Generosity and the $12,725 watch
I saw an ad for a $12,725 men's Swiss watch the other day. It was a beautiful piece of jewelry with a circle of 36 small diamonds around its bold, handsome face. It had all the fine details a watch could possibly have and, oh yes, it keeps accurate time.
The watch ad reminded me of Thorstein Veblen. Over a hundred years ago, Veblen, an American economist from Wisconsin (with Norwegian ancestry) wrote a book, "The Theory of the Leisure Class", and coined the expression "conspicuous consumption." He praised the engineers who make things and put them together but ridiculed the "false values" and social waste of the "leisure classes" and their showy approach to acquiring possessions for their appearance of extravagance to boost their stature. Although Veblen didn't talk about automobiles (because they hadn't been invented yet), the list of items for conspicuous consumption today would also include: homes, jewelry, clothes, yachts, ATVs and other assorted toys. Veblen believed that conspicuous consumption led to conspicuous waste -- which he detested.
All of us, even kids, are tempted by the pull of conspicuous consumption. Any time a teenager puts on a pair of designer jeans with a famous brand name or symbol showing, they're playing the game advertisers want us to play -- pride in our possessions.
We all think we know what we'd do if we won the lottery -- like get one of those $12,725 watches with a circle of diamonds and all the fine details. But the history of lottery winners is story after story of failure, disappointment, disaster and bankruptcy. Eighty percent of lottery winners declare bankruptcy within five years after their win. Evelyn Adams won the New Jersey lottery twice. She got over $5.4 million. But she was a big spender and she loved the slot machines. Today the money is all gone and she lives in a trailer. William "Bud" Post won $16.2 million in the Pennsylvania lottery and bought a car business and a restaurant. Today it's all gone and Post lives on $450 a month and food stamps.
But it doesn't have to be that way. Warren Buffett, age 79, is the third wealthiest person in the world, worth $47 billion. As a kid in Omaha, Neb., Buffett went door to door selling chewing gum, Coca Cola and weekly magazines. By the time he was in high school he was investing in the stock market, his first purchase being of Cities Service stock for himself and his sister. Buffett began his adult career as a stockbroker and investor. By 1962 he was a millionaire. Buffett and his wife bought a five bedroom stucco home in Omaha for $31,500 where he still lives with his second wife.
By 1990, Buffett was a billionaire but has always been known for his personal frugality. His salary is less than a school superintendent. He either drives his own car or takes the bus to get around. He doesn't carry a cell phone and doesn't have a computer on his desk. And he probably doesn't wear a $12,725 watch. No conspicuous consumption or conspicuous waste by Warren Buffett.
Buffett's children will inherit very little. He doesn't believe in passing wealth from one generation to another. He has pledged to give 99 percent of his money to philanthropic causes. In 2006 he gave $30 billion to the Bill and Melinda Gates Foundation. The Gates Foundation is dedicated to global health and development, which includes vaccinations for encephalitis and TB for poor children, the study of infectious and tropical diseases, AIDS research, business loans in developing countries, the development of higher grade crops, water, hygiene and sanitation, disaster relief and SAVE THE CHILDREN.
This article is not in praise of wealth, but of generosity. Be careful what you wish for, but if you hit the financial jackpot or win the lottery, don't rush out and buy a conspicuous $12,725 watch if you can hold yourself back. Instead, do something inconspicuous like buying a $25 watch and sending the other $12,700 to somebody who will spend it on vaccine for a bunch of kids somewhere who are going to get seriously sick unless you help.