OMAHA — Nearly two decades ago, a 10-year-old shareholder stood in front of a microphone here and asked Warren Buffett how the Internet would reshape companies.
It was 2000. Buffett, the chairman and CEO of Berkshire Hathaway, said fairly little. He saw a threat in the Internet, but said he was unsure how it would ultimately affect his investments, according to a report at the time.
On Saturday, that same shareholder, Thomas Kamei, now a 27-year-old investor based in New York, submitted an updated version of his question at Berkshire’s annual meeting. This time, Kamei focused on artificial intelligence, a technology that threatens to upend the economy just as the Internet did years before. What did Buffett make of it?
Buffett said that AI could be “enormously disruptive,” yet beneficial in making the economy more efficient.
“I would certainly think [AI] would result in significantly less employment in certain areas,” he said. “It would be a good thing that would require enormous transformation in how people relate to each other, what they expect of government, all kinds of things.”
The comments came during a more than six-hour Q&A session in which Buffett and his investing partner, Charlie Munger, repeatedly praised efforts to make businesses more productive, despite job losses. They pointed to past advancements in farming and auto manufacturing, industries able to do more with fewer workers.
The duo also defended their work with 3G Capital, the controversial Brazilian private equity firm known for aggressive cost cutting and layoffs. Kraft Heinz, backed by Berkshire and 3G, laid off 1,000 workers in 2016 and plans to cut thousands of additional positions, a strategy seen at odds with Berkshire’s folksy image.
The fear, though, is that AI may cause even more losses. A recent study by PwC found that about 40 percent of jobs could be automated with current technology by 2030.
Buffett laid out a theoretical scenario at one of Berkshire’s best-known companies, Geico. The insurer employs about 36,000 people, yet the financial services industry is seen as vulnerable to automation. Buffett asked: What if all of Geico’s current functions, aided by AI, could be done by 10,000 people, or a third of the staff?
“I don’t think we’ve ever experienced anything quite like that,” he said.
Munger, known for his brevity, told Buffett not to worry. “It’s not going to come that quickly,” he responded.
When a shareholder later asked Buffett if he would push back on a Berkshire subsidiary that wanted to move a factory overseas, Buffett gave examples of previous Berkshire companies like Dexter Shoes that had already been forced to do so.
Global trade, he said, benefited the U.S. by providing consumers with lower prices and more places to sell goods. But he also said that it could create “roadkill” of people, one reason he wants more government programs for displaced workers. He did not outline specific proposals, but said the U.S. needed an “educator-in-chief” who could explain the benefits of trade and come up with solutions.
Unemployment insurance already existed and provided help to those in need, Munger said.
“I’m afraid a capitalist system is going to hurt some people as it modifies and improves,” Munger said. “There’s no way to avoid it.”
By Chip Cutter, Wall Street Journal Reporter