Capitalism and Persistence Produces Big Payoffs

Capitalism and Persistence Produces Big Payoffs

“And you, how you could adore him as well? You are mad. They are so rich; they definitely go hard on our society, in terms of use only. The poor people could suffer and what? It’s madness!”

Mr. Brown: “Peter, you have you lost yourself. You’ve lost your senses. Are you ill? This is what capitalism is all about. I believe you are not able to force any business to be in that place. Again, that’s an example of what tough capitalism is. Capitalism—the way it works. You have to read Adam Smith. He is one of the wisest people that ever came along. He clearly demonstrates the productive power of the capital system. Well, it only improves productivity. The idea is that you let other people do what they do best at and stick to what you are best at. You should work in a field that is most productive for you and not be involved in this self-pity, or how hard will your life be?

“Please sit down, dear Peter.” Mr. Brown himself sat down opposite Peter.

Mr. Brown was continuing his topic of capitalism, asking Charlie, “Do you think Walmart is an excellent example of capitalism? What do you think, Charlie?”

Charlie Munger: “It’s quite interesting to think about Walmart starting from a single store in Bentonville, Arkansas, against Sears, Roebuck with its name, reputation and all of its billions. How does a guy in Bentonville, Arkansas, with no money blow right by Sears, Roebuck? And he does it in his own lifetime in fact, during his own late lifetime because he was already pretty old by the time he started out with one little store. He played the chain store game harder and better than anyone else. Walton invented practically nothing. But he copied everything anybody else ever did that was smart, and he did it with more fanaticism and better employee manipulation. So he just blew right by them all. He also had a very interesting competitive strategy in the early days. He was like a prizefighter who wanted a great record so he could be in the finals and make a big TV hit. So what did he do? He went out and fought forty-two palookas. Right? And the result was knockout, knockout, knockout—forty-two times. Walton, being as shrewd as he was, basically broke other small-town merchants in the early days. With his more efficient system, he might not have been able to tackle some titan head-on at the time. But with his better system, he could destroy those small-town merchants. And he went around doing it time after time after time. Then, as he got bigger, he started destroying the big boys. Well, that was a very, very shrewd strategy lxv.”