The rich really are different

The rise of a ‘money culture’ gone wild


 
The rich really are different

Chris Young/CP

Once upon a time, when I was a hang-loose kid of no particular persuasion at the University of Toronto, I decided to attempt a master’s degree in commerce. I put it that way because that was eons before the M.B.A. was invented and we were enrolled to receive something called a master of commerce degree that nobody remembers.

I had unsuccessfully been trying to stay awake during my classes and felt terminally dubious about my attempt to become an apprentice capitalist. Finally, a kindly part-time professor who worked at Ontario Hydro called me into his office and suggested, no, ordered me, to change my life: “You’re not interested enough in making money,” he said. “But I like your essays. Why not become a writer?”

What the prof didn’t know was that my time and passion were devoted to my garage jazz band. (Since I had grown up in Czechoslovakia, we were called Peter Newman and His Bouncing Czechs.) Our music wasn’t that bad but we never learned to finish together, though we played on the same bill as Leonard Cohen. Once. In short, I took the professor’s advice and now, at the sunset of my professional life, can look back at having authored 25 books that have sold 2.5 million copies. All this because a sympathetic soul made me realize I didn’t belong to the money culture. (Not the music culture either, but that’s another story.)

So what exactly is the money culture? Its motto has to be F. Scott Fitzgerald’s legendary declaration: “Let me tell you about the very rich. They are different from you and me.” The author didn’t define those differences, but the rarely published second half of his quote gives a hint: “They think they are better than we are because we had to discover the compensations and refuges of life for ourselves.” That comment legitimizes my lifetime observations that certain personality traits are natural to the money culture. Making increasingly more money becomes more important than eating. You must submerge every other ambition to the infinite multiplication of wealth. It becomes not only an obsession, but a game you feel compelled to win. Implicit to that contest is to earn more than your rivals. In my Establishment books, I always published detailed lists of the very rich. They were so accurate that a senior federal tax agent once asked me how my guesses were so close to the facts. “Because they’re not guesses,” I explained. “Nobody ever told me the size of their fortunes. But they were well briefed about their rivals and never hesitated to reveal their competitors’ names and fortunes.”

The problem with the money culture is that it tends to equate self-worth with net worth. Intuitions, feelings, motivations and actions are monetized to such an extent that an individual’s value becomes judged strictly in dollars. That means trouble. My favourite historic example of overstepping the boundaries of the money culture was Robert Campeau, the Ottawa Valley house builder: he spent $11 billion he didn’t have to buy New York department stores he didn’t know how to run—then built himself a castle in Germany with a rooftop swimming pool. Campeau’s company declared bankruptcy in 1991.

The most startling recent corporate example of the money culture at work has been the current corporate shuffle at Barrick Gold Corp. Peter Munk, the founding genius of the world’s largest gold mining operation, decided to pay newly appointed co-chair John Thornton a stunning $11.9 million, simply for signing on to a position that paid him $17 million in total compensation in 2012. A senior professor at Tsinghua University in Beijing, Thornton has not been particularly involved in mining ventures but did serve as a director of Rupert Murdoch’s News Corp. and was an executive of Goldman Sachs. Meanwhile, former Barrick CEO Aaron Regent was ousted last year and given $12 million. (There is some serious inequality here: you get $12 million to leave but only $11.9 million to arrive.)

At Barrick’s annual meeting in April, 85 per cent of shareholders voted against Thornton’s staggering signing bonus, an unprecedented slap, which management casually dismissed. But the company’s stock sank to a 20-year low. Bay Street’s wealth managers, including the seven largest pension fund representatives, sharply criticized the deal. But veterans of the money culture didn’t blink.

The money culture took hold at some point in the spring of 1997 when for the first time Canadians received more revenues from dividends, commissions, rents, interest and capital appreciation, than from their wages and salaries. The sector has been expanding ever since. While the defining entrepreneurs insist that they’re in the real estate, fast food, film, oil exploration, or whatever business—they are really in the money business, hyping underutilized pools of funds to multiply their original investments. Cash and careers tend to be measured as individual entities instead of as part of a process.

The character of this country’s money culture has been undeniably altered by the fact that the Canadian Establishment, once an exclusive club, has transformed itself into a meritocracy with accessible networks. It is no longer who you are that is pre-eminent in determining your position but what you’ve done. That’s good news. Anybody can join.

To the question of how friendships work at this level, I never received a better answer than from William Zeckendorf, the New York real estate tycoon who built the magnificent Place Ville Marie in Montreal. When I asked him how he got along with James Muir, the Royal Bank chairman who was his Canadian partner, Zeckendorf replied: “Jim keeps things simple. If you’re his friend, you can do no wrong. If you’re his enemy, you can do no right. And if you’re worth considering at all, you’re in one category or the other.” Works every time.

A former editor of Maclean’s, Peter C. Newman is a professor of distinction at Ryerson University’s Ted Rogers School of Management.


 

The rich really are different

  1. Peter Newman has always given a rich description of personalities behind moneyed power. But I don’t think he’s ever argued the case that a euthanasia of the rentiers would be in Canadians’ real interest. Which is a shame.

  2. Peter: I presume you read the comments. I had a computer crash recently and lost all my email files, including your email address. Please send me an email, so I will have your address again (and this time I’ll back it all up). Best wishes. Dan Johnson Calgary

  3. “The problem with the money culture is that it tends to equate self-worth with net worth. Intuitions, feelings, motivations and actions are monetized to such an extent that an individual’s value becomes judged strictly in dollars. That means trouble” – Peter, thank you. But it also can be said for the Political culture as well right now. I believe the current term is “entitlement”.

  4. well.. hopefully Barrick’s arrogance will catch up with them as shareholders now have a class-action to join that aims to recoup some lost profits through Barrick’s mis-steps and deceptions. They are corrupt through and through, and that has finally caught up to them and impacted the stock price. They deserve to fall.