Berkshire Hathaway 2003 Annual Meeting Audience Question # 44

Forcing a certain part of Social Security into common stocks is not a good idea

Charlie Munger:

Warren, would you agree or disagree that forcing a certain part of Social Security into common stocks is a good idea?

Warren Buffett:

No, I would not. Actually, I would not agree with the one that the gentleman suggested.

I think that, actually, Social Security has been a tremendous thing for the working people of this country. It’s been an intergenerational pact. It’s not insurance.

It simply says, like a family might say, except it extends the concept of family to the whole United States, that if you produce for this country when you’re between the ages of… and I think the upper age limit should be extended… but between the ages of X and 65, that society will provide some base level of income for you for the rest of your life.

And I think a rich society should do that. So, I think the when you have a $10 trillion society, you know… we should do that.

Charlie Munger:

I would agree. I think Social Security, you can argue, is one of the most successful governmental programs we have. And people treat it as a pure disaster coming or something like that.

That’s not my view at all, and I wouldn’t put it in common stocks, either. I think Social Security works pretty well just about the way we’re doing it.

Warren Buffett:

Yeah, we will give a base income to every… and we should in this country… to everybody that leads a reasonably productive life.

And they don’t have to worry about how long… you know… whether they live to be 90 or 100.

And people do worry in their old age. And we don’t need a bunch of people who, you know, go off to war when we need to defend, you know, the rights of our country, and act in every way as good citizens, but they just don’t happen to have the ability to make a lot of money, you know, well, like maybe Charlie and I can.

I think they need a base level, and I think that an intergenerational compact like we have… it’s really a magnificent idea. And I think the country’s a lot better off for it.

I think that telling them that they can save 500 bucks or a thousand bucks and put it into stocks and have everybody lobbying Washington about, you know, who will handle it. You know, everybody thought it was a great idea a few years ago, and I think it’s a very bad idea, frankly.

Charlie?

Charlie Munger:

I like it a lot less than you do.

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