One of the unfortunate aspects of the Internet era is that sound bites have become far more powerful than in the past.  We have unprecedented access to information, but attention spans are short and content is consumed in bits and pieces.

There probably is no other prominent American who is less suited to the sound bite than Berkshire Hathaway Vice Chairman Charlie Munger.  In any particular appearance, specific comments made by Mr. Munger can be collected in a manner that leads to a highly unflattering overall portrait.  Charlie Munger does not need any defenders, and we do not necessarily agree with or endorse all of his views.  Regardless, it is interesting to make a few observations regarding the reaction to his recent lengthy appearance at the University of Michigan.

Costco vs. Rockefeller Foundation

Mr. Munger stated that he believes “Costco does more for civilization than the Rockefeller Foundation” and generally cast some doubt on the efficacy of private foundations that are trying to “do good”.  Most of the media coverage seemed to focus on this statement in an attempt to contrast Mr. Munger’s views with Warren Buffett and Bill Gates who initiated The Giving Pledge which encourages billionaires to earmark at least half of their wealth to charity.  The irony is that Mr. Munger was acknowledged for a $3 million donation to the University at the start of the event and has also given to numerous other causes over the years.

An interpretation of the comments on Costco taken in context would seem to indicate a preference for private business to advance the progress of civilization, but does not appear to preclude the role of charity in any way.  A review of references to charity in Poor Charlie’s Almanack would reveal a very different impression of Mr. Munger’s charitable instincts but this would not make for a snappy headline.

“Suck it Up And Cope”

The other wonderful sound bite from the Michigan event involved Mr. Munger’s advice to “suck it up and cope” when dealing with economic adversity.  Several articles, including this example, have made much of this incendiary comment but seem to ignore not only the context in which the comment was made but his other views regarding economics that paint a very different picture.

Much of the discussion during the two hour event involved Mr. Munger’s depression-era experience where there was no social safety net and families had to cope with adversity by moving in with relatives as well as taking menial jobs for a fraction of their former pay.  He did not appear to be advocating a return to such a system;  in fact, a full assessment of the comments made during the event leads to the opposite conclusion.  While Mr. Munger is a Republican, he came out against any changes to Social Security and did not advocate a massive rollback of social safety net programs.  In addition, he does not favor lower rates of taxation for the wealthy.

The “suck it up and cope” comment appeared to be more of a statement of how individuals should react in times of adversity in order to make the best of unfortunate circumstances.  The audience was made up of students, many of whom were about to enter the workforce.  Mr. Munger seemed to be telling the students to persist when times are tough and reminding them that previous generations had an even more difficult experience. This is a much more nuanced view of the world but is not conducive to catchy headlines, much less several of the comments on Twitter, many of which are not printable on this website.

“Thank God” for the Bailouts

Reasonable people can disagree regarding the wisdom of TARP and the decision to bail out financial institutions.  Mr. Munger clearly comes out in favor of the view that TARP was essential and prevented a catastrophe.  In response to a question regarding the bailouts in which a student asked whether debtors should have been directly assisted rather than financial institutions, Mr. Munger said that the student had it “exactly wrong” and proceeded to comment at length about TARP.

Given Mr. Munger’s views on the misjudgment of government in general, it is highly doubtful that he agrees with every aspect of how the bailouts were conducted.  It is true that Berkshire held investments in companies that benefited from the bailouts so obviously there could be some self serving rhetoric intended to defend Berkshire’s record.  The bailouts created a massive problem of moral hazard and we still have a potential crisis because, if anything, the importance of large financial institutions has increased over the past two years due to consolidation.

Again, the sound bites present a very good opportunity for a headline.  The reality is more complicated and requires understanding the comments in a broader context.

Not a Diplomat …

There are many other aspects of Charlie Munger’s persona and commentary that can lead reasonable people to disagree.  For example, he seems to have a very positive view of Lee Kuan Yew and the authoritarian tactics used to build Singapore.  It is actually surprising that there have not been any headlines lambasting Mr. Munger for a lack of regard for democratic institutions.

For those who really wish to understand Charlie Munger’s worldview, reading Poor Charlie’s Almanack is a necessary starting point. It took this Berkshire shareholder several years to progress from viewing Mr. Munger as “Warren Buffett’s sidekick” to properly understanding his critical role at Berkshire and the context in which his broader statements on the economy and life seem to be intended.

Disclosure:  The author of this article owns shares of Berkshire Hathaway.