Wednesday, September 18, 2002

How Do Clueless People Get Rich?

I'm getting lots of questions about how Rep. Woolsey's district in California can be awash in clueless rich people. I will confess, this is one of those depressing discoveries that I made living out there.

1. Not everyone that is clueless is stupid. There are people with strong technical skills who are otherwise surprisingly ignorant about how the real world works. My favorite was one guy that I used to work with. He is a very nice person (other than being a flaming liberal). He is also fabulously rich now, having made a few hundred million on one of the more successful telecom startups. I remember one day explaining that the only way to get the City of San Jose to tow an abandoned car when we lived there in the 1980s, was if someone set fire to it. Otherwise, the typical time for the city to tow an abandoned vehicle was 90-120 days. I would watch cars slowly lose first their wheels, then body panels, then engine parts, until sometimes, all that was left was a frame and scattered fragments. (Of course, sometimes it was just vandalized, and then eventually taken away.)

This very nice person had grown up in the Midwest. His only question was, "Why don't you just call the city?" Where he grew up, city government actually tried to do its job, and often did. The notion that city governments exist primarily for their own ends, was beyond him.

2. Some people that are clueless are stupid, and either inherit their wealth, or marry it. Others are not stupid, but so guilt-ridden about having grown up rich that they can't understand anything except through the narrow framework of their guilt.

3. There is a surprisingly entrepreneurial form of New Age irrationalism alive in Northern California. My favorite example of this was in the mid-1980s, when there was a brief movement called "Breathatarianism." The proponent claimed that food was not required to sustain life, and that the belief that it was required was just an illusion. Shortly after getting out of prison, he hooked up with a Marin County gal with a graduate degree who had just returned from pilgrimage to Nepal. She was taken with this new empowering philosophy, and within a few weeks, he was teaching weekend seminars at $250 a head titled, "Becoming Breathatarian." The local TV stations covered this, and they were swimming in money and new students.

This went forward very nicely, but eventually, the manager/intellectual pimp for this scam artist noticed that contrary to his claim that he had eaten nothing but air and water for 19 years, he was actually grabbing Barbara Ann sweet rolls on long car trips. She was horrified; these weren't even good whole wheat natural products! His rationalization to her was that they were so nutritionally deficient that they didn't really qualify as "food."

She kept her mouth shut for a few weeks, until she started hearing from students who were heading to tops of local mountains for a month to learn to conquer the illusion that they needed food. At this point, her conscience took precedence over her "relationship" with this con man, and she blew the whistle.

For other examples, read the Pacific Sun, the Marin County alternative weekly. While much of their coverage is the sort of left-wing politics you might expect in a wealthy area like this, the articles and ads make you realize that much of the political left at least operates on the same plane of existence as you and I. They aren't out getting their chakras tuned, or visiting their shaman. (Yes, Marin County has, or at least had a few years ago, a shamanistic marriage and family counselors association.) The movie Serial is a parody of Marin County, but it does capture much of the weirdness of the place the way it used to be.

Remember: if you start out with five million dollars after taxes, you shouldn't ever have to work again. Even at the current disappointing interest rates, if you invest that money in municipal bonds, because that is exempt from both federal income tax and your state's income tax, you will earn about $215,000 a year in net income, with almost no risk. Unless you live very lavishly, most people, even raising a family, will have trouble spending that interest each year.

If five million dollars seems like a lot of money--it's not in Sonoma and Marin Counties. Lots of people have net worths well above that range; I can think of five or six people that I know by first name (and vice versa) with net worths in the ten million and up range that live in Sonoma County. I understand that in Santa Clara County (Silicon Valley), it is very common for mortgage lenders to see loan applications with net worths exceeding five million dollars.

Just so no one gets the wrong impression: I'm not sour grapes (or at least not very sour). I worked for three startups, two of which were mildly successful, and one still owes me several weeks wages. I did okay, but I still have to work for a living.

UPDATE: Just so that there is no misunderstanding about this, let me emphasize that Sonoma County has lots of very rich people who are smart, concerned about their kids and the community in which they live, and are paying attention. A few of them (a very few of them) even see eye to eye with me on politics. They might even be a majority of the superrich that live there--but the clueless left-wing superrich stand out in my mind, because they are so frustrating, and because they played some part in making me unemployable when I promoted the idea in print that being fabulously wealthy includes a moral obligation to help those who are in need.

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