Warren Buffett, co-chair of the 10,000 Small Businesses Advisory Council, takes part in a panel discussion following a news conference announcing a $20 million partnership to bring Goldman Sachs' 10,000 Small Businesses initiative to the city of Detroit, Michigan, November 26, 2013. REUTERS/Rebecca Cook Warren Buffett recently met with a group of MBA students.

A student asked him what shaped his political views (Buffett is a Democrat). The famous investor offered a great thought experiment, which helped him think through the kind of world he wants to live in. In it he characterizes something he calls the "Ovarian Lottery":

My political views were formed by this process. Just imagine that it is 24 hours before you are born. A genie comes and says to you in the womb, “You look like an extraordinarily responsible, intelligent, potential human being. [You're] going to emerge in 24 hours and it is an enormous responsibility I am going to assign to you — determination of the political, economic and social system into which you are going to emerge. You set the rules, any political system, democracy, parliamentary, anything you wish — you can set the economic structure, communistic, capitalistic, set anything in motion and I guarantee you that when you emerge this world will exist for you, your children and grandchildren.

What’s the catch? One catch — just before you emerge you have to go through a huge bucket with 7 billion slips, one for each human. Dip your hand in and that is what you get — you could be born intelligent or not intelligent, born healthy or disabled, born black or white, born in the US or in Bangladesh, etc. You have no idea which slip you will get. Not knowing which slip you are going to get, how would you design the world? Do you want men to push around females? It’s a 50/50 chance you get female. If you think about the political world, you want a system that gets what people want. You want more and more output because you’ll have more wealth to share around.

The US is a great system, turns out $50,000 GDP per capita, 6 times the amount when I was born in just one lifetime. But not knowing what slip you get, you want a system that once it produces output, you don’t want anyone to be left behind. You want to incentivize the top performers, don’t want equality in results, but do want something that those who get the bad tickets still have a decent life. You also don’t want fear in people’s minds — fear of lack of money in old age, fear of cost of health care. I call this the “Ovarian Lottery.”

My sisters didn’t get the same ticket. Expectations for them were that they would marry well, or if they work, would work as a nurse, teacher, etc. If you are designing the world knowing 50/50 male or female, you don’t want this type of world for women — you could get female. Design your world this way; this should be your philosophy. I look at Forbes 400, look at their figures and see how it’s gone up in the last 30 years. Americans at the bottom are also improving, and that is great, but we don’t want that degree of inequality. Only governments can correct that. Right way to look at it is the standpoint of how you would view the world if you didn’t know who you would be. If you’re not willing to gamble with your slip out of 100 random slips, you are lucky! The top 1% of 7 billion people. Everyone is wired differently. You can’t say you do everything yourself. We all have teachers, and people before us who led us to where we are. We can’t let people fall too far behind. You all definitely got good slips.

Even if you don't buy Buffett's idea that only government can alleviate certain forms of inequality, one thing that's great about Buffett is his appreciation of luck, and the realization that he won a lottery ticket by dint of his birth. So many of our elites can't stop talking about how hard they worked, or the importance of taking risk and all that. Buffett readily acknowledges that he had incredible fortune from the moment he was born.

At the same event, Warren Buffett also explained why he thought George W. Bush uttered the greatest economic statement of all time.