Do You Sincerely Want to Be Rich? Why?

Do You Sincerely Want to Be Rich? Why?

Guest post by Dr. Gary North

“Do you sincerely want to be rich?” That phrase was the marketing tool of a mutual fund icon half a century ago: Bernie Cornfeld.
Cornfeld began selling mutual funds in the mid-1950’s. He did so well that he had an international team of 25,000 salesmen a decade later. They sold mutual funds door-to-door in Europe, especially Germany. They sold the funds to middle-class investors. It all went bust in 1969 when the stock market tanked. Bernie’s lifestyle tanked with it. But, before the economy tanked, he spent time at the Playboy mansion. He was surrounded by good-looking young women who would not have had anything to do with him if he had not been rich.

He later served 11 months in prison in Switzerland. His friends deserted him. He did not die in poverty, but he was no longer superrich.

He understood the power of his rhetorical question. There were a lot of people who sincerely wanted to be rich. They have the illusion that, if they just want it hard enough, and they found somebody selling them a mutual fund, that they could get rich. That illusion is with us still.

LIFESTYLES OF THE RICH AND FAMOUS

We hear a lot about excessive inequality today. I don’t think it’s much worse than it was in 1900, but so what? In terms of the day-to-day lives of Americans who are in the upper middle class, and who pay the bulk of the income taxes, how are their lives fundamentally different from the lives of the superrich in the top 1%?

Even if we are talking about the middle classes, the major difference would be debt. The middle class is indebted. It has to pay a lot of money for its mortgages. Land prices go up when times are flush, and people take on more debt. So, the elimination of debt would be one mark of a person who has made it out of the middle class into the wealthy class.

In terms of the quality of the lifestyle, however, would there be a fundamental difference? I contend that the lifestyles would not be that much different.

We see tremendous lifestyle differences in societies that were on the verge of starvation and then moved up. Truly impoverished societies are disappearing because of economic growth. In another two decades, there will be very few of these societies remaining. The tremendous advance of economic growth is now eliminating poverty. By the middle of this century, there will not be much life-threatening poverty anywhere on earth. This is a tremendous benefit to the poor. The free market is doing this. It is not being done because of the welfare state.

Back to the superrich. Jeff Bezos just got a divorce, and his wife will take away assets worth over $35 billion. But will her lifestyle change? Only to this extent: she gets Jeff out of her life. But you don’t have to have $35 billion to live alone comfortably without your annoying husband.

What I’m getting at is this: the weeping and gnashing of teeth about the inequality of wealth and the illegitimacy of the quantities of wealth owned by the superrich has very little to do with people’s actual lifestyles. The difference between the superrich and the rich is enormous if we’re talking about net worth. But in terms of lifestyle differences, there aren’t many.

WINNING THE LOTTERY

If you were to win a lottery, and you were guaranteed to receive $1 million a year for the rest of your life, how would your life change?

Obviously, one of the changes would be a constant stream of requests from people seeking handouts. This is what happened to John D. Rockefeller, Sr., beginning in the late 1880’s and continuing until he died five decades later. Here is a description.

The volume of mail defied the imagination. One steamer alone brought five thousand begging letters from Europe. After the announcement of one large educational gift, Rockefeller received fifteen thousand letters during the first week and fifty thousand by the end of the month. He needed a staff just to sift through these appeals.

The best way to assess how much money you would spend is to look at your daily schedule. How much money could you spend in a day if you spent your time exactly the way you wanted? How would you spend those hours differently?

You could go on cruises. But cruises get boring early, and you probably would gain 20 pounds from the free meals.

You could do a lot more reading. Let’s talk about the cost in money of reading for 8 hours a day. You can buy used books on Amazon for about $10. There is no way that you could do enough reading every day to cost you more than $300 a month. That would be a lot of reading. This assumes that you don’t start reading the classics of Western civilization, all of which are free. Project Gutenberg’s books are free, and there are now 58,000 of them. You can read them on a Kindle reader.

You could watch a lot more television. You might even start watching as much television as the people of West Virginia, who sit in front of their TV screens for four hours and 30 minutes a day. But what would you watch? What is there on television today that would be worth 4 1/2 hours a day?

In terms of leisure, for how long could you spend $80,000 a month? When would you become bored out of your skull? Boredom is one of the great afflictions of modern man. My mentor Robert Nisbet put it this way. He was discussing the decline of the idea of progress in modern society.

. . . boredom is spreading in Western society: boredom with the very goods, material and psychic, which modernity has heretofore largely blessed. In his profoundly absorbing Inventing the Future, scientist Dennis Gabor has suggested that “work is the only occupation yet invented which mankind has been able to endure in any but the smallest possible doses.” But, through technology and the fast-developing cult of leisure, we are pushing work into a constantly diminishing place in Western society. The work-ethic wanes and the leisure-ethic grows. But all present evidence is that few if any human beings can endure leisure without becoming bored, succumbing to alcohol and drugs, or other modes of escape, or turning to violence and terrorism in mounting degree. Nothing in the bio- and psychological evolution of mankind has prepared it in slightest degree for the leisure that, by criteria drawn from even the recent historical past, envelops us all in considerable, and rising, degree. Technology has permitted us to make a virtual fetish of leisure, but even while seeking it in constantly expanding dimensions, we are at bottom unable to tolerate it—that is, without recourse to narcotic, psychological, religious, sexual, and violence-saturated releases from the tensions leisure generates.

You would probably go back to work. It might not be for a salaried job; it would be a calling. You would find something to do with your life, day by day, that you regard as productive.

Here is my definition of being rich: enough money so that you can quit your job tomorrow and do anything you want with your time, but not suffer any decline in your lifestyle. There are not a lot of people who are that rich. But if you can find a job or a calling that will pay you to do productive, fulfilling work, then you are as good as rich. If you are doing something for a living that you would be willing to do free of charge, you are rich.

Then the question arises: “How do the superrich demonstrate that they are richer than the merely rich?” People want to have some kind of visible markers in their lives that identify themselves as having made it.

If you were at the top of the heap, meaning in the top 1% of American income earners, how would you show this to others?

It used to be that people would buy a really big house that people could see. But that doesn’t work well anymore. Today, the way that you show that you have really made it big is that you buy several big houses with a lot of servants, but they are so far off the road that nobody can see them. This is what the superrich began doing no later than 1900. This is why the Rockefellers and other superrich people began buying lots of prime recreation land, and then donating most of this land to the federal government. This way, they kept the public away from their property. They kept the choice property right in the middle of the federal lands, and this kept the hoi polloi away. They still use this strategy to segregate themselves from the general population. But then nobody can see their wealth. What’s the point?

How often do they visit these mansions? They have to pay all that money to keep them running when they are not there, and they are rarely there. It’s all outflow, no benefits. What’s the point?

The superrich do not live much longer than the rich, and the rich don’t live much longer than the middle class. They may get an extra decade of life. But they probably can’t slow down. They are workaholics. They don’t really like leisure. They’re going to stay on the job finding ways to produce goods and services at better prices for the middle class. Basically, the middle class has hired these people to make middle-class living more comfortable. These superrich people are well-paid, but most of their money is in capital equipment. This equipment is making the rest of us richer. What do we care who owns it? We just want that capital to serve our interests. The free-market economy enables us to get that capital serving our interests.

The superrich work long hours. They enjoy their leisure, but they don’t enjoy it often. They go off to their island retreats and do deals with each other. They live in their exclusive penthouses in order to do deals with each other. Their close proximity to other superrich people makes it possible for them to get access to really spectacular deals. They enjoy doing deals and making an above-average rate of return on their investments. They hire specialists to do this for them. But they still like face-to-face deal doing. They are addicted to deals. They are not addicted to the consumer goods that money can buy; they are addicted to deal-doing. They are like kids playing video games. The points matter, and that is just about all that matters to game-addicted kids. They don’t do anything with the points, other than accumulate them.

Most of the hoopla about inequality is based on envy. The politicians who are trying to soak the rich are not doing it to redistribute this wealth. It cannot be redistributed. It’s not in the form of money. It’s not sitting in bank accounts. It’s in capital goods. What the critics of the superrich want is a redistribution of wealth the tears down the superrich for the sake of tearing them down.

CONCLUSION

I suggest that you do the following. What aspects of the lifestyle of the superrich do you really want? Can you buy such a lifestyle today? What would it take for you to be able to buy this lifestyle?

I think the best way to buy that lifestyle is to find something that you can do with your life that is meaningful, and that pays you enough to enjoy two or three hours a day of leisure. Then find something productive to do with your leisure.

Start focusing your life on making the transition to daily work that you like. It may pay more per hour, but probably not twice as much or three times as much. It will give you a sense of satisfaction, and you won’t have to change your lifestyle because of a cut in pay. You will be rich.

 

This article has been first published here https://www.garynorth.com/members/19352.cfm

 





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