America over time. Well solve the economic problems, but thats number one. Rose gates and buffet for the hour, next. Rose funding for charlie rose has been provided by the following and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose bill gates and Warren Buffett is here. Gates is the cochair of the bill Melinda Gates foundation, the philanthropy focuses on education, poverty, and global health. Warren buffett is chairman and c. E. O. Of berkshire hathaway, one of the most Successful Companies of the last five decades. The two have famously been friends for more than 25 years. Together they started the giving pledge in 2010. The initiative encourages the worlds richest to donate the majority of their wealth to philanthropic causes. Buffet pledged to the gates found auction and has given more than 24 billion to charities. I am pleased to have both of them back at this table. Welcome. I have to say in the interest of full disclosure, we just did Something Like this at Columbia University with 1,000 students. Did you this before. Theres Something Special about the curiosity and interest of young people wanting to know how do they learn from you . Wanting to know if you were starting over, what would you do . Wanting to know about values. You do a lot of this. Well, about the friendship, we met on july 5, 1991. And hit it off immediately. Bill was a little reluctant at first, but he got there. Rose reluctant to come. If it wasnt for his mother, we probably wouldnt know each other. And weve had a good time ever since, and weve cooperated on particularly on the giving pledge, but other things as well. And i have to say, everything about us turned out well. Rose he sits on your board. He sits on the berkshire board, and we have a lot of fun talking about a lot of thiks, but the big thing that really came out of one of those discussions really was the giving pledge. Thats worked out so much better than i ever anticipated, charlie. I thought if we got 30, 40 people how many you have i think were 156 or Something Like that. And the people and now weve gone beyond the borders of the United States, which i didnt feel would originally happen. And people are learning more, our members, about effective philanthropy. Theyre learning about things that didnt work. Theyre learning how people handle within their families, wealthy families. Its worked out so much better than i would have guessed six years another seven years ago. Rose both of you have made the point because of the success in technology there are a lot of people with a lot of money who are much younger. Yeah, its a great thing that hes companies are doing so well. As a group, i would say its a particularly philanthropic group. I didnt give huge gifts until i was 45. Some of them in their 30s are already doing amazing things. Rose why were you if the word is reluctant reluctant to give earlier than that. I didnt understand where the huge payoffs were. And i was pretty maniacal about microsof, and only in my late 30s with some encouragement from my wife, melinda, did i start to study it, talk with her about it. We knew i would do it by the time i was 60, but as we were doing that learning, we decide we should accelerate it, and we found a lot of ways we thought we could have high impact. Rose and the principal sort of mission call was that all lives are equal. Thats right. And a lot of that outside the United States has gone to save lives and have kids grow up to be healthy. Rose how did you decide that youd rather give your money to the Gates Foundation than create some foundation of your own and go out and find people to run it and do whatever you wanted to do . My first wife, suzy, and i actually started a foundation over 50 years ago. And we we had talked about it since we were in our 20s. And i always thought i would be rich. He shouldnt think i would be. I said to her, ficompound member at the rate i hope to compound money, there will really be large sums later on. Youre god at giving it away, im good at making it, so ill make it first and you give it away. And she thought that was half a copout and half logical. Rose and probably told you so. Absolutely. So we did something, like i say, we started over 50 years ago. I really thought there would be large sums later on and that she was particularly good at empathizing with people, understanding their need, putting the personal energy into it everything and. She would be better at giving away money they would be. And she died in 2004, as you know, and i had to rethink what i was going to do. So in 2006, i decided that essentially, the bill Melinda GatesFoundation Foundation being the largest, and looking for people that had similar goals with philanthropy with what i had. And the idea that every life is of equal value is fundamental to me. Rose and you knew bill would run it well. , of course. He had his own money up, which was a big deal. But far more than that upon. You had two muchyounger people, very bright, very hard working. They work much harder at this than most people do in this country in their jobs. Was on. Y were on the same track proven quantity. I mean, everything about it made sense. And its continued to make sense 10 years later. Rose bill talked about melindas influence. You said to me about suzy, your late wife, i was a mess until i met suzy. I think thats understating it. Shes changed my life, theres no question about it. Rose how did she change your life . I was a very lopsided, not welladjusted person who happened to be good at one thing, and she put me together. It wasnt overnight, either. But she just had that little sprinkling can, and finally she saw a few sprowts come up. Rose was it a coming together of opposites . No, i wouldnt say that. We were in sync in a very big way. But i she was way more mature than i was. She was 19 when we got married. I was 21, but i was about 12 emotionally. And she put me together. And like i said, it took time. But it changed my life. I mean, i would not have been had anything like the life i have had. Rose and what did Charlie Munger add. Charlie munger, my parentener of 57 or 58 years, and hes extremely wise. Hes a wonderful friend. Weve been partners in that time, and hes strong minded. Im strong minded. We disagree sometimes. We have never had an argument in that whole time and we never will. Rose never had an argument . Never had an argument. That is true. Rose you must disagree. Absolutely we disagree. Rose if you disagree how do you decide on when we disagree he says, warren, youll agree with me because youre smart and im right. Where do i attack that youll figure out im right. Listen, i respect his opinion enormously whenever he gives it to me. I respect bills opinion. But its more fun doing things with partners. I mean, the most fun is, obviously, a marriage partner. And thats the most important relationship. But having a business partner, if i had done everything i had done, it wouldnt have worked out this way, but lets say i got double the results, it would be more fun doing it with charlie. Rose who says no to bill gates . Well, melinda. Ive seen it happen. laughter its great when somebody knows, you know, when you might move too fast or be overoptimistic. And, you know, if a team comes in and im pointing out things we havent done, and maybe theyre not as motivated afterwards. So they can get me to correct that. I ive matured a lot, and i give melinda immense credit. You know, she still has work to do. laughter i think im getting there. Complementary strengths where you share the same goal is a great thing. I had that with paul allen in the early days of microsoft. I had that with steve ballmer, as microsoft got going. Both in my family and in the foundation, its melinda. Rose how much time do you spend at microsoft . Im there about 15 of the time. And i get to work just on the r d part, brainstorming with people, thinking, okay, how are we going to take this Artificial Intelligence and make it understand, help you use your time better. Its a very exciting time in software, and, you know, theres five companies that are, you know, in really strong position. Microsoft it leading in some real cool stuff. Rose like ma . laughter . The way that a business takes information about customers, about communication with customers, looking at data, that mission of really using data in a. I. , and getting the productivity of all those workers up because they see more information, microsoft is the leader in that. And its a well niche. You know, its a multihundredbilliondollar niche that theyre strong in. They will be innovating along that line more in the next few years than ever in our history. Rose you have a passion for Artificial Intelligence, you do. Yeah. Its the ultimate dream when you start working on software is the kind of deep understanding and intelligence that humans have. So its been the holy grail when can the computer learn to play games . When can the computer learn to read . When can it understand speech . And things like speech and vision have made such progress in recent years. I mean, you know, you have been tracking this and exposing your viewers to some of it, because i cant overstate even for people in the field, its a pretty magical time. Rose and its potential is to do what, change everything . Well, to in the first instance, to be the best assistant ever, to look at all your information and, you know, help you know in the few minutes between meetings what you should look at or when youre trying to a trip, organize things, to be a much, much, much better assistant than it is today. And then eventually certain mechanical tasks like warehouse work or driving that it would take that over. But for intellectual work, it it will just magnify the creativity and make your time more valuable. Rose are you interested in technology . I i i dont have enough i dont think i have a natural bent that way to start with. And id be so far behind, i never would catch up with people that have been working on it and it would not be a game i would be able to win at. Rose is a principal criteria for you understanding the business . Yeah, i have to understand the business. And there are lots of businesses i dont understand. Some of them may be almost ununderstandable, and others are just outside my sphere of confidence. Rose but you do have people now that do have that kind of expertise that you have brought in. I have two people who themselveses have different circles of competence. But they arent chosen because they have a different circle or anything. Theres a lot of overlap. Theres overlap between them. And the important thing, you know, is not how its nice to have a huge circle of competence. Its much more important to know where the limits are of it. You can do very well if you only understand 5 of the businesses in the country. Rose and find plenty of opportunities. And you know that youve got the 5 are in that circle. Rose i mean, you made a huge purchase in 2016, precision was bought in 2016. Yeah, we bought in 2016. Rose 37 billion. Including debt. 33, 34 billion in cash. Rose is it harder and harder to find an acquisition candidate . Sure. We have to move a needle on 400 billion of market capital. If we make a Million Dollars were talking a quarter of 1 . And thats after tax. Thats more than a billion and a half pretax. Its hard to find things. I would do better percentagewise if i was working with a much smaller amount of capital. Rose how do you find them . Its interesting. Ill get a call, ill be sitting thinking i mean, different things. In terms of private businesses, its because i get a call from a private seller. But occasionally, i just decide to act and we never do anything unfriendly in terms of buying whole businesses. Rose are there people who know you and are close to you on the lookout for you . Or not much. Not much. laughter no. Rose youre shake your head. Charlie, yeef net bought 12 billion of common stocks since the election. Rose 12 billion of common stock. Its in my mind which ones i pick. Now, the guys that work with me, the two fellows, they probably bought a little bit or sold a little bit, too. But those are ideas ive either come at from a different slant in some way or whatever it may be. Rose is airlines one of those . Well, is i wont tell you it will show on september 30 that we own some airlines. Rose right. Some stocks. Rose so why did do you that . Well, that i wont get into. laughter but butt it was, it was in large part my decision. Rose the old joke as you know absolutely. Rose how do you become a millionaire. Start as a billionaire and buy an airline. Theres no question its been a graveyard for a lot of money. Rose but transportation has been something both in terms of but theyre not related. The railroads and airlines are not related. Rose all the . Theyre different kinds of businesses. You cant move the track. You can move planes around. And you cant go into aurls attract people theres a certain romance to it, like hollywood does or something. So you can actually go into the business and more than 100 airlines have gone broke in the last 20 or 25 years or Something Like that. So its a different sort of business. Rose how is knowing bill changed or influences or enhabsed your sense of the way the world works . Well, i learn from him. You know, i like to learn from all friends, and bill happens to be a particularly good source. But thats listen, thats the fun of having friends, charlie. I dont think i would it would be hard for me to be a friend with anyone they dont learn something from. Theyd probably get kind of bored with me, and id get bored with them. Who is that guy talking about stocks . Rose and bill what you have learned from him, being associated with him, sitting on his board . Immense amounts. He wrote an article for Fortune Magazine that i read before i met him about that its not necessarily a good idea to leave large sums to your children. So that was pretty fundamental, and i remember reading that and i i was convinced that that was right. And it meant, wow, now you have to think of how to give that away. I also remember warren showing me his calendar oh, i love this. And i had every minute packed and thought that was the only way to do things. The fact that he is so careful about his time can i show this . This is he has days that theres nothing on it. Absolutely. Rose this is october its hightech. Be careful. He might not understand it. Rose im not going to show it. This is the week of april, on which there are only three entries for the week. There will be four maybe by april. Rose it taught you what, not to crowd yourself too much and give yourself time to read and think and that you control your time, and that sitting and thinking may be of much higher priority than a normal c. E. O. Who, you know, theres all this demand and you feel like you need to go and see all these people. Its not a proxy of your seriousness that you filled every minute in your schedule. And people are going to want your time. Its the only thing you cant buy. I can buy anything i want, basically, but i cant buy time. Rose and so to have time is the most precious thing you can have. I better be careful with it. Theres no way i will be able to buy more time. Rose and living in omaha makes that easier. That makes it a lot easier. For 50 whatever it is now. For 54 years i spent five minutes going each way. Now just imagine if that was a half an hour each way. I know the words to a lot more songs, and thats about it. Rose it adds up, doesnt it . It really adds up. If youre doing an hour a day difference, coming and going, and, you know, thats 2. 5 of the persons work week. That means 40 years youre talking about a year. Rose do you agree politically . On almost everything. You know, general sense that youve got to keep the economy turning up greater output and that you have to allocate it in a fair way. That basic framework we see very much the same. Rose do both of you believe we can achieve a 4 growth rate. Thats pretty high. Rose like 2016, i think the last quarter was 1. 26 or something. Charlie, a 2 growth rate, if we have a little less than 1 population growth, which we probably will, in one generation 25 years now. People have kids later. Will add 19,000 per capita, family of four, 76,000 to real g. D. P. A family on four on average that would be 76,000 more stuff for family of four in one generation. I mean, we are going to have more the goose is going to keep laying more golden eggs. We have a wonderful system. Rose there are things that will get in the way. 2 . And 2 will produce miracles. Rose but 3 is probably possible, isnt it . It may or it could be, but that would be fabulous. Rose right. But 2 will 19,000 per capita. Thats greater than exists in, you know, a whole lot of countries. That will be added. The question is what we do with it. Rose how do you see the future of china . Well, theyve done a great job on some things. Theyre not a democracy, and it hangs in the balance how their political system will evolve. But in terms of raising incomes, getting rid of poverty, improving health, its an unbelievable miracle that theyre embracing, in their own special way, of the market, sincially rale just 1990 theyve done very well. Theyre the second biggest economy in the world. Theyre serious about trade. Theyre serious about clean energy. They are super important. The most important relationship in the world is the u. S. China relationship. Rose clearly. Because theyre the two biggest economic powers in the world. Right, and theyre rising and theyll continue and were strong and were going to stay very strong. Rose what could make us not stay strong . Theres a lot of strength that weve built up over decades, the way we do research, our universities, the way that people take risk, and thats why our Technology Companies are still so strong. Our Biotech Companies are still so strong. So the Education System is one that, you know, we need to go back and look at. You know, and that is one huge source of inequity because if you get a great education, actually, the outcomes are pretty good, mobility. Rose your experience has told you its much harder than you imagined. Improving the u. S. Education system, yes. The dropout rate has gone down a bit, so thats great. But the overall reading scores, math scores, and the inequality hasnt budgeted much in the last 10 years.