Hoarders
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Audio Recording by George Hahn
Throughout human history, if we had access to more than we needed, we kept the excess to survive in leaner times. Having surplus items also signaled wealth and desirability as a mate, and key rituals often depended on precious items being stored safely. Our ability to store crops was key to developing an agricultural economy. Artisanal objects, to be preserved for centuries, made us feel closer to God — the most beautiful items were kept in houses of worship, which then became stores of value. The industrial age, and ensuing mass production, created the mother of all good problems, which soon became just a problem: superabundance. Our instincts have not kept pace with productivity or processing power. We not only gorge, we hoard.
Failure to Launch
It’s incredibly challenging to ascend through the soupy atmosphere of youth, and sate our desire for things and experiences, when an entire economy and society runs on one incentive: more. It’s a cliché, but true: The first million (i.e., launch) is the hardest and most dangerous. The Falcon 9 Heavy rocket, which travels thousands of miles, burns a third of its propellant in the first mile. Most folks who reach orbit keep the engines roaring. They aspire to travel from multi-millionaire to billionaire to Bezos. Also, it gets easier once you’re in space — a touch of thrust/effort moves you thousands of miles vs. feet. Capitalism favors capital, so more quickly becomes irresistible. Unable to turn off the boosters, many überwealthy people become hoarders, obtaining more for no other purpose than amassing more.
Exhale
My father and mother were never more than two degrees of separation away from economic anxiety. Yes, my mom was disappointed that my dad left her for another woman, but her financial fear was worse. How would she take care of me, and herself, by herself? I never realized, and most people never will, how much economic anxiety we carry until the weight has been lifted. Economic security brought something else I did not anticipate: a multiyear exhale.
Not having been able to afford a home nurse when my mom was going through chemo, the feeling of failure when I later lost my business — the same month my oldest son was born — was acute. I still register an ache in the small of my back remembering those moments. It’s unacceptable, full stop, that an economy where one company (NVDA) can add the GDP of Australia in one calendar month also has large swaths of the population who live with this profound anxiety. What is the ratio of the explosion of billionaires to deaths of despair in America? My gut tells me it’s positive, when any decent society would demand the size of these cohorts be inversely correlated.
This anxiety is largely absent in other, less wealthy countries. Incumbents will make excuses that these countries sit on oil or are more homogenous. Pro tip: That’s a bullshit narrative meant to wallpaper over just how fucking outrageous it is that six people control more wealth than the bottom half of America, and pay an average tax rate of 6%. Also, we produce more oil than any country in the world. But I digress.
Spent
It’s fashionable to disdain spending, but spending puts money back into the economy, often at points with the most impact, generating wages and opportunities. I don’t understand people who are wealthy and don’t spend their money. Being social creates jobs for waiters, bartenders, and busboys. All jobs I had in college: A busy night at the Westwood Marquis, Chart House restaurant, or Monty’s Steakhouse (ask your parents if they lived in West LA in the nineties) could change my life that week. It takes hundreds of hands to make a new car or refurbish a vacation home. This isn’t an argument for trickle-down economics — we don’t need to put more money in the pockets of the wealthy. But the money they have is better spent in the economy than hoarded in the market. Consumer spending makes up two-thirds of economic activity in the U.S., and the top fifth of households by income account for nearly half of that spending. A million dollars in entertainment spending supports 6.5 jobs directly and another 22.5 indirectly.
Eudaimonia
Modern research confirms Aristotle. Long-term, sustainable happiness doesn’t come from wealth, but from relationships with others. The real gift of wealth is being freed from the economic anxiety that can stress nearly every relationship. Economic insecurity can rob us of happiness, but wealth offers diminishing returns. The lifestyle and entertainment opportunities available to someone with $10 million in assets differ in modest degree from those available to someone with $100 million. Going from $100 million to $1 billion is likely a wash. You can buy a football team, but you’ll also need private security. I know many centi-millionaires and a few billionaires, and I have witnessed no evidence, scientific or anecdotal, that wealth beyond relief from economic anxiety, and the ability to do wonderful things with your family, results in any incremental increases in happiness. If there’s nothing to be gained above a certain amount, and nearly everything to buttress low-income households … then isn’t a highly progressive tax policy, at the very top income levels, a no-brainer?
Give It Away
One form of spending that’s proven to generate reward and happiness is giving. The more you spend on others, the greater your increase in happiness. In fact, giving to others provides both passing pleasure and long-term happiness, something borne out in numerous studies: MRI scans show that giving money to a food bank lights up the same pleasure center in our brain that responds to cocaine. People who do small acts of kindness for strangers report being happier for weeks afterward. Volunteering is correlated with a stronger sense of well-being. Giving money away has been shown to have a similar correlation with happiness as making more of it. In sum, if/when you hit your number (good problem), why wouldn’t you spend or give away your incremental wealth? Why wouldn’t we pursue real wealth — happiness, a sense of belonging, being part of something bigger than ourselves?
Virtue vs. Signaling
Any philanthropic effort is probably better than none at all, but not all giving is created equal. There’s too much tech- and finance-bro PR boosting, and not enough actual giving.
Exhibit A: In 2010, ambitious Newark mayor Cory Booker wanted to attract $200 million to fix Newark’s corrupt and broken public school system. He convinced Mark Zuckerberg to pledge $100 million, and investor Bill Ackman to add $25 million. Then he, Zuck, and Governor Chris Christie all went on Oprah to announce their grand plan. After the show aired, Zuck went back to depressing teens and coarsening our discourse, Christie became a full-time presidential candidate, and Booker rode the attention to D.C. The $200 million disappeared into the same corrupt and broken school system without a trace. Were they wrong to invest in Newark’s schools? No, just not effective. Without a sustained, structural investment in infrastructure, money from the wealthy is often just a sugarhigh.
Exhibit B: Far too much billionaire philanthropy isn’t giving, but a 12-carat misdirection: shuffling money to avoid taxes and sustain dynasties. Forty-one percent of giving from the ultra-wealthy goes to private foundations and donor-advised funds. These organizations pay board members, consultants, and others, donate money to one another, and may never plant one tree or dig one well. Many are warehouses for money to grow tax free, in effect subsidizing billionaire investing with taxpayer money. The super-wealthy have weaponized the tax code to hoard wealth and then take the moral high ground with philanthropy that is camouflage for taxes owed. For every dollar a billionaire donates to charity, the government loses 74¢ in revenue.
Exhibit C: The Giving Pledge is a promise to give the majority of your wealth away by the time you die. The Pledge receives a lot of press. Bill Gates and Warren Buffet introduced it in an effort to spur billionaire giving above the anemic 10% that’s been the norm. The good it has done, however, is dwarfed by its promise and PR. “Giving” excludes political donations, but that’s about it, and notably permits the same private foundations that billionaires have long used to avoid actually giving anyone else a dime. There’s an organization behind the Pledge that coordinates events and conversations between members, but I believe this has (mostly) been window dressing, obscuring an obscene level of income inequality that runs unfettered. Gates and Buffet are richer than when they started giving; the 73 members of the Pledge, who were all billionaires in 2010, have tripled their collective wealth in the past decade. Wouldn’t a more apt name be “the Hoarding Pledge”?
Her
I have written before about MacKenzie Scott, who practices a below-the-radar approach to giving that is inspiring. Operating with a small team, she vets possible recipients quietly, often without their knowledge, and makes sizable grants with no strings attached, no PR fanfare, nor any demand for input on issues she has no domain expertise in. She’d given nearly $2 billion before making any public statement, and has given away $14 billion to date. Her fellow PNW mega-billionaire, Melinda French Gates, left the Gates Foundation last month to focus her philanthropy on organizations working on behalf of women and families, and she’s already announced $1 billion in gifts spread across dozens of organizations.
There’s more than meets the eye here. Evolutionary theory suggests kin selection and inclusive fitness comes more naturally for women, who are raised to be more empathetic and have an easier time forming social bonds. Women are also socialized to be more nurturing, cooperative, and community-oriented. The previous sentence is a decent disarticulation of generosity. Women develop a desire to help others without personal recognition. Eighty-five percent of charitable giving decisions in affluent households are made or influenced by a woman. In sum, women give differently. There’s more emphasis on the giving part.
Number
I hit my “number” almost a decade ago. I purposefully paused and spent a great deal of time and consciousness on erecting scaffolding to update/temper my instinct to acquire more wealth. I decided I would spend a great deal of money on experiences with my family or services that gave me more time to spend with them and my friends. I likely only have a third of my (chronological) life left, but I’m intent on living 4/3 of my life in that remaining time. Meaning, I want to have a series of experiences that make me feel closer to family and friends and squeeze as much juice from this 7 continent ellipsoid as possible.
After molesting the Earth for 30 years for business, it became obvious that staying in the most beautiful places, in the most iconic cities meant nothing when I was there alone. The previous sentence could also describe my thirties. It’s as if that decade never happened, as I was mostly alone. Another observation I’ve made roaming Terra is that the U.S. is the best place to make money and Europe the best place to spend it — one of the reasons we moved to London. In addition, I have a self-imposed tax of 100%. Each year, I add up my spending and give that same amount, or more, away. The surprise, for me, around giving is how masculine it makes me feel. I feel my strength and skills are protecting and providing.
Hoarders
The hoarding I’ve described above is relevant to only a small percentage of the population. What is more prevalent is the hoarding of goodwill. Each of us has wealth in the form of good intentions, positive gestures, and comity toward others. Do you hoard this goodwill? The first 40 years of my life I was cheap with my emotions, not telling people how impressive they were or how much I admired and cared about them. This is the real environmental waste in our society: possessing the resources to help people feel better about themselves and not sharing that capital. After finishing this sentence, I am going to clear my mind and wish you well. I want you to be happy and prosperous. I (really) do wish you well. And there’s no reason to hoard that sentiment.
Life is so rich,
P.S. On the Prof G Pod this week I spoke with Jessica Tarlov about Trump’s conviction and what it means for American politics. Listen here.
P.P.S. Most people aren’t using AI for strategy — and they should be. In July only, you can take Section’s AI for Strategic Decision-Making workshop for free. Sign up here.
Thanks from Korea. I really impressed with the idea and writing.
Luke 12:13-21, parable at 16-21, and Luke 12:22-59. Same idea.
No one’s curious what Scott’s number is?
He’s mentioned this before in podcasts – US$100 million
Love From India. Every new article is a revelation.
How can I learn to write like you?
After many years of reading Prof G posts, this is clearly a TOP 5%-er.
Thank you, thank you, thank you.
With the secondary market weakening, we’re seeing a trend towards donating wine collections to charity auctions after doc tells you to stop drinking. Traditionally you’ve paid for storage, experts to evaluate the wine and ensure provenance, intermediaries to piecemeal through the collection and to judge what is worth selling and what is only worthy of the kitchen sink. The trend now is to get as high as a valuation as possible for your collection and to dump it on a charity auction, especially true as most wine collectors do not have extensive knowledge of the domaine and are pretty bad at seperating the romance of wine with which wines/vintages/regions are truly ageworthy and investment grade and will appreciate in relation to the cost of storing and insuring the wine over time. Thus it’s better to dump it all, the good and the bad, on the charity after you’ve paid a broker a few hundred bucks and maybe tipped him a bottle of Burgundy for a unrealistic valuation. I’d assume this is the same in the art world, where at least the good donated has the advantage of being a durable rather than consumable product. We had one customer that bought most of the collection on his expense account to entertain clients, and then didn’t the wine just made it to his cellar. Lets call most of this what it is – fraud which has become culturally acceptable by the top echelon of society.
If you haven’t already, I recommend visiting the Happiness Museum in Copenhagen. While listening to the reading of this post my mind went directly back there. Small but mighty (set in the garden level of a non-descript building), it opened my mind to a different view of the world and life. It explores the nature and sources of happiness. Lots of data to back it all up. Just a short flight from London, Scott!
While I appreciate your sentiments, giving the gov’t more money to “redistribute” is an awful idea. Your example of the Jersey school system is repeated throughout the country and underscores my point. We spend immense amounts of money on public education and the end product is getting worse , not better.
Prof G poet and philosopher extraordinaire. The only premise I disagree with is the idea that we have to rely on philanthropy to take care of our most needy. Shouldn’t our government do that? I’m weary of the noblesse oblige approach we take so the wealthy can feel good about giving. Let’s create real social change that doesn’t rely on the ultra wealthy.
As a post Christian atheist not believing in the soul or spiritual rejuvenation
I now pledge allegiance, for the time being, to Prof G
I’m a fellow American currently living in the old world – Switzerland to be exact. There are a few things living abroad has illuminated about our shared homeland: 1) There is one prayer we Americans sing together in unison, “more”. It is both our strength and our downfall. 2) Being in a land that lives aligned with values I hold dearest – safety, health, prosperity – is wonderful but nothing is better than being near my loved ones who are largely back in the US. 3) It is always a good time to state my goodwill. Assuming that others know my good intentions is silly.
Thank you for the work you do to illuminate some of the key challenges we face as human beings and as Americans. You make it look easy, but I know it is not.
PS. Go Bruins! Class of ’98 here and a frequenter of Monty’s, though as a poor college student I was only good for a shared Long Island iced tea (strong but expensive) and fun on the dance floor.
Wow! That last paragraph. You’re in a writing groove!
This was a very meaningful episode to me. As a kid when adults would inevitably ask what I wanted to be when I grew up, I replied “a philanthropist,” to their amusement. Because where would a southern girl ever get that kind of money. I so appreciate the ideas you present on this and your other podcasts. Even the silly man jokes. ✌️
I dunno.
You say on the one hand that a progressive tax is a “no brainer”, but then you illustrate how $200 million poured into the Newark Public School system evaporated, and assume it was doomed to fail because it was a “sugar high” than to let the evidence speak for itself: our public institutions that the lower earners of society rely on are broken, and throwing money at them doesn’t appear to fix the problem.
Scott, if you haven’t already, check out Chris Anderson’s new book, Infectious Generosity. He’d be a great guest for Pivot. He’s helped me rethink “quiet,” ego-free giving/spending and how to be thoughtfully public about it to help inspire others to join in.
Great article. Giving back w time and treasure simply makes for a great life. Hoarding is an illusion that we should be smart about
Sometimes I agree with you. Sometimes I don’t. But this is simply brilliant. Thank you.
“Growth for the sake of growth is the ideology of the cancer cell.”
-Edward Abbey
The last three minutes of Hoarders — way to make me cry, Prof G.
The road is paved with good intentions. Scott is well intentioned and talks a good talk but his solutions are empty.
Government has never been a good steward of capital as it is rife with waste, inefficiency and corruption and capital is mis-allocated because there are no market forces providing feedback. Government employees serve their administrator not their customers- a flawed framework.
The best way to help those less fortunate is by providing the tools to improve one’s lot. Money should be focused on education and trade schools and not in such a way that they raise the cost of education, provide useless skills, and burden our youth with massive debt while increasing the salaries of professors and the college endowments. Such retarded outcomes have been created by government sponsored student loan programs meant to help those in need. Good grief!
The simple adage “you teach a man to fish and he can eat for life” will provide a much better outcome than stealing from those with more to give to those with less.
It’s also disingenuous to conflate wealth with income and misrepresent the tax rate of the super rich. They do not pay a 6% tax rate and we do not have a wealth tax.
Very interesting and uplifting article. Revelation of sorts. So different from our experience in Nigeria/Africa where the anxiety of living from day to day goes on while pernicious politicians ravage the commonwealth. Capitalism has become the catalyst for corruption amongst politicians in government. Giving is absent from the lexicon of corrupt ruling class who continually stagnate the economy through selfish and clueless policies while they hoard their loot in the developed countries.
You forgot to mention the fact the billionaires avoid paying tax by borrowing tens of millions from banks by pledging their stock. this allows them to live like kings w/o paying tax. something wrong with this no? As for THE Number, I just hit it, even though stopped working 10 years ago, I had a stream of income since then and was a little short but sold my house so I got there. I gave up living in US 10 years ago too. I have no kids, so set up a charitable trust upon my death so my nest egg, if it throws off enough income, like 5% a year, can give mid six figures a year to charity and never have the principal decline. it could last in perpetuity! I want my nephews to run it so as to learn about philanthropy and investing. yet my brother, their dad, told me what i had done was stupid. said, annoyed, if you want to give it all away do it when you die. Of course he is a Rep. and Trump supporter. Somehow, it didn’t surprise me.
Scott, this is a great article, as always.
But the pie chart of personal consumption vs. GDP is messed up. It makes you believe the US GDP is over $100T. That would be interesting!
Obviously, the whole circle should add to about $29T (19+5+5).
I love your writing! If I could say what I thought, I would say it exactly the way you write it.!
And I used to take my parents to Monty’s all the time in the Woodland Hills ! One of my favorite restaurants with so many fond memories!
Now I live in The Woodlands Texas and I miss those days tremendously🙏❤️
Although I’ve been aware of how the billionaire class perpetuates its control of enormous wealth by avoiding inheritance taxes through the use of philanthropic foundations, this is the first someone with credibility like Galloway has spotlighted the issue. The most effective way to end this practice is to simply change the US Tax Code and put a life time limit on a couple funding a philanthropic foundation of, say, $50 million. The remainder of their estate would be subjected to the full inheritance tax rate of 40% (or higher in the case of billionaires) upon their death.
Hi Scott. I am curious to know if there is a difference between happiness when income is generated by assets/wealth when financially independent versus income generated through labor. I assume there is a big difference here as when people are independent without work that is much more freeing than when they are still under a yolk no matter the income. Any thoughts
god i love these pieces. i feel like you are one of the only people i read who doesn’t want to burn down the entire system in a fit of rage, but can still passionately acknowledge and confront the shameful inequities and dehumanization we’ve created for outrselves and each other. keep going! start a school!
I went to post my comment and your AI accused me of having posted something similar in yhe past and wouldn’t let me post. Are you serious? If redundancy were eliminated in print media and podcasts, 95% of all opinion writers and podcasters would be out of a job. Fox News and MSNBC are thriving tautologies but I can’t post something similar to what I’ve said before to hammer a point home? Sorry, but this goes against the generosity of spirit you so often talk about and I appreciate.
Good read but I think your pie chart is off.
Donations are not really that good since they direct the money to personal interests of the rich rather than to the real priorities of society. However a free society must allow people to do whatever they like with their own money (as long as it’s legal)
What a free society must not allow is for rich people to donate other people’s money to their pet projects.
Allowing ANY tax deductions, on ANY contribution is in effect just that.
The article mentions 74 cents of tax lost on any contribution. There is no calculation that shows it but there are no doubt some substantial tax losses. Every cent of such losses is taking money from others and directing it towards some rich guy’s whims.
Spending for public goods should be left to elected officials and professionals.
Bezos and Zuckerberg are probably very smart people but they have minimal qualifications in the areas where they send their money.
You left so did I but my heart aches. It is hard to see what’s happening in our America today and not feel depressed. I won’t go back until we right the ship with leaders who can act as role models. That its, until a woman is president. I live a simple life in an Asian country where most people, prepared to endure the next typhoon, are happy to be able to bring their family at McDonald’s. What calamity has visited thee America?
We make a living by what we get, but we make a life by what we give.
Churchill
Really good to come across the writing of an economist who has experience of a spectrum of personal economic situations and experiences. It makes for a thoughtful and considered read. Much appreciated.
I like reading you, Scott, because you challenge some of my assumptions. Can you please further challenge my assumption that higher taxes will not directly lead to less financial anxiety for people on the margins . . . because the government is not a good steward of resources? You pointed this out with the Newark school system example. Perhaps the ideal is the Gates’ eradication of polio – maybe the solution instead of taxation is public encouragement/pressure to pick a problem and solve it. As much people seem to dislike Jeff Bezos, I believe that if he decided to personally solve healthcare in the US with a market solution, it would happen (not the joint deal he did with Berkshire Hathaway to reduce Amazon costs, an actual permanent solution).
The government system of the U.S. is really a Democratic Plutocracy. Unfortunately there are a number of plutocrats whose ethics, morals, and sense of what is legal strays a long way away from what is good for the life style of humankind. It is my experience that most of the business owners in the U.S. are pretty good people and support what is best for all their stakeholders. I don’t begrudge their making a lot of money if they do it while taking care of others.
So well written, and forthright as usual, though you did conflate Income and Wealth. If we’re serious about meaningfully changing government funding from individuals, we’ll have to move from an approach solely based on income to one that also considers Wealth – which is where the real money resides. Cheers!
Great message Scott. This is so needed, especially for us men. You are right our women come by this much more naturally. We need to work on it. Thanks for the reminder. And, thanks for the excellent, concise summary of the situation around giving. Disturbing, not surprising.
Perceptions are seldom accurate. Giving comes in many forms and requires attention and thought, but that is just what yields the benefits. Thank you.
I have been thinking this for years and am so happy to read such a well thought out piece.
The question I have always had is that any one of these bazillionairs could pick one world problem and fix it. That might even inspire others of them to do same. Now that would be a good use of funds and quite the legacy. Solve problems, create jobs, raise living standards…it’s all doable with the resources that as Scott says are being horded.
I do remember years ago when I heard that Paul Allen bought a submarine which I’m sure was purchased because he ran out of novel things to buy.
I am sorry to say I only discovered Scott recently. This was my first news letter. WOW! Hitting the nail on the head! I feel like I have found someone else ‘who gets it’. Ok, on the downside maybe I’m just reinforcing my bubble, but at least I’m aware of that issue. Looking forward to more of these.
Scott Galloway’s humanity is one which is very developed.. Not only she intelligent, he also manifests the characteristics of a very kind and compassionate human being.. His sensitivity to those who are disadvantaged is manifested in all his letters.. I love his sentiments and values..
What a great example he must be as a Professor to his students. I am devoted to reading ghis letter, as well as hearing him on Pivot with Kara Swisher.. Not only is he demonstrably a good man, he also has a sense of humour .
Doug Farr told me to be strategic, not just beneficial. It’s beneficial to build one house for one family. It’s strategic to get city policy changed so that many affordable housing units of all type/sizes get built.
Thank you, and I agree income and wealth tax codes need revisions.
We need a Dawg-Ramit Sethi Summit. He’s been doing the Lord’s work for years about how wealth is utterly uncorrelated to how you feel about yourself.
Whoever can put together a nationwide network of therapy practices devoted to people’s scarcity mindset regarding money would do more good for this country than any politician, tech CEO, or entertainer ever could.
You miss a few points in this one:
1) Conflating ‘wealth’ with ‘income’. Some billionaires have a 6% income tax rate yet have billions in wealth. It’s 2 completely different topics that have nothing to do with each other – so why even mention them in the same sentence? Should people and companies be taxed on assets and not income? When a billionaire sells some of those billions in shares and still pays 6% tax rate, then let me know. Does it seem “unfair” they are allowed to have assets increase in value without tax? If so, then you should surely also think it’s unfair for the masses to have their homes and retirement accounts (and even cars during Covid!) soar in value without being taxed. It would be a logistical nightmare to tax the change in assets’ value – and the question of “what do you do when values drop and never recover? Give a refund?”.
2) You seem to suggest that a billionaire who has their wealth directly tied to a specific company should not want to increase their net worth. Solutions? A) they have the company quit innovating and growing, or B) they sell their shares for no other reason than to keep people like you happy so their net worth stops growing and some people won’t have anything to be envious of. A) is ridiculous: it stops job growth directly (hiring people) and indirectly (building/remodeling spaces, buying goods from suppliers, offering lower prices and/or better selections). B) is just as strange.
Bravo. Why are you the only one here stating the obvious?
“Happiness begins where selfishness ends.”
– John Wooden
You missed the movement of money to fake churches that create tax free wealth.
I read and listen to your comments ( Pivot) and I am so impressed by how spot on you are about the corrosiveness of social media and of wealth in this country and our sham of a tax code. But you have a giant blind spot (IMHO) when it comes to global degradation and climate change. I have heard you argue for more growth in this country while also listening to your tales of travel and consumption. Scott, we need less growth and less consumption. The great challenge of the second half of this century is going to be figuring out how to achieve this in a way that doesn’t upend humanity. If we don’t, the Earth will upend humanity for us.
A thoughtful article, for sure. However, I think Aristotle was pretty clear that happiness is the result of “doing what one does best, as best as one can.” (The principle of purpose or, “telos.”) In a way, this could argue that hoarders are among the happy, if this is what they do best!
You missed the movement of money to fake churches that create tax free wealth.
Thanks
Again…thanks.