Money Can't Buy Happiness - But So What?

[The following episode of The Daily Reckoning occurred May 17th, 2000]

“Where do you think you are?” the old woman challenged me.

She had opened her shutters and stuck out her gray head across the road as I stood next to my little car in the driveway of one of Mr. DesHais’s friends. I had driven Mr. Deshais to the small village to pick up his roto-tiller.

I tell you that because the question I had just been posed requires context. The same interrogative in a Paris cafe might be an invitation to discuss existentialism. Or, driving along with Elizabeth, it might be an invitation to an argument. (Elizabeth knows I am reluctant to ask directions or even look at a map.)

But here, on the proletarian side of the little village of Azat-le-Riz, it was a rather rude way of greeting a stranger.

I didn’t know how to answer.

“Why…where am I?… Is this Planet Earth?”

She made no response.

“Ah…” I continued, “yes, it must be. Well, I guess I’ve come to the right place…”

At about that moment, Mr. DesHais emerged from the garage.

“Bonjour Madame,” he called to the woman who, with a sort of grunt of recognition, withdrew her head from the window.

Mr. DesHais is not concerned with money or his neighbors. He has more important things to think about – like drinking. And asparagus. Both need careful attention, leaving no time to worry about money. Mr. DesHais, as near as I can tell, is a happy man.

I followed him into the garage, ducking down through the low door, but hitting my head anyway. On the left were a group of very smelly rabbit cages with enough animals for about a dozen meals.

We passed through the garage and emerged at a vegetable garden. Like all of Mr. DesHais’ garden work, this one was impeccable. Everything was in perfect order. No weeds. Nothing was left untouched. Every square meter had been worked and tended. All of his sense of order and rectitude seems to be focused within garden walls. Outside of them, his life is a mess.

The gardener pulled out some salad plants and gave them to me to carry. Then we made our way back to the car and drove around a series of very tiny roads to another of his hangouts.

The place was dilapidated. You could barely tell that someone lived in the stone building. Smoke was coming from the chimney and there was a dented car in the driveway. Had it not been for those signs, the place might have been mistaken for a sheep barn. There were sheep around. And chickens. And a dog, which barked as we drove up.

I was backing up towards the rototiller when a hulking figure slowly drifted out of the door, like a rusty freighter passing under a bridge. The man was dressed in workclothes. He looked about 50 – except that he had the most remarkable hair. It was black and shiny – like the hair on a newborn baby. It was thick, too.

While I was admiring his hair, I noticed that he leaned to the left. If he was a freighter, he had been loaded improperly and was listing to starboard. His starboard eye barely opened, too.

“That’s Andre,” explained Mr. DesHais. “He’s a little strange.”

If Mr. DesHais thought he was strange, the man must be a certifiable lunatic. Our gardener lives in a world peopled by colorful drunks and half-wits. As I have told you, his driver’s license was taken away…in the interest of the safety of the rest of commune. So I chauffeur him around on errands.

Elizabeth and I visited the chateau in Azat-le-Riz just a little over a week ago. We had coffee in those polite, but unsatisfying, demi-tasse cups amid the ancestral portraits and peeling wallpaper. Now Mr. DesHais was showing me the other side of the village. I write like I drive. In today’s letter I have a rough idea of where I am going, but I’m open to surprises. Every road takes you somewhere – though not necessarily where you intended to go.

Wealth is, of course, relative. I exhibit my own relatives as proof. My daughter, Maria, says she is embarrassed to bring her friends over to our apartment. We live in a modest flat on the ground floor. I would not have chosen a street-level apartment, but we were in a hurry to rent something…and it wasn’t easy to find an apartment big enough for our large family. Besides, the place was a bargain.

But ground floor apartments in Paris are very unstylish. They are often lived in by the “concierge,” who looks after the apartment building.

To make matters worse, the children are all going to schools in a rich part of the city – the 16th arrondissement. Maria reported that one of her friends had invited her to lunch. The two girls lunched with her friend’s mother in their apartment, where they were attended by a maid in uniform. Jules, meanwhile, went to a party at a friend’s apartment and reported that the child lived in an apartment that resembled the palace of Versailles.

The apartment was on two floors and had a reception room big enough for 32 12- year-olds to run around. My mother, meanwhile, who lives with us, affects an “innocents abroad” attitude. “From shirtsleeves to shirtsleeves in three generations,” is the French expression. Money comes and goes. My mother has seen all three of the generations in a single lifetime. She has been rich and poor. She can recall, fondly (I believe she recalls everything fondly), living in a house without indoor plumbing or central heating. A contrarian like her son, she was rich during the Depression, but flat broke during the boom of the `50s.

I recall being broke in the `50s. And the `60s. And the `70s, for that matter. But not fondly. On the other hand, were it not for the family, I would have a much different attitude towards money. Left to my own devices, I am as happy hobnobbing with Mr. DesHais’s alcoholic n’er-do-wells as I am with Elizabeth’s more upmarket friends.

Which brings me to the point of this little letter (I imagine you are relieved to discover that it has a point).

I find that I am happiest when I am working outside. As a hobby, Churchill laid up brick walls during WWII. Masonry attracts me, too. Imagine what fun it would have been to work on a wall with Winston! Ah…but the pursuit of pleasure is one thing. Making money is another. If money could make people happy, there should be a lot more happy people in America today than there were 40 years ago.

“According to a Federal Reserve report,” writes Shlomo Maital in a recent issue of “Barron’s,” “between 1992 and 1998 net household wealth rose to $70,000 from $55,000.” Are people nearly 30% happier? Mr. Maital answers the question: “Despite this,” he says, “the percentage of Americans who state they are `very happy’ has actually declined slightly since the mid-1960s from 40% to just over 30%. Studies show only a weak link, or no link at all, between happiness and wealth.”

But so what? If money is not worth pursuing… happiness is an even less worthy goal. At least the pursuit of money is much less selfish. “Greed is good,” said Gordon Gekko, who went on to explain why. People make money, not for themselves, but for others. In making money, people render a service to others and are rewarded for doing so. The more service they give – whether it is by making a software program available to the world or by making capital available to the businesses that need it – the more money they get in return.

At least, that is how it is supposed to work. But this is Planet Earth…where nothing is ever as simple or as straightforward as it seems. And none of life’s roads leads exactly where you expect.

Bill Bonner
Paris, France
May 15, 2001

*** ‘Waiting for the Fed’ was yesterday’s theme on Wall Street. What will Greenspan and the Federal Open Market Committee do when they meet today? How far will they lower interest rates?

*** Marking time, the Dow rose 56 points. The Nasdaq fell 25 – its fourth straight losing session. When the waiting is over, then what? Short-term interest rates will be lower after the FOMC meeting, or not.

*** So what? Is Mr. Market hesitating because he doesn’t know what the Fed will do? Or because he doesn’t know if it will make any difference? If 4.5% was not the magic fed funds rate…who’s to say what is?

*** “If one steps back a bit and thinks about this objectively,” says honorary DR Blue Team member Doug Noland, “isn’t it just silly and at the same time absolutely frightening that so many have put so much faith in the capabilities of Federal Reserve?”

*** Nevertheless, Greenspan’s success to date has silenced most critics – both the inanimate ones like the gold price and those flesh-and-blood ones inclined to offer a contrary view.

*** “Gold competes with the cosmology of Alan Greenspan,” says James Grant. Faith in the yellow metal as “money” competes directly with the notion that Greenspan’s all-knowing Federal Reserve is capable of manipulating short-term interest rates to achieve optimal economic performance. Were gold to mount an honest-to-goodness rally of some magnitude and duration in response to rising inflationary pressures, what would become of the economic cosmos as we know it?

*** The price of gold inched up to $268 yesterday.

*** Mr. Bond, meanwhile, seems to know exactly what he’s doing. He’s seen this movie before and knows how it will end. By lowering short-term rates aggressively, the Fed cultivates the rising inflationary expectations (if not inflation itself) that drive long-term interest rates higher. Corporate borrowers, well aware of this age-old phenomenon, are rushing into the market to secure long-term financing at attractive rates. During the first three months of this year bond issuance soared 172% over the same period last year.

*** Consumers are rushing in to borrow as well. Mortgage lender, Countrywide Credit, reported making a record $10.2 billion of new loans in April, an astounding increase of 130% over the prior year. The pipeline of mortgages in the process of funding ended the month at a record $18.6 billion – double what it was one year ago.

*** But consumers are not just borrowing… “Consumers boost spending despite fears,” says the SF Gate. “Downturn has not hit restaurants,” observes the Long Beach Press. “American Consumers Still on Spending Spree,” proclaims the Financial Times. Clearly, both the consumer and the corporate borrower are happy to avail themselves of easy credit, just like a child will jump at the offer of a free ice cream cone. But heaven on earth has still not arrived: “Market setbacks stagger families saving for school,” notes the Dallas paper. “Power Prices Surge,” remarks the N.Y. Times. “…Mortgage Rates Aren’t Falling,” declares Newsweek.

*** While all eyes are on the Fed, Weldon’s Money Monitor observes: “Global trade is already in a recession. Taiwan, Philippines, Singapore, Chile, Hong Kong, Costa Rica, Malaysia, India – all have reported a double-digit drop in exports year-over- year.”

*** Yet, MZM (cash) in the US rose 26.5% over the last 3 mo. Home prices are rising at the rate of 1% per month in many areas. And bonds are falling. While inflation is the odds-on favorite among most bettors – deflation has yet to surrender.

*** I don’t have time to write a letter today, so I pulled out one of our “Biggest Hits” from last year. I’m rushing to catch a plane to Chicago – for a meeting of The Supper Club. Then, I’m off to Santa Fe for my son’s graduation. Will has finished 4 years at St. John’s College…details to follow…

Your humble scribbler,

Bill Bonner

The Daily Reckoning