The following is a transcript of Buffett’s discussion with Arnold and Chris Matthews

Wednesday, 10/22/2008

Governor Schwarzenegger Discusses the Economy with Warren Buffett at the 2008 Women’s Conference

CHRIS MATTHEWS: The stock market dropped 350 points this morning. What should people do here, do now, today, as they make their investment decisions from here on out, Mr. Buffett?

WARREN BUFFETT: Well, I have no idea what the stock market is going to do in the next day, week, year. There’s no question in my mind that stocks 10 years from now will be appreciably higher than they are now and there’s no question in my mind that people that leave their money in cash equivalents are going to own something of less value at that time. Now, I can’t time when you get in but if you own something that’s destined to become worth less with cash equivalents and you have a choice to swap it into something that’s destined to be worth more — when you do it is up to you.

I don’t think people can time it, so I believe in doing it promptly. And as I mentioned last week, I actually, in my personal portfolio, was going from 100 percent governments into 100 percent stocks, as stocks are going down.

CHRIS MATTHEWS: So still, what we hear from our managers — and we always hear the same thing — stay in the market?

WARREN BUFFETT: Yes. Well, in this country in the 20th century we had the Great Depression, we had two World Wars, one of which it looked like we were losing for a while and we had the flu epidemics, we had the resignation of a president, we had about a dozen recessions and panics. The Dow started that century at 66 and it ended at 11,497. This country works. It can get gummed up from time to time, the economy but this country works. (Applause)

CHRIS MATTHEWS: Governor Schwarzenegger, before we get to public policy I want to talk to you about the way I know you started off. As a business guy, right?


CHRIS MATTHEWS: I want to ask you just a really basic question. Why is it better to be your own boss?

GOVERNOR SCHWARZENEGGER: Well, first of all, let me just say that I’m very happy to be back here again at the Women’s Conference. And I just want to say thank you again to Maria, to my wife, who was working on this all year long to make this a great conference and to have so many women show up, so let’s give her a big hand for the great job that she is doing. (Applause)

And I also want to thank the 14,000 women that are here today for supporting this conference and I also want to thank the sponsors for coming here and supporting this and putting their money behind it. So, thank you very much. (Applause)

I always have enjoyed having my own business. I started at the age of 10 — Warren and I were talking about this backstage, because Warren said the most important thing to be a successful businessman is that you start early and that you get it early, of what it takes to be an entrepreneur. I started at the age of 10 selling ice cream and I made 150 to 180 schilling every weekend when I ran around the lake where I grew up in Austria selling ice cream. And every year during school vacation I always went out and worked and tried to run my own little businesses.

So it was just something that was in my blood. I don’t know where it came from, because no one in my family was into business, no one had their own business but I always enjoyed that. And so, when I grew up I ran a gym in Munich at the age of 19 and when I came to America I started my own mail-order business. And so everything was always involved around running my own business.

Also, I think when you are a person that believes in taking risks and not just relying on a safety net — I came to America because there were great opportunities here. But it was not a safety net that was underneath there. You were out there and you took the risk and if you fall, you fall. And I like that, I like to take the risks, because the bigger the risks the greater the gains but the greater the fall is also, at the same time, so you have to recognize that. So I always enjoyed that.

CHRIS MATTHEWS: You know, the word ‘socialist’ has been used in this campaign as a negative, it’s been thrown at the Democratic candidates. You came from a socialist country. You were out there selling ice cream as a capitalist, a young capitalist, sort of challenging the system. What are your thoughts?

GOVERNOR SCHWARZENEGGER: Well, I can tell you one thing, that I didn’t pay taxes. (Laughter) I was 10 years old, no one collected any taxes from me. But I tell you one thing, that I left Europe because of the socialistic kind of environment and the way countries were run and the way government was on your back and therefore stifled the opportunities in Europe and that’s why I came to America. (Applause)

So I hope — and that’s why I’ve been always involved in campaigning for political leaders that I believe in, because I wanted to do everything that I can to make sure that America doesn’t go back to those days of 40 years ago when I left Europe, that we go back to that system of redistribution of wealth that some people are talking about. There is no redistribution of wealth. (Applause)

CHRIS MATTHEWS: I love the way we poll the audience like this. We have just heard from the Republicans. (Laughter) I know. And now we’re going to — just to do my Hardball number, which is what I get paid to do, I’m going to ask you a question which doesn’t contradict but complements what the Governor just said.

You have spoken out against what you see as the disproportionate money that people make in American corporate life, that the top person makes exponentially what other employees make. (Applause) What do you think about that as a counterpoint, to some extent, to what we just heard?

WARREN BUFFETT: Well, I think that a great many of the CEOs do deserve what they’re being paid; they get paid very well and they produce a lot for the country. So I have no quarrel with people making a lot of money. I do have a quarrel with people failing and making a lot of money. (Applause) Lately it’s sort of been the bigger they are the softer they fall and I don’t really like that. (Laughter)

CHRIS MATTHEWS: Well, what do you think of this sort of top-down socialism where, if you’re a big financial firm and somebody likes the cut of your jib at the Fed or the Treasury Department, you get saved and if somebody doesn’t like the cut of your jib, you’re Lehman Brothers, for example, you fall? What do you think of that form of government, that form of economic society?

WARREN BUFFETT: Well, I think it’s a tough decision, if you’re the chairman of the Fed or the secretary of the Treasury, to decide whether the fall of a given institution is going to produce a tsunami throughout the rest of the economy. And I think that, looking back, probably what happened to Lehman was a mistake. But I can understand why they made that decision. They were under a lot of criticism for what had happened in Bear Stearns. They didn’t really bail out those firms, if you look at where the stock of Bear Stearns ended up, or you look at where the stock of AIG ended up, or that sort of thing.

What they were really trying to do was keep a virus from spreading throughout the system. And I think, in the case of Lehman, when they didn’t do it, they got some unexpected effects that made them very cautious about what they could do in the future. We really have an enormously interconnected system and if you have millions of derivative tickets outstanding, as they did at Lehman or at Bear Stearns and the firm fails, it clogs up the system for a long time.

You shouldn’t save the top people, though. The idea that people walk away with tens or hundreds of millions of dollars after destroying an institution —

CHRIS MATTHEWS: Well, how do you throw the baby out and keep the bathwater?

WARREN BUFFETT: Well, I think if you’ve got a choice you save the baby and the baby is the system.

CHRIS MATTHEWS: What about this? Do you think when you were selling ice cream in Austria that you would have liked it, when winter came and they weren’t selling so well, that the government came along and helped you out?

GOVERNOR SCHWARZENEGGER: Absolutely not. (Laughter) Let me just tell you, that would be the biggest mistake, because that will make me lazy in being creative. (Applause) That is the problem.

What it did was, when winter came, I had to get creative and I had to sell hotdogs when they were ice curling in Austria. And so I knew that they were all freezing, so I had to sell hot tea, I had to sell schnapps and I had to sell sausages and all those kind of things in order to make them happy. (Laughter)


GOVERNOR SCHWARZENEGGER: And you know, the more schnapps you served them, the more tips they gave you, so it was all very good. (Laughter) So I liked that.

But you don’t want a safety net, you don’t want the government to step in. Government has its function — and I think the important thing is also in Europe, as I have said, 40 years ago we had socialism there but that has changed. The European governments all have learned to go the other way and to come up with a good mixture where government is important but where it’s not the solution to everything. And to have a public-private partnership is the ideal thing. This is why I think it’s important that America doesn’t go back to 40 years ago. (Applause)

CHRIS MATTHEWS: Is capitalism a fair system? Does it measure merit? If you’re a good businessperson, will you succeed, if you’re a bad businessperson will you fail?

WARREN BUFFETT: It works extremely well. We’ve got a great, great system. In the 20th century the average person in the United States improved their standard of living 7 for 1 in real terms, so we’ve got a great system. I always say that in investing you want to buy stock in a company that has a business that’s so good that an idiot can run it, because sooner or later one will. (Laughter) We have a country like that. (Applause)

CHRIS MATTHEWS: You know, I love that. Governor Schwarzenegger came to this country because he wanted to, because of his aspirations. And I always ask this question of people: If you don’t think this country is exceptional, how come every ethnic group that ever comes to America, no matter where they come from, does better here?



WARREN BUFFETT: I can tell you why. This country in 1790 had 4 million people. China had 290 million people then, almost the population we have now. The people were just as smart there, they had similar climates, they had similar natural resources. And here, a couple hundred years later, we’ve got 25 percent of the GDP of the world. And China is really starting to go now, because they’ve picked up on us.

We’ve had an imperfect but we’ve had a rule of law, we’ve had a market system and we’ve had a meritocracy. And those qualities have unleashed human potential. The human potential was there in China before, the human potential was there in Europe but you did not have a system that unleashed that potential the way the American system has.

And I would give credit to those three factors. We have a system where Jack Welch ends up running General Electric and Mike Tyson ends up fighting for the heavyweight championship but it doesn’t put Mike Tyson in charge of General Electric or put Jack Welch in there fighting for the heavyweight championship. We have developed talents like an Olympic qualifying event where the right people get the right resources and the right jobs and then we protect that by a rule of law. And it works very, very well.

CHRIS MATTHEWS: I think Welch could take Tyson right now. (Laughter) Just a guess.

WARREN BUFFETT: I tell you, I’ve got a little money on that one. (Laughter)

CHRIS MATHEWS: Let me ask you, Governor, about these tough times, because as a governor of the largest state you face the toughest fiscal crunch. How do we get out of this thing? Where does it go? Are we victims of it, or are we guilty of something?

GOVERNOR SCHWARZENEGGER: Well, first of all, let me just add to what Warren said, that I think this is really the greatest country in the world. I think it has the most opportunities of any nation and I’ve traveled all over the world. (Applause) It is staggering. Anyone can make it here if you have the will. It’s all about the will, how much fire do you have in the belly, how much do you really want to rely on yourself or how much do you want to go and get a handout? So that really depends.

So this is really by far the best nation even though it has its weak points and we have our crises and we have our downturns financially and economically and all those things and the stock market goes up and down. But there’s one thing we know for sure about America. It always will come back and it always will be the most powerful nation and the best nation and the most generous nation in the world. That we know for sure. (Applause)

California, like all other states, has gotten into financial trouble because of what’s going on, on the national level and on the international level. I think California got hit very hard with the housing crisis. But we are very fortunate, even though there was a terrible situation of people losing their homes and people getting unemployed and so on.

But at the same time, one has to look at the positive also in California, because we have so many different industries that hold up the economy in California. So, even though the housing market went down, we have the high-tech industry, we have the green technology industry, the biotech, nanotech, we have the most unbelievable agriculture in the Central Valley, all of those kinds of things. All of this is holding up California and the entertainment and music industries and so on.

So we are very diversified here and we have very hardworking people and very intelligent and innovative people in California. So we have various different industries that are doing well, better than last year. For instance, the biotechnology, high technology, all of those things are doing better than last year and also green technology, even though, like I said, the housing market is down.

So the key thing now is, as Warren said, to do everything that we can to support the housing market. And this is why we have urged the federal government to come in and to support the housing market and to put money into the housing market. And I think this is the direction that the second economic stimulus package should go, in that direction, to use that money and to go in and to maybe buy up some of the loans but with the adjusted, with the variable — with the adjusted rate, with the new value of homes. And even though Warren said it’s very difficult to do — I totally agree it is very hard to do those things, where do you begin and all this.

But I think that’s the key, to make people stay in their homes and not to lose their homes, because the financial market is not interested, the lenders are not interested and the families are not interested. No one is interested in losing their home, because when banks take over those homes — we have seen in California — they have to do the upkeep. They now have to sell those homes again, they have to clean the swimming pools so they don’t have the mosquitoes gather there and then create and spread sicknesses and so on. So all of this stuff. They don’t want to get stuck with the homes. So I think there is something in there for everyone if government helps with those homeowners and keeps people in their homes. (Applause)

CHRIS MATTHEWS: Warren, if you have to explain to a very untrained mind what happened to the American economy in the year 2008, how would you explain it?

WARREN BUFFETT: Well, what happened was, it began two years back when 300 million Americans, virtually unanimously, believed that every house was going to go up in value every year. And you believed it, I believed it, our friends believed it, the media believed it, Congress believed it, the lenders believed it, Wall Street believed it. So you had this feeling — and, of course, everybody aspires to own a home and if it’s going to cost more next year you might as well buy it this year.

And the lenders didn’t worry about whether you could meet the payments very much in terms of your income, because they figured the house was going to be worth more next year and if you couldn’t pay they’d sell the house at a profit anyway.

So there was this universal belief and so you had a housing bubble and you had a huge asset class — at the peak it was about $22 trillion — it hit almost 68 percent of the households in the United States, it hit all the lenders and everything else. And the world leveraged up, based on this. People were willing to lend money to almost anyone to buy almost any kind of house. Forget about the down payment.

Now, a couple of years ago it became apparent that that was a fallacy. If houses have dropped 20 percent roughly nationwide, that’s $4-and-a-fraction trillion. If you take a $4.5 trillion hit to an asset class that’s owned by a very large number of people, in which people have bought securities on all over the world, all of a sudden people’s attitude changed and they started not trusting anybody.

And then they wanted to deleverage. People that had leveraged up, both individuals and institutions, wanted to deleverage. Everybody wanted to take out on the asset side of their balance sheet. And when the whole world starts wanting to deleverage and there’s nobody on the other side, the system freezes up.

That’s why you needed the federal government. The federal government is the only party that can leverage up in a period like this. I can’t leverage up, the state of California can’t leverage up.

CHRIS MATTHEWS: What does ‘leverage up’ mean?

WARREN BUFFETT: It means borrowing more money and in a sense buying assets with borrowed money. The whole world was buying assets with borrowed money a few years ago. Now those people are trying to get those loans down. You need somebody else to leverage up and that has to be the federal government.

CHRIS MATTHEWS: So when the Governor says ‘stimulus package’ we go beyond what they did a couple of weeks ago, we keep going beyond, keep taking steps to stimulate —

WARREN BUFFETT: One way or another, you let the rest of the system deleverage to some extent because they need to. Homeowners need to deleverage. They over-borrowed. And a stimulus package is one part of it but actually some form of either buying assets or pumping money into the system to buy assets is absolutely required and that’s why we’re doing it.

GOVERNOR SCHWARZENEGGER: Warren, I think it will be very important, because we always talk about how government should come in and help out in this situation, which I think is the right thing to do but I think it would be good if you address just a little bit about how much government was involved in getting us into this situation in the first place, because I think government sometimes creates the mess. (Applause) And then all of a sudden you try to get out of it and the question then is, can the same mind — like Nietzsche said, the same mind that has created the problem cannot really solve the problem. Is this also the case here? And how do we move forward on that?

Well, they won’t do it perfectly but nobody would do it perfectly. You know, you could put in Alexander Hamilton or somebody as secretary of the Treasury, whomever. It is a big, big problem and it’s going to be sloppy by its nature. You have 55 million mortgages in the United States. Now, only 4 million of them are in trouble at the present time. You have 20 million homes that are owned free and clear. But if you try to implement something on a national scale through a bureaucracy and so on, it’s going to be messy. But it’s the only real vehicle we’ve got to do it on the scale that’s required. There’s no way that the big banks by themselves, there’s no way that investors by themselves can stop the tide of assets that are being thrown at them as the world tries to deleverage.

CHRIS MATTHEWS: Let’s talk about government policy. Governor, you mentioned that when you took office five years ago you did have strong commitments to initiatives like After School; I interviewed you on those many times. And you’ve very much been pushing the priority of education in California. Let’s talk about all the people here, 14,000 people here and if they’re interested in being an entrepreneur, or they already are an entrepreneur, or they’re simply trying to make it as consumers, employees, perhaps corporate officers. What can the government do to be positive? What is the role, the positive role government plays?

GOVERNOR SCHWARZENEGGER: Well, I think that it is very important that government reacts very quickly to the changes. And I think we have seen with the federal government because of the vote of the $700 billion package that was the first economic stimulus package. Because that failed and they waited a week, that had a terrible impact and people lost confidence in government and therefore it had no impact then afterwards at all. As a matter of fact, the stock market went down when they approved finally the $700 billion dollars.

So I think for government it is very important to react quickly, even though it’s very challenging, because we deal with 120 legislators in Sacramento and in Washington, of course, you have many more that you have to deal with. Then you deal with both of the parties, the Democrats and Republicans and all of those things. So I think it’s challenging but we’ve got to be very quick.

Like in California, we were way ahead of what was going on because we saw last year already in November the problem with the housing crisis, so therefore we got together with the lenders and with the banks and financial institutions and started working out agreements to help the homeowners and not to go into foreclosure but to make the adjustments with the interest rates and to work together with the homeowners.

We put also money behind it with a campaign to make the homeowners aware, to go and start communicating with the lenders, because that’s the most important thing. Rather than throwing the mail away when they get mail, or someone making a phone call, not to answer the phone, go and communicate. Because they were all scared, homeowners are scared, we wanted to inspire them — here is what you do — so we did that.

We also passed laws that the lenders have to get in touch with the homeowners if there’s an adjustment of interest rates and they maybe cannot afford that interest rate bump.

All of those things we did very early on and I think that was important. And then the federal government actually followed us and did the same thing in some of those areas.

So now again we are going to have a special session very soon, after the elections, to get together again with the legislative leaders and with the legislators to see — because times change so quickly and things are changing, events are changing so quickly, we have to reevaluate is there more that we can do about the mortgage crisis and in order to keep people in their homes and so on.

But we in California, we have done great things. We are very fortunate that the people of California have approved $42 billion plus an additional $8 billion of infrastructure bonds. So we have this money. Part of it has been appropriated and the other part not. Let’s push billions of dollars as quickly as possible out there to start building the schools, refurbishing the classrooms, building the highways, the onramps, the off ramps, to create jobs, because we’ve got to create jobs. (Applause) That is the most important thing.

And I think that, when it comes to women — because this is a women’s conference — women are so much in charge of financial matters in homes. It’s great, the majority of women are running the financial situation at home. And I think that they have the challenges, women have the additional challenges of having to take care of the elderly — more than 70 percent of the women have to take care of the elderly in the family.

But at the same time, you know, it’s great when you see women owning so many businesses. Like in California, we have almost a million women owning businesses — small businesses, medium, large businesses and so on — so that’s, I think, very encouraging. And the key thing now is I think for women, that we do everything that we can together, that we create more executives, business executives and more leaders within corporations, because there are still only 10, a little bit more than 10 percent of women leading corporations, the biggest corporations in the United States. (Applause)

And also, my goal is to do everything that we can to create also more women in the Legislature, because we still have maybe 25 percent, or 24 percent of legislators that are women in California. (Applause) I think if we get that up to a level of 50/50, I think that you would see decisions are being made differently because women have different priorities and I think we need that mix in Sacramento and in Washington in order to make great decisions. (Applause)

CHRIS MATTHEWS: You know, we’re outnumbered here, three guys, okay?

WARREN BUFFETT: I like it. For a guy that couldn’t get a date in high school, I’m enjoying this. (Laughter)

CHRIS MATTHEWS: You know, if you look at what the law has done — and it’s a very free enterprise group here and very self-reliant, it seems. But if you look at some good things the government has done over the years — I’ll be the liberal for a minute — I look at Title 9. I love Title 9. (Applause) Because my wife went to Stanford, she was on the national championship tennis team and she had to pay for all the away-game travel as a player on the team. They were really unfair to women athletes.

And then I watched and this is for obvious reasons — well, all genders watched this. The women’s volleyball team at the Olympics this year was probably the national obsession for two weeks. (Applause) And obviously none of that would have happened without — well, without California, obviously and the beach and then the lifestyle.

But the fact that women have been given a chance in athletics — I want to try something by you, because you’ve come out of that world to some extent, I mean you represented it — women in athletics, leadership roles in athletics, I really believe lead to, as it has in so many cases with men, led to leadership roles in business. There’s something about command and leadership and personal physical challenge that is going to make the future of women, the athletes of today, the leaders of tomorrow. That’s my hunch. What do you think?

GOVERNOR SCHWARZENEGGER: Well, I think that I have said many times that I learned my lessons, very important lessons, in sports. There are so many great things that you learn about camaraderie, about working together with others, being a team player. You have to analyze your performance, you have to recognize the shortcomings, as everyone has with their performance. What do I need to work on? How do I work on those shortcomings? How do I listen to other people’s input so that I can make improvements? So all of this and follow through. The most important, one of the most important lessons that you learn in sports is follow through. If you play tennis they talk about follow through with the swing. When you play golf they talk about follow through with the swing. When you go skiing they talk about finishing your turn and all of those things. The same is in life, as I always say.

Like for instance, when you come to green energy technology and about fighting global warming, there are a lot of people that pass laws in order to go and fight global warming. But then to actually execute the laws and to follow through and to implement the laws and to make it actually happen, is a whole other thing. That’s the difficult part and that’s why we in California have been so successful, that we create the laws and then there is follow through, that we actually do go and cut down and fight global warming, cut down on greenhouse gas emissions and so on. So I think those are all lessons you learn from sports and you can apply those lessons to running a business or showing leadership when you are the governor, or if you are a senator or if you run for office or anything, or run a business, whatever it is. I think all of things do have a great asset, that you bring this knowledge with you and this experience.

WARREN BUFFETT: I talked about how our system has unleashed human potential but for two centuries this country really ignored half of its human potential. (Applause) If you go back to 1776, Thomas Jefferson in that famous second paragraph of the Declaration of Independence inspired people throughout the country when he said “We hold these truths to be self-evident, that all men are created equal.” Those words were totally hollow when they came around to drafting the Constitution. A black was three-fifths of a person. All men are created equal — three-fifths of a person. Women got the right to vote in 1920 with the 19th Amendment. And even after that, it was 1981 before Sandra Day O’Conner was put on the Supreme Court. We went 200 years after the Declaration of Independence. (Applause)

So we, in effect, ignored half the talent in the country. It’s what gives me a lot of hope for the future in terms of unleashing even more potential in this country. If you read the Constitution of the United States, Article 2, Section 1 talks about the qualifications of the president. I imagine Arnold has read that section. (Laughter)

The second sentence says, “He shall serve a term of four years.” I think it’s the only personal pronoun in the Constitution. “He shall . . .” I mean, imagine the message that has been delivering, both literally and subliminally and every other way, to half the population. And like I said, it took 131 years before we even said they could vote or serve on juries. We have wasted potential like you can’t believe in this country but now we’re going to start unleashing it. (Applause)

CHRIS MATTHEWS: The devilish part of me is leading me in this direction now. Ready?

WARREN BUFFETT: Okay, we’ve been warned.

CHRIS MATTHEWS: We’ve got two guys here. Could it be that women have been victimized by their own superiority in terms of competence? I suggest this. I grew up in an old-school family. My father was the boss and all that but he really wasn’t the boss — it was complicated — but he thought he was the boss. (Laughter) He thought he was the boss. And, you know, my mom was the genius, the reason we went to good colleges, the reason we had our teeth straightened, the reason we had piano lessons, the reason we had a house at the shore, the reason we became sort of moderately above, slightly above middle-middle, was because my mom had that vision. And she worked my father to get it done and then she worked very hard to get it done. (Laughter)

But she was the mental brain of the family. The checkbook would never have been even looked at if it hadn’t been for her. She knew all that.

And this is so true today and I just wonder whether women are working so hard that they’re losing their leverage, because they do all the mental stuff. They know what shots the kids have had. If you ask a guy what shots the kids have had he looks at you like you’re from Pluto. Like, why would I know that, you know? (Laughter) The teachers’ names, they don’t know their classmates’ names. The wife, the mother, knows them all or feels guilty if she doesn’t, the shots, the kids, everything about them. Child enrichment, they have to go to the museum today, they’ve got to go to get piano lessons today. The husband is thinking, I’ve got to get out of here, kind of thing. (Laughter)

And yet mentally he’s carrying the notion of pater familia still. So my question is, are women the secret CEOs, or the secret CFOs, the secret C of the family? And why aren’t they running the place officially, is what I’m asking. (Applause) That’s my troubling thought.

WARREN BUFFETT: Okay. Let me get devilish too. Going back to this household of your youth — (Laughter). If you could have made the change, would you have changed yourself, in terms of exploring your talents and everything else in the future — would you have changed your sex into a woman and made that choice and said that’s the better side of the fence to be on? (Laughter)

CHRIS MATTHEWS: Back then — you are playing to this crowd. (Laughter) I would think that — being my daughter is a good deal, I’ll put it that way, all right? Today, in the 21st century, being a young woman of college age and having ambitions — like she just popped me with lawyer the other day, or she popped my wife with it — complete aptitude and complete confidence that she can do just about anything. And as I said, she’s out there exploring the costs of big government debt 20, 30 years from now. I don’t think she has any barrier that she can see.

WARREN BUFFETT: And I’m all for that. It’s changed dramatically but I was born in 1930 and I had two sisters, absolutely as smart as I was. Subliminally they were given the message in school, at home, in their church — they saw men ruling the churches, the saw men ruling everything. They were given the message that they did not have the same destiny that I had and that was a terrible message. (Applause)

Now, I think it’s gotten way, way better. But the idea that if you had ambitions in anything — I talked to the woman one time that was the first woman doctor to go to Cornell Medical School. They had her stand behind a screen during the anatomy class. The messages you got as a woman 50 years ago were that your place was over here. And maybe you outsmarted your husband in some way or another but very few males I knew then said gee, I wish I’d been born a woman so I could explore my talents fully, you know, in whatever field. (Laughter)

CHRIS MATTHEWS: So what changed? What was the catalyst?

WARREN BUFFETT: Well, I think it started changing, actually, in 1920 with the 19th Amendment. But it changed very slowly. And then, I think women have had different models. I think that the emergence of a Sandra Day O’Connor, whatever it may be, you had to see it to believe it. And they didn’t see it 50 or 75 years ago. Now they see women running businesses and they see women doing things, this year running for president in a very serious way. So it has changed. Hillary Clinton has done a lot for women. (Applause)

CHRIS MATTHEWS: What do you think about that, Governor? Here in California — let’s talk politics for a minute, because it’s the time to do it. Hillary Clinton won roughly half the votes in the Democratic Party when she ran for president and it was very close right to then end. We’ve got a vice-presidential running mate on the Republican side now, with a very good clothing allowance. (Laughter) See? Listen to this.

WARREN BUFFETT: Remember your mother, Chris.

CHRIS MATTHEWS: It has begun, it has begun. Governor, what do you think about politics and women right now? California has two U.S. Senators who are women, very prominent. (Applause) Have we reached equality yet in politics, or something close to it, or not? Are we still 20 years off from something like equality in politics?

GOVERNOR SCHWARZENEGGER: Well, first of all, let me just say it was interesting that he didn’t answer the question that you asked originally, if you ever wanted to be a woman. That was really the question but anyway, he didn’t answer that question. (Laughter) Very good. But anyway, the bottom line — Warren, you put the pressure on him, I’m telling you. You’ve got to tone it down, Warren. You’ve got to tone it down.

But anyway, let me just —

CHRIS MATTHEWS: Well, actually I had four brothers and no sisters, so I don’t know. But point taken.

GOVERNOR SCHWARZENEGGER: You don’t have to explain, because there are some men in California that would like to change to be a woman. (Laughter) But don’t worry, you don’t have to make that commitment.

But anyway, I think I mentioned that —

CHRIS MATTHEWS: Are we going back to girly boys again? (Laughter)


WARREN BUFFETT: I don’t say taxes, he doesn’t say girly men. (Laughter)


GOVERNOR SCHWARZENEGGER: I think I mentioned that earlier, that I think that women have made tremendous strides forward. And it is very, very challenging to be a woman, obviously, because of the tradition where you come from and then to break through this glass ceiling and to go and really make those advances and moves forward. And I think that this year it was really a terrific year, even though you see all the bickering, the partisan bickering out there and the fights and they’re pointing fingers at each other. But the fact is that woman have really made a major move. And like you said, Hillary Clinton — I mean, this is extraordinary. On the Democratic side, of course, I think there are two breakthroughs. It didn’t matter who was chosen in the end, because he’s a great breakthrough on the African-American side and an extraordinary breakthrough it would have been also for woman. (Applause) So I think that was fantastic, to see that.

And I think also on the Republican side I think it’s great that McCain picked Palin, Governor Palin, because that is again — (Applause) And you know, I’m not talking about now the argument, less experienced, more experienced, clothes $150,000 or $20,000 and all those things. That has nothing to do with it. It’s just that a woman is there in there in that position. I think that is extraordinary. I’m very proud of the Republican Party because of it, because I felt they would never get there, to really break through those kind of areas and they did, so that was terrific.

And I think that now we have to continue on. I think America is ready to elect a woman as president and America is ready to elect an African-American to be president. I think Americans are ready for change. (Applause)

CHRIS MATTHEWS: Well, I guess we sit here as three men and I want to say something to defend what seems to be my trolldom here. (Laughter) I am amazed at the person I live with, her ability to multitask — and that’s not even explaining her fully — the ability to think about things in the widest variety of concern in our lives, the broadest, deepest concern. And she has these things on her mind and she deals with them and I’ll put things off. And she’ll deal with bureaucrats. I hate dealing with bureaucrats. I hate dealing with companies when you call them up to fix something. And she’s so gutsy at calling up the bureaucrat, calling up the agency, fixing — and she’ll say, “I fixed that thing we were worried about today,” when I come home and have dinner with her. She’s made the dinner and she’s dealt with the most complicated issues of our time every single day of my life. With the kids, she knows all this stuff about our family. She is like a giant computer of knowledge about our family and I’m like this insect that comes in and knows nothing except where’s the food, I’ll make the coffee. And I am so proud.

And what I think we’re talking about here is the lag. Men have appreciated, these three guys here and society has appreciated the enormous intellectual and conscientious role that women have played for so many centuries in this country. It’s not new, the capability. It’s new, the recognition and I think that’s what’s happened. (Applause)

And I salute Maria — and I didn’t get a chance to talk about how you divide responsibilities and authority in the Schwarzenegger household. Do you want to ask for extra time for that? (Laughter)

GOVERNOR SCHWARZENEGGER: I can tell you, in our household it’s very easy. I just say yes to everything Maria asks for. (Laughter) To keep peace.

CHRIS MATTHEWS: I don’t think so. I think it’s more complicated.

GOVERNOR SCHWARZENEGGER: But I tell you, you have a really good point there, because if you really watch women and how they function at home and the kind of multi-tasking that they do — I’m absolutely blown away, for instance, by Maria. I mean, she has been, when the kids grew up and they were little babies, they were crawling around under the desk at home and she would be working on the computer and she would be on the phone on one side and she was taking notes on the other and I will come in and ask her a question and she will continue doing all of those things. When I just read a script I couldn’t have a kid in the room. She is so unbelievable with the multitasking. And I think women have that capability more so, much more so than men have. So they are maybe superior, who knows? (Applause)

CHRIS MATTHEWS: Maybe superior, who knows? But definitely, finally politics and society is catching up with reality. Thank you all. Thank you, Warren Buffet, sir.

WARREN BUFFETT: Thank you. (Applause)

CHRIS MATTHEWS: And thank you, Governor. (Applause)