on February 27, 2010
*MONEY AS AN END IN ITSELF*
One thing I saw as a big problem with this book is that it largely does not address _why_ you should listen to him. He does say that he wants to make money to stay out of the "rat race", but that does not translate into being Warren Buffett, Bill Gates, and Donald Trump, which are people he says we should strive to study and emulate. Robert is presenting this book from the paradigm that money is the goal in and of itself. Why should you try to be rich? Because then you'll be rich! A circular argument that he feebly defends by equating being excessively rich to not being in the rat race. To him, being taught from a young age by his rich dad, he sees richness as an obvious premise to life, but he fails to adequately defend this paradigm that underlies the entire book.
*MONEY IS EQUAL TO WORTH*
Robert constantly criticizes poor people, and people who don't make the decision to be rich. He criticizes people who realize that to do what he does, they would have to do things they feel are destructive, or too risky. While I don't think he ever states it explicitly, he does constantly equate a person's worth (as a person) to their balance sheet. This is the justification he uses for BLAME THE VICTIM (below). It doesn't make sense to see punishing poorness with job insecurity, inadequate medical care, etc etc, unless you see poorness as being worthy of punishment. I don't remember him using the word punishment, but he does express that this is a deserved negative consequence. He could defend this by saying that poorness is merely a reflection of worth, not that they are punished _for_ being poor, but that they are punished _with_ being poor (ie poorness _is_ the punishment), that would still be a misdirection. According to his book, the poor are poor because they don't generate assets, they generate liabilities. They put their money in the expense column before the income column. Is this worthy of punishment? Why is struggling to put food on the table a legitimate punishment for behaving in ways that aren't monetarily conducive? In other words, the money system is self-referential. You have money because you are good at making money. You lose money because you are good at losing money.
If we take monetary worth to be an indicator of anything other than one's ability to succeed at making money, then we are deluding ourselves. Worthwhile behaviour does not translate into money, detrimental behaviour does not translate into poorness. Slavery ended about 150 years ago, plantation owners were upset because slavery is free labour, a very profitable way to behave even though it abuses a huge portion of our society. And many people who produce value for our society are poor, consider open source authors and teachers, for example. Money and lack thereof cannot be equated to true worth or value to the society. In an anecdote from the book, he points out that he is a "best-selling author", because he understands sales and marketing, while a woman he meets with is a "best-writing author" who can't sell any books. In this example, her admittedly good writing doesn't generate money, while his book does. So in this case, money did not select the better book, but rather the better marketed book. So clearly we cannot take money as equivalent to inherent worth.
*BLAME THE VICTIM*
Robert admits that the poor are victims, he talks about it constantly, calls it the rat race, talks about the many ways they are taken advantage of, such as with taxes. He admits the reason for this is their lack of financial literacy, they are doing what they are taught to do, and says this can be perpetuated throughout many generations. He says their schools and parents and society teach them to behave the way they do which places them into this poor and middle class brackets where they are the victims. They think going to school, getting a job, having a family, buying a house will make them rich, but it just puts them at the bottom, in debt, living paycheck to paycheck. So they are victims because they were trained to be victims. He constantly talks about mindset (one thing I agree strongly with him about), suggesting that a major part of becoming rich is the decision to be rich. To think like rich people do (for a criticism of this, see CAPITALISM IS A ZERO SUM GAME, below). Something these people do not do, because they were taught to think like poor and middle class people do. Then he proceeds to blame them for being poor. Says that they are poor because they are afraid, ignorant, and indecisive. He sees capitalism (as most capitalists do) as a system of rewards and punishments for selecting people and ideas with the best value and worth.
But how can he justify punishing the poor for being the way they have been taught to be? He had a "rich dad" to teach him the ropes, and while he did initiate that relationship, the vast majority of people do not have such a mentor, cannot initiate such a mentor (ie he grew up in a rich neighborhood, so while he capitalized on opportunity to find a rich dad, that opportunity itself is not available to most people, and becomes decreasingly probable the poorer one's parents are).
Also, the most pervasive influence is society and culture, an image and worldview set in large part by magazines, movies, television, music, etc. Areas marketing people use to influence people into thinking and in turn behaving in the ways they desire. This marketing is purchased by the rich. They establish the behaviour that is causing the problem. If all the poor and middle class are excessive consumers, then the rich make money. So they encourage this mindset. They establish norms, the people on television live a certain lifestyle, this lifestyle is then associated with a certain group / bracket of people, even though that group / bracket cannot afford to live that lifestyle. The people see that, think that they are supposed to have those things and live that way, and so they do. They go into debt, not even realizing they are living outside their means. The poor / middle class mindset is thus not just taught from parents with the mindset to their children, but also from the rich in order to make greater profits at their expense.
*USES EXPLOITING THE DESPERATE AS A JUSTIFICATION*
Robert gives many examples of things he has done, and has seen others do (see OVER-RELIANCE ON ANECDOTE). These things largely result in exploiting poor people. For example, he waits for people to go bankrupt, or have banks foreclose on their property, and looks for houses that have been on the market long enough that he can offer significantly less than they are worth. In other words, he has trained himself to spot desperate people, and then capitalize on their desperation. He justifies this by saying that he is providing a service, or something of value, something beneficial, as evidenced in that these people pay him money. If he wasn't doing something good, they wouldn't have sold him a $70k property for $5k that he turns around and sells for $60k. But the reason they go along with this is not because he is providing something valuable, but rather, because their situation is so desperate that they have no choice. They are forced to take the offer, because they don't have any other options. He is not providing a service, he is exploiting the desperate. As analogy, if someone is desperately poor, they may feel forced to sell their organs for money. Thus we outlaw selling of organs, to prevent this exploitation. But if it were not outlawed, then his reasoning would imply that purchasing cheap organs off of desperately poor people is beneficial, to them, because otherwise they wouldn't have made the sale. Turning around and selling them for hundreds of thousands of dollars to people who will die if they don't get them is not extortion, but service, because otherwise they wouldn't have made the purchase.
Because he justifies what he does by using their evaluation of the value of his deal, he also must ignore some of his foundational points in the book about how terrible these people are at evaluating the merit of such deals, as talked about in BLAME THE VICTIM.
*OVER-RELIANCE ON ANECDOTE*
This book is heavy with anecdotes intended to illustrate the points. Most of the anecdotes are personal experiences, and most of them deal with real-estate. This may seem pragmatic, but I think it hides serious problems. If the theory behind his points is wrong, then the anecdotes make it seem right. He believes that everyone can do the things he does (and to be fair, I agree with that), but his examples are mostly himself. If you did not have his experience with international law from piloting ships, leadership from the military, sales and confidence from selling xerox machines, knowledge from attending conferences and school, then your chances of replicating his success would be drastically reduced. His anecdotes are very heavily real-estate based, but that market has been largely tapped out. I can't help but wonder if he would still be "broke" (which he distinguishes from "poor") if not for having that wave to ride. He says his rich dad started teaching him when he was 9, but that he didn't become "[financially] free" until he was 47. If he had all these advantages and all this capability, then why did it take so long? The anecdotes don't address this, they get the reader excited and make his points seem valid, while sweeping potential issues under the rug.
*CAPITALISM IS A ZERO SUM GAME*
He claims to be selling financial wisdom, the lessons his rich dad taught him. He presents this as a laudable thing to do, he'll educate people about how to make money, and then they will be better capable of making money, making their lives better. So it seems like he is providing something valuable. But this is myopic, we cannot all be winners. There are a finite number of dollars, for every one that I acquire, that is one fewer that anyone else can acquire, thus capitalism is a zero-sum game. For every winner, there is a loser. Actually, with the way it works in practice, for every winner, there are about a thousand losers. In other words, if we all learned to think and act like he does, then no one could get ahead, and his lessons would be pointless. There could be no rich people if there were no poor people, so by adopting practices to make himself rich, he is adopting practices to make others poor. His model for how to get ahead is a model for how to put others behind, directly contradicting many of the justifications he gives for adopting his views and practices. He wants to help educate us to become rich, but this goal cannot be attained (if everyone is rich, then no one is rich).
*THIS IS NOT A BOOK ABOUT RUNNING / STARTING A BUSINESS*
It was marketed to me as a book about business, or at the very least, a book about wise financial thinking. But running a business is almost never talked about, instead he focuses on investment. If you have seen his chart of the four different groups of people who make up the world of business (not in "Rich Dad Poor Dad", but you can find it on the covers of several other books in this series, such as "Rich Dad's CASHFLOW Quadrant"), he breaks it into employees, self-employed, big business owner, and investor. This book focuses almost exclusively on the investor category. Even then, it is more about mindset than practices. One thing is sure, he spends very little time talking about how to own a business, it is all about choosing to own assets. (ie he would say that you shouldn't own and run a business at all because that is a job. Instead unless you have someone else running it for you, because then it is a passive income, and you can spend your time looking for other investments)
*WHAT THE BOOK IS TRULY SELLING
This book is aimed at eager capitalists, people who get excited about money, people who want to make money, people who want to start businesses, people who feel trapped in the "rat race", people who consider themselves savvy and intelligent and don't understand why they are not rich. Through marketing, it also pretends to be for parents concerned their children will wind up in the rat race like they are, but this is mostly cursory. So what does it give these people? What can they get from this book? What is Robert trying to convey? You might say it gives them hope, or a dream. I think it mostly just gets them excited, makes them revel in their financial desires, makes them feel that these desires are achievable, and that reading the book is helping them achieve them, somehow.
But, if you've looked at the people it is marketed to, you'll notice that they are mostly people who do not want to be poor, or who feel trapped or unhappy in some way. The book equates poor and middle class and rat race with extremely undesirable positions, and imparts that you should be getting out of them. This, in itself, builds the foundation of discontentment that the dreams rely on. That you can get to a better place than you are. In other words, you are not in as good of a place as you _should_ be. Once you are sold on this, it turns that "should" into a "can", and you are inspired. But you wouldn't need this inspiration if you didn't feel that you were in a bad place, a feeling the book goes to great lengths to ensure you experience. It manufactures discontentment, and markets it as the American Dream. Is the dream attainable? If you can truly learn to think like Robert does, then it is more likely to be attainable, sure. But it sets no paths to follow (see summary below), no set of steps. You'll be in the same position when you finish as when you started, you'll just feel more desperate that things aren't happening.
SUM UP THE BOOK IN A SENTENCE
If you think about money _all_of_the_time_; critically analyze what others and yourself are doing to be successful and unsuccessful; constantly look for money making opportunities; and strive to make money making decisions, then you will become rich.