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There's a lot of hindsight there, even in the first few paragraphs. For example, the monetary inflation of the 20th century wouldn't have been obvious to someon

There's a lot of hindsight there, even in the first few paragraphs. For example, the monetary inflation of the 20th century wouldn't have been obvious to someone living in 1884 right after the monetary tightening accompanying the resumption of the gold standard. Inflation occurs in societies that debase their currency or that discover large new sources of whatever commodity their currency is backed by. It is far from a universal occurrence. Constant inflation did not occur in the United States until after the FDR presidency when we adopted a fiat currency standard. Making a company worth $2 trillion 1884 dollars is much harder than making a company worth $2 trillion of today's dollars or of 1865 dollars. Couldn't bring myself to finish. If there are good ideas in there somewhere, let me know.

byrneseyeview 18y ago
The inflation thing has been an article of faith with Buffett and Munger. I think a fairly smart person could see that: unless the government has a bias against extending suffrage, you should expect politicians to advocate extending suffrage to more groups (so those groups feel they owe it to whoever let them vote); so there will be more voters; so politicians will have an incentive to do take more broadly redistributive action; so if they can have their money on the benefits (projects funded by deficit spending) but not on the costs (depreciation of financial assets), they'll go for it. This is a huge part of the reason that Buffett and Munger have moved away from capital-intensive industries. I thought one interesting part was the mix of different cognitive biases used to make Coke popular: the idea that universal distribution was a form of 'social proof' was new to me (the first time I read it; KO is up about 40% including dividends since then). And the inflation thing should not be a big deal. Besides those paragraphs, the essay holds true if you have a real-money target (with the same compounded growth) or a target in terms of ounces of gold or cowrie shells. It's not like Coca-Cola made their money because they were short the dollar through leverage.
- Prrometheus 18y ago
  >And the inflation thing should not be a big deal. I know it's not a big deal, it's just in an early paragraph and a glaring example of hindsight. If you'll recall, in the late 19th century farmers in the United States wanted to legalize silver as currency because deflation was making it hard for them to pay back their mortgages.
aston 18y ago
More 20-20 hindsight follows in later paragraphs. There's a lot of unfortunate bellyaching about random 'mistakes' the Coca-Cola company made that clearly would not have been worth thinking about on the first pitch of the company (like worrying about letting other products use the word "cola"). By the end you realize it's less of an instructional on how to build a good soft drink business and more of a rant about how there aren't any good sociologists/psychologists working at a Coca-Cola and that the academics aren't paying enough attention. Not really that useful...

byrneseyeview 18y ago

The inflation thing has been an article of faith with Buffett and Munger. I think a fairly smart person could see that: unless the government has a bias against extending suffrage, you should expect politicians to advocate extending suffrage to more groups (so those groups feel they owe it to whoever let them vote); so there will be more voters; so politicians will have an incentive to do take more broadly redistributive action; so if they can have their money on the benefits (projects funded by deficit spending) but not on the costs (depreciation of financial assets), they'll go for it. This is a huge part of the reason that Buffett and Munger have moved away from capital-intensive industries. I thought one interesting part was the mix of different cognitive biases used to make Coke popular: the idea that universal distribution was a form of 'social proof' was new to me (the first time I read it; KO is up about 40% including dividends since then). And the inflation thing should not be a big deal. Besides those paragraphs, the essay holds true if you have a real-money target (with the same compounded growth) or a target in terms of ounces of gold or cowrie shells. It's not like Coca-Cola made their money because they were short the dollar through leverage.

Prrometheus 18y ago
>And the inflation thing should not be a big deal. I know it's not a big deal, it's just in an early paragraph and a glaring example of hindsight. If you'll recall, in the late 19th century farmers in the United States wanted to legalize silver as currency because deflation was making it hard for them to pay back their mortgages.

aston 18y ago

More 20-20 hindsight follows in later paragraphs. There's a lot of unfortunate bellyaching about random 'mistakes' the Coca-Cola company made that clearly would not have been worth thinking about on the first pitch of the company (like worrying about letting other products use the word "cola"). By the end you realize it's less of an instructional on how to build a good soft drink business and more of a rant about how there aren't any good sociologists/psychologists working at a Coca-Cola and that the academics aren't paying enough attention. Not really that useful...