Berkshire Hathaway CEO Warren Buffett isn’t known for worrying much about technology. The legendary stock-picker has famously shunned smartphones, and until recently did not invest in tech companies (though that may be changing).
At the Berkshire Hathaway annual meeting in Omaha Saturday, Buffett said that advances in artificial intelligence have forced him to consider the impact the technology could have on his businesses, and it’s not good. Self-driving cars alone could be a double whammy to Berkshire Hathaway, hurting it in more than one industry in which it competes.
“I would say that driverless trucks are a lot more of a threat than an opportunity,” not just to Berkshire’s railroad business, but also to its insurance business, Buffett said at the shareholder meeting. “Both of those, autonomous vehicles, widespread, would hurt us.”
Berkshire Hathaway (BRK-A) owns the railroad Burlington Northern Santa Fe, or BNSF, and would likely lose many of its shipping customers if trucks could transport goods without human drivers, dramatically reducing the cost of trucking. And a secondary effect of the same trend could also make Berkshire’s auto insurance business, Geico, much less profitable, Buffett said.
“If driverless trucks became pervasive, it would only be because they are safer,” he said. “And that would mean that the overall economic cost of auto-related losses had gone down, and that would drive down the premium income of Geico.” In other words, self-driving vehicles would lead to fewer crashes, so human drivers wouldn’t have to spend as much on car insurance.
Of course, if that happens, the benefits to society far outweigh the loss for Geico, and Buffett acknowledged this. “If they make the world safer, it’s going to be a very good thing,” he said, “but it won’t be a good thing for auto insurers.”
On the other hand, the investor known as the Oracle of Omaha predicted that AI and automation could create “huge problems in terms of democracy” as we know it, as people attempt to adjust to an economy that needs far fewer human workers to be just as productive.
“It would require enormous transformation in how people relate to each other, what they expect of government, all kinds of things,” Buffett said. “I would think that artificial intelligence would have that hugely beneficial social effect, but a very unpredictable political effect if it came in fast, which I think it could.
“If you fire half the people, and the other people keep working, I just think it gets very unpredictable,” Buffett elaborated. “I think we saw some of that in this election.”
As for how fast it could happen, Buffett thinks 20 years is feasible, “and probably a shorter time frame.”
Buffett, who is 86, isn’t sure he’ll live to see it, however. “I don’t think you have to worry about that,” his business partner Charlie Munger advised Buffett. “It’s not going to come that quickly.”