Robert Kiyosaki on Assets, Liabilities, and Financial Intelligence

Best known for his 1997 financial education book, Rich Dad, Poor Dad, Robert Kiyosaki has been teaching people about money and financial education ever since.  This short video gives a great look at his basic idea, "buy assets, avoid liabilities."  But most people are never taught what really makes  an asset an asset.  Kiyosaki makes it simple,

"Assets put money in your pocket, liabilities take money out of your pocket."  

This video is part of a series with the young woman in the video, who's doing videos for the Millennial crowd, sharing Robert's knowledge with a new generation.  Personally, I highly recommend Robert Kiyosaki's books, and I think Rich Dad, Poor Dad, and Cash Flow Quadrant, should be taught in school.  But they won't be, so you have to learn this stuff on your own.  

In a side note, a friend I hadn't seen in a while told me the other day that I should talk less about being homeless right now on social media, because it casts me in a negative light.  I understand his concern.  But a crazy series of things happened, and this is where I'm at.  It's a long, ridiculous story. 

Part of my role right now is to prove it's actually possible to work off the streets, and actually build a legitimate business over time.  How do I know this is possible?  Well, for one, Robert and Kim Kiyosaki were homeless at one point.  Really.  They lived in their car for about three weeks, then in a friend's basement for about 9 months, I think, as they put together a business plan.  The business idea worked, it did well (before Robert wrote books), and they now own thousands of rental properties, stocks, oil service interests, and other investments.  Robert tells the story in one of his books (Cashflow Quadrant?). 

While I don't ever expect to make the money Robert and Kim do, the fact that I'm trying to build something, and slowly making it happen, may help other people make the leap to make change in their lives that's needed.  That's a big part of why I'm open about being homeless right now.  Also, it's the Information Age, people figure shit like this out anyhow.  You might as well admit it up front, and move on. 

Why I think micro businesses and small businesses are so important now

Technology is taking over human jobs.  Lots of them.  I'm the taxi driver falling down the hole.  I lived through the technological disruption of the taxi industry in 2003, though I struggled through 4 more years of it, before becoming fully homeless.  In my case, I went directly from working 80+ hours a week to living on the streets the very next day.  I, quite literally, became homeless from working too much.  We live in weird times.

Six years ago, a couple of researchers from Oxford University, in England, looked into the problem of how many human jobs would likely be replaced by new technology in the future. The study, which concluded that 47% of jobs will likely be replaced by new technology.  Here's the link to their research paper.  When?  In the next 20 to 25 years, so by 2033 to 2038, by their reckoning.  We're six years into that 25 years now, and yes, a lot of jobs are disappearing.

Now I know most of your eyes just glazed over, thinking "what does this mean to me?"  In the United States, I looked it up a few months back, and that "47% of jobs" works out to around 92 MILLION JOBS, 47% of the actual working population. That's a lot of jobs, and yes, they are already disappearing.  Many people might ask, "are they sure 92 million jobs will disappear?"  No, it's an estimate.  My thinking is, let's say the researchers are off, and it's 20 % less jobs that disappear, that's still 73.6 million jobs going away.  If the researchers are off, and 20% more jobs disappear, that's over 110 million jobs disappearing.  My point is, whatever the actual number turns out to be it's an astronomical number.

Now a lot of new jobs will be created, but nowhere near enough to put all these people back to work.  Looking forward, this is a huge societal issue, and it has already wreaked havoc on society, with the loss of tens of millions of good paying factory jobs lost in the 1970's through the 2000's.  Right now we have over 7 million American men of working age who are just not working.  They don't get counted in the "unemployment" statistics, because they're not looking for work.  Don't believe me? Here's the guy who wrote the book about it.  It appears that about 2/3 of these men get Social Security Disability checks, and/or other government aid.  So now, your tax dollars are not only supporting the whole government, the massive federal debt interest payments, but also 7 million guys, and a large number of women, many just too lazy to work.  Really.

This is just the beginning, most of the jobs haven't been lost yet, this problem will only get much, much worse.  A very small number of people are looking for answers and ideas to deal with this huge and looming social issue.  Most of those people are high tech people, who have a good idea where technology is heading, and how it will affect the job market.  Right now, there are two main thoughts on how to handle this issue of tens of millions more people losing their jobs to technology.

Idea #1:  This comes from economic development researcher and professor, Richard Florida, who wrote the epic work, The Rise of the Creative Class.  His research, among other things, discovered the wide gap in income between the growing "Creative Class" group of workers, and the also growing number of service sector workers.  His idea is to work with government and business to make service class jobs better paying jobs.  Companies like Whole Foods and Costco figured out how to pay their workers better than many similar companies, so it's possible many other companies could follow suit.  That's a really good idea.  Florida's work has many other facets, and he continues today to research and write on this and related ideas. 

Idea #2 comes from the high tech sector.  The idea now being pushed by many on that front is Universal Basic Income.  This is the concept of giving every single person, or at least every single adult, a check from the government each month.  The thinking is that, with this basic amount of money, poverty will be largely eliminated, people will not have to live in poverty, and will be able to buy the basic necessities with their government check, and can work part time or full time to make more money.  Obviously, the money paid out by the government to pay 330 million Americans $1,000 a month (or whatever amount), has to come from somewhere.  That's $330 billion a month, a third of a trillion dollars, a ludicrous amount, even in today's world.

I don't think this is a good idea, even if it could, somehow, be financed.  Just look at the people on living on Disability, and particularly the areas with huge numbers of people on Disability, like West Virginia and Kentucky.  Those areas are also the epicenter of our opiate crisis.  That's not a coincidence. 

Here's my main problem with both of these ideas.  Richard Florida's plan to raise pay for service workers would most likely require Congress to raise minimum wage quite a bit, and encourage the federal government to provide strong incentives to big business to pay workers more.  Those ideas require our federal government to make really controversial plans, and actually take action, in the near future.  Right now, our government barely functions at all.  Smart ideas, no matter how helpful they could be, will not happen anytime soon in a big way, simply because our government won't be able to accomplish what is required, in a reasonable time frame.

The same is true of Universal Basic Income, it would require higher taxes somewhere, along with astronomical amounts of debt, and it would require smart and timely action by Congress and other parts of the federal government.  That's just not going to happen soon.

So what does that leave us with as options?

My idea.  Encourage and help individuals to create their own jobs, by starting micro businesses and small businesses.  A micro business is generally a one person operation, whether it's an ebay store operated from a spare bedroom, working gigs like Uber and Lyft full time, or providing a needed service for local people or businesses.  A small business is just a slightly larger operation, usually involving one or more employees, like opening a cupcake bakery, or a landscaping business, for example.

Here's the good part of my idea, Congress and government is not involved at all.  It's D.I.Y. (Do It Yourself), grassroots economic development.  When people need extra money, they'll start looking for gig work, part time work, or some "side hustle" to help make ends meet.  That will happen naturally.  In today's world, with all the technology available to most people, it is easier than ever to begin a wide range of money making and small business ideas.  It's still not easy, and it takes a little thinking and a lot of work, but it is entirely possible to find ways to make money outside the traditional job market.

Rather than go to government officials and spend months or years pushing for large scale social plans, my drive is to go right to the people looking to make more money, and help them actually do that.  That's what I want to make this blog about.

Yes, I know many of the posts so far are about Big Picture thinking, and the economy writ large.  I'm into those things, those big ideas and futuristic thinking fascinate me.  That's why I'm the guy writing this blog post.  But at the same time, I got hit by technological disruption as a taxi driver several years ago.  I know how much it sucks.  I know what happens if you ignore new technology like I did.  Right now I'm exactly what I'm writing about.  I'm a former writer and video producer turned "content creator."  I'm an artist and writer using these new media skills and tech platforms to promote and sell my artwork.  So I'm right in the middle of all this myself.

As this blog moves along, I'll throw in my own ideas, things I've learned working with several entrepreneurs, or as a taxi driver or manager, and how I'm dealing with all the things I struggle with.  But I'm also going to show people who are building micro and small businesses, and doing it successfully.

I'm definitely not against Richard Florida and other people working to make service jobs better jobs.  That needs to happen.  I just think it will happen slowly, compared to the massive loss of jobs happening as we speak.  I'm not against the tech people toying with the Universal Basic income idea, and seeing if there are functional ways for that basic idea to work in some way.  But personally, I like the simple and direct method, help people create micro and small businesses.  And help that happen RIGHT NOW.

That's why I see this as my main focus these days, and why I started this blog, separate from my personal blog, to dive full bore into this idea.  Personally I think the U.S. will need millions of small businesses to be built in the next 10-20 years.  So that's where I'm putting my effort.  I hope some of you find things that will help you in your life.

The Phoenix Recession

Borrowing this great scene again, this time with the further appearances by Fawkes.  Dumbledore's phoenix, Fawkes, goes up in flames, and is reborn.  In the last post in my personal blog, I predicted a major event will happen this month that will make it obvious that we're in for a serious economic downturn.  I think we're in the verge of a "Lehman Brothers moment," something in the business or economic world to make it obvious things are NOT as they should be.

It is part of the natural order of things that there are times when something old must die, it simply must collapse, it must go up in flames, its time is over.  And then, also part of the natural order of things, that at that point, something new will be born, and will grow in its place.  The mythical phoenix is a symbol of that period of change.  I think we're at a major point like that in Western society as a whole.  Writing that last post, I realized, I see this next recession as the flaming of the phoenix.  While tough economic times are hard for most everyone, I see the potential for something great to be reborn from the economic ruins.

"May you live in interesting times."

-Ancient Chinese curse

If you read my personal blog much, you know I've been drumming on about this coming recession for a couple of years now.  The reason is because I see this next economic downturn as much more than a slow economic period.  Being the weirdo I am, I've been drawn to little known and often overlooked social theories, and ultra long term trends.  There are several long term trends ending right now, in our little piece of human history, and the best way to describe this time is a transition of many transitions.  That's why my overall theory is something I call, The Big Transition.  Not a creative name, but it fits.  We truly do live in "interesting times."

On one hand, we are simply near the end of a bull run in our stock markets, and in the real estate markets of the most vibrant urban areas.  The stock prices and real estate prices (in prime areas) have been going up since early 2009.  The stock markets have been nearly stagnant for the last year ans a half, but hover near the high water mark.  Things are overpriced, and we're heading into a recession that will shake out, prices will drop dramatically, some businesses will collapse or go up in flames (if they have good insurance), and new ones will be born.

On another level, we are still in the long transition from the Industrial Age to the Information Age.  The rise of many new technologies, particularly communications, computers, the internet, and biology, are rapidly changing what's possible in many ways, and changing our everyday lives, the way we interact with each other, who it's possible to interact with, and how business and organizational structures work.  We're leaving an economic model based on factories in nearly every town, making physical goods, and selling those goods in mass market stores nationwide and worldwide.

We're going into an economic model based on nearly every person having a voice in society, a model where every person carries a small device that is a phone, a publishing company, and a TV studio, and a comedy club all in one.  One person can now share funny cat videos with a stranger next door and another in Spain, publish a video or blog post that can be viewed by billions, and can sell a homemade item and ship it to South Africa, or nearly anywhere else.  It's a world of tiny niches of interest, of many and multi-cultural voices, and a world that's extremely scary to a lot of people.  It's a world where old business models from the Industrial Age are collapsing, and where new, tech-enabled business models, are being created, and disrupting the old.  It's a world where the old school power structures are straining to keep control, while many of their long hid secrets come to light.  We're in a period of massive change at a frightening pace.  In a word, it's chaotic.

On yet another level, the United States of America, the grand experiment created unlike any other, where any individual, with hard and smart work, could create a business or idea, and move up in society, has reached a point of peak corruption in many businesses and political scenes.  After a full, generation of seeing the rich get much richer, while the lives of the majority of people have stayed financially stagnant, or have gone down, the common people are pissed off.  The average people have had enough, and we've been seeing the beginnings of a worldwide populist movement.  The people, in the U.S., and everywhere, are remembering they have the numbers, and ultimately, the strength, to change things to a more fair system. It's never pretty, and it can be brutal (like in Hong Kong at the moment), but it will keep happening.

On yet another level, America has been built on the idea of common people as business people.  Originally (after stealing the country from the Indians), Americans were farmers, traders, and shopkeepers, creating their own destiny.  Born in the early stages of the Industrial Age, America saw, and dominated, in the rise of the factories, and reigned as a super power in the late Industrial Age.  But with that came the rise of jobs, and most Americans went from being small businesses in the late 1800's (whether a farmer or shopkeeper), to being workers, punching a time clock ,and relying on a paycheck.  Now, with the rise of new technologies over the last 50 or so years, many Americans are turning back into entrepreneurs again, or trying to.  So that's another major shift that's happening.

Another transition is that we've been a country that looked up to the business people for 350 years.  But now the common people are rising, and standing up to the large scale corruption in many businesses, and other institutions.  As that rise bubbled under the surface, a new mentality has been rising to dominate the American collective psyche.  This is what P.R. Sarkar, philosopher and theorist from India, calls "The Warrior Mentality."  These are people who prize physical abilities and courage, more than the salesmanship and manipulation of Industrial Age business culture.

People doing scary and courageous shit have been slowly and quietly rising up in stature for several decades now.  Some of these people are the obvious, when you think of the core values of courage and physical ability, the soldiers, police, firefighters, and professional athletes.  We all know these jobs take physical ability, and courage, at different levels.  But courage is also needed, and demonstrated, by action sports athletes, activists, artists of all kinds, pioneers of all kinds, and entrepreneurs.

The Warrior Mentality is becoming the dominant mentality, and the wishy washy fence sitters are getting the boot.   This is why nearly all of us hate most of our old school politicians these days, no matter what political party you belong to.  Our long term politicians are schemers who will flip at the drop of a hat, they are not leaders.  As all of this chaos happens, the average people are looking for courageous leaders, or (as we've unfortunately learned the hard way in the last couple of years), people that pretend to be courageous leaders, and can con a large part of society into following them.  But those types show their true colors soon enough, and most people see through them before too long.  Ultimately, the truly courageous, they will become our new leaders, in business, in political circles, and in other organizations.

So, in my geeky, big picture view, all of these forces and changes are coming together to make this next recession a time of incredible change.  And incredibly scary.  That's where the courage part comes in.  I think this next economic downturn, which will be severe, as the major shakeout of our lifetime.  A lot of major change will happen in a short amount of time.

Like the phoenix, one thing after another that we know well, will burst into flames and die off.  That will be catastrophic on many levels, and painful for many people.  But this is all to make way for new things that are, and will continue to be, born.

Welcome everyone, to The Phoenix Recession.