On Frugality

Every now and then, someone will come around and tell us how Warren Buffet is very rich but also very frugal. The article tells us how being rich doesn't necessarily mean one has to live a flashy and extravagant lifestyle, indulging in luxuries such as yachts and enormous mansions. They say these people are in touch with the average people of the world, and because of this, they are modest and wonderful.

I disagree.

Now, many wealthy people are generous philanthropists. The underlying reason for this could be because they feel it is their social obligation to give back to the less fortunate, or because they are simply aware that the government will take a large amount away each year and at death. This is all jolly and lovely. If I had billions, I'd probably give some of it away too.

However, priding oneself on driving the same beat-up car for the last twenty years and taking economy-class flights to business meetings across the globe? I'm not so sure that does any good to society.

As much as these people have a social obligation to distribute their wealth by donating to charity, they also have an obligation to distribute their wealth by spending it.

Ingvar Kamprad could, for instance, buy a new car instead of driving a 240GL. He could have bought a new Saab and it still would have been unextravagant, and it would have helped his fellow Swedes. Better yet, he could have bought the entire Saab company. Sure, perhaps it wouldn't be a sensible investment, but if he treated it as an act of charity, there would be no problem at all.

So anyway, start spending. It's good for the economy.