Socialism Or Capitalism… You Get To Decide

Dear Reader,

My poor dad grew up to become a socialist. He was school-smart but not street-smart. He strongly believed the government should take care of people for life. 

My rich dad grew up to become a capitalist. He did not finish school, but he did become street-smart. He believed in building businesses that provided a stable income for his family and his workers’ families. He believed that people should learn to take care of themselves. 

As a capitalist, he believed in teaching people to fish.

Socialism took control during the last depression when massive government welfare programs were created. Rather than teaching people to fish, we gave people fish—even rich people. If the United States were a truly capitalist nation, we would let the economy fall, not prop it up with bailout upon bailout. Bear markets, market crashes, and depressions are the economy’s way of hitting the reset button. Recessions and depressions correct the mistakes made and reveal the crimes committed during the boom times.

Today, instead of hitting the reset button, we hand out trillions of dollars to the incompetent, the fraudulent, and the obsolete. Bear markets exist to clean out the faults, scams, and inefficiencies that grew from a preceding bull market. Rather than let the bear market do its work, we let the government pay billions of dollars in bailout money to bankers who loaded the world with fraudulent debt, when we should be sending those bankers to jail. Businesses like General Motors that grew too fat and lazy during the good times to compete in the bad times are saved from bankruptcy. Executives who are firing thousands of workers are given cash bonuses and golden parachutes as the businesses they were entrusted with protecting and growing instead contract and, as the company’s share price drops, investors lose their money.

That is not capitalism. Today’s bailout government is socialism—for the rich. In many ways, it is worse than Marxism or communism, because at least those systems had the illusion of being for the people. Those systems at least preached the redistribution of money from the rich to the poor, even if they didn’t practice it. Our bailouts, however, take money from the poor in the form of taxes and give it to the rich.

America is much like a person who uses his credit card to pay off is other credit cards. This is why there is no financial education in our schools. 

That is why socialism grows in popularity in America, the richest country in the history of the world. Many people would rather be given fish—because being given a fish is much easier than learning to fish. 

And shouldering the responsibility for their financial future.

Why I’m A Capitalist

In a capitalist government, a democracy wants citizens like you and me to be partners, investing in projects the government needs to be done. In the United States, “a free-market economy” means that ordinary people and citizen entrepreneurs are encouraged to participate in projects the government wants and needs to be done via tax incentives.

If the government had to build those apartment buildings… that would be socialism.  If I build them, it’s capitalism. Personally, I prefer to be a capitalist on the B and I side of the CASHFLOW® Quadrant.

The B and the I quadrants simply receive many more tax incentives from the government because the activities that take place in those quadrants perform vital functions that help the government do its job of improving the economy, providing jobs, and providing food, energy, and fuel to citizens and businesses.

Tax Incentives for Housing

For example, the government needs entrepreneurs to provide housing. This is why “depreciation” is a tax incentive for real estate investors.

Tax Incentives For Jobs 

The government also wants people to provide jobs. That is why entrepreneurs in the B quadrant with over 500 employees pay less in taxes. In 2018, Amazon was shopping for a new city to relocate its new headquarters. Many cities would have loved to have thousands of highly paid employees, which is why so many cities offered tax incentives to Amazon. Elon Musk’s Tesla Motors received over $1 billion in tax incentives to build his battery factory in Nevada.

Tax Incentives For High-Paid Employees

Amazon and Tesla have thousands of well-paid employees. Generally speaking, the more an employee is paid, the more tax revenue is generated. Highly-paid employees attract hundreds of small businesses. Small business owners pay higher taxes. That is why local governments offer tax incentives to companies like Amazon and Tesla to move their businesses to cities and states across the United States. 

Big business attracts small business, which means more jobs, and more jobs mean more housing, more schools, more government service employees, and more taxes to city and state governments.

Tax Incentives For Energy

Civilization cannot grow without energy. If energy became scarce or more expensive, civilization would crumble. Hence the government also wants entrepreneurs to provide energy, so there are tax incentives for oil and gas exploration. 

Tax Incentives For Food

And the government wants you and me to produce food, so there are tax incentives for people to produce food. If people are hungry, riots follow.

Incentives—Not Loopholes 

These incentives are not loopholes or “mistakes” that unscrupulous crooks sneak through, as these journalists want readers to believe. These incentives are intentional, legal, and available for everyone, including the journalists.

Again, tax and tax incentives are the engines of capitalism.

Rich dad said, “A true capitalist, an entrepreneur, knows how to take a dollar and turn it into a hundred dollars. Give a bureaucrat a dollar, and they’ll spend a hundred.”

Today, millions of people are relying on bureaucrats taught by “A” students for their financial well-being. The problem is that they don’t have your well-being in mind. They have theirs.

How do you combat this? By becoming a capitalist. Whether by investing or starting a business, you have to take control of your money and your retirement, not trust it in the hands of those who don’t have your best interests in mind.


Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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