New York: The US economy should brace itself for the aftershocks of the unprecedented government stimulus. But the future of the US and Wall Street is bright. That’s the word from the Oracle of Omaha, Berkshire Hathaway Inc. chairman and chief executive Warren Buffett, and Microsoft Corp. chairman Bill Gates, even as they take a trip down memory lane at New York’s Columbia University and talk about their message to the students of today, and about how the world has changed since they walked through the corridors of education. Edited excerpts:

Campus talk: Berkshire Hathaway chairman and chief executive Warren Buffett (left) and Microsoft Corp. chairman Bill Gates. Photographs: Andrew Harrer / Bloomberg and Daniel Acker / Bloomberg

We will start talking about being back on campus. What does it mean for you?

Buffett: Been a long time. This place does have pleasant memories because both (professor Benjamin) Graham and (professor David) Dodd, and they are the reason I came to Columbia, they both treated me so much better as an individual. I’d learnt from them intellectually already when I read the books and all that, but Dodd treated me like a son. He would take me out for dinner and Graham took a great interest. And that was just terrific for a 19-year-old kid.

When you come back to campus on a day like today, is it different, is it the same?

Buffett: They have added a lot of building and this building wasn’t here. We should go across the street about a block away and look at my $10 (Rs468) a month room.

Is that still here?

Buffett: It is still here. There is an apartment house there and, I forget, I believe I was on the sixth floor there and I had the maid’s room and paid $10 a month.

Do you ever regret leaving? Do you ever wish that you had stayed through?

Gates: Being in school is a lot of fun because there are other smart kids around; some of the classes teach you something. But I had something I thought was urgent. So I didn’t leave school because I didn’t enjoy it; it’s a great time in people’s lives.

So you think people should take advantage?

Gates: I always say that unless you have some unbelievable opportunity you should stay and graduate.

I know that you spent a lot of time in focusing and studying on all kinds of things including diseases that are going around in the world and I am dying to ask you a question—would you have your kids get the H1N1 vaccination?

Gates: Sure. As that becomes available, I think everybody should have it.

There are concerns from a lot of parents—it’s a brand new thing but it’s the same sort of vaccination process that we have used for over 60 years.

Gates: This one doesn’t pose any particular new risks. All medical things have a small degree of risk in them, but the benefit is quite strong.

While we are talking about healthcare, we are talking about a nation that is considering a massive shift and how our healthcare is run. Do you think it’s headed in the right direction?

Buffett: I think the emphasis has gotten over on the payment mechanism and all that. In terms of making a basic change in the fee for service, I do not think we have made the most of the opportunity if we are going to tackle healthcare. I do not think what’s happening in hospitals, what’s happening in doctors’ offices and what is costing us 16% of GDP (gross domestic product), is going to change dramatically. The argument has gotten off way more in terms of whether insurance companies should do it or how they should be handled. So we may be missing an opportunity.

Would you agree with that?

Gates: Absolutely, healthcare is important, it is great it is getting some focus. But the idea of how you make it more efficient has got almost no discussion. And we are going to have to discuss that at some point. It’s a problem. The incentive system is not appropriate and so we actually spend a lot more than many other countries and yet the results we get aren’t a lot better.

Is it worse though to stay with the status quo or to maybe adopt a Bill that is less than perfect?

Gates: Once I get through the 1,900 pages, I will let you know.

Buffett:That is more of a question for political scientists. In other words, do you get five years from now a better result if you just enact almost anything and then start tinkering with it or will the nature of the bureaucracy and everything be such that you sort of get locked into something that will be sacrosanct for a long time? But, as Bill said, the incentives haven’t been changed...

Is there much in the Bill to change how hospitals behave? Very little. Another 20% or something goes just into doctors’ offices. Does a doctor have much incentive to behave differently under this? Not so much.

So I would have loved to have seen some of the top minds like George Halvorson at (healthcare organization) Kaiser Permanente, those people just sit in a room for a few weeks and say, how do we really incentivize people throughout this system to do things for people that will make them healthier and probably get rid of a lot of the cost.

When you were looking around, getting a feel for the campus, when you were here there weren’t a lot of women on the campus, were there?

Buffett: At the business school, when I was at Columbia, my memory is, and I think I am right on this, there was one woman in the class, Maggie Shanks.

I was looking for a school, actually, where I was going to be the only boy. So this was really quite a disappointment. 1776, they said all men are created equal and all that, but in 1951 there was one woman in the class of the Columbia Business School.

Fortunately, it has changed a lot since then.

Was she a good student

Buffett: I remember what she looked like but don’t remember her grades.

There maybe a little rivalry between you two from time to time, you remember the school song here?

Buffett: We own New York, who owns New York, so people say. We own New York, we own New York, who? Columbia.

Do you want to sing Harvard’s?

Gates: No, I wouldn’t sing it well, either musically or in terms of having encountered it.

We were talking about healthcare and one of the issues people worry so much about is when do you start focusing on the deficit, when we start worrying about spending, is there a point where you just say too much?

Buffet: We have done extraordinary things and applied extraordinary dosages of things that we have done in the past to pull this country out of the financial panic like, virtually, it’s not as ever seen, but the right thing to do in a general way, but with unprecedented dosages you get unprecedented after-effects, and we are quite likely to, and they won’t necessarily be welcome after-effects. But that was still a right decision, to apply that much medicine, but we can’t do what we are doing fiscally for a long period of time without having a real impact on inflation, on the dollar and a lot of unprecedented after-effects.

You said when you bought Burlington Northern (Santa Fe Railway) that this was a big bet on the future of America.

Buffett: And I have no doubt about the future of America, look at Bill, that’s a good illustration that the country has a good future. People like Bill have been able to come into this US economy and work miracles and our system has allowed the potential of a Bill Gates to come out. Two hundred years ago, he would have been some dirt farmer or some blacksmith but we have a system that unleashes potential that is going to keep going that and you can bet on the future of America with enormous confidence.

Do you think there could be another Bill Gates even at this school right now?

Gates: Sure. Opportunities as science creates new frontiers, new businesses are being formed today that are going to save lives, make our lives better and make billions of dollars and that’s why the system is actually used by lots of other countries, so the US has set an example and still the best.

Do you think that the future’s innovators are going to come from this country or are they going to come from some other imitator countries?

Gates: That would be more of a mix... At the end of World War II, the US stood alone and since then other countries are getting their act together and contributing to global prosperity. Every new drug that is invented, every great new piece of software is beneficial. So the US would be at lead because our universities, our basic system is still the best, but others including China and India are coming along and they fixed some of the mistakes they were making, pretty extreme in the case of China, so they will be contributing, buying goods and being part of the economy. They may even shift some goods from Burlington Northern.

What is the important fix that China has made that has helped them a long way?

Gates: They have doubled the focus on education, their culture is always strong on that, but allowing them to be a market economy, letting people create businesses which, before 1979, they didn’t allow at all, but then gradually they opened it up and now they are a capitalistic country.

At the heart of capitalism here, at Columbia in New York city, we talked about 50% of students who were here eventually go into financial services, some Wall Street type job. Is Wall Street going to be there for them after what we just went through the last year?

Buffett: Yes Wall Street will be there for them... Wall Street is an integral part of the US economy and it should be at the centre, the real things that encountered developing these businesses and all but they need Wall Street. The Bill talks about these ideas coming from China and India; we should rejoice about that. I love the idea that the US is the home of much of this but it’s better, for the rest of the world is doing us.

You made some comments about financial compensation on Wall Street. Is it in the right place right now?

Gates: The compensation is very high... But it’s a very difficult thing to come in and regulate without potentially making things worse... Most of the approaches would actually cause problems.

You have any ideas?

Buffett: Well, the market’s system which overall works wonder for us and it’s a large part as to where we have got over the last couple of centuries. It does produce very unusual things in compensation.

If you are a poor baseball player now in the Major League you are making 20 or 30 times or probably five times at least in inflation-adjusted terms as to what Babe Ruth (Major League baseball player from 1914-1935) made. But if you made money for other people, you get paid well, and if you are a great nurse, you don’t, and if you are a great teacher, you don’t. But if you are on a different spot, the market economy pays off like crazy, and Wall Street happens to be the place where it pays off crazy as the most.

When did you guys cook up the idea to come to Columbia to meet with the students today?

Gates: We have done something at the University of Washington. That was our first business school appearance. Then we went to Nebraska and...I thought since Warren was here, this will be a fun place to do a joint interview.

How did you come up with the idea for the very first, though?

Gates: A magazine had interviewed us jointly and we had a lot of fun with that. So I suggested the business school thing and Warren said he was game.

There are a lot of people who don’t know you two, who may think that you are a little bit of an unlikely pair. Bill came up with an entire new innovation and created a whole new industry, and Warren, you don’t have an email account. How do you interact?

Gates: Warren’s on the Internet playing bridge a lot, so this is his non-tech image and I would not want to damage it.

Buffett: I am saving myself for the next big technological breakthrough, none of this is big enough for me yet, so I am waiting.

Gates: He wants robots in his office so that he can get the head count down from 13 or 18.

Buffett: But not below one.

So you both care about education and you both care about students and their future, you both have given a tonne of money, so you both believe in philanthropy too. What else did you find in common, the first time you guys met?

Buffett: We were the most terrible golfers and we share that; we have so much sober eating habits, he has his ways to go but we are in sync on most things.

There are a lot of concerns about the independence of the Fed (US Federal Reserve), especially all these Bills that are moving through Congress right now. Do you worry about that?

Buffett: I think there is nothing more important in the economic future of the country than to have an independent Fed and I think that has been demonstrated over the years; I think it was demonstrated particularly even last fall.

You think the system is perfectly fine, (but) people are saying it’s an antiquated system...

Buffett: Perhaps the regional banks are better adapted than 1911. I am not sure you need someone reporting from Longhorn and we tell him how is it going but in terms of its fundamental mission as a central bank, I think it’s done a good job over the years. I think it has had good leadership and terrific leadership and curbing the independence of the Fed could lead to a lot of mischief.