Chapter 3 of The Challenge of Charity

Discovering How a Wealth Gap Is Also a Learning and Responsibility Gap

In Chapter 2, I talked about some of the mistakes my partners and I made early on with Rancho Santana, the resort community we were developing in Nicaragua. Some of those mistakes were because we had no experience with real estate outside of the United States. But another mistake – a big one that I was personally guilty of – had to do with a lack of understanding of Third World economics.

Antonio had given me good advice when he explained why the $400 a month that I planned to pay the housekeeper we would be hiring for the vacation home K and I had built at the resort was a bad idea. Although it contradicted my impulses, I could see that it was sensible.

Still, I wasn’t comfortable with paying my housekeeper the local market rate. Notwithstanding the logic of Antonio’s argument, paying a full-time person just $100 a month felt miserly. I wrangled with the dilemma for a few days and landed on a compromise. I would hire two people instead of one. One would work indoors only as a housekeeper and the other would work outside as a gardener, pool cleaner, and occasional handyman. I would pay each of them $125. (Antonio was okay with that.) And I would find some extra chores outside of their regular duties for which I’d pay them an additional $50, which put my overall outlay to $350, but spread over two jobs instead of one.

Experience and Expectations

Yessenia, a young woman from the area who had worked for Antonio’s family, became our housekeeper. And Enrique, a young man Antonio recommended, became our outside worker.

They both seemed grateful for their jobs, arrived promptly every morning at 7:00 a.m., and worked with energy and enthusiasm. It was a promising beginning, but I quickly discovered they had little to no idea about what to do, or even how to do it.

Enrique and Yessenia had grown up in a world without electricity, let alone modern devices. The houses they knew – in the nearby hamlets where they lived – had simple openings for windows, outdoor latrines, and dirt floors. No gardens. No pools. (The first time I gave Yessenia the keys to let herself in and out of our place when we weren’t there, she blushed. She had never seen house keys before.)

So the job of teaching Enrique how to trim hedges with electric clippers, mow the lawn with a gas-powered lawn mower, and change the pool filter fell to me. And we had to hire someone to teach Yessenia how to use a vacuum cleaner, a microwave, an electric stove, a wash machine, and a dishwasher.

But the challenge went deeper than that. Yessenia and Enrique had very different perspectives on what “clean” and “dirty” or “orderly” and “neat” meant. When you have grown up walking on dirt floors all your life, you aren’t accustomed to seeing dirt below your feet as a problem – as something that needs to be fixed. Likewise, when you’ve grown up surrounded by plants in their natural state, it’s not easy to understand why anyone would want to shape them into something else.

It was obvious to me that Enrique and Yessenia needed to learn more than the basics of what is required to maintain a US-styled home, and K and I were going to have to learn how to teach them what they didn’t know.

A happy surprise was discovering that they were as eager to learn as we were to teach them.

Una Pequeña Petición 

There was, however, one thing that bothered me.

As soon as their regular duties were completed, they would find a shady spot and sit down. I would see them talking, relaxing, sometimes even napping until the “official” end of their workday. It didn’t seem to matter whether they had finished their chores an hour early or an hour after they began in the morning. They did what they were asked to do. Then they simply stopped.

This didn’t jibe with my notion of a good “work ethic.” How would they be able to have more in life if they were not willing to do more than the absolute minimum?

But the fact was, I had knowingly and purposely hired two full-time people to do one full-time job. There simply wasn’t enough work to do in and around the house to keep them both busy. At the same time, I recognized that if we’d had additional chores for them to do, they would have happily done them and worked what I would consider to be a full day. In fact, had we asked them, I’m sure they would have even worked extra hours.

In other words, this had nothing to do with being lazy. They simply had a different view of what was expected of them. It wasn’t about staying busy for seven or eight hours. It was about doing what their employer asked them to do. A difference of culture, not character.

I mentioned it to Antonio one day. He shrugged it off.

I persisted. “But don’t you think…”

“Mark,” he said. “Just two months ago, you were telling me that you wanted to pay them too much money. Now you are telling me that they are not working enough to earn the money you are paying them. Your house is orderly. Your garden is manicured. Your pool is clean. What more do you want?”

I had no answer for that. My concern wasn’t about trying to get more work out of them. I feared that I was enabling them to develop a bad habit that would keep them from achieving what I assumed were their dreams. Clearly, Antonio didn’t see it that way.

A Little Emergency

One day, several months after I had hired her, Yessenia came to me to tell me that her mother was very sick. The problem was that the local hospital in Rivas did not have the equipment for the treatment she needed. She would have to go to the big hospital in Managua. And that would cost money – both for the treatment and the transportation.

I asked her how much it would cost, expecting to hear something in the thousands of dollars. But it was less than $500. So it was a no-brainer. I gave her the money and she thanked me.

Then one day Enrique mentioned something about wishing he had a bicycle to get to work. I asked him how he had been doing it. He had been walking. I asked him how much a bike would cost. Less than $100. I gave it to him without a second thought.

These little “solicitations” from Yessenia and Enrique continued as the months passed. And I always felt good about helping them. It wasn’t lost on me that I was solving their personal problems at a fraction of what it would cost me to do so in the US. That is, of course, a common logic to being charitable in poor countries. The cost/benefit ratio is much better than it is in rich countries. And by benefits, I mean the benefits to the giver as well as the receiver.

As the years passed, Enrique and Yessenia found spouses and had children. As their families grew, I found myself helping them with all sorts of wants and needs. There was infant care, grammar school graduations, birthday parties, confirmations, household improvements, and never-ending medical expenses.

Although their wishes were always posed as requests, I had the distinct feeling that they expected me to grant them. To be clear, they never pressured me. On the contrary, with each request I felt like I was the one being given a gift.

And there was an unforeseen bonus: It gave me many opportunities to interact with their children in an avuncular sort of way. And the relationships that developed, immensely gratifying to me, have continued to the present day.

But some of the other homeowners at Rancho Santana didn’t feel the same way as I did. Their attitude was, “I’m paying them well by local standards, so why are they asking me for more money? They should be happy to have such a good job.”

That makes some sense. This time, however, Antonio agreed with me. “We are obligated to help them,” he said. “Because of who we are, we have a responsibility to the people that work for us. Not just to them, but to their families. And especially to their children.”

Anagnorisis 

It clicked. Finally, I had a clear understanding of the dynamics of what was going on.

In deciding to build a resort in this remote area of Nicaragua, my partners and I had invested in a local economy that was very poor and almost entirely undeveloped. Given our intentions, the amount of money we were investing, and the state of the economy, what we were doing was in some ways akin to what the French and English had done in colonizing African countries. We were developing a beautiful part of the world for our use and profit by taking advantage of cheap property prices and labor.

Our project would initially bring millions – and then tens of millions, and eventually more than a hundred million dollars of investment income – to the area. In theory, a good thing. But our purpose was not to improve the local economy. It was to build a tourist resort and residential community for wealthy gringos and, as I said in the beginning of this book, to profit from it.

For this part of Nicaragua to move up to an economy that could support a thriving middle class, it needed more than tourism and a few wealthy landowners. It needed industry. It was, after all, the Industrial Revolution in the US that ended the stark, binary divide that had existed for a thousand years between the world’s rich and poor.

But what we had done, unconsciously and inadvertently, was insert ourselves into a culture that was already, in many ways, like the culture of the feudal medieval societies of Europe.

Noblesse Oblige 

Back then, as we all know, there was the concept of noblesse oblige (literally, “nobility obligates”). It was a moral code that governed the relationship between the nobility and the commoners. It defined the rights and responsibilities of both parties.

But there were also unwritten rules beyond, for example, the written rule that the lord “owned” 10 percent of whatever his serfs produced. And among those unwritten rules was the understanding that when one of his “dependents” became sick or disabled or their children needed something, it was his duty to step in.

Some of those rules were codified. But they also existed in the more general notion of proper conduct.

I believe that idea displayed itself in Antonio’s support of my gut feeling that I had a responsibility to take care of Enrique, Yessenia, and their families. It was how his grandparents and parents treated their workers. It was how he treated the low-paid people that worked for him.

His approach to his workers was informed by the culture he grew up in. And because the local economy was still essentially feudal, that culture included a commitment to noblesse oblige.

Afterthoughts 

Today, the idea of noblesse oblige would likely be viewed as antiquated and even condescending. It was an ethic born out of a worldview that saw in the stark divide between rich and poor, landed gentry and serfs, a natural order. Perhaps even a divine plan. That attitude was replaced at the end of the 18th century by the idea that all men are created equal. And with the higher wages that millions of middle-class workers earned after the Industrial Revolution, it had become feasible for them to take care of their personal needs themselves.

As an employer of primarily white-collar, middle-class employees in my US and European companies, I don’t expect them to ask me for help when they have financial problems. But today in Nicaragua, and particularly in the Tola region of Nicaragua where Rancho Santana is located, the economy is not yet modern in the industrialized sense. Nicaraguan employees get some benefits and protections, thanks to fairly recent governmental regulations. But because the minimum wage is still so low, it is not – for most employees – nearly enough.

In the future, if Nicaragua’s economy develops to the point where unskilled workers are earning $15 or $20 an hour, the idea of noblesse oblige will surely disappear. In the meantime, I will continue to enjoy a relationship with my domestic employees that is archaic but mutually satisfactory.

Lessons Learned 

* When the lifestyle standards between you and your employees is ten times what it is in your home country, accept the fact that even the best and most willing workers will need to learn lots of things that you take for granted.

* When you are paying someone that works for you a tenth of what you’d pay for the same service in the US, understand that it is not reasonable to eschew the local customs of noblesse oblige.

An Excerpt from The Art of Collecting Art 

My First (Accidental) Collection – a Little of This, a Little of That

Building a valuable art collection takes more than time and money. It takes patience and discrimination and knowledge of the art industry that is not normally available to the public. During my time as co-owner of an art gallery, working with a partner that understood the game, I had acquired a bit of that knowledge. Among other things, I had learned that…

* The art industry is made up of four different sectors, each with its own practices, protocols, risks, and opportunities: (1) producers (artists, agents), (2) sellers (brokers, dealers, galleries), (3) casual buyers (decorators, casual collectors), and (4) investors (speculators, serious collectors, museums).

* Successful art dealers aren’t dilettantes, like I was. They are serious marketers and salespeople. They are 20% about the art and 80% about the deal.

* The big and fast money is made – also lost – by speculators.

* The sure money is made with “investment-grade” art.

The rest I would eventually learn through trial and error, and with the help and advice of dozens of people I would befriend in the years ahead.

Meanwhile, when I made the decision to step down as co-owner of the gallery, my interest in collecting art got a major boost from the buyout deal I made with my partner.

Our gallery specialized in modern and contemporary art, with a focus on limited-edition lithographs by “names” like Marc Chagall, Picasso, and Salvador Dali. We also sold Color Field and COBRA paintings – two schools of modern art that I knew very little about at the time.

I didn’t like Chagall. (I still don’t.) But I very much liked Picasso and Dali. So I really wanted to be “paid” for my share of the business with pieces of their work. But I knew enough by then to know that if I wanted to be a serious collector, I didn’t want the lithographs. I wanted “significant” one-of-a-kind pieces – i.e., paintings.

I wasn’t attracted to either the Color Field or the COBRA paintings that we had in the gallery. The Color Field art was minimalist and abstract – canvasses of flat bands and boxes of muted color. But even though the COBRA art looked like children’s fingerpainting to me, I arbitrarily chose five pieces. A large painting by Karel Appel. Two small pieces by Asger Jorn, and two pieces by Guillaume Cornelis van Beverloo, a.k.a. Corneille. I found places in my home to hang the smaller works and I put the large Appel in the basement.

I made up my mind to forget about COBRA art and create a collection that I would actually enjoy looking at. But as the years passed and I learned more about the COBRA artists, the seemingly childish things they had produced became more and more interesting to me. The Museum of Art in Fort Lauderdale had a collection of COBRA art that I occasionally visited, strengthening my interest. And one year, when my wife and I were visiting Amsterdam, I happened upon a gallery that specialized in COBRA art and bought a second Appel and two large works by Jacques Doucet and Theo Wolvecamp.

Since then, I’ve added to that small collection with additional works by Appel, Alechinsky, and Corneille.

I now have a reasonably complete assembly of COBRA art that I display in one room of our home in Florida. I’m no longer embarrassed by its apparent lack of technique and juvenile subject matter. I like it. (And its value has multiplied many times.)

My Second Collection – Early 20th Century Modernists

The collection that I began to assemble after exiting the gallery business was comprised of the works of artists that I had first seen in Gabriella’s house so many years before: early 20th century European modernists such as Jules Pascin, Jean Derain, and Édouard Vuillard.

I bought small paintings and drawings as my budget would allow. But the works of these artists were already pricey when I started buying them and have become even more costly. So that collection, near and dear to my heart, is still a modest one, at best.

My Third Collection – Mexican Modernists

I was speaking at an investment conference in Palm Springs, California. Strolling through town, I wandered into an art gallery.

The gallery was dimly lit and dead quiet. The art – mostly oil paintings and some gouaches – was stunning. I spent several minutes meandering around before being greeted by an elderly man in a tattered sweater who had emerged from somewhere in the back. He introduced himself as Bernard Lewin.

I explained that I was in town for business but had the afternoon free and was “in the market for a few pieces.”

Hand on his chin, Mr. Lewin studied me for a moment. Then he smiled, spread his arms, and said, “Look around. Take your time. Ask if you have questions.”

He turned and disappeared into the back.

I spent a good hour or so looking and making mental notes of the pieces I especially liked. I left without seeing Mr. Lewin again, but I went back the next day… and the next day… and the next. Each time, I was warmly received and my many questions were answered before he would, again, disappear.

Despite Mr. Lewin’s apparent indifference towards me as a potential buyer, I loved the art I was looking at and was determined to buy something from him.

What I didn’t know at the time was that I had inadvertently wandered into a gallery that featured some of the most important Mexican modern artists, including Diego Rivera, David Siqueiros, José Clemente Orozco, Rufino Tamayo, Francisco Zúñiga, and Frida Kahlo. And this old man in a tattered sweater was not only a major collector, he was the most important US dealer of their work. (Before his death, he and his wife Edith donated more than 2,000 pieces from their private collection to the Los Angeles County Museum of Art.)

Most of what I thought I wanted to buy – “significant” works by these artists –was way out of my price range. But Mr. Lewin helped me select three pieces that I could afford: a large “mixograph” by Tamayo, a drawing by Rivera, and a beautiful little oil painting by Orozco.

The three cost me considerably more than I had planned to spend. But in retrospect, they were very good investments. The Orozco alone is worth more than ten times what I paid for it.

Over those several days, I had spent a total of no more than four hours with Mr. Lewin. But in that time, he had set me on a path that would immeasurably enrich my life.

Having fallen in love with the Mexican modernists, I began to add to this mini collection with pieces by Francisco Toledo and Vladimir Cora, whose work at the time was relatively affordable. I also bought additional reasonably priced pieces by contemporary (living) Mexican masters.

This set me up for the next phase of my collecting career: I met Suzanne Snider and got back into the art business.