A short interview with Charlie Munger, partner with Warren Buffett:
- I would argue that a majority of the horrors we face would not have happened if the accounting profession developed and enforced better accounting. They are way too liberal in providing the kind of accounting the financial promoters want. They’ve sold out, and they do not even realize that they’ve sold out.
- The economy hasn’t contracted as much as during the Great Depression, but the malfeasance and silliness, the triggering events for today’s crisis, were much greater and more widespread. In the ’20s, a tiny class of people were financial promoters and a tiny class of people were buying securities. Today, it’s deep in the whole culture, and it is way more extreme.
- I would argue that the economists have not been all that good at working concepts of good and evil into their profession. Nor do they understand, at all well, the economic consequences of bad accounting.
Full Stanford .pdf