♪ announcer: from our studios in new york city, this is "charlie rose." charlie: bill gates and warren buffett are here. is chairman and ceo of berkshire hathaway. the two have famously been friends for more than 25 years. together they started the giving 0, they donate the bulk of their wealth to charitable causes.

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 a thousand students. there is something special about the curiosity and interest of young people wanting to know how to they learn from you, wanting to know if you were starting wantingat would you do; to know about values, you do a lot of this? ande met on july 5, 1991 hit it off immediately. if it wasn't for his mother we probably wouldn't know each other and we have had a good time ever since. we come together particularly on the giving things, but other things as well. charlie: he sits on your board?

he sits on the berkshire board. the big thing that came out of discussions was the giving pledge. that has worked out so much better than i ever anticipated, charlie. i thought if i got 30-40 people, i would -- i think we are 100 and 56 or something like that. now goingople -- and beyond the borders of the united states, which i didn't feel would originally happen. people are learning more -- our members -- learning about things, how people handle within their families, wealthy families, and it has worked out so much better than i would've asked six years ago or seven years ago. charlie: both of you had made the point because of success in technology, there are a lot of people coming into a lot of money much younger.

>> it is a great thing that they are doing so well. i didn't give huge gifts until i was a 45, some in their 30's are already doing amazing things. why were you reluctant to give earlier than that? bill: i hadn't taken the time to hugestand where the payoffs were. i was pretty maniacal about microsoft and only in my late 30's with some encouragement from my wife, melinda, did i start to study and talk with her about it. we knew i would do it by the time i was 60, but as we were learning we decided we should accelerate it. with found a lot of ways we could have high impact. charlie: the principal mission call was all lives are equal? bill: that's right. a lot of that going out of the

united states has gone to save lives. charlie: how did you decide that you'd rather give money to the gates foundation rather than starting at the notion of your own -- starting a foundation of your own? my first wife and i did start a foundation some years ago. i compounder if money like i hope to, there will be really large sums later on. you are good at giving away and i'm good at making it, she thought that was half a copout and have logical. -- we something like started over 50 years ago, but i really thought that there would andarge sums later on she was particularly good with empathizing with people, she

would be better at giving it away then i would be here and died in 2004, as you know. then i had to rethink what i was going to do. decided five foundations, the gates foundation being the largest, i looked for people with similar goals than what i had, the idea of every life having equal value is just fundamental to me. charlie: and you do well? he is putting his own money up, which is a big deal, but you had two much younger people, very bright, very hard-working. they were harder than most people do in their jobs and they were on the same track i was on. everything about it made sense. and it is continuing to make sense years later. charlie: talking about melinda's

influence, susie was -- changed my life. i was a very lopsided not well-adjusted person and she put me together. it wasn't overnight, but she just had a little sprinkling can -- ofrlie: a coming together opposites? warren: no. i wouldn't say that. bigere in sync in a way, but she was very much more mature when we got together. i was like 12 emotionally. she put me together. it changed my life. i would not have been -- had anything like the life i had. charlie: and what did charlie munger add? my partner of 58 years,

he is extremely wise. he is a wonderful friend. he is strong-minded, i am strong-minded. disagree, but we have never had an argument in all that time. charlie: you never had an argument? surely you disagree. warren: certainly we do. agrees warren, you'll with me because i'm smart and -- because you are smart and i am right. i respect him enormous lee. enormously. a marriage partner is the most important relationship, but having a business partner -- if i had done everything i had done, it wouldn't have worked

out this way, it would've been more fun with charlie. charlie: who says no to bill gates? bill: melinda. [laughter] warren: i have seen it happen. bill: it's great when somebody knows you might move too fast or be too optimistic. a team comes in planning out things we haven't done or maybe they are not as motivated afterwards, so that they can get me to correct that. i have matured a lot and i give melinda immense credit, she still has work to do, but i think i'm getting there. strengths where you share the same goal is a great thing. i had that with paul allen in the early days, is in steve and microsoft. going on now it's melinda. charlie: how much time do you spend at microsoft?

15% of am there about the time, and i just get there on the rmb part. brainstorming with people, how do we take -- r&d part. it is a very exciting time in software. there are five companies in a really strong position. microsoft is leaving in some really cool stuff. the way that a business takes information about customers, communication with customers, mission,t data, that really using data and ai, getting productivity up, microsoft is the leader in that. that a wonderful niche they are strong in. and they will be innovating

along that line more in the next two years than ever in history. charlie: it is a path to artificial intelligence? the ultimate dream when you start working on software is the deep understanding intelligence that humans have. it has been the holy grail, when the computer learn to play games, when can it learn to read, when can it understand speech. things like speech and vision made such progress in recent years. you have been tracking this and exposing your viewers to this. even for people in the field it is a magical time. charlie: its potential is to do what, change everything? bill: and the first instance to be the best assistant ever, looking your information and help you know in the few minutes between meetings what you should look at, or if you are trying to plan a trip, organize things, to

be a much better assistant then 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 will just magnify the creativity and make your time more valuable. charlie: are you interested in technology? warren: i don't think i have a way to startthat with, and i would be so far behind i would never catch up with people. i have been working on it -- it would not be a game i would win. is a principal criteria for you to understand the business? warren: yes. i have to understand. understandable, and others have my confidence. have mywo circles that

confidence. there is overlap between them and the important thing is not how -- it is nice to have a huge circle of competence, much more so than where the limits are of it. you can do very well if you only understand 5% of the businesses in the country. d -- findand fin plenty of opportunity. in made a huge purchase 2016. is it harder and harder to find an acquisition candidate? warren: we have to move the needle on a $400 million market , it is hard to find -- i

would do better percentagewise if i was working with a smaller amount of capital. charlie: how do you find it? warren: it is interesting. i will get a call, i will be sitting thinking -- in private businesses it's because i get a call from a private seller, but occasionally i just decide to act and we never do anything unfriendly, but in terms of buying whole businesses -- charlie: are people close to you on the lookout for you? warren: not much. bought 12 have not billion of common stocks since the election. that's in my mind which ones i picked. guys at work with me, the two fellows probably bought a little bit or sold it little bit, too. but those are ideas that come at a different slant -- air -- is one of those?

it was shown on september 30 that we own some airlines. charlie: why did you do that? warren: that i won't get into, but it was in large part my decision. charlie: the old joke as you know, how do you become a millionaire, be a billionaire and buy an airline. transportation has been something that -- warren: but they are not related. railroads and airlines are different businesses. you cannot move the track. people, there is a certain romance to it. you can actually go into the business and more than 100 airlines have gone broke. it is a different sort of business. charlie: how has knowing bill

influenced or enhanced your sense of the way the world works? warren: i learned from them. i like to learn from all friends here at bill happens to be a very good source. that is the fun of having friends, charlie. it would be hard for me to be a friend with anybody i don't learn from. and they would probably get bored with me. [laughter] ♪

♪ do you feel a certain responsibility as a woman ceo to mentor other women and speak out on issues relating to women? >> you always want to be noticed

and rewarded for what you did, your contribution. ♪ for "wrote an article fortune magazine" before i met him that it's not necessarily a good idea to leave large sums to your children. that was pretty fundamental. i remember reading that and i was convinced that was right and now you have to think of how to give it away. warren showing me his calendar. i had every minute packed and thought it was the only way you could do things. the fact that he is so careful about -- [laughter] --l: he has days charlie: that there is nothing on. bill: there is nothing on.

be careful, you might not understand. charlie: this is the week of april of which there are only three entries for a week. arren: there will be four by april. charlie: not to crowd yourself too much, read, think -- warren: you control your time, sitting and thinking may be a much higher priority than a all thiso who there is demand, you feel like you need to see all these people. of yourt a proxy seriousness that you have filled every minute of your schedule. i can buy anything i want, basically, but i cannot buy time . charlie: two halftime is the most precious thing you can

have? way i canere is no buy time. charlie: living in omaha makes it easier? warren: yes. drove both ways, it was about a half an hour each way, i knew the words to a lot more songs. if you're doing an hour coming and going, that is 2.5% of the person's work week. charlie: do you agree politically? on a most everything, a general sense that you have to keep the economy turning up greater output and that you have too in a fair way. that basic framework we see very much the same. believe to both of you you can achieve a 4% growth rate? warren: that is pretty high.

charlie: i think the last quarter was 1.6 or something. rate ina 2% growth one generation will add 19,000 four,pita, family of 76,002 real gdp. be 76,000 more stuff for one family of four. the goose will keep laying golden egg's. we have a wonderful system. charlie: there are things that can get in the way of that? warren: 2%? charlie: 3% would be a miracle, wouldn't? warren: that would be fabulous, but 2% -- that is greater than

exists in a whole lot of countries. charlie: what you see for the future of china? they have done a great job on some things. they are not in a democracy so it hangs in the balanced how their political system will evolve, but in terms of raising incomes, getting rid of poverty, it is a miracle that their embrace of the market since really just 1990 they have done very well. they are the second biggest economy in the world. they are serious about trade, serious about clean energy. they are super important, the most relationship in the world is the u.s.-china relationship. charlie: clearly, because they are the two biggest economic powers in the world. bill: right. we are strong and are going to stay strong. charlie: what can make us not

strong? bill: there is a lot of strength we have built up over decades, the way we do research, universities, the way people take risk. that is why our tech companies are still strong, our biotech companies are still strong your the education system is one we need to go back and look at. inequity,e source of because if you get a good education, the outcome is pretty good. charlie: your experience -- much harder than you imagine. bill: improving the u.s. education system, yes. the dropout rate has gone down a bit, so that is great. but overall reading scores, math scores, and inequality hasn't budged in the last 10 years. one of the goals of our foundation is, working with

partners, to change that. so far, it has proven to be one of the top or once, but -- stillr ones, but we are committed to it. we still believe it is achievable. charlie: all the talk about immigration, are we still looking at a situation where some of the best and brightest come here, get an education, and then go back to india or china rather than staying here? bill: a lot do stay and the most important import the u.s. has far is human talent. a lot of the hardest working, best and brightest from almost every country in the world have wanted to come to the u.s. university at departments or doctors, engineers, people starting up companies, building jobs, it has

been a huge strength of hours. we have always made it super easy for that to work, but it has worked very well. so, the number going back, it is we are stillut net a huge beneficiary of human talent. charlie: i think -- wrote this, green should staple eight -- a green card to every diploma? bill: i believe that. i could be biased because i'm from the tech industry. i believe that keeping talent in the country is a great thing. charlie: tell us a story -- you told me, you think the second most important document in america's history after the declaration of independence or perhaps the u.s. constitution is this letter by two immigrants? warren: a letter written by two

the jewish immigrants, it doesn't sound like much. in august of 1939 on a just before germany moved into poland, leo zillard was born in hungary and went to germany. he worked in germany with bert einstein. in 1933, both of them left germany and they came to the united states. they become citizens and they presidentetter to roosevelt. he got einstein to sign it because his name had more weight. it was not even a half a page. atomid germany will get an bomb and it may work and we better get to work on that. the manhattan project came out

of that. so knows what would've happened wasorld war ii if a -- it semetic. if we didn't have great scientists and secondly if those two didn't come to the united states. it welcomed them and they may have saved the country. charlie: germany did not get it and we did. it was the right were hje -- warhead. me a noteou sent saying you're not worried about the american economy, what i worry about is somehow and some way we will make a mistake in terms of the employment of the nuclear weapon or some bad character will buy them or steal

them. warren: weapons of mass destruction. a tiny probability any given way, but there are people who wish us ill, that would like to kill millions of americans. there is psychotic, megalomaniacs, the world has a certain number of them and if they have the knowledge and ability, there are people who would like to kill millions of americans and the weapons are there to do it. einstein said shortly after the launch of the atomic bomb, i which weapons world war iii will be fought, iv will bewar fought with sticks and stones. the president's job is to protect us as much as possible

from weapons of mass destruction. aboutn't worry too much intent with organizations and other nations, it is the only real cloud on america over time. we will solve the economic problems, but that is number one. charlie: you agree? bill: i agree. nuclear weapons, but bioterrorism is also quite daunting. charlie: what is bioterrorism? in an extreme case, somebody would re-create the smallpox and it could kill millions or potentially billions. warren: there was an oped and saidnew york times" and i something to bill -- he said it

sounds reasonable. there are people in the world, may be organizations, who would love the idea of creating a smallpox epidemic. charlie: how do you prevent that? bill: you want to have surveillance to catch it as soon as you can. you want to have medical tools where you can create a vaccine and protect people. science is working on the defense part of this at the same offenseis making the slightly easier. we are vigilant, there are a lot of steps we can take to make the risk lower just like minimizing access to materials meaningfully reduces the chance of a nuclear weapon. charlie: there are some who argue that the next war will not be a nuclear war, but perhaps not even bioterrorism, it will be a cyber war. bill: that is a third area.

i personally -- there is only the three, but not much comfort. yes. a modern society depends on electricity and communications, and information flow. if you can, for a substantial period of time, disrupt that, then a lot of systems depending on how a hospital organizes itself or how food gets moved around, or an airline decides what to do -- or bank accounts, you know, what was that big account supposed to be? a lot of experts and companies now are spending time thinking about that, how do you minimize that, how do you have duplicates, backup? a lot of sophistication going into that. charlie: can the united states risk a trade war with china or

will it have a significant -- warren: it is not a good idea. that theem of trade is benefits are diffused and invisible. so, you don't walk in and buy a shoes or underwear and it says you just saved 12% because it was purchased some, so 320 million people are buying things cheaper than they would the harmfulut effects taking somebody out of a job they have had for 25 years when it is too late to train them for anything, are specific and terrible. you want to figure out how to keep the societal benefits and take care of the people who are the roadkill in this.

there will be roadkill, there is no sense getting yourself. textile atwith berkshire, half of our workers only spoke portuguese. they work in hot and allowed conditions and spent 25 years on looms. when textiles moved elsewhere, there are economic lives were ruined. the is part of trade and benefits -- if somebody buys whatever textiles we were turning out, they buy them a little cheaper. we have to -- trade and if it's everybody, us and them. as a society it penalizes certain people terribly. and we have to take care of the people that are getting hurt. charlie: take care means what? warren: you will have to have some kind of -- you have to have retraining when it is feasible, andwhen it isn't feasible

you speak portuguese and our 55, you have to make sure that person has an income that is permanence or it -- that is commensurate. say becauset to everybody's benefit -- to help with this guy. we can afford it and we should do it. did you -- the economic inequality that was out there that donald trump tapped into? i was no better at seeing those trends than other people. charlie: what about brexit and other -- again, i was surprised by the brexit vote. charlie: and the uprising that took place in terms of feeding off of that -- bill: there is no doubt that

younger people and urban people in terms of social mores and being able to benefit more from new technology and things out there, there is somewhat of a divide there. the fact that it would lead to this political result is a wake-up call saying what is in terms of economic or social improvingcan we by medicine, improving education system, can we take what the negative views are there and engage and uplift their views in the future. to me the greatest surprise is and how people voted, because i didn't think about myself as having expertise on this. but the general question, will you think your children will be better off, i think they well, but the fact they don't feel that way -- the improvements in

health and the new products that will be available to them -- charlie: and what technology enables them to do? bill: right. that is a concern. if people don't see the arrow of time pointing toward greater things, better research, better education, it creates a sense of malaise saying some things are working, let's do more of those things. ♪ ♪

track your pack. set a curfew, or two. make dinner-time device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. introducing xfinity xfi. amazing speed, coverage and control. change the way you wifi. xfinity. the future of awesome.

have the best economy, best universities, best talent, and we have the best spirit of innovation and creativity. could we lose that? bill: i don't think we will. warren: no. i think the odds are very -- charlie: this is what you call the special sauce? warren: we still have the special sauce. if the rest of the world learns from that special sauce, it is not a zero-sum game. it won't the -- deprive us. overall, our society will be if you take in aggregate, our children will live better.

the real question is will it continue to leave lots of people behind. a specialized market system will leave people behind. is,e is -- if somebody however you want to measure it, 10% below average, their opportunities in this world today have not improved at all from 30 or 40 years ago. the classic situation is you in 1982,forbes 400 number one guy was dan ludwick, he had $2 billion. now it would be 30 or 40 times that. more highly specialized economy year after year, different from the agrarian economy from 200 years ago, it's and morebe more people at the top winning big

time. and it won't do much for the person that really doesn't have any special skills for the market. the average person or slightly below average person in terms of market talent is not going to do very well unless we have policy to make sure they participate in some way. and the guys at the top will keep doing better. charlie: policy has to be -- warren: the market system is a traffic cop, it directs resources and brains, and it does a great job. but it also directs winnings, it will favor more people at the top. government has always had a role. government redirects the winning so it isn't totally the market system, but delivers the winnings. i don't want to kill the market system in terms of producing at all. we want more stuff, but there more people falling

relatively behind and that is not a good result. we can do better. charlie: i'm sure you saw a report last week that suggested andook eight billionaires said they have more wealth than the bottom half of the population in the world? warren: yeah. 1982, theyes four in 25 times as much as 35 years ago and believe me that does not strike somebody that is working 40 hours a week and trying to support a couple of kids on it -- charlie: and their incomes remain the same or become less -- or they are threatened by forces they can't-- paysn: the market system more and more. say you are a middleweight boxer. in the 1930's you wouldn't even undercard, but then

television comes along, cable, pay-per-view, then tens of millions of dollars. it is a pop, it is terrific. theare you -- if you are 45th, it was pretty much the same for you. like frank sinatra when he first played on television. if you have a good idea you can --e ilion's just on the idea make billions just on the idea. 1800 and youk to were reasonably strong and willing to work hard, you were worth 90% on a farm as much as the best guy. the market system will push it in that direction and government is there to -- charlie: what would you change? warren: i would change the earned income tax credit, big-time. i am where i am not i

myself at all. millions of americans out there, and a lot of crossover. it just -- i benefit enormously by having come along when i came along and where i came along your some people did and some people didn't. there is nothing wrong with the market system that makes life better for millions of people, they ought to get rewarded, but you have to take care of the people that just don't fit well in that. in this country paid based on athletic ability, i've could -- i could study eight hours a day and i'm still going to -- i will get the ring or something like that and 10 minutes later i'm on my back. the talents that get rewarded our import, because they bring us more that the country wants and they make improvements in but they leave people in mind.

it won't be solved simply by education. charlie: is it the responsibility of government to do something about it? warren: sure it is. bill: but the government also has to keep his nest in shape -- business in shape. striking the balance should be at the heart of political dialogue. charlie: you can have the barest island in the world and two guys living on it and deciding how they can divide up the palm tree, the only thing on the island, but it won't ache any difference -- it won't make any difference. charlie: beyond national security, when you -- what do we have to be fearful of in the future? we have talked about some people believe that there is artificial intelligent risk, you have spoken to that and other people have. what is around the corner that -- artificials

intelligence is clearly one of those things, too -- but also offers a scary world, whether gene editing or that kind of --what do you think? gene editing is a good one where the promise of helping with disease, making plans that are more productive, it is playing with the software of life. exactly how tong -- how it should be used -- if you can make sure your child was otherr attractive or had characteristics, is that an appropriate use of technology. how do you decide that? >> government questions.

there is balance between freedom and security, it came up in terms of hitting in which a phone terrorist might have left future possible terrorist acts. bill: that is another one where -- making sure the government completely bound to what goes on, financial transactions, communications, because you trust appropriate policies of when and how government's ability to see -- that is another one. there will be a big debate about -- some extremists might say government shouldn't see anything, others will say government should say everything, but i think there is the potential for the best of both worlds approach. charlie: there should be procedure? bill: right.

and we have had procedure. some people think that even so things went on, so there are voices out there that 10 for the -- tend toward less not let government see things. that is the question, how much of a gene editing, how much governmental ability -- we need politicians who draw in great opinions. running a health care system and deciding when people are super expensive treatments, should health care demand so much of the economy that investing in education and social services and those things, that will be another huge problem that will be debated in the political arena. charlie: phil has health care right in your judgment? bill: the european countries -- charlie: scandinavian or -- bill: the u.k. spends about half

of much of the gdp as the u.s. does. a is hard to express what mammoth difference that is. you're talking about almost 9% of gdp difference. that is one out of 11 people who go to work every day are the extra health care activity here in the united states. i'm not saying we should just whole cell adopt their system, which is single-payer -- wholesale adopt their system which is single-payer, there are other systems that are great. one ofto medical care is the few things we do quite a bit worse than other countries. there are some like education that a lot of rich countries don't do well on your this one is where we are uniquely bad. health care and

education, we don't do as well as other countries? bill: most rich countries don't do well. there is he's male information where we do better than a lot, so that one we are more middle of the pack in terms of achievement. it is health care access where we look particularly bad. charlie: is there a ticking clock on global warning? bill: yes. fortunately, it is not overnight. the big impacts are in the 30 to although, itframe, has already increased the chance of drought and storms. we are seeing that. charlie: you can see direct causation there? bill: yes. alreadying effect is there. overlaid with that is pacific oscillation and normal weather things, so exactly how much is

the heating signal versus other things, you can get reasonable disagreement, but there is no doubt that that is their. re -- there. but particularly the middle east and parts of africa, we are already seeing some of that and over time it gets worse. changing the energy system which has a long lead time of invention and deployment, i feel it is one of the most urgent problems. charlie: is the answer finding alternative sources of energy? that magic three characteristics, reliable, clean, and low-cost. there are many paths to get there. we have to encourage innovators trying different things. if you can take some and turn it and turn ito -- sun

directly into gasoline, that would be an approach. there are approaches that take nuclear to a new level of safety and a lower level of cost so that that would be a key part. we need to find a lot of innovative ideas, both government and private sector. is it -- today more challenging than when you were running microsoft? bill: i am on a steep learning curve in both cases. i love the fact that i get to meet great people. i get to see things work, see things that fail. for this stage of my life, i am in a perfect position. i couldn't be happier. charlie: do you have an influence on microsoft? not just as a shareholder -- bill: yeah.

i get to keep up-to-date. and we are using digital enablement things to get financial services to people all of the world and to get medical data. staying up-to-date on the digital p's help me do my foundation work. something akinid to this, the average person lives better than john d rockefeller did. warren: that's true. you live better and terms of entertainment choices, travel choices. he could not buy them. that is in one lifetime. it is amazing. charlie: what brings you the most satisfaction beyond family? warren: greatest sex action eatest satisfaction is staying in good health. charlie: what do you enjoy? warren: i enjoy running

berkshire. it has been my painting for 50 some years. i get to paint what i want. i don't have to follow what wall street is telling me what to do in that quarter or something like that. i own the brush, i on the campus and the campus is unlimited. it is a pretty nice game and i get to do it every day with people i like. i don't have to associate with anyone that causes my stomach to churn. if i was in politics i would have to smile at people i wanted to hit. i've got a good deal and i'm hanging on to it. brooke said to me, i spent too much of my life were in about what people think of me, but now i only worry about what i think of them. warren: my business is -- i am lucky that way.

business is so much easier than philanthropy. in business you are looking for people you like to associate with and to an extent i can create the world around me. charlie: if you are saying some he walked in your door and you wanted -- they wanted you to buy their company and you saw it as a -- goose -- i would say no. marrying for money is already a bad idea under any circumstances, but if you are already rich -- charlie: it doesn't make any sense at all. [laughter] charlie: what is the metric of satisfaction? warren: doing a decent job of running a place, and it gets more difficult because of the size of the place. that it is working with a whole lot of people. it is like gene mccarthy said about being a football coach,

just difficult enough to be interesting, but it really isn't that hard. [laughter] warren: he had a way of getting people irritated at times. charlie: what brings you the most joy? bill: learning things and making breakthroughs after all of the greattamme stuff -- family stuff, that is a lot of fun. every once in a while something really makes sense and you can teach people, share and insight, i think that is satisfying. when i sit down with melinda and write a letter, i have had a chance to see things, what can i share that might be helpful to people and is sustained. it is hard, doesn't happen all the time, but between my learning and eating able to share where i see this is what i thought it was, that gives me great satisfaction. ♪

got you outnumbered. the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen.

>> 7:00 a.m. here in hong kong. we are live. welcome to daybreak asia. we have the view from jackson hole. policymakers in wyoming. investors are watching for central bank policies. we inflation is not a crisis. and for bloomberg's global headquarters, i'm betty liu. profit falls in a record. they want to fly directly to london and new york. and the samsung