The Wealth Hoarders. Chuck Collins
can be scared. Please them enormously or scare them enormously, and one moonless night they will put their fingers to their lips, warning you not to make a sound. They will lead you through the dark to the widest, deepest river of wealth ever known to man. You’ll be shown your place on the riverbank, and handed a bucket all your own. Slurp as much as you want, but try to keep the racket of your slurping down. A poor man might hear.”
The vastness of the Money River is revealing itself to me. Like the mighty Charles and Mystic Rivers I see before me flowing into Boston Harbor, I now see the deep green waters of the Money River winding through Boston’s Financial District. And like the “No Dumping” notices along the Charles, the signs posted along its banks read, “Never Touch the Principal.”
“Chuck, our family office is not just about the money.” Dee adjusts a scarf around her neck that matches her earrings. “It’s about stewardship and passing on values.”
“How does it do that?” I am still thinking about Kurt Vonnegut’s “slurping lessons.”
“We do programs for your generation of family members. With wealth comes a responsibility to be active in the community, give to charity, and leave a legacy for the next generation. We’re in the business of training young adults to be good stewards.”
“That’s why I shouldn’t touch the principal?” I offer.
“Exactly,” said Dee, nodding “Do whatever you desire with the income – invest it in some cockamamie scheme or give it to your cause of the month. You can live lavishly on the income – or like a church mouse and donate your income to charity. But don’t selfishly deprive future generations by diminishing the principal.”
“Oh, there’s the selfish thing.” I wondered where it fitted in. I look at Dee closely, as she places her palms down on the conference room table. I respect her stewardship ethic and her authentic feeling of responsibility to future generations. I am attracted to the environmental sensibility I see in many wealthy Bostonians like Dee. I have hiked on trails established by “blue blood” institutions such as the Trustees of Reservations, Nature Conservancy and the Audubon Society. New England is blessed with such farsighted stewards and the lands they preserved decades ago.
Dee is civically engaged, serving on the boards of a number of organizations, including a service center for low-income women. She is educated and worldly. She recently traveled to Cairo and knows a great deal about Islam and antiquities. Her Beacon Hill house is stocked full of books and magazines like Harper’s and The Atlantic Monthly. She converses with me about slain Nicaraguan independence leader Augusto Sandino – a close friend of hers had interviewed him in the 1920s. She has had her own suffering and loss. Her husband died of cancer – and her grandson struggles with mental health. But she has a forward-moving attitude and talks about “aging with joy.” I have been reading the works of Dorothy Day, the founder of the Catholic Worker movement, and thought Dee would have cheered Day’s notion of “duty of delight.”
I envy aspects of her life, constantly surrounded by natural beauty, leisure time, and social connections. I imagine her relaxing on the porch of her rustic house on Nantucket, reading a book or watching the tide come in, chatting with John Kerry as he pedals by on his bicycle. Or presiding over a raucous backyard dinner table of relatives eating lobster and grilled summer vegetables. Once I spied her walking on the Charles River Esplanade with her grand-children, merrily telling them stories and picking up litter. But with all its attractiveness, I know her life is not for me.
Dee is part of a civically engaged elite – in her land conservation activities and community involvements. But the primary beneficiaries of her wealth legacy are mostly a tiny circle of blood relatives and there is no guarantee any of them will be as civic-minded as she is. She participates in an arrangement that perpetuates family wealth for a few and leaves a grossly unequal society for everyone else. I raise this concern, and she briskly dismisses it. “There is little we can do about that,” she says, clapping her hands together as if ridding them of dust. “We are responsible for our own backyard first.”
Dee demonstrates little apparent ambivalence about the mountain of wealth that she sits on. Most of what she possesses she does not consider privilege. In 1983, there is not a society-wide discussion about notions of race and class privilege. She does not believe there is any connection between an economic system that incrementally enlarges her wealth and advantages – and diminishes the security and opportunities of others. The road of her insatiable curiosity stops at the speed bump of these particular questions.
I will not follow Dee’s path as a philanthropist. She gives her “time, talent and treasure,” as they say at Trinity Church. But the donations of treasure come after the repairs and maintenance to the Beacon Hill house and the summerhouse on Nantucket and a bunch of other “fishing camps” and shoreline properties that “have claims upon her.” The charity comes after private-school tuitions for her grandchildren and various summer camps, years abroad and expensive vacations, and birthday presents. Each December, there are the maximum allowable tax-free gifts to multiple trust funds, carefully planned at the family office.
Eventually, charitable donations flow; first to overly endowed alma maters like Harvard University and obligatory artistic institutions like the Boston Symphony Orchestra. Then to the land conservancies to purchase holdings to buffer their country properties and the organizations upon whose boards she or her family members serve. Finally, after most of the mighty river has been siphoned away, a trickle flows to what Christians call the “corporal works of mercy” – feeding the hungry, sheltering the homeless, clothing the naked (Isaiah commanded these as well). To me, the payout doesn’t warrant all the time and talk of charity. The more I witness, the more the philanthropy appears as a salve for wealth advantage, a glaze to give a clay pot a glowing exterior. Dee has taught me something, but it isn’t the lesson of multi-generational stewardship she intended. By opening the door to her family office, she has given me an unusual view of the “river of money.” I am revolted by it. I want no part of this wealth preservation world.
A lifetime has passed since 1983 and my meetings with Dee. She has left this world. At her memorial service, I sit in the back of old Trinity Church, listening to her grandchildren tell their stories. I wish I could “ring her up” and ask her about her impressions of the way the world has changed. A few years after my visits with Dee at her family office, I gave the wealth in my name to several foundations that fund “change not charity.” Decades later, I have no regrets about this decision. Even without the money, I appreciate the ample inheritance I received of other intergenerational advantages, many of them hardwired into my life.2
My feelings about inherited wealth and philanthropy have only intensified over time, after four decades of surging income and wealth inequality. For twenty years, I’ve worked to defend the estate tax – the only US levy on the inherited wealth of multi-millionaires and billionaires. I’ve seen how philanthropy has becoming increasingly “top heavy,” dominated by larger mega-donors as donations from small donors decline. Most alarming, trillions of dollars are now vanishing into a hidden-wealth archipelago. With the help of an increasingly aggressive “Wealth Defense Industry,” vast amounts of treasure are being sequestered into dynastic trusts, anonymous companies, shell corporations, and offshore tax havens.
I recently read that there are an estimated 10,000 family offices globally, up from several hundred in Dee’s day. They manage the assets of the global super-wealthy, all with the primary mission of “wealth preservation” over multiple generations. These global rich are increasingly stateless, detaching their money from nation states and conventional representations of ownership in order to hide and preserve it. A global oligarchy is growing – and it does not bode well for everyone else and the planet. That is my motivation for this primer about the Wealth Defense Industry, or more accurately, the Dynasty Protection Racket.
Notes
1 1. The names of people in this section have been changed.
2 2. See my book, Collins, Born on Third Base: A One Percenter Makes the Case