"Efficiency is required over time in capitalism" · Transcript

WarrenI don't think you can ever find a statement that Charlie and I have ever made in terms of Berkshire companies or anybody else is where we said that there should be more people working than are needed in a company. And the 3G people have been successful in building marvelous businesses, and it is true that they have entered into some purchases where there were considerably more people running the business than needed. And the interesting thing is that after they reduce the headcount to the number needed, the companies have done extremely well. I mean, you've seen Burger King outgrow its main competitor by a significant margin. You've seen Tim Horton have some very good figures in the first quarter. And I don't know of any company that has a policy that says we're going to have a lot more people than we need. But a good many companies end up in that position and the 3G buys into one they quite promptly and treat people well in terms of the severance, but they get it down to what they need. And I hope our Berkshire companies are not being run with more people than they need either. They usually aren't when we buy them. And, you know, we look for those kind of companies that are well managed. 3G is will, if they find out that 100 people are doing what 50 people can do, I'll get it to where 50 people are doing it. And I think that actually makes sense throughout American business. Well, the alternate to the system of having your company right-sized, the right number of people, is what eventually happened in Russia. And there, everybody had a job. And the way it all worked out was some workers said, well, they pretend to pay us and we pretend to work. And a whole damn economy didn't work. Of course we want the right number of people in the jobs. It's interesting in the railroad business. In the railroad business, after World War II in 1947 or thereabouts, I think there were about 1.6 million people in the railroad business, and it was a lousy business. And capital was short for any kind of improvements. And now there are less than 200,000. So they've gone from a million. $1,000 to less than $200,000, carrying more freight, more distance, and doing it in far safer conditions. Safety has improved dramatically in the railroad industry. And if somebody thinks it would be better to be running the railroads with a million six, you know, people doing it, you would have a terrible railroad system. You wouldn't have anything like you have today. Efficiency is required over time in capitalism. And I really tipped my hat to what the 3G people have done.