Atanu Dey On India's Development

Mr Ambani’s Home

How much would you spend on your home if your net worth was estimated by Forbes a few months ago to be around $43 billion? If you were Mukesh Ambani, you would spend a couple of billion dollars on a place you’d like to call home. Sounds reasonable to me. For most people, their home is the most valuable possession, often accounting for a very significant portion of their net wealth. Mukesh Ambani is spending a very small — almost insignificant — part of this wealth in building a home.

Yet it is easy to get outraged when you consider not the relative amount but the absolute amount. That absolute amount relative to the wealth of the average Indian is obscene. I got an email which pointed to “the extravagant and vulgar display of the wealth in a very poor country, where millions go without food and shelter.” Not the most astute of observations but certainly very accurate. The adjective “vulgar” is quite appropriate.

The outrage begins with the rhetorical question “how dare Mukeshbhai build such an expensive home for himself considering that there are people who are homeless?” Then it continues on with a reference to his recent statement in his address at the Waldorf Astoria hotel in New York reported by rediff.

Business leaders across the world must come forward to correct the ‘imbalance’ in terms of incomes of the rich and the poor, Mukesh Ambani, chairman of the Reliance Industries said.

“We cannot have islands of prosperity in the oceans of poverty and squalor, and for businesses to win respect, they have to come with new business models that balances the world.”

Building a billion dollar home in the middle of squalor and then talking about the inadvisability of “islands of prosperity” certainly exposes one to charges of unparalleled hypocrisy. But here’s the irony: most of those who point to Mukesh’s hypocrisy are pretty hypocritical themselves. Mukesh’s hypocrisy is vulgar in the sense that it pertains to a lot of people, something that is common, banal or ordinary.

The senders of outraged emails need to ask themselves how much the value of their own homes rises out of the reach of the poor they so patronizingly speak on behalf of. To the really poor, a half a million dollar home is as remote as a billion dollar home. So if they wish to throw stones at Mukesh’s fancy house, they should do so from outside the confines of their own glass houses.

This display of hypocrisy is a specific instance of a more general tendency that I have noted about do-gooders. They want others to part with their wealth for the general good — but they themselves feel that their own above average wealth is entirely deserved and they don’t have any obligation to share their wealth. I find it especially galling when rich politicians lecture rich businessmen on the merits of simplicity, frugality and generosity.

My take on this is simple. If you got ‘em, smoke ‘em. Do what you will. If you have accumulated wealth by playing by the rules of the game, you decide what you want to do with it: give it away or build yourself a Taj Mahal.

Until the day that I have given away my wealth so that I am at the level of those on whose behalf I plead, I don’t think I can honestly point a finger at Mukesh or anybody else for doing whatever they want with what they have.

  • http://www.ssaidoor.com ctrlalteredmind

    Spot on! These are precisely some of the points that I have been trying to make with people who have broached the subject. While the whole exercise does appear gaudy at the very least, I wonder if people would have had the same acerbic reaction if Mr. Ambani were to say, call his construction a facility/headquarters/extravagant lobby as a frontispiece for his company instead of a home. I’m willing to bet that people would then start celebrating the building instead of criticizing it. These public reactions appear to be knee-jerk responses driven by the “grapes are sour” mindset. The average person on the street is not going to immediately start fantasizing about philanthropic opportunities given windfall income. The first things that come to peoples’ minds are the luxury home and the yachts, figuratively speaking.

  • jayant-manik

    WTF!!
    Another Indian Billionaire “wasting” his father’s hard earned money on building the most expensive domicile in the entire universe!

  • dp.chalasani

    I think Mr. Ambani’s house and the wide media attention it’s getting has the potential of being a positive externality. Its possible that many young people in India might now be inspired to be entrepreneurs and wish for themselves the kind of wealth the Ambani’s now have.

    Such inspiration can only be very good for our society. Of course , all the hypocrites are not going to be inspired anytime soon.

  • pankaj

    Absolutely i have heard this thing from many people that rich should give money to poor,which is nonsense in this context wether anil ambani builds his palatial house or not it hardly matters, india is going to be hapless as it is .regarding the anil ambanis speech in NY which i saw on tv,it is for consumption of the gullible americans ,not to be taken seriously.

  • http://vaibh.blogspot.com vaibhavg8

    @jayant-manik
    Its not only their father’s well-earned money. Both the brothers have themselves worked exceedingly well to create wealth. By no stretch of imagination can you call them spoilt brats.

  • http://www.cse.iitb.ac.in/~parijat parijatgarg

    The way I see it, Mr. Ambani has just taken 2 billion dollars from his “pocket” and put it into national circulation. Is that so bad?

    Also, even though he might be worth 43 billion dollars, I suppose most of it is in reliance stock. How much of it is infact in that form? Unless he sold some of his shares, I suppose we must also compare the 2 billion dollars he spent against his non-stock wealth.

  • Vaidehi

    Good one ! This typical mindset that the rich are all bad and the poor are all angels is ridiculous.

    It is all a question of individual choices one makes. Wilful abstinence very often comes as a result of profound thought, deep sorrow etc. Had the same house been owned by a muslim or a converted christian in India I wonder how many would have turned jealous in dhimmi India.

    If by subtle coercion in tandem with sedulous engendering of guilt feelings, one is forced to *donate* for the upkeep of inimical parasites around, it would inevitably lead to stifling of creativity and free spirit .

  • praveshb

    Hi Atanu and everybody

    I agree to many of the points in the blog and comments. But I think we are all being very simplistic here. We have to understand that any of the wealth that Mukesh Ambani or for that matter even me is not completely the function of our own intentions, acts, intelligence or whatever. We have gained tremendously from the society surrounding us, our govt, our system, our culture, our parents(who in turn have benefited from the same outside sources). So all our achievements are not isolated. This is something that prompts me to share atleast part of my wealth to those who have not been fortunate enough to access my opportunities and good luck. I am sure Mukesh Ambani and family deserves every bit of that $2bn home that he is building, but lets just not say that its “his” wealth and he has the moral right to spend the way he is want. The rules of the gane are made by mortal creatures, and they can be wrong. So following rules of the game when you dont want to share your wealth could be .. and I am saying again .. could be a relfection of the selfishness of the person’s nature.

  • http://www.deeshaa.org Atanu Dey

    praveshb, I agree with you that everyone is indebted to others for what he or she accomplishes. “No man is an island, entire of itself” as John Donne wrote.

    We are all different in our inclinations and talents. Some are smarter than others, some wiser, some more selfish, some more generous.

    I may feel that Mukesh should have a more modest home. But on a matter of principle — that of private property — I think he has the right to do what he feels with his money. I may feel moral outrage at his waste (if that is what it is) but I will defend his right to waste because I wish to live in a free society. In a free society, nobody should tell anybody what he or she must do with private property.

  • Raghuveer

    Atanu,

    To elaborate what you wrote further, some of the outrage is justified because of the ‘in your face’ nature of the project especially since its in a city like Bombay where a significant percentage of the population lives in slums. In a starving village, it is akin to laying out a full-course meal for oneself in front of everyone.

  • http://www.deeshaa.org Atanu Dey

    Raghuveer, I can’t agree more with you that the “in your face” stance is disgusting. And your analogy is apt. In fact, I find huge billboards advertising expensively priced fabulous meals with brilliant colored pictures of food in Indian cities in very poor taste (so to speak) considering that the cities are full of people who could never even afford a modest meal.

    But let me add one point that I missed earlier. While I am disgusted by the ostentatious display of wealth by the rich, what really makes me sick is the unrelieved squalor in which millions have to live. And when one realizes that the misery is largely the result of absolutely stupid economic policies and therefore largely avoidable, it makes the situation much harder to bear.

  • http://www.sundarmail.com Sundar

    It looks more like a hyped news with a zero added to the end. Wondering how is he going to spend 8000 crores in building his home, unless he builds a bunker and fills with cash or build door/window frames with gold.

    I guess its value could be 800 crores.

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  • ashujo

    There are two issues here. One is that of private property and there it’s of course true that Ambani can do whatever he wants with his property. But Pravesh hits the issue on its head. Barack Obama once asked none other than Warren Buffet (now “again” the richest man in the world) why he gave so much money to charity. And Buffet basically said what Pravesh has stated, that while he owes his success in part to his own talents, it was made possible only because he lived in a society that educated him, that supported the application of his particular talents. The least he could do in Buffet’s opinion, is to repay some of this favor back. It’s one of the most humbling stories I have heard and makes a lot of sense in my opinion. Nobody should claim that you should be told how to spend your own wealth, but as I see it, the number of people who are steeped in hubris, thinking that they owe their success only to their innate qualities, is more than we would be comfortable with.

  • lurker

    Pravesh and Ashujo,

    I think the Ambanis have done their bit to the society by paying their taxes. Their taxes (approx. 1/3rd of their wealth) is paid to the government, so that it can help the society. If someone feel that the Ambanis have ill-gotten wealth, let him/her sue them for tax-evasion or illegal practices and put the wealth where it rightly belongs!

    What the Ambanis decide to do with the rest of their hard-earned money (whether display it ostentatiously in front of teeming millions of poor Indians or decide to donate it to charity) is their own free will.

    As Atanu rightly pointed out, for a poor homeless hungry citizen, a $2 billion home is as unaffordable as a $1 million home (I am willing to bet that homes worth Rs.4 crores are numerous, atleast in Mumbai). I may find it vulgar, but I will defend to death, the Ambanis right to their vulgarity!

    -Mayuresh Gaikwad

  • ashujo

    As I mentioned before, I agree that their right to vulgarity must be defended. I will do that too. But I don’t believe that any one of us has actually done their final bit for society, for the simple reason that there’s always more to do. It’s simply about the greater context in which we live.
    Ironically I think the Ambanis’ taxes would be better spent in directly aiding society instead of putting them into the black hole of government coffers where they disappear forever!

  • http://chaitanya1.wordpress.com chaitanya

    Lets see what options we have. (a) Tax Ambani’s wealth and spend by govt. (b) Respect private property and let Ambani spend to his whim.

    I think most of us agree that option-a has failed worldwide. so, we are left with option-b as a decent economic system to follow. But, the golden mean to me, is option-b combined with a sense of “smart” consumption by individuals.

    One can spend a billion dollars (or whatever the amount) on getting highly luxurious item. Or, if one is service oriented, one can inject that money into the society for a targeted benefit. Sure, there are arguments on both sides. Building a billion dollar home will generate employment .. Spending billion dollars on a targeted education program has its long term benefits. It seems to me, the latter choice has more long term benefits to society.

    In economics jargon, the choice is whether you spend money for “consumption” or to build up capital / infrastructure. An education program builds up human capital and is beneficial to society in long term.

    This is not just about Ambani’s choice. These choices are in everyones life. Say, you chose to drive 200 miles to some place in your gas guzzler, instead of taking a train. A significant part of that money, has gone into Saudi coffers, instead of (pick a social program to support from your savings). Yes, both sides have some advantages. But the choice is, immediate consumption (vs) long term benefit for society.

    Anyway, so, while is completely defend private property rights, what you choose to do with that “right” could have lot of impact long term. As they say, “vote with your wallet”.

  • pankaj

    One thing we are missing is that Charity is christian ethic no doubt about it, we have many industralists in india who are very rich how many have opened schools,colleges or given back to society from which they have got so much,like say USA’s Stanford,Harvard.Bill gates,warren buffet and countless other rich people in USA have donated and continue to donate to their colleges,schools and the society from where they have come,not only that they have also given to other countries charitable causes,how many of us have even given a 100 rs to our schools or colleges, we forget them once we finish our education.

  • Vaidehi

    pankaj ,

    Click on the following link and read it all before you come up with such hastily neat assumptions.

  • Vaidehi

    The link is not going through. Sorry for the glitch.

    Google search typing *Jawahar’s interview with Swami Dayananda* and you can access the facts eclipsed by Indian govt and media.

  • lurker

    Mukesh is simply doing what Trump has done. Here in NYC on uws, on Wall St, in Chicago, in Atlantic City, etc. you will find Trump Tower. Why ? How will Mr. Trump live simultaneously in so many homes ? Well, technically he owns a penthouse in each tower, so he lives there. But in reality, these are merely hotels/high-end apartments. You rent them & live with Trump himself. btw its not that expensive. Trump tower rent in NYC used to be like 3500$ a month for 800 sq ft, which is not bad for a pad overlooking Central park & in the heart of the city. 1-day rents are even cheaper. Like if you want to become doctor in USA, you have to take USMLE exam, which is a computer exam taken in a private test center run by one private company called Prometric. Now, this Prometric typically rents office space in Trump tower & fills it with computers, then students come & take the exam & next day the place is empty.

    Once its complete, Mukesh will live in penthouse. Rest of the “house” will become a hotel/high-end apartment complex/convention center/designer luxury mall etc. With the rents/leases, Mukesh will then build another “house” in Delhi, another in Ahmedabad etc. etc. This “house” will even have space for seminar centers like Brilliant, Agarwal etc. Then our pre-IIT students will go to Agarwal training from Mukesh house, so Mukesh is contributing to education also.

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  • lurker

    I have a few points to add to this.
    (1) Mr Ambani did not pay that much money.
    He got the land for much less b/c he is connected. Hell when he bought his plane there were shares sold that were noticed not for this issue.
    (2)For the most part, other peoples poverty is not due to some ones wealth.
    so he can do what ever the F he feels with his money
    (3) It does show that he has some midlleeastern british gulam keeping or british nigel butlering mentality….
    I’ve never had servants and actually do feel uncomfortable if some one else has to do my laundary, dishes or cleaning up,
    so even the ordinary lower middle class family with a parttime servant makes me squeamish.
    But 600 servants needed shows he has no taste or value.
    (4) Do consider the values of societies place
    Jeff Bezos is a Ridiculousnare(self made one) If he desires he too could do an ambani kind of thing, but he choose to work on space.
    That to me shows that he is a man who has taste and values good things in life.
    Same can be said of Mr Gates and Buffet who are not leaving nearly all of their wealth to their progeny.
    There are more such example both big and small in other societies than in india.
    As more and more indians have a better chance to be wealthy they ought to look into developing a taste for some thing more interesting rather than gaudy.

  • Amit

    Did my previous comment end in the spam folder? Atanu, could you please check and delete this? Thanks.