The Amish & The Pitfalls Of Making Money
Jim Cates follows up last week’s post on income and material differences in Amish communities with part 2–on the challenges of making money, including the attraction of marketing schemes, and what happens when business deals go bad.
Money…Is a Terrible Master
The full quote actually goes “Money is in some respects life’s fire: it is a very excellent servant, but a terrible master.” No less an expert than P.T. Barnum uttered these words, a man familiar with soaring to the heights of financial success and peering up from the ashes of financial ruin, each more than once in his legendary life.
One might think the Amish, with their plain lifestyle and resistance to technology, would be inoculated against the mastery of money. Such is not necessarily the case.
I should take a moment and make the obvious comment that speaking here as a guest blogger on Amish business practices is bringing coals to Newcastle (Erik is the author of Success Made Simple: An Inside Look at Why Amish Businesses Thrive, 2010). However, the yen for “more” is a common human struggle, and this piece examines, not the successful entrepreneurship of mainstream business, but the quirks that bring the Amish to that edge in which money teeters between the roles of servant and master.
To borrow from Sir Walter Scott and paraphrase his poetry, “Breathes there man with soul so dead, who never to himself hath said ‘Wow! I can make some money on the side doing that!’” The Amish are no exception.
Frequent Amish America visitors are familiar with photos of signs for various businesses and enterprises – “cottage industries” that generate crafts and foodstuffs for the tourist trade and for locals who appreciate the opportunity to buy fresh produce.
Some Amish also entertain parties for dinners in their homes, another means of generating income. Much like Tupperware, Pampered Chef, Avon, and other secondary sources of revenue more familiar to the English crowd, they are largely designed to supplement an existing income, rather than support a family.
The Allure of “Easy” Income
However, again like their English counterparts, the Amish can buy in to marketing ploys that are cleverly disguised pyramid schemes. These usually center on their use of alternative and complementary medicines (A & CMs).
Although the A & CM market has grown exponentially in recent years across all cultural groups, the Amish have a longstanding tradition of utilizing vitamins, herbs, and minerals for primary, as well as secondary health treatments. This makes them a logical marketing target for producers who wish to expand sales, often by encouraging them to develop their entrepreneurial skills.
These efforts can be wholly legitimate. Many companies use a simple model in which the local Amish businessperson acts as a merchant, buys the product at wholesale cost, and sells at retail. However, there are also those who sell the products to the “retailer” at an inflated price, and then encourage the retailer to recruit other “retailers” under them.
As they do so, retailers receive a percentage of the sales from their recruits, creating a pyramid. Profits accrue from this expanding base. For some, this approach is profitable too. However for many it is rapidly disillusioning to realize just how many retailers will need to be recruited below them before they can turn a profit themselves.
The allure of this scheme is readily observable however, particularly for young adults. Construction or factory work can bring a stable, steady, and predictable income. And yet a family that begins increasing in size can place a strain on that income. A husband and wife casting about for ways to supplement their finances are easily drawn to an approach that promises large rewards with minimal financial investment.
When Investments Fail
At times, seemingly better grounded Amish entrepreneurs can also overextend themselves. In 2011 Monroe Beachy made headlines, dubbed “The Amish Bernie Madoff.” However, much smaller versions of the difficulties Beachy created for Amish investors occurred – and continue to occur – throughout Amish settlements.
They are not reported for several reasons. First, because they often involve much smaller amounts of money, the individuals responsible attempt to reimburse their investors, correcting the situation themselves once it has been exposed.
Second, in at least some situations the church takes responsibility for reimbursing defrauded investors, while the entrepreneur is responsible for reimbursing the church. And third, there are times when the issue is simply not reported or addressed, as investors shoulder their losses rather than create a scandal.
Are these entrepreneurs villains, preying on the financially vulnerable? In many cases, the answer is no. There is a naiveté fostered among the Amish. They believe that while the world is a risky and even dangerous place, there is an inherent safety within their own communities.
And in fairness, the potential for being conned, manipulated, or even swindled in a business deal is much, much higher in an Amish-English business transaction than in an Amish-Amish transaction.
However, that does not mean that within-Amish transactions are free from the risk of manipulation, deceit, or erroneous decisions, and it is there that trust becomes excessive; a trust all too often clouded by the potential for easy income.
God, Family & Financial Security
The Amish have faith in God to order and manage all affairs in heaven and earth. And yet the areas of health and finances may be two of the most difficult in which to follow the ultimate will of the Maker.
Financial independence serves several purposes for an Amish family. It demonstrates the determination of the husband/father to assure that his family receives adequate care. It assures a continued separation from the world and any social programs that offer support in times of need. And it demonstrates the blessings of God.
For so many reasons, the Amish feel impelled to maintain their financial status if at all possible. Unfortunately, as is true for all of us, the role of money, as servant or master, can easily be blurred by its allure.
Jim Cates is author of Serving the Amish: A Cultural Guide for Professionals. He can be contacted through this blog or his website at servingtheamish.net.
An Amish wealth gap?
According to one Old Order bishop, a big challenge to the Amish way of life is the development of an Amish moneyed class: Amish entrepreneurs who have made it big, especially in the furniture industry. As long as the Amish were mostly family farmers, there was little difference in wealth or influence, and bishops were the acknowledged community leaders. Now, with the growth of Amish industry, a big wealth gap has developed. At least some of the “Amish 1%” resist having their lives and choices regulated by bishops, and may even have more influence in their communities than bishops do. That’s a “Pitfall of Making Money” I’d like to see addressed more fully in these blogs.
I know one Amish entrepreneur who likely owns the largest business of them all (within the Amish), literally hundreds of employees, both Amish and non-Amish (when 20-30 employees is considered “large” for the Amish). A real outlier. A neighbor company he works with has dozens of employees, and he dwarfs that one. Of course by his home and appearance, he doesn’t stand out in any way from his fellow church members.
No doubt he wields a lot of influence in his community, but in the time I’ve spent with him I hear a lot from him about doing things which involve the community–not only his own local community, but cooperating in different ways with others in his industry. This seems important to him–it’s possible some of this emphasis comes from awareness of his more visible status as such an outlier.
But I think it also comes down to the attitude a person has, and where the heart is. It takes some humility to submit to the community when you have created a multi-million dollar business by your own hard work and innovation and when literally hundreds of others depend on you for employment. I can understand why some Amish struggle with that and you sometimes get conflict, especially the ones who’ve seen success. They are human after all.
Damon you are likely aware of this already, but I found last year’s JAPAS article on wealth distribution in Holmes County to be a good read on this general subject:
Re: An Amish wealth gap?
Many thanks, Erik. I wasn’t aware of that article.
Damon, not only the “Amish 1%” (which I’ll leave to Erik and others to discuss more fully), but in the Elkhart-LaGrange settlement, money generated by factory work is a concern. Particularly for adolescent and young adult males who live at home and have comparatively few living expenses, the hourly wage allows them luxuries they can have trouble relinquishing in the face of purchasing real estate and their own families that demand a much larger share of their paycheck.
Very eye opening. I never thought about this happening in an Amish Community. Just proves that human sin effects us all, even the most devout.
I often wondered how that affected their community and the way of life they live. It is one thing to be making a living comfortably and getting by with enough to feed and take care of your family, but what if you really start to make a profit and have more than your family needs? It seems like they contribute to the needs of all by helping with medical expenses and when a crisis arises with their community members they also pitch in. I would hate to see their simple way of life and their beliefs and morals be influenced by money. They are such a good, simple and honest society and people. That is why I admire them so!!!
I think you bring up a good point Donna, in that wealth cuts both ways–it can create “inequality” (which imo it is debatable how bad at thing that actually is) and engender pride, but communities and families have real needs which have to be met, and money can be used for good ends like in the case of medical expense you mention.
Do church leaders address this newish challenge sufficiently in both what they preach and more importantly in their own example (b/c ministers may also be successful business people)? It’s ultimately a personal thing whether one remains mindful of one’s values, but like with other things the community influence can help.
Looking at homes from the outside often gives you only a small idea of how well off someone is. There is also the problem of living above your means and keeping up with the Joneses, so I guess you can see we’re very human. There is the up side of helping each other. I know of wealthy business men who use there wealth wisely. One man, who is now deceased, left a great amount to benefit our parochial schools. I’ve heard of men paying off a widow’s mortgage and also paying huge hospital bills. But, yes, there is a great concern among our people about living a rich life and wasting what we have been given.
Those that make a lot of money are wonderful for the community at large, if of course they share the wealth. After all, it is not money that is the root of all evil. It is the LOVE of money that is the root of all evil.
God doesn’t forbid wealth, and you can see many Bible examples of those He blessed with wealth.
Amy, I totally agree with you. In church we have often been reminded to take an example from Abraham and the widow with her mite, not the rich man in the parable of him and Lazarus or the rich young ruler. I guess it’s not so much how much we have as what we do with it. We need to remember who blessed us with our riches.
I know the Amish help others (like aiding others, Amish or Englisch, when a natural disaster strikes). I also realize they are expected to contribute to a kind of community fund to help out others in their own church district.
How much (percentage of income or general wealth?) is an average Amish family expected to give? Are families with several older, working children (unmarried) expected to give more than, say, a family with several children under age 10? Is it biblical tithing? I would think people would like to be able to budget. I’m not being flip, but what is the Amish “fiscal year”? Is there a certain time of year that their contribution to the “general fund” is expected to be made?
Money is an “issue” for us all.
Usually our contribution depends on the amount of our day’s wages for Church Fund (medical aid). Then for Fire and Storm Aid we pay like a half dollar or a dollar a thousand according to our evaluation, which lists the approximate total of all we own. It depends on the need. we also do free-will offering at different times of the year.