Berkshire Hathaway vice chairman Charlie Munger is best known as Warren Buffett's business partner and right-hand man.
But the billionaire investor has made a name for himself through imparting his own personal wisdom for decades. In the early 1990s, Munger gave a speech at Harvard University about the importance of exploring the intersection of psychology and economics (an animated version by investment firm Tiny Capital and animation studio Thinko can be found below).
To support his claim, Munger dropped a quote from an unexpected hero of his: Albert Einstein.
The theme throughout his speech is that of applying different disciplines to one's business and career decisions. Near the close of his speech, Munger poses the question: "How should the best parts of psychology and economics interrelate in an enlightened economist's mind?"
Munger quotes Einstein: "The Lord is subtle, but not malicious."
In this case, he connects Einstein's quote to the Earth's subtly changing axial tilt, the very reason our planet has seasons.
"Over every 40,000 years or so there's this little wobble, and that has pronounced long-term effects [on Earth]," Munger says. "The world would be simpler for a long-term climatologist if the angle of the axis of the Earth's rotation, compared to the plane of the Euclyptic, were absolutely fixed. But it isn't fixed."
To make his point, Munger adds, "I don't think it's going to be that hard to bend economics a little to accommodate what's right in psychology."
This wouldn't be the last time Munger cites Einstein as his inspiration. Here are three other reasons that illustrate how the Berkshire Hathaway exec looks up to Einstein.
He admires his philosophy on simplicity
Munger is no stranger to combining his appreciation of science and his business thinking. In 2003, Munger gave an undergraduate lecture at the University of California, Santa Barbara on the strengths and faults in teaching academic economics.
He cited Einstein as saying, "Everything should be made as simple as possible, but no more simple." Though Munger notes this was a redundant saying, he provided the quote as a way to criticize economics as just too complex.
Keynes was smart but Einstein 'said it better'
During the same University of California lecture, Munger says he thinks it's ridiculous the way people cling to failed ideas. He quotes the late renowned economist John Maynard Keynes as having said, "It's not bringing in the new ideas that's so hard. It's getting rid of the old ones."
While Munger agrees with this statement, he adds "Einstein said it better, attributing his mental success to 'curiosity, concentration, perseverance and self-criticism.'"
"By self-criticism he meant becoming good at destroying your own best-loved and hardest-won ideas," Munger says. "If you can get really good at destroying your own wrong ideas, that is a great gift."
He's the world's most interesting man
Munger credits part of his success to physics and its approach to problem-solving. In 2014, he gave a $65 million gift to the Kavli Institute of Theoretical Physics at UC Santa Barbara and gave a speech to the board of trustees the following year,
In that speech, Munger said, "The most interesting man to me is Einstein."
"If he had not had people to talk to about physics he would not have been able to make his discoveries. He got a reputation for being alone, but he wasn't totally alone," Munger said.
With his donation, Munger was supporting the institution's need to create a great facility for the scientific minds to get together.
"Even Einstein needed to talk to other people who knew a lot about physics. I am so aware of the fact that that is the way it works that the idea of getting physicists together is just such a wonderful idea," Munger said.
As someone who sees more than 30,000 people each year at his annual shareholder meetings, Munger knows a thing or two about getting smart minds to together in one place.
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