Berkshire Hathaway 2006 Annual Meeting Audience Question # 20

The ultimate problem of mankind

Warren Buffett:

Number 5?

Audience Member:

Good morning. My name is Glen Strong. I’m from Canton, Ohio.

I’m an optimistic person, and I’m sure it would be more enjoyable to discuss the Chicago Cubs’ march to the World Series.

Warren Buffett:

You are optimistic.

But everybody has a bad century now and then, as somebody said about the Cubs.

Audience Member:

However… I have an information deficit on a certain topic that I hope you can fix. Please gaze into your crystal ball.

As an investor, I want to know how to address the risk of nuclear terrorism in the United States.

Consider a scenario where terrorists have detonated a nuclear device in a major U.S. city. I know there would be a terrible cost in human lives.

Gentlemen, what would happen to our economy? How would it respond? How resilient would it be? Thank you.

Warren Buffett:

Well, it would certainly depend on the extent of it.

But, if you’re asking how to profit from that, there’s probably some dealer that will sell you mortality derivatives. But I’m not sure that’s what we would be thinking about then.

No. I agree with you. I couldn’t agree with you more about that being the ultimate problem of mankind, not necessarily a terrorist-type usage, but a state-sponsored usage of weapons of mass destruction.

And it will happen someday. The extent to which it will happen, where it will happen, who knows. But we’ve always had evil people. We’ve always had people who wish evil on others.

And, you know, thousands of years ago, if you were psychotic or a religious fanatic or a malcontent and you wished evil on your neighbor, you picked up a rock and threw it at them, and that was about the damage you could do. But we went on to bows and arrows and cannons and a few things.

But since 1945, it’s… the potential for inflicting enormous harm on incredible numbers of people has increased, you know, at a geometric pace.

So it is the problem of mankind. It may happen here. It may happen someplace else.

People say it’s a… sometimes they say, “Well, you know, if we’d solve poverty, we’d solve this.” Well, I will just remind you that nuclear weapons have only been used twice, and those were by the richest country in the world, the United States, in 1945.

So, people will justify their use under some circumstances, if they feel threatened. They will justify them for religious reasons.

They will do all kinds of crazy things.

And the… what holds it in check is the degree to which the lack of knowledge of how to do it is controlled, and the degree to which the materials are controlled, and which the deliverability is circumscribed.

And we’re losing ground on all of those fronts. The knowledge is more widespread. The possibility of getting your hands on materials… you know, the Dr. Khans of the world and so on, has increased.

And it will be a… it’s a real problem, but we won’t be thinking about what Berkshire did that day in the stock market.

And I don’t know how money attacks that. I mean, I’ve always saw that as the top priority, I think should be the top priority for philanthropy, in my particular case.

But it’s a difficult… it’s a very difficult… it’s a worst-case problem. You know, you have 6 billion people in the world, and you have a certain percentage of them who are, one way or another, a little crazy, or very crazy, and some of whom in that craziness would manifest itself by trying to do great harm to a lot of people.

And it’s… only one of them has to succeed.

I don’t know how many we’ve intercepted over the years. I’m sure we’ve intercepted a lot of incipient ones.

But it is a worst-case problem, and one will succeed at some point. And it may be state- sponsored; it may be terrorists.

But, you know, Berkshire is better set to survive than anybody else, but it won’t make much difference.


Charlie Munger:

Well, I think that the chances we’ll have another 60 or 70 years with no nuclear devices used on purpose is pretty close to zero.

So, I think you’re right to worry about it, but I don’t, myself, think there’s much that any of us can do about it, except be as sensible as we can and take the consequences as they come.

Warren Buffett:

The only thing you can do about it… but you only have one vote… is to elect leaders who are terribly conscious of the product… problem… and who devote a significant part, you know, of their thought and energy into minimizing it.

You can’t eliminate it. You know, the genie is out of the bottle. And you would like to have the leading… the leaders… of the major countries of the world regarding it as their primary… as a primary… focus.

Actually, in the 2004 campaign, I think that both candidates said it was the major problem of our time. But, you know, they probably suffer from the same feeling that I do, that it’s very hard to address.

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