A discussion for debate: Less Kiyosaki, more Midas Mulligan.

In Richard Kiyosaki's RICH DAD, POOR DAD, the author describes four types of money-makers.

Whatever qualms I have with other aspects of the book, I believe the quadrant to be accurate indicator of the common perception of wealth creation. But that common perception would be wrong if it doesn't take into account that the investor's can only make money on the strength of the ultimate self employed businessman, the creator. I'm more interested in the perception of morality involved with one's placement within this quadrant. While I don't believe Objectivism takes a stance on one's morality simply by judging which method is used, there is debate anyway over the matter among Objectivists. Kiyosaki doesn't outright make moral assumptions, either, but they are somewhat implied. Particularly of interest is his take on those in the (S)elf-employed field. His observations here are of interest for fans of the romanticized notion of the self-employed as portrayed in the characters of Ayn Rand.

When Kiyosaki talks of the self employed, he pays lip service to those who do, saying things like you want a perfectionist in a doctor or dentist. Then points to several "problems." Long hours, perfectionism, and the obvious factor one is not making money when one is not working. If the self starter becomes ill or unable to work, his income is gone. He usually wants things done his way, and as a result, is afraid to delegate responsibility to other. Kiyosaki refers here to Michael Gerber's THE E-MYTH, which deals with the problem of technichians who wrongly equate skill in one area as being the same as an entrepreneur. The solution offered is to "franchise" one's method of doing things. I think this works on a limited basis; but it requires an employee, not a self-starter with their own ideas. So this creates an issue for those self-employed who have a moral bias against employees, because in order to create large-scale passive income, they become dependent on those employees anyway. The problem of exhaustion is real, and a good illustration is when Roark is finally convinced by Wynand to take a vacation, or the near-collapse of Reardon in ATLAS SHRUGGED. These traits are examples of "working hard, not smart."

The biggest complaint of Kiyosaki is that a self-employed person is still, in essence, an "employee," with himself as the employer, but still bound to the same role, only more so because of the added responsibilities. And of course, he points to the statistics of failed businesses. He points to the superiority of the next categories on the quadrant because they supposedly offer financial freedom, through passive income. What he fails to address is that those investors and system builders are, in their own way, dependent on all those creators, for without whom their would be nothing to invest in.

By his criteria, Howard Roark is a bad example of how to succeed in business. Certainly we can point to his time "in the quarry" as one example. Peter Keating would no doubtably concur with Kiyosaki, since Keating seemed to earn all his money passively, through the efforts of others. And that's the problem. Without condeming the role of the investor or the value of system-building businessmen (even Roark needed his Enright, and every Taggart her Mulligan, Kiyosaki at best is simply ignorant of the the nature of secondhandedness, or at worst, promoting it.

Another factor ignored in Kiyosaki's advice is the role of productive achievement involved in work. Without saying that investors can't be productive, those investors still gain their role from the role of the creator. Kiyosaki cautions against "perfectionism," and condemns long hours and exhaustion as some kind of Faustian bargain. But I'd caution against downplaying the psychological benefits of said prices for production, as he does, even if he pays lip service. He ignores the fact that, "in order to get something done, you've got to love the doing." Which means that not everyone will be interested in investing, which is a business in itself. It's not a hobby that pays for beginners, anyway, and requires its own amount of time and effort to be done properly, time that could be spent on one's real passion or skill potential. Now, that's not saying that someone culdn't be an investor, make a ton of money, and use that free time to pursue his personal goals as a self-employed creator. But If everyone were to follow Kiyosaki's advice and become investors, and made enough passive income to increase his free time, what would he advise to do with it? Like any good Amway-styled salesman, he'll parade the idea of fast cars, big houses, and all sorts of luxury entertainment. But in doing so, he simply promotes the hedonistic lifestyle. But being entertained cannot be the goal of one's life, even art is meant to be fuel, not the destination. Ronald Merrill talked of this in his discussion of "the Galt-like golfer." What about a highly productive man who, rich at 30, retires and spends the rest of his life playing golf? Has he really done anything wrong?" Merrill claims that Objectivist ethics would say "yes, he has," because "it's not what he has that counts, nore even what he does, but what he is. By living in idleness, he is diminishing his productive capability and ability, and thus acting against his own life...And that matters, because-in reality-fortunes are vulnerable to inflation, depression, and confiscation."

This last line in particular should really give people tempted to look to gurus like Kiyosaki pause. The self-employed creator is more at risk than anyone in the quadrant, as demonstrated in ATLAS SHRUGGED. But his worst potential enemy is not a statist government that would sieze his creations and cut off his income, it is the investor who uncritically, without principle, funds his destruction by continuing to profit from a mixed market economy. Kiyosaki, along with other financial gurus, like, say, Suze Orman, have many good ideas. But their ideas are, for the most part, based around current government regulations. They can offer advice on tax shelters, tax deferments, etc. Some will advise how to pay less or no taxes. Objectivists are cautioned against "striking" out of a misguided desire for martyrdom, but it could be argued that the risk of tax evasion and other methods of bucking the system create a worse risk through being criminalized. Some would call the Roarks impractical or martyrs for not playing by the system's rules, but the counterargument is that those investors and gurus who pay lip service to government regulations while evading are only enabling the statist government, while making things worse for everyone in the long run. "In the long run, we'll all be dead," said Keynes. But this is not the attitude Objectivist investors should take, if for their own selfish interest: The more they accept government interference in the market, the more it hurts the potential of their investments. The more they allow the creator to suffer under ever-increasing regulation, the more they hurt their own investments. Instead of looking at the self-employed creator as a bad role model for creating wealth, we need to see, as Kiyosaki likes to assert, the "hidden" wealth that makes investing possible to begin with. Mulligan owned the land, but it was called "Galt's Gulch" for a reason. Let's remember the role of the division of labor in the creation of wealth.