Cheap billionaires
Forbes has a slideshow of billionaire cheapskates who drive old cars, fly economy and stay in budget hotels:
Link (via Digg)Ingvar Kamprad & Family
$33 billion
Country: Sweden
Ikea's pennywise founder is famous for being cheap. He flies coach, drives a 1993 Volvo and often dines at lower-tier restaurants. He also reportedly furnishes his home with Ikea's affordable merchandise. Kamprad was recently quoted as saying that the only luxuries he splurges on are the occasional upscale cravat and Swedish fish roe.
(Image credit: Ikea, a Creative Commons Attribution only licensed photo from Seth W's photostream)
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Why are these guys being called out as cheapskates? Would they be better people if they spent their money on a bunch of useless crap? Maybe part of the reason they are rich is because they saw the value of saving money instead of spending it?
Well, if I had billions of dollars I sure wouldn't fly economy, I'll tell you that much. I don't know many people who would willingly submit to that.
And I'd have to be eating out of the garbage before I'd decide it was okay to give myself haircuts. It almost seems like these guys have adopted stinginess as a kind of hobby.
There appears to be a bug in the posting system. I was logged in, posted a comment, saved it, and was told anonymous replies could take a very long time to be posted. So here I go from scratch...
Articles like the one in Forbes are typical. They point out eccentricities without mentioning how much these same people donate to charities and other philanthropic causes.
Not everyone needs bling to prove their self-worth. Sometimes just working hard and living ethically is enough. Too bad more people don't feel the same way.
I think those miserly magnates should be applauded! There's nothing worse than a rich person who goes out of their way to demonstrate how rich and important they are.
- "He flies coach". Yes, and when travelling (making deals in Russia for Ikea) he rents a minivan and travels with his interpreter and staff (1), staying at what amounts to Holiday Inn. That's what he's "always done".
- "drives a 1993 Volvo". Yes, from the heydays of ugly Volvos. Which, I suppose, makes him even more adorable.
- "often dines at lower-tier restaurants". He's from the southeast of Sweden. We're stereotyped to be 1) modest 2) entrepreneurial 2) thrifty. He's the proto-"smålänning".
To each there own. If nothing else, this is a nice thing to hear about when the media is flooded by people with marginal wealth, by comparison, who can't even handle or do anything useful with the handful of millions they have.
It makes me wonder what having a billion dollars would actually feel like. The number and value is so abstract or unreal that it wouldn't feel like wealth. :S
I can understand where these people are coming from. I was raised in a household where in the early years, the money for the next meal was always in question and luxuries were limited to home-baked treats from Granny.
Now at the age of 19 we're in a much more stable situation at home but I'm at university and doing my very utmost to live off the student loan and my own scraped together cash after a public school education (which I maintain is far better than private.) If I was handed a large sum of cash, the last thing on my mind would be to go splurge it on a car or something ridiculous. "How can I make this last?" would be the only question on my mind.
On the other side, flying economy is a cruel and unusual punishment for yourself when the cost of first or business class isn't an issue to you at all.
Shame on these billionaires. SHAME SHAME SHAME!!! Where are the giant flying zeppelins with glass domes on top? Where are the private islands stocked with european uber babes and beer volcanoes and monkey butlers? Some people have no idea how to spend money.
This explains why some of the richest people are the worst tippers. They did not get rich by being generous.
Tipping waiters is very much an American phenomenon. If a wealthy European executive doesn't tip you well, it's probably because your provided average service, and because (s)he assumes that you're making a decent wage on your job (which is indeed the case for Waiters elsewhere in the world).
Although there's a fine line between thriftiness and stinginess, I have enormous amounts of respect for the billionaires who don't squander their money away on status symbols, expensive cars, massive houses, etc., and choose to live modestly instead.
I have actually noticed that the truly wealthy people tend to spend considerably less on frivolous luxury items than the middle classes. Just look at the explosion of uber-expensive luxury brands in the US over the past few years.
So he gives all his money away to charity then? Because if you don't spend it, and you don't give it away, what else can you do with money?
"...he splurges on...the occasional upscale cravat..."
Who the hell wears cravats anymore?
IKEA is owned by a Dutch charitable foundation called SIF which Mr Krampad set up in 1982. The foundation pays zero taxes and so far has paid out $1.7M to the Lund Institute of Technology. The whole scheme stinks. See http://www.evb.ch/cm_data/Ikea_e.pdf
Terry Pratchett made the point (in Men at Arms, I think) that at least some rich people get and stay that way because they buy stuff that lasts, and then they make it last. He was talking about old money, but it applies to these guys as well. Warren Buffett's $31,500 (in Fifties dollars) house is an amusing contrast to Bill Gates' $125 million geek palace.
Some of their habits do seem a little over the top--hell yes, I'd travel first class if I could afford it--but they're still much better than the nouveau riche with their million-dollar cars and $25,000 desserts, although I do have to admit that flash-in-the-pan pop stars and dot-bomb paper millionaires are often good for some schadenfreude, eventually.
I don't consider anyone who drives an old Volvo as a cheapskate. Quite the opposite. Have you ever had service done on an old Volvo? You sure have if you own one, and often. Before selling mine a couple years ago, I unlovingly referred to it as "my Swedish whore."
He's displaying both a poverty and Depression mentality. You can see it in many of the elderly. They stash everything away, even if they are extremely successful. They put everything away for a "rainy day" and deny themselves simply pleasures.
Who in their right mind would live in poverty with an unlimited supply of wealth? I believe he is stashing money away because he's afraid of what might happen if he doesn't. Not to mention, he gets attention by "living like the common man".
There's a fine line between living comfortably/frugally and simply being cheap. Seriously, a billionaire that drives a '93 Volvo and furnishes his own house with Ikea furniture has issues. Not to mention, he's not exactly the key Ikea demographic.
@16,mghuntb5: I think the most appropriate term for this guy is "class traitor", and you seem to be greeting him with the same attitude people held towards "race traitors" in less tolerant times.
Maybe he just doesn't identify with the uber-rich, and relates better to working-class people...does that mean he has "issues"? To expect that he behave according to class guidelines because of his bank balance seems unfair.
Also, this guy probably has something to teach us. He's probably one of the most qualified people on earth to determine whether money can buy happiness. While we imagine we'd be happy to live the uber-rich life, we've never actually tried it, so it's hard to know. This guy actually has that opportunity and apparently decided it wasn't for him.
Maybe it's like Scientology - once you're rich enough you can finally get access to the big secret, only this big secret is that all that you've been accumulating is worthless.
"Maybe part of the reason they are rich is because they saw the value of saving money instead of spending it?"
"Also, this guy probably has something to teach us. He's probably one of the most qualified people on earth to determine whether money can buy happiness...This guy actually has that opportunity and apparently decided it wasn't for him."
Sorry, but wrong, and wrong. Money is a symbolic resource; that it its only value. There's only one reason to hoard a symbolic resource, and that's to have it for use in the future. But by all indications, Mr. Kamprad seems unlikely to suddenly start spending his $33 billion in the future.
Simply replace the "$33 billion" with "33 billion cans of food". What would be the purpose of saving 33 billion cans of food, especially if one shows no indication of wanting to eat them, or give them away? Hoarding 33 million cans deprives others who could use it. Just think if he decided to "spend" those 33 billion cans of food. World hunger could be wiped out for a year, I'd guess. Or if he spent $30 billion -- what a boon that would be for the local economy; how many people could benefit! And of course, by donating that $30 billion to environmental, animal and human rights charities, he could do an astounding amount of good for the earth.
But instead, he's just a hoarder.
What will happen if he doesn't? Let's say he dies with $33 billion in assets. The State will get a huge chunk of that (not that they would've earned it in any way), and the rest will go to either charities (who could probably better use the money now, than then) or to his heirs, who will likely spend it as most inheritors do.
So what is the virtue in tying up $33 billion in symbolic resources? Wouldn't it be far more virtuous to do some good with it now?
Speaking of billionaires....
This reminds me of a Q&A session I saw on PBS with Bill Gates and Rupert Murdoch.
Someone asked them if they supported a flat income tax, and Gates said (and Murdoch agreed), "We already have a flat tax. People like Rupert and I should be paying more in taxes."
In a country where waitstaff aren't paid the minimum wage, this seems commendable to me.
"what is the virtue in tying up $33 billion in symbolic resources? Wouldn't it be far more virtuous to do some good with it now?"
Yeah, for sure. Make no mistake, I think this guy is extremely self-centered for having that much wealth at all. After all, it's far more than a person could ever need in a lifetime, and his refusal to share it indicates a profound apathy towards the suffering of others which could be eased with such a huge sum.
However, that doesn't negate the fact that he's deliberately living far below his means - not because he has to, but because he prefers to. It's a simple concept, but one that's so alien to most western people that it's worth noting. As a strong believer in the voluntary simplicity movement, I think his is an example non-stupidly-rich people could benefit from following as well. And maybe once people get used to the idea that "you don't have to spend it just because you have it", they'll be more willing to give their excess to help out others.
Some people don't like to live like yuppies, fashion-chasers, social climbers. Some people get their jollies out of skiing, helping others, doing art rather than shopping.
Is that any reason to refer to them as "cheapskates"?
"However, that doesn't negate the fact that he's deliberately living far below his means - not because he has to, but because he prefers to. It's a simple concept, but one that's so alien to most western people that it's worth noting. As a strong believer in the voluntary simplicity movement, I think his is an example non-stupidly-rich people could benefit from following as well. And maybe once people get used to the idea that 'you don't have to spend it just because you have it', they'll be more willing to give their excess to help out others."
True, but does "having it" require stockpiling it? He could just as easily subscribe to the voluntary simplicity ethos (as do I) by simply accepting a much lower compensation package. If he accepted say, enough to support himself in the manner he prefers (say, $50,000 a year) and kept enough in the bank to live off the interest if he ever decided to retire (say, $10 million), he would free up an incredible amount of resources with which to do good. Not just symbolic good, but real good. $32,990,000,000 could do a tremendous amount of good the world-over, don't you think? That could cure some major diseases, feed all the hungry and build schools and hospitals in 100 needy towns. Is setting an example of "spending abstinence" to seem good really anywhere near as beneficial as spending that money to actually do good?
To wear out my earlier analogy -- if I had 33 billion cans of food but ate only enough to survive on, some people might be favorably impressed with my economy. But if I only ate enough to survive on while at the same time giving the surplus to those who need it -- is there any question as to which sets the better example of voluntary simplicity?
Again, I agree. But think of it this way - most wealthy people don't realize they're wealthy. They genuinely feel that they need everything they have. For example, my standard of living is easily higher than a huge majority of the world's, but I don't feel wealthy - almost everything I have, I feel like I need, and couldn't do without.
People won't give up things they feel they "need" voluntarily. The only long-term sustainable solution is to help people realize that they really don't need all that they have. Only after that realization will they be willing to consider sharing their excess with someone who really does need it.
@#23: "Only after that realization will they be willing to consider sharing their excess with someone who really does need it."
There's another, admittedly controversial way of persuading people to share their excess wealth. They've been trying it out in Europe for years now. It's called taxation.
It's better than waiting around for the rich and super-rich to develop altruistic instincts, which, let's face it, ain't gonna happen any time soon.
Is Kamprad a "cheapskate"?
My definition of "frugal" is: someone who doesn't spend money on himself. A "cheapskate" is someone who doesn't spend money on other people.
How well does he pay his employees, that's the measure--not whether he flies first class or coach.
I think what people here aren't realizing is just how difficult it is to give away that kind of money. Sure one could do a lot of good with 33 billion, but where does one start? How does one ensure that the money donated is being used appropriately or effectively? How do you know who to trust/hire? Is what you're giving money to ethical? The list goes on and on.
Think about it, Bill Gates had to quit his day job in order to give his money away. It's actually a full time endeavor for him (and his wife!) -- and at 85 years old, I doubt Mr. Kamprad has the energy to do the same.
Personally, while I wouldn't say no to it, having 33 billion in the bank must be one of hell of a burden. All I can see is stress!
I'm no economist but there are a number of false assumptions being discussed above.
1) There is a different between 'net worth' and 'liquid assets'. I may be worth $30 billion but it isn't available as cash. It is tied up in stocks, real estate, investments in business, etc. Anyone with investments that are large and non-diversified are going to have a problem 'cashing out'. If they try to sell, the value of their illiquid assets will crash. Bill Gates doesn't have $10 billion in cash sitting in a bank account.
2) Some posters above assume that because I hold $30 billion in assets that I am depriving others of its benefit. This is a classic economic fallacy. The economy is not a zero-sum game. I do not make money at the expense of others who fail to make it. When we participate in the economy we grow the entire pie. We don't just make our piece bigger. As mentioned in #1, by investing my $30 billion, I put my assets to work for me and for those who also receive the fruits of my investments.
Case in point: If I work for a start-up and receive a modest salary I get to participate in the economy by spending my earnings on essentials and non-essentials. Where is my salary coming from? It is given to me from part of the investment a multi-millionaire has made in my firm. If the firm fails, I keep the money and the investor gets nothing. If the firm succeeds, I get salary + stock options and the investor gets richer. Win-win.
#3 How much 'stuff' does a person need? None of us are immortal. We all turn to dust.
The top salesman in a firm may wear expensive suits, drive a fancy car, and have a trophy wife. He may bring in $1 million a year. He is a wage slave. The owner probably wears jeans, drives a Toyota, and shaves twice a week. Why? Because he can.