Warren Buffett and Charles Munger on California’s Prospects

Asked at a May 2, 2010 press conference the day following the Berkshire Hathaway shareholders meeting in Omaha Nebraska, Warren Buffett and his business partner, California resident Charles Munger, were asked a question about the Golden State.

The thrust of the question centered on however California goes, so goes the nation. The reporter sought Buffett and Munger’s views on the global impact of the state’s budget shortfall and other economic issues.

Munger, 86, answered first:

“California probably has the most dysfunctional Legislature in the country. I’m a connoisseur of the worst. When I see a place that’s mastered the worst like the California Legislature, I think I understand it. They’ve gerrymandered the districts. (The result is only a) certified left-wing nut or a certified right-wing nut gets elected. If you throw your best people out and only elect idiots in, you get a very dysfunctional system. You are certainly right in naming California as the poster boy for dysfunctional government in the United States.

“That said, we have a wonderful climate. We have a lot of wonderful people. We have that going for us (which helps us overcome) our huge amount of idiocy.”

Buffett’s take:

“California will work out over time. There’s so much going for it. It’s like a very rich family that can afford to mess things up for awhile. You may have Prop. 13 … that kind of distorts reality in terms of financial matters and so on but if you’re the state of California you basically have a first lien on all the property in that state. It comes ahead of the mortgage.

“People are going to continue to want to move to California. I would love to own the equity in California. It’s a fabulous place.”

Munger again:

“The infusion of Asian talent in California is simply awesome. It’s changing California so rapidly.

Buffett:

“And they have the best candy in the world.”

(Editor’s Note: Presumably referring to See’s which Berkshire Hathaway owns.)

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