Charlie Munger on How to Lead a Successful Life

6 minute read
Munger was Vice Chairman of Berkshire Hathaway and was Warren Buffett’s closest business partner and right-hand man. He died on Nov. 28, 2023. This piece is adapted from his book of talks, Poor Charlie's Almanack, published by Stripe Press.

A young rustic once said, “I wish I knew where I was going to die, and then I’d never go there.” While a ridiculous-sounding idea, the rustic had a profound truth in his possession. The way complex adaptive systems work, and the way mental constructs work, problems frequently become easier to solve through inversion. If you turn problems around into reverse, you often think better. For instance, if you want to help India, the question you should consider asking is not “How can I help India?” Instead, you should ask, “How can I hurt India?” You find what will do the worst damage, and then try to avoid it.

Perhaps the two approaches seem logically the same thing. But those who have mastered algebra know that inversion will often and easily solve problems that otherwise resist solution. And in life, just as in algebra, inversion will help you solve problems that you can’t otherwise handle.

Let me use a little inversion now. What will really fail in life? What do we want to avoid? Some answers are easy. For example, sloth and unreliability will fail. If you’re unreliable, it doesn’t matter what your virtues are, you’re going to crater immediately. So faithfully doing what you’ve engaged to do should be an automatic part of your conduct. Of course you want to avoid sloth and unreliability.

Another thing to avoid is extremely intense ideology, because it cabbages up one’s mind. You see a lot of it in the worst of the TV preachers. They have different, intense, inconsistent ideas about technical theology, and a lot of them have minds reduced to cabbage. That can happen with political ideology. And if you’re young, it’s particularly easy to drift into intense and foolish political ideology and never get out. 

I have what I call an iron prescription that helps me keep sane when I drift toward preferring one intense ideology over another. I feel that I’m not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I’ve reached that state. 

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Another thing that often causes folly and ruin is the self-serving bias, often subconscious, to which we’re all subject. You think that “the true little me” is entitled to do what it wants to do. For instance, why shouldn’t the true little me get what it wants by overspending its income? 

Well, there once was a man who became the most famous composer in the world, but he was utterly miserable most of the time. One of the reasons was that he always overspent his income. That was Mozart. If Mozart couldn’t get by with this kind of asinine conduct, I don’t think you should try it. 

Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity can get pretty close to paranoia. Paranoia is one of the very hardest things to reverse. You do not want to drift into self-pity. I had a friend who carried a thick stack of linen-based cards. When somebody would make a comment that reflected self-pity, he would slowly and portentously pull out his huge stack of cards, take the top one, and hand it to the person. The card said, “Your story has touched my heart. Never have I heard of anyone with as many misfortunes as you.” 

Well, you can say that’s waggery, but I suggest it can be mental hygiene. Every time you find you’re drifting into self-pity, whatever the cause, even if your child is dying of cancer, self-pity is not going to help. Just give yourself one of my friend’s cards. Self-pity is always counterproductive. It’s the wrong way to think. And when you avoid it, you get a great advantage over everybody else, or almost everybody else, because self-pity is a standard response. And you can train yourself out of it.

Of course, you also want to get self-serving bias out of your mental routines. Thinking that what’s good for you is good for the wider civilization and rationalizing foolish or evil conduct based on your subconscious tendency to serve yourself is a terrible way to think. You want to drive that out of yourself because you want to be wise, not foolish, and good, not evil. 

You also have to allow, in your own cognition and conduct, for the self-serving bias of everybody else, because most people are not going to be very successful at removing such bias, the human condition being what it is. If you don’t allow for self-serving bias in the conduct of others, you are, again, a fool.

The general counsel was technically and morally correct, but his approach didn’t persuade. He recommended a very unpleasant thing for the busy CEO to do and the CEO, quite understandably, put the issue off, and put it off, not with any intent to do wrong. In due course, when powerful regulators resented not having been promptly informed, down went the CEO and the general counsel with him.

The correct persuasive technique in situations like that was given by Ben Franklin. He said, “If you would persuade, appeal to interest, not to reason.”

The self-serving bias of man is extreme, and should have been used in attaining the correct outcome. So the general counsel should have said, “Look, this is likely to erupt into something that will destroy you, take away your money, take away your status, grossly impair your reputation. My recommendation will prevent a likely disaster from which you can’t recover.” That approach would have worked. You should often appeal to interest, not to reason, even when your motives are lofty.

Perverse associations are also to be avoided. You particularly want to avoid working directly under somebody you don’t admire and don’t want to be like. It’s dangerous. We’re all subject to control to some extent by authority figures, particularly authority figures who are rewarding us. Dealing properly with this danger requires both some talent and will.

I coped in my time by identifying people I admired and by maneuvering, mostly without criticizing anybody, so that I was usually working under the right sort of people. A lot of law firms will permit that if you’re shrewd enough to work it out with some tact. Generally, your outcome in life will be more satisfactory if you work under people you correctly admire.

Adapted from Poor Charlie's Almanack, to be published by Stripe Press on Dec. 5th

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