Andrew Carnegie was once the richest man in the world. Coming from a poor background, he loved making money and he loved spending it. Yet he felt guilty sometimes about loving it so much. In December of 1868, at the age of 33, Carnegie sat at his desk at the St. Nicholas Hotel in New York and wrote a memo to himself. He had a net worth of $400,000 and received annual income in dividends of $50,000 from his holdings in sixteen companies. We quote:
“Beyond this never earn. Make no effort to increase fortune, but spend the surplus each year for benevolent purposes. Cast aside business forever except for others… Man must have an idol—the amassing of wealth is one of the worst species of idolatry—no idol more debasing than the worship of money… To continue much longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make more money in the shortest time, must degrade me beyond hope of permanent recovery.”
He vowed to retire in two years. But the lure of wealth proved too strong. By 1901, he was easily worth over $250 million.
His conscience never slept. In a famous article titled “The Gospel of Wealth” published in 1889, Carnegie expressed that the chief problem of the age was the proper administration of wealth, “so that the ties of brotherhood may still bind together the rich and poor in a harmonious relationship.” We excerpt as follows:
”This, then, is held to be the duty of the man of wealth: To consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer…in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community. The millionaire’s wealth was not his to spend, but his to wisely give away. Rich men should be thankful for one inestimable boon. They have it in their power during their lives to busy themselves in organizing benefactions from which the masses of their fellows will derive lasting advantage, and thus dignify their own lives.”
But how do you determine what’s “surplus” in today’s world?
As of last year, UBS estimates there are 2,325 billionaires around the world with a combined net worth of $7.3 trillion. The average person in this ultra affluent tier is 63 years old and has liquid holdings of $600 million. There is a wealth “ceiling” of $10 billion with 95% of the world’s billionaires worth between $1 billion and $10 billion. Crossing the $10 billion threshold has been particularly rare.
Based purely on subjective reasoning, we can probably all come to an agreement that anything above $1 billion represents a fair “surplus”. With interest rates at 2%, this would provide an annual income of $20 million. The world would still have 2,325 billionaires and nearly $5 trillion swept aside
to spend for “benevolent purposes”.
The point I’m trying to make here is really simple: There is enough money in this world to solve all of our problems. It’s just that the money doesn’t flow to all the right places. There is no shortage of food either. No one should sleep hungry. Yet, food just doesn’t pass on to where it’s needed most. As Gandhi once said, the earth provides enough to satisfy every man’s need, but not every man’s greed.
How do we unclog this world?
A new Oxfam study found that—based on current trends—by next year, 1% of the world’s population will own more wealth than the other 99%. According to the report, 80 people now own the same amount of wealth as more than 3.5 billion people, down from 388 in 2010. This has sparked a futile debate on rising global inequality and on ways to correct such imbalances. I for one don’t believe in government’s interjection or redistributive taxation. The laws of distribution should be as free as the laws of accumulation. We just need to break down our ego-shell and awaken our conscience.
Peter Buffett, Warren Buffett’s son, wrote an op-ed for the New York Times in June of 2013 titled “The Charitable-Industrial Complex”. We quote:
“As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to “give back.” It’s what I would call “conscience laundering”—feeling better about about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity. But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over. Nearly every time someone feels better by doing good, on the other side of the world (or street), someone else is further locked into a system that will not allow the true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life.”
Excluding future pledges, billionaires, on average, donate just over $100 million cumulatively over their lifetimes. This is equivalent to 3% of their net worth. Why can’t we give as extravagantly as we spend? And why do we wait till the end of our lives? As Peter Tunney says, “THE TIME IS ALWAYS NOW”. I truly believe (excessive) savings weakens the soul.
We marvel at the “giving pledge” of billionaires, and yet, it is those who have little and give it all who are the true believers in the bounty of life. As per Khalil Gibran, their coffer is never empty. You often say, “I would give, but only to the deserving… The trees in your orchard say not so, nor the flocks in your pasture. They give that they may live, for to withhold is to perish. Surely he who is worthy to receive his days and his nights, is worthy of all else from you.”
I have come to realize that my earnings are not just my own. Mixed in my purse is the right of many others who earn too little or nothing at all. We are all but trustees for the poor and dispossessed. This is the real test for mankind. The river of money should always flow, with no forcing, and no holding back. What’s your surplus?