What is your opinion of the importance of technology in business education today?
I love what technology is doing for the world, including me. I don’t think it is easy to pick who the technology winners will be in ten years, like it is with chewing gum or soft drinks. But, that is an investment decision. We are the world’s leaders in technology and it is an engine that will do wonders for this country over time.
It’s a tool.For a student to leave business school and not know how technology affects business and a mind to keep up with the progress of technology would be insupportable. Technology is the future of business. It is transforming society. If I were starting out in business today, I would be very focused on technology.
Could you comment on the state of financial literacy? Is there anything that could be added to educational curricula to improve it? What should future generations know?
Buffett: I think there’s a problem with the current generation. ABC has a new TV program coming out [on the subject]. Financial literacy is a tough sell in a world of credit cards and calculators. But we’re making progress over time. We recommend working with students to make them literate, and they’ll have a terrific advantage. We hope our annual reports contribute. But people do silly things. On my honeymoon in 1952, I was 21, my wife was 19, and we stopped at the Flamingo in Las Vegas and saw well-dressed people who traveled thousands of miles to do something very dumb. [That tells you] it’s a world of opportunity. I started teaching at the University of Nebraska at age 21.
Munger: [We live in a] world of legalized gambling, in the form of lotteries, and high-cost credit card debt. We’ve been going in the wrong direction. I don’t think you can teach people high finance who can’t use a credit card.
Buffett: If you’re willing to pay 18% on a credit card, you will not come out well. It’s probably good for our business. They’ll go their way, we’ll go our way. We’re looking for things that are mispriced.
What can be done to educate children of financial management, and prevent future financial mayhem?
Warren Buffett: We will see financial mayhem from time to time. People do crazy things. I would argue some of the problems were caused by the prevailing conventional wisdom taught in business schools. I’m not positive about modifying madness of man from time to time. Regarding the first part of your question, getting good financial habits early in life is important. Not everybody gets that. Andy Hayward, who did Liberties Kids, has created the Secret Millionaires Club show. If we get to 2-3% of kids with better habits it will be good for the world. We will take Ben Franklin’s ideas and make them entertaining for children’s stories. It is good to have smart learning at elementary level, that is better than advanced degrees at graduate level.
Charlie Munger: I admire McDonalds, which I think has succeeded better as educators than a university where I recently spoke. They were not amused at the comparison. McDonald’s has had a constructive effect on employees who were threatened with not making it. They teach marginal people responsibility. Employment culture of McDonald’s is not appreciated enough. Come to work on time, move up the ladder, get a paycheck, and many go onto much higher paying jobs.
Warren Buffett: I learned a lot from a Paper Manager at the Washington Post – he taught me, and talked to me not in a preaching way, saying ‘you could do better if you did this’. Lucky if parents teach you, but anything that brings it into broader teaching environment I’m for.
Do you think an MBA is an important degree for students to have today?
If you are interested in business, or likely to be in business, an MBA is very useful. But, what is really important is what you bring to a class in terms of being interested in the subject. If you view a course like accounting as a drudge and a requirement, you are missing the whole game. Any course can be exciting. Mastering accounting is like mastering a new language, it can be so much fun. The attitude should be one of discovery, that you are coming there and discovering. Accounting is the Rosetta Stone of business. Economics is fascinating, the first page of economics describes how mankind deals with insatiable wants and creates the systems to fulfill these wants. It’s great stuff. Really how the world works. Business is a subsection, a fairly understandable subsection, not like black holes, which are fairly hard to visualize, but business is everyday stuff and you are learning how the world works. You are 18-19 years old and learning about the world, understanding how this great world works. The GDP per capita in the 20th century increased 6 to 1. Think of that, six times. Why does that work here in the U.S., why doesn’t it work other places? The U.S. is a small part of the universe, but a very important part and understanding that and seeing everything else against that backdrop for the rest of your life is fabulous.
What do you remember about your education at the University of Nebraska?
I had a great experience at Nebraska. Probably the best teacher I had was Ray Dein in accounting. I think everybody in business school should really know accounting; it is the language of business. If you are not comfortable with the lan- guage, you can’ t be comfortable in the country. You just have to get it into your spinal cord. It is so valuable in business.
You began you university education at another institution, what are you thoughts on the education you received at the University of Nebraska?
The best year of my undergraduate work was at Nebraska; I would call it my best overall experience except for the year at Columbia, where I studied with Ben Graham. The teachers at the University turned me on. There wasn’t a class that disappointed me. I was close to my professors, who actually taught the classes, At my previous undergraduate college, graduate students taught the classes. One of the best things that happened was the day the University was going to award the “Nathan Gold Scholarship,” a $500 scholarship to attend graduate school anywhere in the U.S. As it turned out, I was the only applicant that showed up for the interview. So I won the scholarship by default. My dad wanted me to apply to Harvard Business School. It was a 10-hour train ride to Chicago where I met with the person who was to interview me, and was told to come back another time when I was older. I was 19 at the time. So I rode 10 hours back, wondering what I was going to tell my Dad. In August of that year I was leafing through magazines and discovered that Ben Graham was teaching at Columbia, so I contacted the Dean at Columbia and even though it was very late to apply, was accepted.
What's the one thing that your MBA didn't prepare you for when you got out into the real world?
Well, I was -- it prepared me very well, not the whole degree, but specific professors prepared me very well for what I wanted to go into. I knew I was interested in investing, like I say, from the time I was six or seven years of age. So I was lucky that I found what turned me on early on. And I had these two marvellous professors here at Columbia that just being around -- I had read all the stuff they had written. So it wasn't I was acquiring lots of incremental knowledge but I was getting inspired. They were terrific for me. They treated me like a son. They would take me out to dinner. Ben Graham did the same thing for me. So it gave me confidence in myself. It just propelled me into a field I already love with a terrific tailwind from these professors that believed in me. But let me add one point because -- to the MBA situation. Right now, I would pay $100,000 for 10% of the future earnings of any of you. So anybody that wants to see me after this is over -- If that's true, you are a million-dollar asset right now, right, if 10% of you is worth 100,000? You could improve -- many of you, and I certainly could have when I got out, just in terms of learning communication skills. You know, it's not something that is taught. I actually went to a Dale Carnegie course later on in terms of public speaking. But if you improve your value 50% by having better communication skills, that's another $500,000 in terms of capital value. See me after the class and I'll pay you 150-thousand.
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