Many of the most famous rich, especially in America, have signed up to The Giving Pledge, and various explanations range from a Carnegian: ‘The man who dies rich dies disgraced,’ to observations on the potentially toxic aspects of great inheritance. But how widespread is this? How selfless, caring and burgher-like are the world’s über-rich?
A usual picture drawn is of a middle class family around a kitchen table having ‘a meal’ together and warm-hearted sensitive parents (who are also significant wealth owners) nursing fears about their children’s welfare and normality, all behind enlightened brows furrowed by modern concerns. Perhaps writers are unaware of the still existing staff hierarchies and family position that remain in houses such as Badminton, Brocklesby, Longford, Mulgrave and Tregothnan (to name a few that are not open to the public).
What about the real values of some of the really successful wealth owners and creators? Might these include desperation for a son at Eton, yearning to see said boy in a tunic of a regiment of the Brigade of Guards, or the desire that a daughter make a good match, and marry someone with an established handle to their name? Anthony Powell confided to his sometime-friend, Malcolm Muggeridge that he longed above all for:
‘’a wife with a title and a house with a drive,’’ both of which he eventually acquired (he married a sister of the late Lord Longford).
Even in articles about the family office (FO) sector, examples are invariably from an upper-middle or middle-class home. It is incredibly rare for mention to be made of the upper classes, by named example or general outlook. As an aside it might be recalled that James Lees-Milne (a third generation Etonian) preferred to be termed lower-upper class rather than upper-middle, since the latter had indelibly bourgeois connotations. While living in a Worcestershire manor house, his family could claim only to be lower-upper class because its rapidly diminishing wealth was recent and came from the cotton trade, rather than from landed income. These nuances might seem ludicrous to some, but it would be equally foolish to assume they no longer exist.
Another tiresome canard is the myth of the classless America. When Paul Mellon declared that his family was ‘not dynastic’, he was speaking as a modest man who saw himself as an outsider to those families in America who were. His grandfather, Judge Thomas Mellon, the patriarch of the family, had spoken of the old families of Pittsburgh such as the Hillmans, Olivers and Reas, in contrast to his own. It doesn’t take long in certain East Coast circles to appreciate the reputation and position of families such as the Cabots & Lowells.
Most articles on this subject set out a ludicrously noble and enlightened view, devoid of human failing, or even just simple old-fashioned pride. A good real example is a goal in a family constitution stating: “Raising children with a strong work ethic is key.” Contrast this with a boy being told: “You are a ‘Howard’ (for instance),” and then receiving some illumination as to why he is different, perhaps superior and certainly expected to behave in a better-bred manner than others.
Much of this may be relevant to behavioural finance, (rare in being at once voguish and useful). But more significantly, the simple fact is that increasing status and money are more likely to lead to arrogance and unpleasantness. Riches don’t alter human characteristics, for they are immutable, but they do amplify them.
Surveys and findings, usually by the sell-side flattering their prospects, abound with over idealistic examples of ‘giving patterns’ of the rich. The 2008 Wilmington Trust with Campden survey on “Women and wealth” declared the family values that were most important to be: “generosity and giving back to the community; respect for people of all wealth backgrounds; strong work ethic; frugality and prudence about spending.” The November 2008 edition of the Family Business Magazine leads with” “Why companies should be more like Families.”
Its reasoning was that families have: “rich communication, bonding through adversity, support networks, shared visions and values.” One wonders where on eart ring Family Offices survey found that “men expressed many core life values, including modesty, generosity, honesty, practicality, preparedness, and fostering a strong work ethic.”
Writing on philanthropy can be no less utopian. The actions of the multi-billionaires in the public eye (eg Buffett, Gates, Soros, Ellison) are certainly not representative even of the top end of the wealth spectrum, if one imagines that to range from say $500m to $5bn, and so their activities (including The Giving Pledge) are, in some respects, irrelevant.
Doubters may suggest the philanthropy surge in recent years on the part of the rich may be motivated by other factors than a noble spirit. Dr. Johnson declared: “No, Sir; to act from pure benevolence is not possible for finite beings. Human benevolence is mingled with vanity, interest, or some other motive.” More recently, the latest World Wealth Report produced by Merrill Lynch and Capgemini points out that social responsibility, social networking and tax benefits may be just as important as altruism and charity in prompting an involvement in philanthropy. As an aside one might add that many foundations are only the ‘front end’ for a subsumed single FO (this statement rather precludes the giving examples, but families from the Hellenic Republic come to mind).
If potential heirs have a shred of human instinct they are likely to feel, at least in part, dispossessed, especially the children of wealth creators. Hilton Hotels patriarch Barron Hilton is giving 97% of his $2.3 billion personal fortune to charity, leaving approximately $69m for his heirs. Other examples are Warren Buffet giving away 99% of $47bn (ie $470m left) and Larry Ellison 95% of $28bn (ie $1.4bn left). Caprice Bourret, on being asked if she had taken steps to pass on her assets, replied: “I have left everything to my family. I think charity begins with your family and you take it from there.” In fairness one should add she is a generous donor to charities including ChildLine, Tikva and Great Ormond Street Hospital, but surely her honesty, and balance, are thoroughly refreshing.
The point is not to deride charitable giving to worthy causes, which must be upheld and applauded, but to portray the realities of rich people’s behaviour. In this quarter the human features of avarice, vengefulness and arrogance are often tempered by kindness, forgiveness and modesty. But both sides, seamlessly meandering betwixt each other, may be writ very large indeed.
In 2010, the Journal of Personality and Social Psychology carried a piece by Dr. Paul K. Piff. Its summary of four experiments was that the poor, rather than the rich, were more inclined to charity.
The platitudinous comment ‘I don’t want riches to change me’ is trite, un-thoughtful, narrow-minded and ungrateful, if meant in the regard to lifestyle, consumption and patronage. It is admirable if it expresses the retaining of a single and good set of manners applied to all. Billionaire Adolf Merckle (his birth in early 1934 might explain what in later years could be seen as a surprising Christian name) lived in a modest house in the Swabian town of Blaubeuren, which even had his name on the letterbox. Warren Buffett lives in the same small three-bedroom house in mid-town Omaha he bought after he got married 50 years ago.
While of course one must defend their right to do so, it is not actually laudable. Rather, one could see it as uncultivated and a startling waste of opportunity. How could people of such means not wish to live in beauty and own pictures by Pontormo, Velázquez and van Dyck?
The 2007 ‘War on Greed’ protests outside the Park Avenue apartment of Henry Kravis
(a lavish host and cultivated art collector) brought to mind Dr. Johnson’s comment:
“You cannot spend money in luxury without doing good to the poor. Nay, you do more good to them by spending it in luxury, than by giving it; for by spending it in luxury,
you make them exert industry, whereas by giving it, you keep them idle.” Similarly, the Bellocian duty of Lord Finchley was “To give employment to the artisan.”
Had Lords Conway, Leicester, Scarsdale and Lyttelton chosen not to consume, nor to be a patron, England would be bereft of Ragley, Holkham, Kedleston and Hagley. Lord Leicester spent about £90,000 (by his death in 1759) in building Holkham, which would equate to about £6.7m today. That actually seems rather good value to employ such luminaries as Campbell, Brettingham, Kent and Burlington, when the government-commissioned Rogers’ Millennium Dome cost more than ten times this sum.
Does this thesis dare to suggest it would have been a less beneficial use of Leicester’s resources to spend none of that money on Holkham and all of it on poor relief and other charitable causes? Yes, in part, it does. Increased wealth brings increased responsibility, both to consume and to be a patron of the arts. One drives growth and industry, the other enriches and beautifies our environment. Surely our humanity is dependent on a balance of both.
