2008: Aren’t we going to eventually have a gigantic inflation here in the U.S.?

AUDIENCE MEMBER: Hi. I’m Dr. Silber from the Infertility Center of St. Louis. And we feel that by making many, many babies, we’re doing the best we can to help salvage the solvency of Social Security. (Laughs)

WARREN BUFFETT: We won’t pursue the logic of that too far. (Laughter)

AUDIENCE MEMBER: We need someone to pay into the system, and with the demographic implosion that we’re facing and the current anti-immigration feeling, that this is the real cause of the Social Security dilemma that we’re facing. And it’s true in most of the developed world.

But my question is, everybody is looking very closely at what you and Charlie are going to say at this meeting because there’s just a huge amount of confusion since the credit crisis, and I guess you’ve been through many, many years and decades of confusion.

But everybody really wants to know what you think, because we have three candidates, one of whom I like, which I won’t mention, but all three of whom seem to be pandering to voters and not really demonstrating a profound understanding of economics.

And we’re going to decrease interest rates to help the credit crisis, and we’re going to inject $180 billion as free gifts into the economy, and yet our dollar is down 50 percent, and we certainly don’t want a recession and all the misery that would bring.

But aren’t we going to eventually have a gigantic inflation here in the U.S.?

And so — in China, which is our major partner in this, the stock market has gone down and people are losing money because they’re worried about the U.S.

So I’m wondering if you could just shed some words of wisdom on, if you were the presidential candidate — which I would like to see happen — what would be your position or your policy?

WARREN BUFFETT: Well, I think it was Bill Buckley that ran for mayor of New York, you know, 40 years ago or something like that, and they asked him what the first thing he would do if he were elected. He said, “I’d ask for a recount.” (Laughter)

It’s not an easy game. I think we have — just personally— I think we have three pretty good candidates this time — quite good candidates.

But I think that your comments about the pandering and all that, I’m afraid that’s just part of — if you have a very long political process, and you have people only generally willing to listen to ideas in fairly short form, and you’re trying to make the other candidates look bad one way or another — I think that the truth is you do get a lot of pandering in the policies that are proposed.

I think you have candidates that are pretty smart about economics. I happen to think two of the three are maybe a little smarter about economics than the third, but the third may be just as smart, too. They may just be forced into a different position.

You know, a political process is something that doesn’t lend itself to Douglas-Lincoln debates on the fine points of policy, and it’s a tough game.

And I don’t — the one thing I think is I think they will behave better in office than on the stump. I think that’s true of all three of them, and I think — but I think that’s just built into the system.

We — you know, we have a country that works awfully well. You know, whether Warren Harding is in office or Franklin Pierce, or whatever it may be over the years.

And it gets back to that saying I’ve said many times that you want to buy stock in a business that’s so good that an idiot can run it because sooner or later one will. (Laughter)

And we live in a country, frankly, that is so good that your children and grandchildren will live a lot better than you live, even though an idiot or two runs it from time to time in between.

But we’ve got a lot better than idiots running. Believe me. I think we’ve got three very good candidates, and I wish — whichever one of them wins, I wish them well.

You know, it’s the toughest job in the world, the most important job in the world, and I think the motivations of the people running it are a lot better sometimes than their proclamations as they go along in the political process.

I think it’s very hard to run in Iowa without being for ethanol. You know, it may be — you may win some badge for courage or something in the end, but you won’t win the presidency.

Charlie?

CHARLIE MUNGER: Well, I’d like to address the recent turmoil and its relation to politics.

After Enron totally shocked the nation with the gross amount of folly and misbehavior, our politicians passed Sarbanes-Oxley, and it has now turned out that they were shooting at an elephant with a pea shooter.

And low and behold, we have a convulsion that makes Enron look like a tea party.

And I confidently predict that we will have changes in regulation and that they won’t work perfectly. (Laughter)

Human nature always has these incentives to rationalize and misbehave, and the learned professions very often fail in their basic responsibility to be learned. And we’re going to have this turmoil as far ahead as you can see.

WARREN BUFFETT: But look at it this way: I have a job here I love. You know, I’d gladly pay to have this job.

Now, I have enough stock so that I’m reasonably assured of keeping the job, but let’s just assume for the moment that there are three other candidates out there, and none of us had any stock, and we were all up here making a pitch to you.

My answers might have been a little different today, you know, in terms of what Berkshire’s prospects would be under me and all that sort of thing going forward. It’s a corrupting process.

Now, you know, it works pretty well, but the process itself has to be corrupting.

Just take the boom in commodity prices we’ve had. We’ve had a boom in the price of oil, but we’ve had a boom in the price of corn and soybeans.

Now, I’ve heard no political candidate say you’ve had this huge increase in the price of corn and soybeans. That means all these poor people throughout the country, they’ll be paying more for food, so we ought to put an excess profits tax on farmers. That is not something you’re going to hear.

On the other hand, when it happens in oil and it happens to be Exxon, you know, people will propose occasionally we ought to put a terrible tax on Exxon because the price of oil has gone up.

There’s a lot of situational ethics, or situational policymaking, that depends on how many voters there are in any given category and what state you happen to be in and all that. But I don’t think I’d behave any better.

If my ambition were to be President of the United States, you know, I would — I’m sure it would affect my — what I talked about and my behavior. You know, we’re all human beings.

So I don’t condemn the people for the fact that when they, you know, are working 18 hours a day and the other guy is shooting at them and they start exaggerating things a little, I just don’t think you should expect more of human beings than — and I think that they will tend — I think any one of the three candidates — will tend to behave quite well in the White House.

They’ll succumb to all the things that presidents do in terms of having to — certain groups that helped them get there and all that sort of thing. But I think, on balance, they will end up doing what they think is best for the country, and I think they’re all smart people.