I.O.U.S.A - Addison Wiggin [89]
not perfectly in all cases, but probably better than much of the rest of the world — and that system unleashed the potential of citizens in the United States to an extent far greater than in many countries, including, up until recently, China. And I think maybe the Chinese have caught on to some of the benefi ts of our system and they will unleash the potential of their people as well. And there ’ s nothing bad about that. The fact that your neighbor lives well is not going to hurt how you live.
In this country, we have seen imports increase from 5 percent of GDP to 17 percent or so of GDP in the past 35 or so years. And yet we have 4.5 percent unemployment and we have a very, very prosperous country. So it ’ s a good thing for us. What is not good is the imbalance between imports and exports. We ’ ve actually increased our exports from 5 percent of GDP to about 11 percent of GDP. The rest of the world is buying more and more of our goods all the time. But at an even greater rate, we ’ re buying more and more of theirs. That ’ s not good. More trade overall is good as c14.indd 181
8/26/08 7:02:10 PM
182 The
Interviews
long as it ’ s true trade. If it ’ s pseudo - trade, where we ’ re buying but not selling, I do not think that ’ s good over time.
Q: Is there a way to correct the trade path that we ’ re on, and if so, what is it?
Warren Buffett: It ’ s complicated. I reluctantly think that it probably requires some governmental policies that will lead to imports and exports actually increasing, but coming much closer to balancing imports and exports. I think that ’ s advisable. I don ’ t think the world comes to an end if it doesn ’ t happen this year or next year, but piling up more and more and more external debt and having the rest of the world own more and more of the United States may create real political instability down the line, and increase the possibility that demagogues come along and do some very foolish things.
Q: You ’ ve said before that manufacturing is not the ideal business, but securities is, and sort of like losing the productive capacity of the companies. Am I getting that right?
Warren Buffett: Yes. If you go back 100 years, a very high percentage of the people worked on farms. And if you ’ d said to people at that time, somebody ’ s going to invent an automotive engine, and tractors will replace horses, and you ’ ll need fewer people and you ’ ll have combines and planters, undoubtedly there would have been all kinds of scary headlines saying, “ Eighty Percent of Farmers to be Unemployed. ” People would have asked what they were going to do, and would have expected the world to come to an end, and that they ’ d all be sitting around. That isn ’ t what happens at all.
What happens is that you get more productive. People are freed up to go up into other things. We didn ’ t have motion pictures back 100 years ago. That industry employs a lot of people now. It ’ s not a blessing to the individuals, and there ought to be a big safety net for the people that get hit hard in their specifi c industries. But it ’ s a blessing when fewer people can accomplish the same goals. The railroad industry, at one time, employed a million people in this country. Now there ’ s about 200,000, and they ’ re hauling far more c14.indd 182
8/26/08 7:02:10 PM
Warren
Buffett 183
freight than they did when they employed the million people. If you ’ d predicted 40 or 50 years ago that 800,000 people were going to lose their jobs in rails, all of the rail workers would have formed committees and looked for congressmen to protect them and that sort of thing. But in the end, that ’ s what capitalism ’ s all about: fi nding ways that fewer people can do the same job, so that the people released can turn out even more goods and services that people want.
Q: Would you say that, just in your approach to business, a higher percentage now comes from services? Or does a higher