With Jamie Johnson, documentary film producer of Born Rich & The One Percent
There’s a famous quotation from F. Scott Fitzgerald’s short story, The Rich Boy: “Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft, where we are hard, cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand.” That idea is reflected in the documentary film, The One Percent, made by Steve’s guest, Jamie Johnson, one of the heirs to the Johnson & Johnson fortune.
Silence Is Golden
Jamie explained that the ultra-rich—families who have had huge fortunes for generations—typically don’t like to talk about money. It’s considered to be in bad taste to do so. The result is that, ironically, many heirs to large family fortunes know next to nothing about managing money. Even though they’re raised in privileged environments, have great educations, and have access to capital to invest, they often find it difficult to be successful in business or to be good at managing money in their personal lives.
New Money vs Old-Money Attitudes
One of the people that Jamie interviewed whom he found particularly interesting was Paul Orfalea, the self-made millionaire who founded Kinko’s. What struck Jamie was the difference in attitude toward talking about money that Orfalea had as compared to those born into multigenerational wealth. Orfalea spoke freely and openly about making money and having money. Jamie concluded that the difference in attitude may stem from the fact that those who create their own wealth in a relatively short span of time have a greater belief and confidence that they could create a fortune again. Rather than being defensive when people ask them about their money, they feel comfortable in being able to say, “I earned it”.
In contrast, many of the long-established ultra-rich seem inexplicably sensitive when it comes to talking about their money. Steve brought up the case of Nicole Buffett, granddaughter of Warren Buffett, who summarily disinherited her after her appearance in Jamie’s film. Her sole offense seems to have been speaking publicly about the family’s money.
The Growing Wealth Gap
One of the things Jamie’s film points out is the growing gap between the very wealthy and the average person. A graph shown in the film illustrates the disparity between people of great wealth who average earning $1 million a year and the average person who makes only $35,000 a year. Jamie has noticed an increasing isolation among the very wealthy as well as a growing disconnect from the rest of society. He theorized that this may have been a contributing factor to the 2008 financial crisis, that many of those at the very top may have been reckless in their financial decisions, not taking into consideration the potential harm to others.
However, another person Jamie interviewed for the film, economist Milton Freidman, strongly disagreed with Jamie’s criticism of the free market system, insisting that it ultimately leads to the best economic outcomes for all of society.
Click here to learn more about Jamie Johnson and his previous and upcoming film projects.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: My next guest grew up in one of the wealthiest families in the United States. According to Business Insider, his personal inherited net worth in 2011 was in excess of $600 million. Yet what makes him a fascinating subject is that he has produced two well-regarded documentaries about the world in which he grew up. His first, Born Rich, was nominated for two Emmy awards. His second film finished in 2006 speaks to the challenges America faces as a society in which 1% of the people control nearly half the total wealth.
My guest is Jamie Johnson, the great-grandson of the co-founder of Johnson & Johnson. Hi, Jamie. Welcome to the show.
Jamie Johnson: Hello.
Steve Pomeranz: Tell us about the point of view of the film and its original purpose.
Jamie Johnson: The two films I’ve made, really were both intended to look at wealth and affluent families in the United States in a way that no one had done before in the documentary film, and wealth is a topic that is often considered uncomfortable, and it’s something people have a difficult time discussing publicly and sometimes even privately within their own families and among personal friends. And I thought, well, let’s bring this topic to the surface and let’s explore the subject in a documentary film. There are all kinds of difficult issues surrounding wealth and issues of inequality and things like that and the films focus on many of those issues.
Steve Pomeranz: The wealthy, and I would say we’re really not talking about the 1% because a successful physician can easily be in the 1%, we’re really talking about the ultra-high rich now, really the 0.1%; would that be more accurate in your view?
Jamie Johnson: Yes, that’s certainly true.
Steve Pomeranz: Okay. Those individuals as a group and you were brought up in that culture, they find it difficult to talk about money amongst themselves as well and also what about inter-family?
Jamie Johnson: I would say that families traditionally who have had wealth for multiple generations really do not like discussing money. It’s something that’s considered in bad taste. It’s considered taboo. And I think that there’s a long tradition of people being brought up in affluent circles, and they’re taught from an early age that it’s something you shouldn’t discuss. And what happens then is many issues surrounding wealth, many times practical issues relating to investments and business-related issues, also personal issues surrounding wealth, wealth transference in wealthy families, because the topic isn’t discussed, many people don’t succeed in affluent families on either of those fronts.
Even though they’re raised in privileged environments and have great educations and have access to capital to invest, it’s difficult often for them to find a way to be successful in business and it’s also difficult for them to find a way to be successful in their personal lives relating to issues surrounding money and how it’s distributed and just handled and thought of within the family.
Steve Pomeranz: There was a talk you gave, I believe it was on YouTube, and it was for The Moth, and you were talking about attending almost like a counseling session for the very wealthy. Do you want to tell us a little bit about that? I thought it was pretty funny.
Jamie Johnson: Yes, there are different groups that are support groups for affluent individuals, and you’ve seen more and more of this because as the world becomes more aware of socially-conscious investing and socially-responsible stewardship of wealth, which is gaining popularity in affluent circles and there’s a greater awareness around that topic. You have these groups being formed by young wealthy people, and the requirements to join the group and membership is often that you are affluent and you do come from money, and people talk about some of the benefits and some of the excess baggage that goes along with inherited money.
Of course, when they’re talking about what they feel some of the excess baggage is and what they feel the drawbacks of being rich really are like, it can often become kind of laughable, and it’s easy not to have sympathy, obviously, for people who have many privileges and sometimes want to complain about that.
Steve Pomeranz: Your father was, I think, noticeably torn in the video. You made multiple attempts to talk about openly with money, I think in a very kind of just casual way. And at the end of the video, at the end of the documentary, he’s like, “Okay, let’s talk about it,” but he kept self-stifling his responses and eventually he just wasn’t able to do it. And also, what is ironic about that is that when he was, I think, around your age, he funded a film in the 1960s looking at the poor in South Africa and your mom says towards the end of the film that he changed, kind of his personality or his way of thinking changed after he received a lot of peer pressure from within the family.
So obviously, he’s your dad and it seemed kind of like an awkward moment. What’s your take on the way he was handling you making this movie and the way he thinks about the money as well?
Jamie Johnson: My dad is a really private guy, so anything that comes up, any personal topic with him, he’s often reluctant to discuss. And he was raised and taught from a young age not to discuss money. And I think that he often tried to instill that value within our own nuclear family. So when I said, “I’m making a documentary film and it involves children of inherited wealth and these topics are going to come up and it may be in the media,” he had a negative reaction and he didn’t want to participate and he discouraged me to do that, and we conflicted in many ways, as you said. And that’s something that you see play out over the course of both films that I made.
I think on one level, he’s traditional, he’s kind of old school that way. So he feels that the films I made probably shouldn’t have been made and these topics didn’t need to be discussed and presented so publicly. And then on another side, he’s a kind man and he is a loving man and I think on a personal level he supports me emotionally anyway in that he’s pleased that I’m making films and that it’s meaningful to me and he sees that I want to do it. There was a conflict for him, of course, because he doesn’t believe that it should be a public topic.
Steve Pomeranz: Right. That definitely came across in the documentary and made it that much more interesting, that much more real. You interviewed about 28 people, so I counted on IMDB; only really three of them were individuals who had created their own wealth. The rest were former government officials, the financial advisers to the Johnson family and the heirs themselves. Why so few of the people who kind of originated their wealth as opposed to those that just kind of comment on the effects of the wealth and those who were the beneficiaries of the wealth?
Jamie Johnson: I think I had less access to people who were self-made. Many of the people I know through the network of associations I have naturally come from multigenerational wealth, and I tend to know less people in my own life who are self-made. Also, because I understand through experience and through close observation the experiences of people who have inherited wealth and how multigenerational wealth affects individuals and its effect on society and culture, that’s something that I really have a special understanding of, and so I tend to focus on that angle as opposed to entrepreneurs and first-generation wealth creators.
It’s something that interests me. And in the film, I interview a guy named Paul Orfalea who started the Kinko’s Copy Center, and he sold that and he’s a very successful guy and an entrepreneur, and he was a pleasure to get to know. He’s very forthright and he’s outspoken and that’s another thing that came up through my journey of making this film is that you often see people who are self-made and they have a little bit more confidence in speaking publicly about their money and their own success.
One of the reasons why I think that occurs is because people who generate wealth, a lot of wealth in a short period of time, have a greater sense they could do it again and they have greater self-belief that they can earn money and so they don’t feel as defensive when people ask them about their personal wealth and their affluence. They feel that it’s easy for them to say, “I earned it,” and they have a feeling almost that they could do it again. That’s not always the case.
Steve Pomeranz: You bring up this point that those who inherit the wealth seem to feel less confident about it and less sanguine about the trappings of wealth and there’s this unease. As a matter of fact, two interviews, one interested me especially, was with Nicole Buffett, Warren Buffet’s granddaughter. I follow Warren Buffett a lot as I’m an investment advisor myself and I know the kind of culture that he permeates, but I was very surprised to hear that after the interview in which it seemed like she was just being very simple and very honest and finding her way in the world, unless I missed something totally, the fact that he basically wrote her a very terse letter disinheriting her as a member of the family. Did that come as a shock to you? Was there anything in the documentary maybe that did not actually end up in the documentary that would have explained that situation more fully?
Jamie Johnson: There really wasn’t anything that would have merited his reaction. He had a very strong reaction, and I think it surprised everyone, especially Nicole who was in the film when you describe that she received that letter from her grandfather. I think it just speaks to this very strong sense that people who are very influential and have a great deal of money and who don’t want it discussed and who don’t want personal things about their own lives revealed publicly, they react and they go out of their way to try and control the flow of information and sometimes there are consequences for younger members of affluent families who step out of line, so to speak, and then they’re punished. In this case, that came in pretty harsh form.
Steve Pomeranz: I’m speaking with Jamie Johnson. He is the great-grandson of the co-founder of Johnson & Johnson, and he has made two films to date and we’re going to ask him what his new project is in a moment. The film I’m speaking about is One-Percenters, right? That’s the correct name?
Jamie Johnson: The One Percent.
Steve Pomeranz: The One Percent. Thank you. And I saw it on Netflix and it’s available on YouTube.
Now, it definitely seemed to me that the film had a point of view and it was kind of, I don’t want to say negative towards the wealthy, but more I think empathetic to the disparity between the wealthy and the rest of the country. As a matter of fact, you show a graph there that says that the average person of great wealth makes $1 million a year and that’s the average, whereas average American makes $35,000 a year. Of course, that was in 06, so I’m sure that the disparity is even greater today. And you spoke with the Nobel prize-winning economist, Milton Friedman, who’s no longer with us, and he kind of got angry at you and stopped the interview, but he maintained that the wealth that these people created actually brings up the whole society.
And as a matter of fact, Forbes stated in an article that, “The poorest in America are better off than 70% of the world, and that while it’s true that there’s more inequality in the US, it’s not because the poor are poorer, it’s because the rich are richer.” Can I have some comment on that?
Jamie Johnson: Yes. A number of things. One thing that that happened is that when I started making The One Percent and even when the film was released, it was just before the financial crisis. The film does have a point of view, and it does suggest that there are problems with the growing wealth gap with the concentration of wealth at the highest tiers of the economic ladder and potentially some of the problems that cause in terms of isolating different groups of people and the lack of general cohesion in culture and society. When I was making this film, I felt that I was starting to see trends and I was starting to notice that there was a sense of disconnection for the most affluent people in the country and the rest of the country and working people.
And it wasn’t as popular of a topic. It wasn’t something that everyone was willing to accept that there are problems in that inequality and there are problems with this sense of to America some people have referred to it, but after, of course, the financial crisis, it’s more widely accepted that there was a sense among the elite and at the top of financial institutions where people were making decisions that were reckless and that were not considering how their investments and their short-term financial goals and wealth building was potentially putting other people at risk.
Now that’s more widely accepted. Milton Friedman, who you mentioned, who I interviewed in the film, was one of the last interviews he ever did on video. He was infuriated with many of the questions that I put to him and my point of view, and he really maintains a strong belief that market forces would resolve all social and cultural problems and that we realized during the financial crisis but that wasn’t exactly true. Before the financial crisis, people were really more on board with Friedman’s thesis and, of course, afterwards, they were saying, “No, we have to reevaluate the sense that the free market is a solution for everything and that maybe we do need regulation and we do need oversight in certain areas.”
That’s a long-winded response, but it is a complicated and involved answer, and you wonder, do these things come in cycles? I’m sure, depending on where the economy is and what’s happened, it will become fashionable again to say, “Hey, let’s let the free market decide everything and let’s let the wealthiest investors deregulate the economy and Wall Street and let’s all ride the wave.” And, of course, that might backfire again as well.
Steve Pomeranz: I think you’ve made the point that it is complicated. There are no easy solutions. There’s any number of ways to look at this thing and a lot of it will depend upon how much of the economy improves and how the rest of society fairs. So, Jamie, we only have a few seconds left. Tell us what you’re currently working on.
Jamie Johnson: I’m working on fictional projects these days. I recently shot a short film called Adrift, starring Cornelia Livingston and McCaleb Burnett. They’re two very talented actors, and I’ve always been interested in personal relationships, the psychology of personal relationships, which come up in my documentaries. This fictional work is not about wealth, but it’s about close relationships, how people manage them, and essentially, it looks at how people can become more honest with themselves in psychological ways and work towards healthier and more functional relationships.
Steve Pomeranz: Well, honesty seems to be a theme of your life perhaps. That seems to be the thread running through much of this. Jamie, thank you so much for joining us, and I look forward to seeing that movie and having you back on when you’re doing your next project. Thank you so much.
Jamie Johnson: Thank you.