Books — what I read and what I think about it.
I’m not writing this to recommend a book. Morgan Housel’s The Psychology of Money was the trigger, but what hasn’t let go of me since is a bigger question: why do you often fall hardest exactly when you’ve made it? And why does that hold not just for individuals, but for whole families and whole societies?
Individuals
Housel’s book is full of people who had long since won. Jesse Livermore made the equivalent of three billion dollars in a single day in 1929 — and was broke a few years later, because after the triumph he felt invincible and kept betting bigger. Rajat Gupta, head of McKinsey and worth a hundred million, wanted to be a billionaire on top of it and ended up in prison for insider trading. Neither was a beginner. They were more successful than almost everyone around them — and that was exactly the problem. Success itself gave them the feeling that more success was guaranteed.
Families
What’s striking is that the same pattern plays out across generations, with no crash at all. There’s an old rule of thumb for it: shirtsleeves to shirtsleeves in three generations. The first builds it, the second manages it, the third loses it. Thomas Mann turned it into a whole novel with Buddenbrooks — the decline of a merchant family over four generations, in which growing refinement eats away exactly the hard business instinct that created the wealth in the first place.
That’s the heart of it for me: it isn’t failure that gets dangerous, it’s success that lasts too long. Anyone who had to fight for something knows how fast it can be gone. Anyone who only inherited it — money, status, a working company — takes it for granted. And taking it for granted is the beginning of the end.
Societies
And then I wonder whether the same thing happens on the largest scale. The political scientist Francis Fukuyama wrote in 1989 that with the victory of liberal democracy we’d reached something like the “end of history” — the final form of government, administration from here on out. Critics called it a staggering complacency even then. We have money, the big wars seemed over, no one needs to get their hands dirty anymore. That very feeling of having arrived is the collective version of Livermore’s “swelled head.”
You only have to look at how fast ancient Rome, which seemed eternal, fell apart in the end. And I see it up close too: here in Germany we declare one excellence initiative after another and certify how good we are — while the products get expensive and excite fewer and fewer people. That’s not an isolated problem but the same pattern: mistaking past success for a guarantee of the future.
Why I’m writing this down
Not because I have a solution. But because the nasty thing about this pattern is that you can’t feel it from the inside. Decline feels exactly like stability for quite a while — until suddenly it doesn’t. The only thing that helps is asking yourself honestly, now and then: is it my own work carrying me right now, or just momentum others built before me, and an edge that’s quietly melting?
I don’t have a finished answer. But sitting with the question, especially when things are going well, feels more honest than waiting for the next title.
Related
Background: the individual cases are from Morgan Housel, “The Psychology of Money” (Harriman House 2020); on Livermore, Housel’s essay. The 30/12/3 rule of thumb traces to a 1980s US study and is worth reading critically. Fukuyama’s thesis: “The End of History”. The rest are my own thoughts.
