>> rose: welcome to the program. it is the end of summer, and as we prepare for the next season, we bring you some of our favorite conversations here on charlie rose. tonight an hour with warren buffett, and bill gates, cofounders of the giving pledge. >> einstein said shortly after the launch of what was called the atomic bomb, i know with what weapons world war roam throw will be fought, but world warv will be fought with sticks and soans. and that probability exists, and it's the number one job of the president of the united states, to the extent possible, protect us from weapons of mass destruction, and they can exist with individuals, but you don't worry too much about, that the intent, but with organizations s and even with a couple nations. and it's the only real cloud on

america over time. we'll solve the economic problems, but that's 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 world's 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. there's 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 wasn't for his mother, we probably wouldn't know each other. and we've had a good time ever since, and we've 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. that's worked out so much better than i ever anticipated, charlie. i thought if we got 30, 40 people -- >> how many you have-- >> i think we're 156 or something like that. and the people-- and now we've gone beyond the borders of the united states, which i didn't feel would originally happen. and people are learning more, our members, about effective

philanthropy. they're learning about things that didn't work. they're learning how people handle within their families, wealthy families. it's 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, it's a great thing that he's companies are doing so well. as a group, i would say it's a particularly philanthropic group. i didn't 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 didn't 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. >> that's 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 you'd 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 shouldn't 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. you're god at giving it away, i'm good at making it, so i'll make it first and you give it

away. and she thought that was half a cop-out 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 gates foundation 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 much-younger 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 it's continued to make sense 10 years later. >> rose: bill talked about melinda's influence. you said to me about suzy, your late wife, "i was a mess until i met suzy." >> i think that's understating it. she's changed my life, there's no question about it. >> rose: how did she change your life? >> i was a very lopsided, not well-adjusted person who happened to be good at one thing, and she put me together. it wasn't 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 wouldn't 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 he's extremely wise. he's a wonderful friend. we've been partners in that time, and he's strong minded. i'm 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, you'll agree with me because you're smart and i'm right." where do i attack that -- >> "you'll figure out i'm

right." >> listen, i respect his opinion enormously whenever he gives it to me. i respect bill's opinion. but it's more fun doing things with partners. i mean, the most fun is, obviously, a marriage partner. and that's 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, but let's say i got double the results, it would be more fun doing it with charlie. >> rose: who says no to bill gates? >> well, melinda. >> i've seen it happen. ( laughter ) >> it's great when somebody knows, you know, when you might move too fast or be over-optimistic. and, you know, if a team comes in and i'm pointing out things we haven't done, and maybe they're not as motivated afterwards. so they can get me to correct that. i-- i've matured a lot, and i give melinda immense credit. you know, she still has work to do. ( laughter ) i think i'm 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, it's melinda. >> rose: how much time do you spend at microsoft? >> i'm 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. it's a very exciting time in software, and, you know, there's 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 it's a well niche. you know, it's a multihundred-billion-dollar niche that they're 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. it's the ultimate dream when you start working on software is the kind of deep understanding and intelligence that humans have. so it's 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 can't over-state even for people

in the field, it's 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 you're 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 don't have enough-- i don't think i have a natural bent that way to start with. and i'd 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 un-understandable, 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 aren't chosen because they have a different circle or anything. there's a lot of overlap. there's overlap between them. and the important thing, you know, is not how-- it's nice to have a huge circle of competence. it's 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 you've 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 we're talking a quarter of 1%. and that's after tax. that's more than a billion and a half pretax. it's hard to find things. i would do better percentage-wise if i was working with a much smaller amount of capital. >> rose: how do you find them? >> it's interesting. i'll get a call, i'll be sitting thinking-- i mean, different things. in terms of 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 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: you're shake your head.

>> charlie, yeef net bought 12 billion of common stocks since the election. >> rose: 12 billion of common stock. >> it's 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 i've either come at from a different slant in some way or whatever it may be. >> rose: is airlines one of those? >> well, is-- i won't 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 won't 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." >> there's no question it's been a graveyard for a lot of money. >> rose: but transportation has been something both in terms of-- >> but they're not related. the railroads and airlines are not related. >> rose: all the?

>> they're different kinds of businesses. you can't move the track. you can move planes around. and you can't go into-- aurls attract people-- there's 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 it's 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 that's-- listen, that's the fun of having friends, charlie. i don't think i would-- it would be hard for me to be a friend with anyone they don't learn something from. they'd probably get kind of bored with me, and i'd 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 it's 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 there's nothing on it. >> absolutely. >> rose: this is october-- >> it's high-tech. be careful. he might not understand it. >> rose: i'm 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, there's all this demand and you feel like you need to go and see all these people. it's not a proxy of your seriousness that you filled every minute in your schedule. >> and people are going to want your time. it's the only thing you can't buy. i can buy anything i want, basically, but i can't buy time. >> rose: and so to have time is the most precious thing you can have. >> i better be careful with it. there's 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 that's about it. >> rose: it adds up, doesn't it? >> it really adds up. if you're doing an hour a day difference, coming and going, and, you know, that's 2.5% of the person's work week. that means 40 years you're talking about a year. >> rose: do you agree politically? >> on almost everything. you know, general sense that you've 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. >> that's 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, isn't it? >> it may or-- it could be, but that would be fabulous. >> rose: right. >> but 2% will-- 19,000 per capita. that's 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, they've done a great job on some things. they're 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, it's an unbelievable miracle that they're embracing, in their own special way, of the market, sincially rale just 1990 they've done very well. they're the second biggest economy in the world. they're serious about trade. they're serious about clean energy. they are super important. the most important relationship in the world is the u.s.-china relationship. >> rose: clearly. because they're the two biggest economic powers in the world. >> right, and they're rising-- >> and they'll continue-- >> and we're strong and we're going to stay very strong. >> rose: what could make us not stay strong? >> there's a lot of strength that we've built up over decades, the way we do research, our universities, the way that people take risk, and that's 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 it's much harder than you imagined. >> improving the u.s. education system, yes. the dropout rate has gone down a bit, so that's great. but the overall reading scores, math scores, and the inequality hasn't budgeted much in the last 10 years. and one of the goals of our foundation is, working with partners, to change that and so far, it's proven to be one of the tougher ones. we still believe that it's super important, and there are promising if we look at individual schools, we see great things.

so we still believe it's achievable. >> rose: all the talk about immigration, i want to talk about it a little bit, but all the talk about immigration, are we still looking at a situation where some of the best and brightest from overseas come here, get an education, and then go back to india, or china, or wherever, rather than staying here? >> a lot do stay. and the most important import the u.s. has ever had by far is human talent. it's been to our benefit that a lot of the hardest working, best and brightest from almost every country in the world have wanted to come to the u.s. so if you look at university departments or, you know, doctors, engineers, people starting up companies, building jobs, it's been a huge strength of ours. we haven't always made it super easy for that to work. but it has worked very, very well. so the number going back, it's meaningful, but net, we are

still a huge beneficiary of human talent. >> rose: it used to be said-- and tom frieden i think wrote this, we ought to staple a green card to every diploma. >> i believe that, and i have a bias because i'm from the tech industry and we can create multiple jobs around the engineer instead of having to do that outside the united states. yes, i believe that keeping talent in the country is a great thing. >> rose: tell us the story-- because you told me this story and i-- you think the second most important document in america's history, after the declaration of independence, or perhaps the u.s. constitution-- or both-- is this letter-- >> it was a letter written by two jewish immigrants. >> rose: whose names were. >> that doesn't sound like much until i tell you one of the names. in august of 1939, just before germany moved into poland, leo zollard, whose name is not well

known, who was born in hungary, but he went to germany, and he worked in germany with albert einstein. and in 1933, i believe both of them left germany, and where do they come? they come to the united states. and they become united states citizens, and they cosine a letter to president roosevelt-- and that letter, which you can see on the internet-- not even a full page-- says germany is going-- i'm really paraphasing here-- germany is going to get an atom bomb and we better get to work on one. and the "manhattan project" came out of that. and knows what would have happened in world war ii "a," if hitler hadn't been so anti-semitic. and secondly, if those two hadn't chose to emigrate to the

united states. i mean, the united states was, you know, it welcomed them. and they-- they may have saved this country. they may have saved this country. >> rose: so germany did not get it and we did. >> all those b-1s and b-2s lobbed over there in england, didn't have the right warhad from the standpoint of the germans. if we had started three years later-- who knows what would have happened. remarkable men, both immigrants glu sent me a note maybe a month ago, and you said, "i'm not worried about the american economy." >> that's right. >> rose: what i'm worried about is somehow, in some way, we'll make a mistake in terms of the deployment of nuclear weapons or some bad character will buy them or steal them-- >> weapons of mass destruction are out there. >> rose: maybe it's an accident, a computer blip. >> it's a tiny problem any given day but there are people who

wish us ill will. there are psychotics, religious fanatiction, megalomain action. the world has a certain number of them, and if they have the knowledge and the ability there are people who would like to kill millions of americans. and the weapons are there to do it. i mean, when we-- einstein said shortly after the launch of what was then called the atomic bomb, he said, "i know not with what weapons world war iii will be fought, but world war iv will be fought with sticks and stones. and that probability exists, and it's the number one job-- the president of the united states, which every president acknowledges-- is to the extent possible, protect us from weapons of mass destruction. and they can exist with individuals, but you don't worry too much about that, the intent, but with organizations and maybe even with a couple of nations. and it's the only real cloud on america over time. we'll solve the economic problems. but that's number one.

>> rose: you agree? >> i agree. and it's not just nuclear weapons. >> no. >> the bioterrorism piece is also quite daunting. >> rose: what's the bioterrism piece? >> in extreme case, somebody would reconstruct, say, a smallpox virus, and have that spread, and it would not only kill millions. it could potential kill billions. >> i think it was on the op-ed piece in the "new york times" within the last, about two years-- i check with bill because i don't understand this stuff well enough-- and he said yeah, it makes sense, in terms of being feasible. it was bas smallpox epidemic. >> rose: and how do you prevent them from doing that? >> well, 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 time it's-- it's making the offense slightly easier. so if we're vigilant, there's a lot of steps we can take to make the risk lower, just like minimizing access to fissile materials meaningfully reduce the chance of a nuclear weapon. >> rose: there are some who argue the next war will not be a nuclear war, or perhaps not even bioterrorism. it will be a cyber war. >> that's a third area, and i-- you know, personally, there are only the three. but that's not much comfort. yes, the-- a modern society depends on electricity, and

communications and information flow. and if you can for a substantial period of time, disrupt that, then a lot of systems, you know, including how a hospital organizes itself or how food gets moved around. >> rose: financial institutions. >> or an airline decides what to do. or bank accounts, you know, what was that bank account supposed to be? and so a lot of experts in government and companies now are spending time thinking about okay how do you minimize that? how do you have duplicates, backup? a lot of sophistication going into that. >> rose: can the united states risk a trade war with china or with mexico or-- will it have a... significant-- >> it's not a good idea. ( laughter ) not a good idea. trade benefits-- the problem of

trade is that the benefits are defused and invisible. so you don't walk in and buy a pair of shoes or some underwear or anything, it says, "you just saved 12% because this was purchased someplace else. sm 320 million people are buying things, the bananas come from central-- they're buying things cheaper than they would otherwise. but the harmful effects, taking somebody out of a job they've had for 25 years when it's too late to retrain them for anything, they're very specific and terrible. now what you want to figure out a way is keep the societal benefits and take care of the people that really are the-- you be, they-- they're the road kill, basically, in this. and there will be road kill. there's no sense kidding yourself. we started with a textile mill in berkshire. half our workers only spoke port geez.

they worked in hot conditions, loud conditions and spent 20, 25 years on looms. when textiles moved elsewhere, their lives, economic lives were ruined. and that is going to happen. that is part of trade. and the benefits, you know, when somebody buys whatever textiles we were turning out-- haifnger chives-- anything-- they may buy them a little cheaper. and trade benefits everybody, us and them, as a society. it penalizes certain people terribly. and we've got to take care of the people that are getting hurt because we've got the resources to do it. >> rose: "take care" means what? >> somehow you have to have some kind of-- you have to have retraining when it is feasible but it isn't feasible when you only speak portuguese and you're 55 and live in new bedford and spent your whole life on a loom. we do that as a society. we don't want to let the individual case prejudice against trade that benefitsy

everybody, but we also don't want to say everybody benefits to hell with this guy. we can afford that and we should do it and that's how we will get a good trade policy. >> rose: did you appreciate the economic security that was out there that donald trump was able to tap into politically? >> no, i'm not an expert on political centiment, so i was-- sentiment, so i was no better at seeing those trends than other people. >> rose: oh, with brexit? >> again, i was surprised by the brexit vote. >> rose: and the notion of the populist uprising that took place in a sense of feeding off of that. >> well, there's no doubt that-- that younger people and urban people in terms of their social mores and being seen to benefit relatively more from the new technology and things that are out there. there is somewhat of a divide

there. the fact that that would lead to these political results is a bit of a wake-up call to say, okay, what is, in terms of economic and social issues or, you know-- can we by improving medicine, improving the education system, can we take what the negative views are there and gwen engage in a-- uplift their views of the future. to me the greatest surprise of all isn't how people voted. because i didn't think of myself as having expertise on that. but this general question when you say, "will your children be better off than you?" i believe their children will be better off, but the fact they don't feel that way, that the improvements in health and the new products that will be available to them -- >> and what technology enables them to do. >> right. that is a concern because if people don't see the arrow of

time pointing towards greater things, the idea of doubling down on more research and taking the best education and getting that spread around, it creates a sense of maalize, where you don't have the guidance to, hey, some things are working. let's do more of those things. >> rose: the question i ask, also, is could america lose-- i mean, if you look at today, we have the best military, we have the best economy, we have the best universities, we have the best talent, and we have the best spirit of innovation and creativity. could we lose that? >> i don't think we will, no. i think the odds of that-- of losing is that are very -- >> this is what you call the "special sauce." >> we have the special sauce, and we have still have the special sauce. if the rest of world learns from that special sauce, it's not a zero-sum game. that is terrific. but it won't deprive us. overall, in aggregate, our society will be far richer 10,

20, 30 years ago, and if you just take an aggregate, our children will live better. the real question is, will it continue to leave lots of people behind? and a specialized market system will leave people behind. there is-- if somebody is-- however you want to measure it-- 10% below average, their opportunities in this world today have not improved at all, you know, from 30 or 40 years ago. and-- well, the classic situation, you take the "forbes" 400. in 19 qoork the number one guy was dan lugwig. he had $2 billion. >> rose: was he a ship builder? >> now it would be 30 or 40 times that. 30 or 40 times. and this more highly specialized economy year after year,

different from that agrarian economy of 200 years ago, it's going to be more and more people at the very top winning big, big time, and it really won't do, absent certain types of programs, 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 particularly market talents, is not going to do very well unless we have policies to make sure they participate in this way. and the guys at the top are going to keep doing better. >> rose: policies from government. >> it has to be government. the market system is a traffic cop. it directs resources and it directs brains and it does a great job of it. it also directs all the winnings. it will continually favor more people at the top. governments is always in-- government came in with social security and government redirects the winning so it isn't totally the market system that delivers the winnings.

but i don't want to kill the market system in terms of producing at all. we want more and more stuff. but there will be more and more people falling further, relatively, behind, and that's not-- that's not a good result. i mean, we can afford-- we can do better. >> rose: i'm sure you saw this. this was a report last week that i think suggested-- it took eight billionaires and said they have more wealth that are the bottom half of the population in the world. >> in this country, if you took the "forbes" 400, they have $2.4 trillion now, 25 times as much-- not exactly the same people, but take the 400-- 25 times as much as 35 years ago. and, believe me, that does not strike somebody that's working 40 hours a week and trying to support a couple of kids on it and finding, you know. >> rose: and their income has remained the same or less or-- >> but they just aren't participating. >> rose: or threatened by forces they can't comprehend. >> they can't it's market system just pays more and more-- just

think, say you're a middleweight boxer. in the 30s, you were limited to general-- you wouldn't even get on the undercard at madison square garden and it was limited. but television comes along and cable comes and along and pay per view and tens and tens of millions of dollars. so at the top it's terrific. but if you're the 45th best middleweight in the country, it's pretty much the same it used to be in the 30. if you're frank sinatra you're a lot better off if you have television than playing in some theater in new york where you started. it's magnified, but throughout. if you have a good business idea, you can get it capitalized and it's worth billions just on the idea. it's just tougher. whereas, you know, you go back to 1800, and if you were-- if you were reasonably strong and willing to work hard you were worth 90% as much on the farm as the very best guy. the differral-- and it it will keep widening. the market system will push it in that direction.

but government is there -- >> what would you change if you could? >> i would change the earned income tax credit big time. i-- i am where i am not by myself at all. i mean, there are 320 million other americans out there, and there are a lot of crosses over at normandy and everything else. it just-- i benefit enormously by having come along when i came along and where i came along. and some people did and some people didn't. there's nothing wrong with the market system that rewards anybody that makes life better for millions of people. they ought to get enormously rewarded, but you have to take care of the people that just don't fill well into that particular niche. if this company paid off based on athletic ability i could study eight hours a day and i'm still going to get in the ring or something like that and 10 seconds later i'm on my back. it's the talents that get rewarded in the market system are important because they bring us more of the goods and

services that the country wants and make all kinds of improvements in how we live, just incredible. but they leave people behind. and it won't be solved simply by education. you want everybody -- >> and is it the responsibility of government to do something about it? >> sure it is. sure it is. >> rose: go ahead, bill. >> but the government also has to keep, you know, business in shape that it has the incentive to do things right. and striking that balance should be at the heart of political dialogue. >> more golden eggs. nothing is going to work. you can have the fairest island in the world and two guys are living on it and deciding how they divide up the palm tree. it's the only thing on the island but it won't make any difference. >> rose: so, beyond national security issues, when you-- when you-- what do we have to be fearful of in the future? we've talked about some people believe artificial intelligence offers certain kinds of risk,

and you've spoken to that, that it could get out of control. you have spoken to that and other people have. what's around the corner that' t will both benefit us-- artificial intelligence is clearly one of those things, too-- but also offers a scary world. whether it is gene editing or that kind of-- you think about these things. >> gene editing is a good one, where the promise of helping with disease, making plants that are more productive, gene editing is, you know, playing with the software of life, sort of the ultimate software work. and yet, deciding exactly how it should be use. you know, if you could make sure your child was thin or, you know, attractive or had certain other characteristics, is that an appropriate use of the

technology? >> rose: how do you decide that? the whole thing about if there's some balance between freedom and security that came up in terms of, you know, even in terms of getting inside of a phone in which a terrorist might have left future possible terrorist acts, you know. >> well, that's another one, where, you know, making sure the government isn't completely blind to what goes on, and financial transactions, communications, because you trust that the appropriate policies for when and how government's ability to see information is used. that's another one where there will be a big debate about, you know, some extremist might say government really shouldn't see anything. others would say government should see everything.

but i think there's the potential for a best of both worlds approach. >> rose: if in fact there's some appropriate procedure to get. >> right. and we have had procedures and, you know, some people feel those-- that even-- there are voices out there that would tend towards the "hey, let's not let government see things." and that's another political question. how much do we do gene editing? how much the government has this ability. we need politicians who really draw in great opinions. running a health care system and deciding when people are inventing 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. >> rose: who has health care right? who's gotten health care right,

in your judgment? >> the european countries -- >> scandinavian? >> well, the u.k. spends about half as much as a percentage of g.d.p. as the united states. now, their system has waiting and things like that. but it's hard to express what a mammoth difference that is. i mean, you're talking about almost 9% of g.d.p. difference. you know, that is one out of 11 people who go to work every day are the extra health care activity here in the united states. so i'm not saying we should just wholesale adopt their system which is a single-payer system. there are other really good systems that are not single-payer systems. germany, switzerland, france. they do quite well. it's one of the few things, access to medical care, is one of the few things that we actually do quite a bit worse than other rich countries. there's some like education that

a lot of rich countries don't do a very good job on. this one is-- is where we're sort of uniquely bad. >> rose: health care and education, we don't do it as well as other people, other industrialized nations. >> most rich countries don't do that well on education. there are pieces like kaup universities. that one we're more middle of the pack in terms of our achievement. it's health care access where you would have to say we look particularly bad. >> rose: is there a ticking clock on global warming? >> yes. fortunately, it's not overnight. the really big negative intractz in the, you know, 30- to 70-year time frame. although, it has already increased the chance of drought and storms and we're seeing-- we're seeing that. >> rose: do you see a direct causation there? >> yes. the heating effect is already

there. now, overlaid with that are is the pacific oscillation and normal weather things. so exactly how much of it is the heating signal versus those other things, you can get reasonable disagreement. but there's no doubt that, that's there-- the global average temperature is rising. and the droughts, particularly in places like the middle east or parts of africa, we're already seeing some of that. and as you go out in time, it gets a lot worse. so changing the energy system, which has a long lead time. invention and deployment, i feel this is one of the most urgent problems. >> rose: and is the urgent answer finding alternative sources of energy? >> finding that magic three characteristics-- reliable, clean, and low cost. and there are many paths to get there. and so we have to encourage lots

of innovators trying different things. you know, if you could take sun it & turn it directly into gasoline, that would be an approach because that can be stored 24 hours a day and even moved around very well. there's approaches that involve taking nuclear to a new level of safety and a lower level of cost so that that would be a key part system. we need to fund a lot of innovative ideas, both government and private sector. >> rose: is your life today more intellectually challenging than when you were running microsoft? >> that's hard to compare. i am on a steep learning curve in both cases. you know, i-- i-- i love the fact that i get to meet great people. i get to see things work. i see things that fail. for this stage of my life, i'm in a perfect position. i couldn't be happier.

>> rose: do you have an influence on microsoft? >> i love going over ask sharing my thoughts. and i get to keep up to date a little bit because of that. and we're using some of those digital enablement things like to get cheap financial servicess to people around the world or look at medical data. staying up to date on the digital piece helps me do my foundation work. >> rose: you mean, you said something akin to this. the average person today lives better than john d. rockefeller did when he was alive. >> that's true. >> rose: the richest man in the world at the time. >> you live better in terms of your entertainment choices, your travel choices. i mean, john-- he couldn't buy them. and that was in one lifetime. it's amazing. >> rose: what brings you the most satisfaction beyond family? >> my greatest satisfaction is just staying in good health. i mean, when you're exirks i mean-- you when you're exix you

look at this 86 you look at this differently. >> rose: you're in good health? >> yes, i enjoy every day. >> rose: what is it you enjoy? >> i enjoy running berkshire if you get right down to my psyche. it's been my painting for 50-some years. i get to paint what i want. i don't have to-- i don't have to do-- you know, follow what wall street is telling me to do next quarter or something like that. so i own the brush. i own the canvas, and the canvas is unlimited. that's 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 were in politics, i'd have to smile at a lot of people i want to hit, you know. >> rose: you just don't-- >> it's really. i've got a good deal. i'm hanging on to it. >> rose: i often repeat the story, brook aster once said to me, "i spent too much of my life worrying about what people thought of me and now i only care what i think of them now."

>> he was good. >> rose: i own want to see people i like. >> in my business, i'm luck they way. business is so much easier than philanthropy. philanthropy may be a whole lot more important. but in business you're looking for kind of easy choice. you're look for people you like to associate with. to an extent, i can create the world around me. >> rose: are you saying to me if somebody walked in your door and they wanted you to buy their company, and you saw it as a golden-- >> golden goose run by a farmer i didn't like. i would say no. >> rose: you would say no. even though you knew-- >> charlie, marrying for money is probably a bad idea under any circumstances. but if you're already rich, it does not make any sense at all. ( laughter ) >> rose: but the satisfaction-- i mean, what's the metric of satisfaction? >> really doing a decent job of running a place that-- that gets harder to do because of the size of it over time.

but it's-- it's working with a whole lot of people on interesting-- it's like gene mccarthy said about being a football coach. it's just difficult enough to make it interesting but really isn't that hard. >> rose: he said that? >> he had a way of getting people a little irritated at times. >> rose: what brings you want greatest satisfaction? >> i think lthings and making breakthroughs-- after all the great family stuff-- that is a lot of fun. every once in a while, if something really makes sense and you can teach people about it, share an insight, i think that's also very satisfying. when i sit down with melinda to write the annual letter, the idea of, okay, i've had a chance to see things. what could i sayer that is really succinct that might be helpful to people. that is fun. it's hard. it doesn't happen all the time. but between my learning and

being able to share where i see, oh, this is really simpler than i thought it was, that gives me great satisfaction. >> i would say this, too, charlie. now at 86, i mean, i've seen a lot of people that have gotten older. and i've never seen anybody that is 70 or-- pick an age-- who felt good about their children that felt bad about their life, in all my experience. >> rose: you've never seen anybody who felt good about their children that also felt bad about their life. >> and i've seen plenty of people with lots of money where it hasn't worked out well in the family. >> rose: they didn't feel good about their children. >> or the children didn't feel good about them. whichever way. but in other words, they failed at the most important teaching job they had. and personal relationship. and sometimes it happens for extraneous reasons. but i really have never met anybody, regardless of their economic circumstances, who felt

their life was a failure, felt they'd been -- >> that their children had become-- they loved their children and the children were doing-- >> absolutely. they felt good about-- they brought them into the world. >> rose: and they felt like they had equipped themselves for the future. >> i knew one fellow who was extraordinarily rich. he put a lot of money in his kids' name. he didn't want them to have any control over it. once a year he would have dinner with them and try to get them to sign the income tax return blank. in this case, none of them, he wanted to have enough confidence in them-- it's crazy. they-- he would woo them during the dinner, and they knew exactly what was going on once a year, and then he'd bribe them sort of to sign their income tax return in blank so he could file and they wouldn't know what they had. when you have adults -- i've seen time after time when people-- i've seen plenty of the other, too, but successes at

business and failure. and i don't think they feel that good. about life. >> rose: thank you for coming. bill, thank you very much. bill gates and warren buffett for the hour. thank you for joining us. see you next time. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org

>> rose: funding for "charlie rose" has been provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide. >> you're w

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