Charlie Munger: I Would Take An Axe To The Financial Sector

During the 2011 Berkshire Hathaway Annual Meeting, Charlie Munger explained why he would take an axe to the financial sector. Here’s an excerpt from the meeting:

CHARLIE MUNGER: Yeah, the one place that I feel we’re making a huge mistake is not learning enough from the big mess that came from wretched excess in our financial system. I don’t think we throttled the sin and folly out of that aspect of the economy nearly enough.

And I think — if you look at all the panics and depressions in the United States, they all came from financial collapses, usually preceded by perfectly asinine and greedy behavior. And I think that would be a lot to be said for taking an axe to our financial sector and whittling it down to a more constructive size.

WARREN BUFFETT: Tell us more about how you use that axe. (Applause)

CHARLIE MUNGER: Well, Warren, I’ll make myself ridiculous, but I guess I’m so old I’m entitled to do that.

The — I would have the tax system discourage trading. I would have various kinds of Tobin taxes.

I would have securities trading more with the frequency of real estate than the trading by computer algorithms where one person’s computers outwit another person’s computers in what amounts to sort of legalized front running.

I don’t think we need any of that stuff. And I think making heroes out of the people who succeed at it is not good for the fiber of the country, either.

I hate the idea that 25 percent of our best engineers are going into the financial sector. So, I think it’s crazy what we’ve allowed. (Applause)

And I think the lack of contrition in our financial sector, after the disgraceful stuff they got us into, is perfectly awesome. It makes Dave Sokol look like a hero. (Applause)

WARREN BUFFETT: He’s getting warmed up. (Laughter)