Why I’m a Capitalist

Why I’m a Capitalist

The difference between the capitalist and socialist mindset

As many of you know, I grew up with two different dads. My poor dad, my natural father, was the head of the Hawaii education system. He was staunchly unionist, as were all the members of my family who worked in public education and the government.

My dad wanted me to be successful in the E (employee) and S (self-employed) quadrants of the CASHFLOW Quadrant. He suggested I go to school, get my PhD, which he did himself, and work for the government or climb the corporate ladder in the E quadrant or be like my mom, a registered nurse, and become a medical doctor in the S quadrant.

He believed in traditional schools such as colleges, law schools, and medical schools. He valued good grades, degrees, and credentials, such as a law degree or a medical degree.

That is how most parents think.

My rich dad suggested I become a capitalist. That meant I had to study the skills required for success in the B (business) and I (investor) quadrants.

My rich dad believed in education, but not the type of education my poor dad believed in. Rather than go to school, my rich dad signed up for seminars and courses that improved his business and investing skills. He also took personal-development courses. He was not interested in grades or credentials. He wanted real-life skills that gave him strengths and operational skills in the B and I quadrants.

Learning to be a capitalist

When I was in high school, my rich dad often flew to Honolulu to attend seminars on entrepreneurship and investing. One day, when I told my poor dad that rich dad was going to a class on sales, my poor dad laughed. He could not understand why anyone would want to learn how to sell, especially if the class hours were not applied as credit to an advanced college degree. My poor dad looked down on rich dad, who had never finished high school.

Because I had two dads with differing attitudes on education, I became aware there were two types of education. Traditional schools were for those who wanted to be successful in the E and S quadrants. But another type of education, financial education, was for those who wanted to be successful in the B and I quadrants.

What is Capitalism?

There are many academic definitions of capitalism, but what I learned from my rich dad was that capitalism was seeing opportunity and capitalizing on it. He was not well-educated, but he did have street smarts. He knew how business and money worked from helping run his family store as a kid. And, as I’ll talk about later in this post, he knew how to take advantage of every opportunity presented to him.

I am a capitalist because I believe it is the best economic system to reward those who see opportunity and go after it. In the process they also provide opportunities for others. No other system in the world has produced so much wealth and such a high-standard of living.

What is socialism?

Recently there has been a rise in acceptance of socialism in the US. Popular politicians like Bernie Sanders and Alexandria Ocasio-Cortez are the darlings of a generation of young people who see inequality in income, which is a real problem, and think that socialism is the answer.

Again, there are many academic definitions of socialism, but what I learned from my rich dad is that socialism is really just an entitlement mentality formalized in government. Socialism has a Robinhood mentality. Take from the rich and give to the poor.

But rich dad knew that while that could be helpful in the short term, it wouldn’t build generational wealth or teach people how to see opportunity and create innovation.

I’ve been around long enough as well to see that socialism and it’s cousin, communism, are in the end disastrous to a country and economies.

Unions and anti-capitalism

My rich dad was a successful, self-made businessman who owned hotels in Hawaii. Unlike my poor dad who was very pro-union (he was in education, after all), my rich dad was very much against the unions because of the abuses he saw and because he believed they were anti-capitalist, and in many ways a product of a socialist mentality. Not surprisingly, both socialism and unions are also overrun with corruption.

As a child, I heard both sides of the story, and I was able to understand the arguments both my rich dad and my poor dad gave for their positions. Though I loved my poor dad and respected him as a wonderful person, I eventually could not agree with him on unions. I sided with my rich dad, and the rest was history.

If you want to know more about why I believe that unions are anti-capitalist and obsolete, I encourage you to listen to the Rich Dad Radio Show podcast, “Pension Tension.” There I share my views in detail, and I also go into why chronically unfunded public service pension funds are the next ticking financial time bomb for the US.

But today, I want to share a simple story that I think perfectly highlights why I am a capitalist and not a unionist.

Bobby and the fight for unionizing

Many years ago, an employee of my rich dad’s named Bobby decided that the workers at rich dad’s hotel should be unionized. For months he worked tirelessly to organize the employees, preaching the “merits” of being in a union. Bobby’s work was so effective that eventually he was able to call a meeting for a vote on whether or not the employees would go on strike and unionize.

The night of the vote, I was with rich dad, ready to help and do whatever was needed to keep the hotel running should his hundreds of employees walk off the job. The atmosphere was tense, to say the least.

In the end, the votes were cast, and the final tally was a defeat for Bobby. The workers had not decided to unionize, and business resumed as normal—or as normal as it could be after so much tension.

The day after the vote, my rich dad called Bobby to his office.

“Bobby,” he said. “I don’t like you.”

Bobby thought he knew what was next. He was certain the words, “You’re fired,” would be the next thing out of rich dad’s mouth. They were not.

Instead, rich dad said, “But even though I don’t like you, I never knew you had so much leadership ability. It took a lot of work to organize all those people and have them follow you like that. So, I’m promoting you. You’re now over the entire staff.”

What I learned from Bobby’s night

I learned that night that Bobby, a unionist, was blinded by entitlement while my rich dad, a capitalist, clearly saw opportunity.

That is why I’m a capitalist. I believe the world is full of opportunity, none of which I’m entitled to, all of which I can pursue.

Original publish date: September 10, 2013