Charlie Munger on efficient markets and bureaucracy
If markets were efficient, this tent wouldn’t be so full.
Some business schools are teaching properly, but the world grew up amidst a
different fashion, encouraged by academics of the era. What we believe is
simple, and many avoid it because of that simplicity. They want to be experts.
And how can you be an expert if it’s simple? Also, execution is difficult – and
people don’t like to fail.
The whole institutional reward system encourages different
behavior and thought. If you went to work at a big firm, you’d grind your way
up. It’s a hierarchy. Nobody cares about how to do it better. And by the time
you’d been there 10-15 years, you’d be thinking their way. This didn’t happen
to Warren.
[Wesco board member] Peter Kaufman came into a business
[Glenair] and became the CEO in his early 30s, so he’s been the CEO a long
time. The whole place is twenty or more times bigger. That’s a Berkshire
experience, but that’s not normal. Normal bureaucracy doesn’t reward an
attitude like ours.
