Berkshire Hathaway 2009 Annual Meeting Audience Question # 14

Which is better: the then current government stimulus bill or the one implemented during the great depression?

Warren Buffett:

OK, number 7.

Audience Member:

My name is Jim Powers. I’m from West Newton, Massachusetts. My question has to do with this stimulus bill by the federal government.

I’ve read that only 8 percent of the money is intended to go to infrastructure. When you invest money, you normally look at the asset you’re getting for the money.

With the country going into so much debt, don’t you think it would be better if a great percentage of the money invested by the federal government go to solid assets, as it did during the Great Depression with the Tennessee Valley Authority, Hoover Dam, other facilities, that are still making money today, and paying back the original investment by the government many times over, while putting numerous people to work?

Charlie Munger:

Let me answer that one. Yes.

Warren Buffett:

I would certainly agree. I mean the ’30s… a lot of really wonderful things were done with the money that was used to then to stimulate the economy. And that should be the goal and a model.

I can’t evaluate perfectly what the current stimulus bill will do. I know that I… I did get a notice the other day from the Social Security Administration telling me I’m getting $250 more. That ought to last me 6 or 7 months.

Charlie will make his last longer, I’m sure.

But you know, that’s the stimulus that the Buffett household has received at the present time.

Obviously, you want to use the money as intelligently as possible.

Obviously, also, anytime the federal government does anything on a massive scale… any time any big organization, a church or a business or anything, you know, throws all kinds of resources at something, usually there’s a fair amount of slop.

I think that the intent… but by the time it gets through Congress and everything, I can’t guarantee how the result comes out… but I think the intent is to get the money into action quickly and to end up having it utilized in intelligent ways.

But if the day after Pearl Harbor happened, you know, if you’d attached 5 or 6 thousand earmarks to the declaration of war, you know, it would not have been a pretty sight.

I mean, it… we have a system now where… that doesn’t seem to be perfectly effective, I would say, in detaching the interests of particular legislators away from the common goal.

I mean, I get distressed when I look at what gets attached to some of these bills. And that certainly was a case in point. So I’ll go along with Charlie on the answer.

But I think the intent of the administration is the right thing. When the American public pulls back like they have, government does need to step in.

It will have consequences. We are doing things on a scale… we’re doing the conventional things, but we’re doing them in unconventional amounts.

And we will see consequences from what we are doing now. I think we should be doing it. But I don’t think we should think it’s a free ride.

Charlie Munger:

Yeah, we have one big no-brainer on the list of infrastructure investments that can be made. And that is a hugely improved nationwide electricity grid. The chances that that won’t help us are zero.

And that, when it happens, will enormously benefit Berkshire’s utility subsidiary. But that isn’t the reason I’m raising it. I would be making this argument if we didn’t have a utilities subsidiary.

Warren Buffett:

We might make it a little more strongly if we had the utilities subsidiary, however.

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