money

Success Secret of the Rich and Famous: Insulate Yourself From Personal Responsibility

From the blog Mercy Not Sacrifice, I learned about a list wealth guru Dave Ramsey had posted of 20 Things Rich People Do that Poor People Do Not. His source for the stats is something called The Rich Institute, which makes the stats fairly dubious to begin with. The list sets out to prove that rich people are in charge of their destinies and are rich due to their superior choices. The list has received a lot of commentary elsewhere. In some cases the items on the list presumably are meant to imply cause and effect. For example, Ramsey says the rich eat less junk food. I think we are to assume that this is a moral decision and that choosing not to eat junk food makes people wealthier rather than assuming rich people having the budget to buy healthier foods and poor people have the budget for junk food.

Then there is this utterly meaningless list item: “74% of wealthy teach good daily success habits to their children vs. 1% of poor.” What is a “good daily success habit”?

No one has done a better job summing up this kind of nonsense than G.K. Chesterton writing a century ago.  His essay The Fallacy of Success says:

There has appeared in our time a particular class of books and articles which I sincerely and solemnly think may be called the silliest ever known among men… On every bookstall, in every magazine, you may find works telling people how to succeed. They are books showing men how to succeed in everything; they are written by men who cannot even succeed in writing books. To begin with, of course, there is no such thing as Success. Or, if you like to put it so, there is nothing that is not successful. That a thing is successful merely means that it is; a millionaire is successful in being a millionaire and a donkey in being a donkey. Any live man has succeeded in living; any dead man may have succeeded in committing suicide. But, passing over the bad logic and bad philosophy in the phrase, we may take it, as these writers do, in the ordinary sense of success in obtaining money or worldly position. These writers profess to tell the ordinary man how he may succeed in his trade or speculation–how, if he is a builder, he may succeed as a builder; how, if he is a stockbroker, he may succeed as a stockbroker… I really think that the people who buy these books (if any people do buy them) have a moral, if not a legal, right to ask for their money back. Nobody would dare to publish a book about electricity which literally told one nothing about electricity; no one would dare publish an article on botany which showed that the writer did not know which end of a plant grew in the earth. Yet our modern world is full of books about Success and successful people which literally contain no kind of idea, and scarcely and kind of verbal sense.

…You may want a book about jumping; you may want a book about whist; you may want a book about cheating at whist. But you cannot want a book about Success. Especially you cannot want a book about Success such as those which you can now find scattered by the hundred about the book-market. You may want to jump or to play cards; but you do not want to read wandering statements to the effect that jumping is jumping, or that games are won by winners. If these writers, for instance, said anything about success in jumping it would be something like this: “The jumper must have a clear aim before him. He must desire definitely to jump higher than the other men who are in for the same competition. He must let no feeble feelings of mercy (sneaked from the sickening Little Englanders and Pro-Boers) prevent him from trying to do his best. He must remember that a competition in jumping is distinctly competitive, and that, as Darwin has gloriously demonstrated, THE WEAKEST GO TO THE WALL.”

What Chesterton makes perfectly clear is that it is useless to talk about the abstraction of “success.” What a person needs to succeed is specific instruction on the information he lacks to get by in a particular context. There is no “success” devoid of context.  Let’s say you were to take a rich kid and plop her alone into a poor neighborhood. Let’s say you were to put her in a struggling inner-city school and leave her to her own devices to get along. How would you expect her to do? Let’s say you were to put her on a small farm and tell her to go tend to the animals. How would she do? What if you were to ask her to work on an assembly line? My guess is that she would not enjoy great success. Why? She was not taught the “daily success habits” to thrive in those environments.

I do believe these statistics:

84% of wealthy believe good habits create opportunity luck vs. 4% of poor.

76% of wealthy believe bad habits create detrimental luck vs. 9% of poor.

That is to say, I do not have faith in any of these numbers, but I am quite certain that the rich are apt to attribute their good fortune to their own habits and other’s misfortune to their bad habits. In fact, the whole article is an exercise in exactly that. Just because this is their belief does not mean it is true. Nor does it mean that believing it caused them to be rich, it is much more likely that being fortunate you’re more inclined to think you get what you deserve, because you deserve good things and you have them.

The Mercy Not Sacrifice article in which I originally read about Dave Ramsey’s list was titled “Another Item for Dave Ramsey’s List of What Rich People Do That Poor People Don’t.” Morgan Guyton wrote “…I found a 21st item to put on Dave’s list. Apparently it’s a growing trend for really rich people to buy expensive artwork, and, instead of hanging it up in their homes, store it in giant, tax-free warehouses in places like Luxembourg to use as investment currency instead of stocks or bonds. These warehouses are called freeports. They are often located next to airports, so that super-rich people can fly around to look at each other’s artwork.”

I found this fascinating in light of the controversy surrounding the potential sale of the artwork at the Detroit Institute of Art in the city’s bankruptcy reorganization.

I would like to do my part and add a 22nd item to the list of things that rich people do that poor people don’t.

22. Rich people insulate themselves from personal responsibility for their failings.

In December 2012, after Robert Kiyosaki, author of the mega-best selling Rich Dad, Poor Dad filed for bankruptcy protection following an expensive legal judgment against him, another wealth and leadership guru Jeremy McCommons wrote an article on his blog to make sense of it.  Kiyosaki had not failed, McCommons argued, in fact, his bankruptcy simply proved his method works.

Upon analyzing the situation with the Rich Dad Poor Dad’s bankruptcy, I realized that Robert Kiyosaki himself did not file bankruptcy and in fact his businesses are still running strong… Suddenly I was reminded of some basic yet important information that is taught by Rich Dad Poor Dad.

  • Use corporate structures to protect yourself and your assets. If your corporation fails or is sewed [sic] you are limited to the exposure of only those assets held by the corporation.

  • Never put all your eggs in one basket. Form separate corporate entities for each brand of your business or group of real estate holdings.

  • Always pay yourself first. It is important to get the cash out of your business when possible. If you pay yourself from the corporation those assets are no longer at risk in the event that the corporation runs into trouble.

Upon analyzing the situation with the Rich Dad Poor Dad’s Bankruptcy, I realized that Robert Kiyosaki himself did not file bankruptcy and in fact his businesses are still running strong. What filed bankruptcy was a corporate entity within the Rich Dad Poor Dad umbrella.  Suddenly I was reminded of some basic yet important information that is taught by Rich Dad Poor Dad.

  • Use corporate structures to protect yourself and your assets.  If your corporation fails or is sewed you are limited to the exposure of only those assets held by the corporation.
  • Never put all your eggs in one basket.  Form separate corporate entities for each branch of your business or group of real estate holdings.
  • Always pay yourself first. It is important to get the cash out of your business when possible. If you pay yourself from the corporation those assets are no longer at risk in the event that the corporation runs into trouble.

– See more at: http://jeremymccommons.com/business/rich-dad-poor-dad-files-bankruptcy/#sthash.UZ2YPN2D.dpuf

Upon analyzing the situation with the Rich Dad Poor Dad’s Bankruptcy, I realized that Robert Kiyosaki himself did not file bankruptcy and in fact his businesses are still running strong. What filed bankruptcy was a corporate entity within the Rich Dad Poor Dad umbrella.  Suddenly I was reminded of some basic yet important information that is taught by Rich Dad Poor Dad.

  • Use corporate structures to protect yourself and your assets.  If your corporation fails or is sewed you are limited to the exposure of only those assets held by the corporation.
  • Never put all your eggs in one basket.  Form separate corporate entities for each branch of your business or group of real estate holdings.
  • Always pay yourself first. It is important to get the cash out of your business when possible. If you pay yourself from the corporation those assets are no longer at risk in the event that the corporation runs into trouble.

– See more at: http://jeremymccommons.com/business/rich-dad-poor-dad-files-bankruptcy/#sthash.UZ2YPN2D.dpuf

Consider this quote:

“A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy…A person you control… yet cannot be held accountable for its actions. Imagine the possibilities!”

This is not a criticism– it is an advertising pitch for Wyoming Corporate Services. Reuters reports that the company “serves as a little Cayman Islands in the Great Plains.

For the rich, profits and losses are just business. It is not personal. When you launch a business and it utterly fails, or if there is a judgment against you for some kind of wrong doing, you just kill off the business entity, keep the money, and start again.

It is not only the poor, but the middle class, who are adversely affected by a pesky sense of moral responsibility.

An article in the Wake Forest Law Review by Brent T. White of the University of Arizona “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis” finds  that “Despite reports that homeowners are increasingly ‘walking away’ from their mortgages, most homeowners continue to make their payments even when they are significantly underwater. This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences…Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.”

Perhaps if the less wealthy want to put some success habits into practice they should walk away from their underwater mortgages. White believes so. He concludes: “…it is time to put to rest the assumption that a borrower who exercises the option to default is somehow immoral or irresponsible. To the contrary, walking away may be the most financially responsible choice i it allows one to meet one’s unsecured credit obligations or provide for the future economic stability of one’s family… The current housing bust should be viewed for what it is: a market failure and a failure to regulate not a moral failure on the part of American homeowners.”

Well, I was reading through my dad’s Economist magazine last night and I found a 21st item to put on Dave’s list. Apparently it’s a growing trend for really rich people to buy expensive artwork, and, instead of hanging it up in their homes, store it in giant, tax-free warehouses in places like Luxembourg to use as investment currency instead of stocks or bonds.

These warehouses are called freeports. They are often located next to airports, so that super-rich people can fly around to look at each other’s artwork.

– See more at: http://morganguyton.us/2013/11/27/another-item-for-dave-ramseys-list-of-what-rich-people-do-that-poor-people-dont-do/#sthash.Gp9K615H.dpuf

Well, I was reading through my dad’s Economist magazine last night and I found a 21st item to put on Dave’s list. Apparently it’s a growing trend for really rich people to buy expensive artwork, and, instead of hanging it up in their homes, store it in giant, tax-free warehouses in places like Luxembourg to use as investment currency instead of stocks or bonds.

These warehouses are called freeports. They are often located next to airports, so that super-rich people can fly around to look at each other’s artwork.

– See more at: http://morganguyton.us/2013/11/27/another-item-for-dave-ramseys-list-of-what-rich-people-do-that-poor-people-dont-do/#sthash.Gp9K615H.dpuf

Are you “We”?

I’ve been writing about how writers and journalists tend to write from the perspective of the well-off rather than the struggling.  I attribute some of that to the fact that it is generally assumed that a writer cannot make a living at writing and needs to have another career, be supported by someone else, or be independently wealthy.  That means, to some extent, writing as a career is limited to people of means and leisure.  There is another factor here as well, which I only alluded to in my article on poor shaming.

A lot of writers do stick with it even though it means struggling financially. We are among the poor.  Yet because of the cultural shame surrounding poverty, we do not dare write in the voice of the poor or marginalized if we want to be taken seriously.  So we end up talking about “we” the financially secure Americans as opposed to “they” the poor, even when that is not true for us as individuals.

I found a fascinating example yesterday of a writer assuming that he and his audience were among those who do not struggle financially.  Jordan Weismann, writing for the Atlantic, wrote an article that makes the case that the poor are not other people, but that poverty is a situation that any of us might face for a time.

The article explains that 40 percent of Americans will fall below the poverty line at some point, but that most people do not stay there for long.

He concludes “What these numbers undercut, though, is the idea that most of the poor, as a broad group, are somehow different than you and me (aside from the bit about having less money).”

If so many Americans are dealing with poverty, and they are not different from anyone else, there is a good chance that some of them are among the readers of this article. They not only like you and me. They are you and me.

Money’s Invisible Influence: The Cases of Oscar Wilde and Lord Alfred Douglas

There is something strange about money.  The need for it is one of the main drivers in most people’s lives.  With the exception of the incredibly wealthy, a very small minority, people need to do things in order to make a living.  During their lifetimes most working artists struggle constantly to keep money coming in. Yet when we look at the works of artists of the past, money and marketplace concerns tend to fade from the picture.

This is why I enjoyed reading Guy and Small’s Oscar Wilde’s Profession which presented him as a working writer.

“Wilde never formed a permanent association with any theatre or company,” the authors wrote.  “His basic problem, at least during the early part of his career, was that his books did not sell particularly well, and that successive publishers were understandably unwilling to continue to invest in an unsuccessful author. His problems with the theater were more basic: he found plays difficult to write, and some of the refusals he experienced were caused by his constitutional inability to meet contractual deadlines… Moreover, there is evidence that he was happy to tailor publications to the requirements of particular markets; Wilde was remarkably willing to take account of ‘public opinion,’ even if he was not always successful in pleasing it… Most importantly, we confirm the suspicions of some critics and theatre historians that Wilde’s career was substantially shaped by the hands of other professionals, from theatre managers, book designers and publishers to the new phenomenon of the literary agent.”

Although Wilde’s output was shaped by the need to make a living, when readers, biographers and scholars talk about his work, they discuss it as if he was entirely in charge of his literary destiny.  He expressed what he wanted to as a writer and a thinker.  The truth is more complex.  He expressed what he wanted to and was able to as a writer within the context of what was possible in his world both culturally and financially.

Now let’s consider his younger friend Lord Alfred Douglas. There is a common perception that the tragedy of Douglas’s life was that he cheated the world out of his poetry because he became so obsessed with setting the record straight about his relationship with Oscar Wilde. Lord Alfred Douglas wrote four autobiographical works, all of which focused to one degree or another on his ill-fated relationship with the playwright.

Even Douglas’s published correspondence with George Bernard Shaw has an undercurrent of Wilde, but this is partly because they were working on revising an Oscar Wilde biography during the correspondence. All of this creates an impression, especially so many years later, that Douglas never focused on anything else.

Indeed, he did spend a great deal of energy fighting what he saw as misconceptions about this formative experience, and he might have been able to put that energy to better literary use. But the sense that Douglas had no life outside the memory of Wilde is created, in part, by our own focus as an audience.

Douglas didn’t need an insane obsession to inspire him to write about Wilde. He wrote four books that dealt with his relationship with Oscar Wilde for a straightforward reason– it was what the public wanted to hear from him and what he could sell. He was a lord without money. He needed to make a living. These books got more attention than the others he wrote, celebrity memoir always sells better than sonnets.

Although we may encounter them all at once, the various books Douglas wrote about the relationship with Wilde spanned a thirty year period. The first was written when he was in his early forties. The last when he was 70 years old. Over time the poetry faded away, as most poetry does, but the juicy gossip still interests readers.

In his lifetime, Douglas published more than a dozen collections of poetry, satire and nonsense verse and The True History of Shakespeare’s Sonnets. When his writings for publications such as The Academy are counted, he was by any fair reckoning quite prolific.

Oscar Wilde wrote “The Importance of Being Earnest” in an attempt to get some fast cash to fund his expensive habits and to give him enough leisure to produce a serious, edgy work that he thought was more artistic.  (It was never finished.)

Lord Alfred Douglas thought he would be remembered to future generations for his poetry long after the scandals of his life were forgotten.

Are You a Failure and How Do You Know?

One of the441px-Leonardo_da_Vinci_025 most challenging things about being an artist (this is one of the major themes of my book Broke is Beautiful) is that the yardstick by which society tends to measure success seems not to apply.  That is to say, artists who measure their success in terms of money or social status s are likely to be miserable.

Money and artistic success simply do not go together like a horse and carriage.  Some rare artists achieve worldly success in their lifetimes, but not many.  If you read biographies of the writers, musicians and painters we most admire from the past, they are nearly always full of money struggles.  Some of the most renowned artists actually starved to death and even those who earned respect and support while they lived were often plagued by feelings of failure in direct proportion to their artistic ambitions.

Case in point, Leonardo Da Vinci, who is featured in the current Failure Magazine:

Author Ross King tells Failure that “It’s amazing — and poignant — to think that Leonardo did consider himself as something of a failure. He didn’t believe that he had achieved everything he might have done. His notebooks have a repeated refrain: ‘Tell me if I ever did a thing.’  We have to remember that when he died in 1519 the Mona Lisa and most of his other paintings were unknown to the world at large, that The Last Supper was already fading, and that his notebooks — with their studies of anatomy and flight — were unknown to everyone but a handful of his friends.”

This is the part of my article where the moral of the story should be.  Here’s the thing, I don’t know what the moral of this story is.  That your talents may be posthumously recognized is not a great deal of consolation when you’re trying to find something to eat.  How do you know if you are creating work that justifies putting up with reduced circumstances?  You don’t.  You never will.  It is a question of faith.

The only thing I can say is that in spite of all the social pressures to just give up these foolish arts dreams and do something practical, there are always people who refuse to listen, and we are all richer for it.

“The Poor”

An interesting thing happened a couple of years ago when my book Broke is Beautiful came out.  The book, about living a good life even if you don’t have money, generated a number of angry comments from people who said I was making light of being broke, that I didn’t know what it was like to really be broke.

At the time I was rolling pennies to buy ramen noodles, or hoping I could come up with enough change for a box of generic pop tarts at the dollar store.  I was turning down social invitations because I didn’t have enough gasoline to get there and back.  I had one pair of jeans with a hole in the knee and I wore them every day because I didn’t have money for another pair.  I skipped meals because I had nothing to eat.  I was broke.  In fact, I was officially poor.  If you were to take all of the people whose incomes fell below the poverty line that year, I was toward the low end of that!

I guess I didn’t sound like it to the people who left angry comments.  I had a book out, so I must be doing OK.  Poor people do not produce things, they don’t publish books, they are not articulate, educated, capable.  They don’t drop references to Shakespeare.  (Any writers out there will back me up on this: given the rather complex system of advances, royalties and so on, it is absolutely possible to have out a book that is getting some attention and to still not have enough to eat.)

Anyway, I couldn’t be a real poor person.  I am from the suburbs.  I have a college education.  I am white.  (According to a 2000 CBS News poll, only 18% of Americans know that most poor people are white.)

At least, I assume these were some of the things that convinced people I couldn’t know their pain.

As a “starving artist” I have lived below the poverty line many years.  The artist’s income goes up and down and I have better years and worse years.  Over all, there have been more of the not-so-much-money years than the flush ones.

This is one of the important things to bear in mind when thinking about “the poor.”  The poor are not those other guys.  They are not a social class.  They are not the same people from one year to another.  The poor, that is people who fall below the poverty line, are a diverse group of people who are in a particular situation.  There is a long post on the blog Your Life is a Gospel that shows all of the statistics.  Even though there may be a similar number of people in the category of “poor” each year, they are not the same individuals from year to year.  People lose jobs, have down turns in their small businesses, suffer medical problems and they fall below the line.  The next year their situation improves but someone else’s worsens.  For most people being poor is not who they are.  It is what is happening to them.

Still most people when they are in this situation do not claim the mantle of “poor.”  The poor are other people.  The poor are the ones who were born that way and stay that way.   The poor have to be other people, of course, because they are not like us.  They are lazy, less capable, they are the ones we help with our charity.  This mentality often keeps people from seeking the help they need lest they have to admit being “poor” and a “charity case.”

“I am a middle class person, I just happen to be having a rough time now.”

One of the things that I discovered while working on Broke is Beautiful is that people who have college educations are more likely than others to build up debts they can’t get on top of and to be hounded by creditors.  They don’t talk about it, and they feel great shame in their isolation.  Being hounded by creditors is supposed to happen to those other people– the poor ones. It becomes a cycle, they try to avoid anything that might harm their stellar credit.  They get loans to keep up appearances until they are so far under everything falls apart.

The idea that we are all part of the great “middle class” fudges a lot of real differences.  It means there is supposedly no difference between the guy on the factory floor and the guy in the management office.  Both are “middle class” people.  So what type of policies benefit the “middle class?”  The one that gives a better wage to the laborer or the one that keeps more of a profit for management? 

The sense that the poor are other people– a class of people who are different from us– affects how we think of the social safety net.  Various studies have found that the more ethnically homogenous a nation is, the more amenable people tend to be to social programs that benefit everyone.  They are more likely to think of the people who would benefit as being “like them.”  Whereas in countries with sizable ethnic minorities, people are more likely to think of social programs as helping “others”– those poor people.  (The stereotypical African-American welfare mother.)

I came across an article recently on the site Everyday Feminism that made the same argument that I did in Broke is BeautifulIt is time for the broke to come out of the closet.

Being honest about our needs is the only way we can stand up for ourselves.  It is important to let the world know that, indeed, the face of “poverty” includes educated, competent, creative people.  It includes hard working people.  It includes the risk takers who try to launch businesses, but fail.  It is not only the rich who are “risk takers,” and it is not only the wealthy who can claim to have among them the “best and brightest.”

“It’s particularly important that poor people who have some aspect of privilege – be it racial, gender, sexual, educational or otherwise – realize that their silence is a form of complicity that reinforces the lies about the poor used to justify the denial of their dignity,” wrote Jeff Nall in Everyday Feminism.  “The time has come for poor people to stop letting other people speak for, and about, them; to stop letting others define who they are.”

I recommend all the articles that you can find via the links in this article, but I will leave you with a quote of a more theological bent from Henri Nouwen:

“When we are not afraid to confess our own poverty, we will be able to be with other people in theirs… Just as we are inclined to ignore our own poverty, we are inclined to ignore others’. We prefer not to see people who are destitute, we do not like to look at people who are deformed or disabled, we avoid talking about people’s pains and sorrows, we stay away from brokenness, helplessness, and neediness. By this avoidance we might lose touch with the people through whom God is manifested to us. But when we have discovered God in our own poverty, we will lose our fear of the poor and go to them to meet God.”