Two Ways of Being an American Multi-Millionaire

Humans learned long ago that we must sweat and toil to earn our means of survival. The development of well-organized communities and our increasingly impressive technology have made that struggle easier. But now we discover that even wealth has its dramas. Even a great career launched at Goldman Sachs can lead to major sorrows.

Money faucet – Man on beach enjoying a pile of money raining down from water faucet. Open valve with dollar bills, beautiful view with sunrise in background. Passive income, salary & profits concept. © Overearth / shutterstock.com

February 21, 2024 02:36 EDT

Jazz saxophonist Julian “Cannonball” Adderley once said, “You know, sometimes we are not prepared for adversity. When it happens, sometimes we are caught short. We don’t know exactly how to handle it when it comes up. Sometimes we don’t know just what to do when adversity takes over.” That discourse began his introduction to his best-known hit, “Mercy, Mercy, Mercy.”

Adderley was a black musician born into a modest middle-class family in Tampa, Florida. He earned his reputation as perhaps the most talented and accomplished alto saxophonist of the generation that followed Charlie Parker. After collaborating on Miles Davis’s iconic album Kind of Blue in 1959, he went on to achieve immortality in a commercially dynamic musical marketplace that bridged jazz and funk, thanks especially to “Mercy, Mercy, Mercy.” Adderley was a millionaire when he died at the age of 46, with a net worth estimated at $1–5 million. Starting out as a struggling black musician a decade before Martin Luther King’s civil rights movement began to change the racial landscape, Adderley understood and overcame adversity, achieving fame and fortune thanks to his brilliant musicianship.

Former Goldman Sachs analyst Sam Dogen retired at the age of 34 with a net worth of $3 million. Had he waited another 12 years, even without working, his fortune would have been multiplied perhaps exponentially. But after retiring, he encountered adversity and, according to Moneywise is now demanding mercy, mercy, mercy.

Dogen has been reduced to the indignity of having to live on a passive income of a mere $230,000 a year. He blames himself for the tragedy. He could have prudently allowed his accumulated fortune to accrue, thanks to a phenomenon an urban legend tells us Einstein called “the most powerful force in the universe” and that Warren Buffett believed was the “eighth wonder of the world.” What was that wonderful force? Very simply, compound interest. Instead of following Einstein’s alleged lead, Dogen decided on a carpe diem strategy by purchasing his dream house with cash. Though that put a solid asset in his personal balance sheet, it reduced his stockpile of interest-bearing dollars, weakening the force field of his potential for compound interest.

Like Adderley himself, the severe trials that Dogen has endured because of his imprudence have turned him into something of a philosopher, who now has a message for humanity. He recently wrote in his blog this compelling, original thought that has the ring of an ancestral proverb: “Desire is the cause of all suffering.”

Today’s Weekly Devil’s Dictionary definition:


For people with true insider’s knowledge of the economy, the realization that one has lost a source of passive income.

Contextual note

Suffering is not the only word in the English language that Dogan has shown a talent for redefining. Progress is another. The following sentence in the Moneywise article gives an idea of what that word might mean in Dogan’s updated dictionary. “He’s since been living off his passive income from stocks, bonds, and real estate — but after paying cash for a recently remodeled home on a triple-wide lot, he says about five years’ worth of progress has been lost.’”

Progress in his dictionary stands for the exact opposite of suffering. In his vocabulary, progress means the maintenance of passive income. In Dogen’s worldview, shared by most of today’s financial elite, the only reliable source of civilizational progress is neither hard work, nor ingenuity, nor the entrepreneurial spirit nor even technological innovation. It’s the action of compound interest, which Buffett also called “the eighth wonder of the world.”

Dogen is very aware of his own moral turpitude and its cost. We learn that “in 2023 his passive income was tracking to generate about $380,000 a year. But after purchasing a new home in the pricey San Francisco Bay Area, he now expects it to decline to about $230,000 — which he claims is no longer enough to cover his family of four’s living expenses.” Someone should have reminded him of the proverb, “You cannot have your house and eat it.” Actually, I think the original was about cake.

The article offers some insight into Dogen’s career as a deep and subtle philosopher. Before discovering the secret of human suffering, he pitched himself as a promoter of “prosperity philosophy,” closely related to another American speciality: “prosperity theology,” the principal weapon of tele-evangelists who preach its gospel to draw donations that pay off even more handsomely than compound interest. Dogen “made headlines back in 2012 for championing the ‘financial independence, retire early’ (FIRE) movement” when he chose to retire and advertise his conversion to this philosophy.

Now that he’s realized his mistake, Dogen has become even more philosophical. Not only has he decided to return to some form of work to supplement the meager $230,000 that he can still count on, faithful to the metaphysics he had earlier embraced, he “still plans to reach FIRE status again within three to five years.” He probably has in mind another proverb: “Life begins at forty… and not at 34.”

Historical note

Most Americans remember Benjamin Franklin’s dictum, “A penny saved is a penny earned.” Franklin was famous for inventing — or at least remembering proverbs, which he published in his famous “Poor Richard’s Almanack.” The penny proverb belongs to a family of proverbs that illustrate the traditional American Puritan ethic. Another one that focuses on avoiding the kind of error Dogen committed urges people to act prudently by husbanding one’s resources: “Waste not, want not.”

Franklin’s own philosophy extended far beyond proverbial wisdom. Consistent with the “penny saved” proverb, Franklin is credited with a lesser-known quote that correctly describes the miracle of compound interest: “Money makes money. And the money that money makes, makes money.”

Poor Richard’s Almanack actually made Franklin rich. The Benjamin Franklin Historical Society describes it as “Franklin’s greatest business accomplishment.” Along with his other ventures, it allowed him not to buy a dream house in a pricey San Francisco neighborhood, but to leave “a gift of $5,000 to each of his two favorite cities, Boston and Philadelphia,” stipulating “that the money was to be invested and could be paid out at two specific dates, the first 100 years and the second 200 years after the date of the gift.”

The result of his modest generosity was that over the allotted time Franklin’s gifts “compounded to approximately $20 million for each city.” Not a bad demonstration of the eighth wonder of the world.

But Franklin’s gesture gives us something else to think about. When Buffett or Dogen composes an encomium to celebrate the mystical powers of compound interest, they focus on the individual who harnesses that power. Franklin sought to attribute that power to two communities who would use it for a collective purpose rather than hoard it to consolidate power. That appears to be the way a lot of “civilized” people reasoned in the 18th century. Many assume that Adam Smith preached the gospel of self-interest we associate with modern economists such as Friedrich Hayek or Milton Friedman. But Smith insisted not just on the virtue of “sympathy” (we would say “empathy” today) but especially on its centrality to basic social and moral behavior. For Smith, it was never about the calculation of maximum profit.

In contrast, Dogen’s reasoning begins and ends with the idea of acting to constitute, expand and defend one’s personal fortune. He will not allow “adversity” to compromise his elite consumer lifestyle. On his constrained budget of $230,000 ($175,000 after taxes), Dogen defines his needs as including a certain number of luxuries.

The linguist and contemporary “philosophizer” Steven Pinker believes the modern world is the ongoing fulfillment of humanity’s genius for progress. His notion of progress doesn’t seem all that different from Dogen’s. Pinker explains that this works because “you and I are both better off if we share our surpluses.” The calculation of what makes us “better off” and where our needs end and our surplusses begin is an idea neither Franklin nor Smith would have found compelling. But, of course, those Enlightenment spirits didn’t live in the post-Enlightenment world so dear to Pinker and Dogen.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of Fair Observer Devil’s Dictionary.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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