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Getting on the Rich Lists

This is the time of year when all the Rich Lists come out of the counting parlours, and our growing obsession with material wealth comes to the fore. To add yet more stuff to the pile, I have culled various nuggets from two recent works on the subject of just how the rich get that way. An early conclusion is that it is not all as ghastly as Francis Bacon would have us believe, when he said: "The ways to enrich are many, and most of them foul.

The most interesting of the two books is called The Millionaire Mind, and is written by Thomas J. Stanley, a professor who specialises in the affluent. His writing is based on studies of those who live in America's most expensive homes. It reveals a number of facts:

• The rich do not get up earlier than other people - they rise on average at the same time as the rest of us;
• They are not especially academically bright - hard work is more important than intellect or qualifications in achieving wealth;
• Frequently they did badly at school - this drove them to try harder;
• They are almost all married, but have low levels of divorce. Divorce ruins more successful people than business failure;
• They tend to marry wives and husbands who support them in their efforts to get ahead and who are interested in accumulating wealth;
• They tend to be frugal and productive but not extravagant - they might almost be called mean;
• A high proportion are outsiders, who work for themselves and did things differently to the crowd - they were not afraid to challenge the status quo;

And on a slightly lighter note:

• They almost never play the Lottery; and
• They tend to play golf;

The second book is called How to Be a Billionaire, by Martin S. Fridson, and might be called a textbook for the really ambitious. Mr Fridson, who works at Merrill Lynch, has studied the "proven strategies from the titans of wealth and tried to identify the common threads. He suggests adopting the following principles:

• Take monumental risks
• Do business in a new way
• Dominate your market
• Consolidate an industry
• Buy low
• Thrive on deals
• Outmanage the competition
• Invest in political influence
• Resist the unions

Among other tactics, he notes the following:

• Rules are breakable
• Copying pays better than innovating
• Hold on to your equity
• Use financial leverage
• Frugality pays
• Enjoy the pursuit
• Develop a thick skin

The first book deals with the rich - the second with the super-rich. To be just rich you do not have to own your own company or take large risks - to become a billionaire you do.

What is interesting is that the process of accumulation of great wealth itself may create more happiness than the fortunes that are achieved. It seems initial accumulators of money get more gratification out of their fortunes than their heirs do. As Lewis Lapham, an expert on the subject of wealth and class, has said: "New money is more fun to be around Old money is niggardly and defensive. It was William K. Vanderbilt who said: "Inherited wealth is a real handicap to happiness. It is as certain a death to ambition as cocaine is to morality. This is perhaps a contradiction of the classic snob's view that Old Money is more respectable and worthy than New Money.

Thanks to changing attitudes to money in this country, there has been a steady trend towards the individual accumulation of considerable wealth and away from corporate and institutional wealth, which is why the ranks of the Rich Lists have swollen. This trend has accelerated with a bull market and the rise of technology millionaires. This is broadly speaking good for the country as a whole, for much of the dynamism and growth of an economy stems from individual entrepreneurs, rather than big corporate efforts.

In neither of the two books mentioned above does greed feature as a key motivator. Perhaps that is because the rich are embarrassed about mentioning such a base desire. Possibly the authors feel that covetousness' - as the original one of the seven deadly sins was characterised - is not an attractive trait to copy. But the drive to acquire is what makes the wheels of our economy turn. We need the rich - and not just for the entertainment value of the Rich Lists.