Rich Dad, Poor Dad

My wife has started reading up on investing and all things financial and entrapreneurial. One of the starting points was one of the "Rich Dad, Poor Dad" books, which she'd read quite a bit of. I'd seen them prominently displayed at book stores. It was folksy and a bit unorthodox. I put a little entry on my "to check out" list to see if there was any merit to what he had to say. She then did a little internet looking into the topic.

I hadn't know was that Robert T. Kiyosaki’s book "Rich Dad, Poor Dad" is a fraud, as in almost everything described in the book as fact is really just made up and false, even best seller status apparently was achieved largely via a quasi-Ponzi scheme.

This is bad for two basic reasons. First, the books are on the non-fiction shelf. Second, the argument for following Kiyosaki's financial advice is basically ad hominem. To paraphrase: "I got rich this way, my friend's dad got rich this way, my own dad failed to get rich because he didn't do it, it works." An ad hominem attack is a legitimate way to question an ad hominem argument.

This isn't to say that there aren't any nuggests of wisdom in 18 books of financial cliches, but given that the book urges readers to leverage and similar high risk approaches to get rich quick, caution is in order when you know that the man who wrote it is a fraud.

Kiyosaki and Education

I don't give Kiyosaki quite as hard a rap for scorning conventional education as some writers do.

While education is valuable in fields where you rely on your ability to reason and draw upon a wealth of received wisdom (law, medicine, engineering, academia, theology), in much of business too much reasoning ability can be a bad thing.

First, it tempts you to do things yourself instead of delegating tasks to an expert. Good business people trust their professional advisors.

Second, outside some select fields, education is largely a sorting tool which isn't that important when you are in business for yourself. Many jobs that require a B.A. or other degree, don't actual involve using the skills you acquire in that education in any meaningful way. The fact that you got into a good college (which shows that you are smart), and that you had enough self-disicipline to graduate, are far more important.

Third, many business people get rich by doing something that logically should be stupid and never the less sticking with it and getting lucky -- education and reasoning ability breeds doubt in these schemes. FedEx was based on a business plan that the professors at Harvard's M.B.A. program frowned upon.

Indeed, even in the professions, big economic sucess is rarely simply a matter of being very smart and very good at what you do.

My father-in-law was a financially successful radiologist not exclusively or even primarily because he was far better than his peers at reading a chart. His financial success had a lot to do with some savy business decisions he made and with his artful management of his business colleagues.

While the straight and narrow path can lead to financial success in law, by getting you hired at a big firm and pushing you along the partner track, many lawyers secure financial success outside this track using very non-academic negotiating and marketing skills to bring and win major class action and personal injury cases.

Edison invented the light bulb thorough brute force trial and error.

Put another way, education and a good job and conventional wisdom are great, proven, reliable tools to becoming upper middle class, but aren't necessarily the best tools for becoming truly rich. Entrapenurial success (or success in the arts and entertainment world) is the main way to achieve great financial wealth, and this involves a set of qualities very different from those rewarded in the traditional good student path.