Berkshire Hathaway Vice Chairman Charles Munger

Warren Buffett and his longtime business partner Charlie Munger get along so well, in part, because they have very different, but complementary, temperaments.

Buffett oftens laughs and makes jokes when he speaks publicly.  Munger is more likely to growl, and he makes no attempt to be diplomatic.  Last May, he told our Becky Quick that the banks' "evil and folly" had "helped create a catastrophe for everyone."

Fortune Magazine's 2006 profile of Munger includes this apt description of how the two men interact on stage during the marathon Q&A session that highlights each year's Berkshire Hathaway shareholders meeting in Omaha:

Over the years the Buffett-and-Munger show has taken on a somewhat formulaic choreography. The two men sit center stage, facing a dark sea of shareholders. Questions are usually fielded first by Buffett, who will answer and then ramble a bit in his inimitable way - often with a one-liner or two mixed in - for five minutes or so.

At that point he will look over to his partner and inquire, "Charlie?" Then one of two things occurs: Munger will either lean in and make a pointed, pithy, often scathing comment (which sometimes elicits gasps or loud guffaws from the crowd). Or Munger will simply remark, "I have nothing to say." (Which, after a particularly long-winded Buffett digression, can be amusing as well.)

Usually Munger doesn't have all that much to say in public, but there are exceptions.

Today (Sunday) his "parable about how one nation came to financial ruin" is one of the most-read and most-emailed items on Slate, the daily web 'magazine' owned by the Washington Post.

Under the headline Basically, It's Over, Munger tells the story of "Basicland," a "large, unpopulated island" in the Pacific Ocean "rich in all nature's bounty except coal, oil and natural gas." It's discovered by Europeans in the early 1700s and repopulated as a new nation.

"Basicland" prospers with a "national ethos that sought to provide a sound currency, efficient trade, and ample loans for credit-worthy businesses while strongly discouraging loans to the incompetent or for ordinary daily purchases."  The government provides only essential services, funded by a simple tax system.  In short, a Charlie Munger paradise.

But then, "by 2012," the nation's great prosperity creates a "peculiar outcome."  With all their money and free time, "Basicland's citizens more and more whiled away their time in the excitement of casino gambling," placing "bets on security prices under a system used in the 1920s in the United States and called 'the bucket shop system.'"

Foreigners then shun Basicland's currency and bonds because "it was just common sense for lenders to avoid gambling addicts" who might be "suddenly faced with hardship."

As hydrocarbon prices rise, Basicland's imports soar.  Its exports are hurt by "low-cost competition from developing countries."

Advice to "strongly discourage casino gambling" from the "virtuous and wise" old man known as the "Good Father," Benfranklin Leekwanyou Vokker (a composite of men Munger appears to admire), is rejected. 

Basicland's economists maintain their "intense faith" in the free market, even if it produces "wild growth in casino gambling."  They "look forward to the day when Basicland would expand real securities trading, as a percentage of securities outstanding, by a factor of 100, so that it could match the speculation level present in the United States just before onslaught of the Great Recession that began in 2008."

After a "couple of economic messes," Basicland's credit is "reduced to tatters."

The unhappy ending: "Basicland is now under new management, using a new governmental system.  It also has a new name: Sorrowland."

That's quite a contrast to Buffett's unflaggingly optimistic view of America's long-term economic future, in which each generation will "live better" than the one before it.

As they say, opposites attract.

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