-3, I had a Federal Reserve chairman I won't tell you which one who told me once he said under 13-3 we can do anything. And the truth is we had to do almost anything. And Hank Paulson had something called -- what was it -- emergency stabilization fund. It was set up when they changed the price of gold back in 1943. That is the thing he used to guarantee money market fund. Nobody ever thought it was designed for that but they did it, you know. And who was going to stop them? I don't know whether the emergency stabilization fund allows that, but you had men there who would act and who had these authorities and to some extent, I believe, I may be wrong on this, that Dodd-Frank circumscribed some of those abilities that the fed and the treasury had and believe me they were important last time.

Charlie Rose: And they could -- they say so. There is also this, JPMorgan and a $13 billion settlement. What do you think of that? Was that appropriate? Was it the right amount? Will it serve to send a signal?

Warren Buffett: I don't know what the right amount is but I know this. When a prosecutor tells you that a financial institution -- it was I think we got fined $290 million when I was at Solomon. I had now negotiating power. Believe me, if they brought a criminal action against us we were out of business the next day and that would have had a lot of consequences. So you really have no -- you're like a wolf baring your throat, basically, if you are dealing in that kind of a situation. And I don't know where the numbers come from. I do know that in my own view, punishing JPMorgan for anything that happened in connection with Bear Stearns or WAMU I think is a terrible mistake. I mean maybe Jamie didn't get an indemnification agreement on Bear Stearns, but he was stepping forward at a time that the government wanted him to step forward and same way with

Charlie Rose: You think it is unfair?

Warren Buffett: Yes. I think if it relates to any of that, I think it is unfair. Yes, I really do.

Charlie Rose: I think they will argue there was more than that.

Warren Buffett: Well there was more than that probably but they have referenced, I think they have referenced the sins of Bear Stearns and WAMU in coming up with the number. And I don't think anybody in government was hoping that JPMorgan was going to walk away from Bear Stearns or WAMU. And I think they could have -- they probably could have gotten an indemnification agreement if they wanted to, you know, take risks with the whole economy in terms of keeping the negotiations going. But, you know, they were asked to act in a very, very quick manner and they did and maybe they are getting punished for it now. I think, I will put it this way I think the system is better off because Jamie Dimon has been running JPMorgan straight through from 2008.

Charlie Rose: You say that because?

Warren Buffett: I think the guy has been a leader.

Charlie Rose: Because of the decisions he has made?

Warren Buffett: Yes.

Charlie Rose: In building the biggest bank in America?

Warren Buffett: Yes when Bear Stearns was going down he was there. And when WAMU was going down he was there. And those were important decisions not just in terms of those institutions but what they said to the rest of the world that somebody is stepping up.

Charlie Rose: Who pays for this -- $13 billion?

Warren Buffett: Well, the shareholders will pay for it. And of course, they're not even the shareholders who were around in the past. That's the nature of it.

Charlie Rose: And if JPMorgan is today -- two other banks you have an investment in -- Bank of America and Wells Fargo might also be at risk.

Warren Buffett: Well, they have written big checks already, you know. The truth is if a regulator comes around you and you hold licenses in all of these states and maybe (inaudible), you do what they say. You know, you put up the best argument you have but you do what they say.

Charlie Rose: Well, according to what we have read, Jamie very much wanted them to also forego the criminal possibilities and they refused to do that so the criminal possibility is still out there.

Warren Buffett: Still is out there -- I don't think it will happen but --

Charlie Rose: But -- if they even think it's going to happen

Warren Buffett: I would not like running a financial institution with a threat of a criminal action against it but I did at one time.

Charlie Rose: The Solomon brothers.

Warren Buffett: I did it. And every day you wake up wondering whether the plug will be pulled.

Charlie Rose: When you look at what they did and in terms of the future, JPMorgan can absorb this.

Warren Buffett: They can absorb $13 billion. That's why they got asked for it. If the exact same actions had happened at a place that couldn't have afforded $13 billion, even --

Charlie Rose: They wouldn't do that.

Warren Buffett: No, no.

Charlie Rose: Do you think too big to fail is still with us? And should be with us?

Warren Buffett: I think -- yes, I think -- but too big to be punished -- the people that were active participants and walked away rich, you know. It is the shareholders of those institutions that pay, I mean the shareholders of AIG paid. They didn't have anything to do with the actions of AIG financial products. But people said the loss was a very significant percentage of their net worth that owned the stock. I think that if you run a major financial institution and you need the help of the government you and your spouse should go away broke. I mean all kinds of other people end up getting broke in these things.

Charlie Rose: That is not what happened.

Warren Buffett: No, that is not what happened.

Charlie Rose: How would you correct that?

Warren Buffett: Well, maybe -- Let me write -- I can write a statute if you gave may little time.

Charlie Rose: What would it say?

Warren Buffett: Well, it would say that, it would have to be more drafted by somebody who knows more about that than I do but essentially I would not let any huge financial institution so important to the functioning of the United States that they had to go to the government and get saved. I would make sure that the CEO that led to that and the spouse walked away broke and I would say that the directors should at least have to refund everything they have earned in the previous five years or so. If that were there I think you would have more attention going into -- you know, you can say the downside to some guy that's got $500 million and 100 million of the stock but that isn't -- you know, that is not real. It is the shareholders that pay for it and society that pays for it so, if you want to change human behavior, I think you change the penalty that happens to the humans whose behavior counts in that situation.

Charlie Rose: Yes, but I mean you are talking about financial losses to these people and they should go broke and they shouldn't profit from the decisions they made that ruined the lives and fortunes of a lot of other people is what you are saying?

Warren Buffett: Yes.

Charlie Rose: Should they go to prison?

Warren Buffett: That depends on what they did but I don't rule it out.

Charlie Rose: Do you think some did things that justified going to prison? You know more about this than most people?

Warren Buffett: Yes. That is hard to say, Charlie, I don't know the answer to that, but it is not inconceivable to me but I don't know the answer to that.

Charlie Rose: The Buffett rule is there.

Warren Buffett: Well, m assistant is called Debbie Bosanek -- so it's the Bosanek rule around the office.

Charlie Rose: And I know and love her.

Warren Buffett: As you should.

Charlie Rose: And there is also this though. I mean what is interesting an this has come up in this conversation and it is about a life or it's about financial doings. You don't want to go right where the line is -- you want to play in the middle of the field.

Warren Buffett: Sure.

Charlie Rose: And you don't want to do things that if they ended up on the front pages of "New York Times" your life would be ruined.

Warren Buffett: Absolutely.

Charlie Rose: As you say you can build a reputation for 20 years and you can destroy it in one moment.

Warren Buffett: Yes. And the United States almost did that here recently.

Charlie Rose: But you are optimistic about the country because of the innovation, because of the resources, mainly because of the human capital.

Warren Buffett: Just look at the last 237 years, I mean what does it pay to bet against America over any time? 237 years, you know, people say well you are betting on America. Well, who wants to bet against it? I mean just look at the record and we haven't come close to tapping our human potential. This country's best days lie ahead of us.

Charlie Rose: Tapping our human potential because science is moving forward so fast and every other kind of --

Warren Buffett: Everything, everything.

Charlie Rose: Now, here is the other interesting thing about your dad, who as you know I have had many, many conversations with. IBM, you made an investment in IBM, not withstanding the fact that you always said I don't want to invest in things that have to do with technology that I might not understand. They have seemed to have run into a rough patch too.

Warren Buffett: Well, I am sure the Ginni Rometty is disappointed with some aspects of this year, but they are going to earn more money this year than they ever will.

Charlie Rose: And orders from China --

Warren Buffett: Some of it yes. But they will have a record per share earnings this year, you know. I mean, that can be disappointing if you expected more, but it is not a bad record, believe me.

Charlie Rose: And I mean this is a good place to talk in this conversation about that which is that, you know, you didn't invest in IBM because what you thought they might do and the stock price might do in the next quarter or the next quarter or the next quarter. You had to look at the fundamentals of the business and say they are on the right track.

Warren Buffett: I don't know what IBM earned in the third quarter of 1927 or 1962 or, I mean in the end every company, including Berkshire, you know, we have had a fair number of blips over time --

Charlie Rose: Right.

Warren Buffett: -- but if we go the right things we will get the right results over time and we are fortunate to be operating in the best country in the world. We got a tailwind.

Charlie Rose: And so does your son, "Forty Chances", and your grandson, with a foreword by you with references to your wife and your mother and your grandmother, "Finding hope in a Hungry World". Great to meet you. HOWARD

Warren Buffett: Thank you.

Charlie Rose: Great to have you back.

Howard Graham Buffett: Nice to be back.

Charlie Rose: Thank you, Warren.

Warren Buffett: Thank you, Charlie.

Charlie Rose: Back in a moment, stay with us.