Warren Buffett’s right-hand man lashed out at government handouts while also praising the bailout in a speech at University of Michigan.
Berkshire Hathaway’s Vice Chairman Charlie Munger and his longtime business partner Warren Buffett apparently do not see eye to eye when it comes to charity. In 2006, Buffett donated pledged 85% of his $40 billion fortune to the Bill and Melinda Gates Foundation and has recently been urging more billionaires to do the same. Munger is having nothing of it. “There’s danger in just shoveling out money to people who say, ‘My life is a little harder than it used to be,’” Munger said at an event at the University of Michigan, which was moderated by CNBC. “At a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”
Both billionaires, however, backed the bank bailout. Does Munger oppose individual charity but support corporate welfare?
- A Charitable History, Uncertain Future As Bloomberg’s Andrew Frye reports, “Munger has previously touted charitable giving. In ‘Poor Charlie’s Almanack,’ a collection of Munger’s speeches and remarks, the investor urges successful capitalists to make donations. Munger gave about $2.4 million in Berkshire stock to charities on Dec. 18. ‘Those of us who have been very fortunate have a duty to give back,’ Munger is quoted as saying in the almanac.” Yet he hasn’t signed up for Buffett’s pledge, in which billionaires promise to give away at least half their wealth after they die: “Whether one gives a lot as one goes along as I do, or a little and then a lot (when one dies) as Warren does, is a matter of personal preference,” Munger said.
- For Profit, Against Nonprofits It seems that Munger’s major beef is with nonprofits. “I’ve seen so much folly and stupidity on the part of our major philanthropic groups, including the World Bank,” he told the students. Mike Tayor of the New York Observer noted his support for Wal-Mart’s worker friendly rival: “I believe Costco does more for civilization than the Rockefeller Foundation.” And he believes individual handouts threaten civilization—unlike TARP. “‘You should thank God’ for bank bailouts,” Munger said, according to Frye. “Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies,” the 86 year old investor concluded.
- Socialism for the Rich, Capitalism for the Rest of Us? As Frye notes, Buffett and Munger both backed the bailout since the beginning. “Whatever the downsides may be, strong and immediate action by government was essential,” Buffett wrote in a February 2009 letter to Berkshire investors. “Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat,” Buffett said. That was certainly true of Berkshire Hathaway, notes Ira Stoller at Future of Capitalism. Although Buffett and Munger never took a penny of bailout money, many of their investments profited from the government action. But this shareholder charity wasn’t necessary to save the economy, financial analyst Joshua Rosner told Frye: “We could have wiped out the equity holders before we wiped out the taxpayer.” According to the Rosner, of research firm Graham Fisher & Co, “Charlie Munger is misrepresenting history, and that’s why the public is angry at Wall Street.”
Munger Says ‘Thank God’ US Opted for Bailouts Over Handouts, Andrew Frye, Bloomberg
Charity is for the Birds, Says Buffett’s Buddy, Mike Taylor, New York Observer
Munger Says Costco Beats Charity as Buffett Signs Up Donors, Andrew Frye, Bloomberg
Munger on the Giving Pledge, Ira Stoller, Future of Capitalism
Photo credit: Nick J. Webb (via Flickr)