At the shareholders' meeting in '92, Munger said something more philosophical: human beings have the nature of starting from their own interests, and even if they pursue their own interests, which may bring huge losses to others, people will still start from their own interests.
At that time, he was commenting that Lloyd's in the United States was in trouble because of the problem with the system, violating some basic psychological laws, Lloyd's stipulates that after signing the order, employees can get a certain percentage of the sales commission, under such a system, employees are focused on performance.
The same problem exists in the banking industry, where banks give employees commissions according to the size of the loans issued, and whether the loans can be recovered after seven or eight years does not affect the salaries of employees. It is also a system with loopholes that can lead to serious problems.
Therefore, system building is very important, and a good system can avoid the impulse of human nature. Especially in the industry that deals with money, it is simply unimaginable to rely on moral constraints. Because in the face of huge interests, people will always try their best to find a way to make a fortune in the loopholes of the system, and when it comes to our A-shares, the current system construction is not perfect enough. Human nature is unreliable, and only under a complete system can the market develop healthily.