Benjamin Franklin: I Am Not Moral Because It Is the Right Thing to Do but Because It Is the Best Policy

Benjamin Franklin: I Am Not Moral Because It Is the Right Thing to Do but Because It Is the Best Policy

Charlie: "Ben Franklin said: 'I'm not moral because it's the right thing to do—but because it's the best policy.' We knew early how advantageous it would be to get a reputation for doing the right thing and it's worked out well for us. My friend Peter Kaufman, said, 'If the rascals really knew how well honor worked, they would come to it.' People make contracts with Berkshire all the time because they trust us to behave well where we have the power and they don't. There is an old expression on this subject, which is really an expression on moral theory: 'How nice it is to have a tyrant's strength and how wrong it is to use it like a tyrant.' It's such a simple idea, but it's a correct idea cli."

Charlie understands well the power of behavior; the unethical behavior could spread very quickly and destroy or even pollinate. "Avoid dealing with people of questionable character," and, "You can't form a business partnership with your frivolous, drunken brother in-law clii." Berkshire is an unusually rational place. It has a long perspective. There are no talks outside of the company to push it in a certain direction.

So, no external factors are pressing to deal with or pressing Warren Buffett and Charlie Munger on any decisions. That is a great way to operate, so as not to be misled by external factors, such as Wall Street's culture; there is no room for any stupidity and rapid decisions. To be independent thinkers is their choice, to avoid any pressures from other people and management.

Warren: "Like in internet stocks and neighbors having success and they have high IQs. It works for a while, that is a great danger period. It starts as skepticism, but neighbors get richer. We don't have any pressures to do that sort of thing. We don't think we are smarter than others; we just won't do stuff we don't understand. And we won't be jealous when others do well. That is what it is all about."

Charlie: "I always say there is a reason why this stuff is in the Bible. Can't covet your neighbor's ass. They were having trouble with envy a long time ago. It is the one sin there is no fun."

Buffett: "This group of companies sells products ranging from lollipops to jet airplanes. Some of the businesses enjoy terrific economics, measured by earnings some unleveraged net tangible assets that run from 25 percent after tax to more than 100 percent.

"A few, however, have very poor returns, a result of some serious mistakes I made in my job of capital allocation. These errors came about because I misjudged either the competitive strength of the business being purchased or the future economics of the industry in which it operated. I try to look out ten or twenty years when making an acquisition, but sometimes my eyesight has been poor. Charlie's has been better; he voted no more than 'present' on several of my errant purchases cliii."

Both Charlie and Warren have an extensive intelligence network of people and companies they have access to, practically to every company in the United States.