Thursday, August 02, 2007
"Take dead aim on the rich boys." - Herman Blume, in a speech made to the students of Rushmore Academy, 1998.
Time to take a little time out from the endless coverage of the recent credit market debacle and focus a bit on personal wealth. Roll 'em...
In a recent WSJ Wealth Report post, writer Robert Frank wonders if rich kids really do have it all.
After profiling the attitudes of the nouveaux riches' young heirs at a Financial Skills Retreat camp, Frank is left with the impression that few of the youth surveyed will go on to grow their wealth or join the ranks of the next generation's business and investment moguls.
Overall, he is left unimpressed by their knowledge and skills (which he finds lacking), and finds their "bubble of privilege" lifestyle a likely drag on their future competitiveness.
From Robert Franks' "Wealth Report" post, "Why Rich Kids Don't Stay Rich".
My conclusion is that despite all their supposed advantages, today’s rich kids have grown up in such bubbles of privilege that they’re not prepared for today’s increasingly competitive job market. They don’t make good investors, they don’t compete well for the top jobs, and they’re not hungry for success like kids who grow up in middle-class homes can be.
Eventually, I argue, their money will run out. And much of the inherited wealth in America will flow back to people who actually earn it — as it has throughout history. This is what makes wealth in America dynamic, rather than dynastic.
There are a few interesting comments sprinkled throughout in the reactions to Frank's post. I think the one line that it sums up (in a "what did you expect?" sort of way) is, "shirtsleeves to shirtsleeves in three generations".
If family money and social position are to be smoothly handed down to the next generation, it seems that they must be accompanied by a simultaneous and successful transmission of core values; among them, modesty and discretion.
This is easier said than done. After all, the Paris Hiltons of the world are far more visible (and influential?) than the more low-key and unostentatious young heirs.
There are very few families as long-lived as the Medicis and the Pamphilis. Most will probably break up or squander their wealth within a few generations, long-lived family foundations aside. Taking the great sweep of history, this seems part of the natural order.
In the meantime, "take dead aim on the rich boys".