What is the rat race?

The rat race is a metaphor in finance that illustrates the pointless pursuit to achieve some degree of financial independence, like rats in a maze that never quite make it to the cheese. Popularized by Robert Kiyosaki with his board game Cashflow and his many books, the concept became a concrete way to showcase how we can be financially trapped as the obligations in life keep exceeding what we earn, despite our persistent hard work.

Of course, we want to escape the rat race. There’s an abundance of financial advice on how exactly to escape it. However amazing all this financial literature is, I find that it’s mostly about getting good at the game. It’s about financial mastery—if you know what keeps you stuck in the race, then you can come up with a plan for how to escape it. But to me, the truth about the rat race isn’t in the race per se, as much as it’s in the rat itself. How does the rat come to be?

To expand the metaphor: Why are we bred as rats in the first place? Could we perhaps become something other than a rat in a rat race? Or race in something other than a maze? And even going deeper into this metaphor you could ask: is everyone in the rat race? Who is not in the rat race and why? Let’s explore the three main elements where the rat race stems from:

A) Schooling

Everyone believes in education. But modern schools have been (and still are) more about indoctrination than they are about education. They emerged as the need for factory workers grew at the dawn of the Industrial Revolution. John D. Rockefeller, American magnate, once said: “I don’t want a nation of thinkers, I want a nation of workers.” He established the General Education Board and funded it with his many contributions.

To this day, schools run on schedules. We have loud bells, timed-based classes, an instructor(s), grades, and teacher’s pets. We still have a pass/fail mentality and the illusion that knowledge is finite. The teacher knows all about the subject and the student has a gap to fill, akin to a factory with definite needs to be met.

So to me the key question is: what do schools prepare us for?

University should prepare us to be able to make money. Tuition in this sense really is a form of investment. We’re investing in the promise that we’ll be able to generate more money as a graduate with the skills that we develop. The hope is that our future returns will help, among other things, to give us a degree of freedom over our finances to live well. But are we really prepared for this? Or are we trained to stay trapped as a factory (knowledge) worker and faithful consumer? It’s both the lack of real life skills and preposterous fees that keep us in the rat race.

And what about pre-Kinder-12th grade? What does it prepare us for? Is the schooling institution educating us or indoctrinating us? To be educated is to be instructed minus an agenda. Unfortunately, most of the education we receive is seldom what’s best for us. Real education to me is learning real life skills. Like learning what nutrition is (and how to cook), what makes us sick, and learning how to stay fit and healthy. How can I avoid preventable widespread diseases such as type 2 diabetes, and all sorts of physiological and infectious diseases?

And what about learning about other real life skills such as home and car maintenance and repairs? Or learning about finance, like the rat race, and the skills we need to not only be employees (getting a job), but perhaps be business owners (learning/finding about what problem(s) you’d want to solve) and investors? Or learning about how to take control of your life, your finances, and your time? And how about learning about relationships? Or preparing the youth to be fit for committed relationships?

The real world is full of problems, uncertainty, of fierce competition, and risk. There is so much more to learn that is painful to see that schools not only keep teaching roughly the same subjects decade after decade but keep indoctrinating for the rat race instead of preparing us to be fit, handy, purposeful, collaborative, moral, emotionally robust, and financially aware.

Generally speaking, schools will always give you the illusion of certainty in the world. That once you are taught in a certain domain, you are prepared to perform. This is the beginning of the shaping us into rats confined in a maze. This is the maze of the resumes and salaries and of making and spending money. But what’s most amazing about the maze is that that’s where we learned to feel comfortable and successful—the place where we show up, we know what we need, and we get paid for it—as long as we appear to be busy, certain, and behave obediently.

B) Parenting

In my opinion, parenting is the biggest source of love a human can experience. It’s also one of the toughest adventures people embark on. We want to raise our children to be exemplary human beings, to be skilled and successful. We want to guide them, to be proud of them, and to support them. But the question is: what do we raise them to be? To me, that will depend on how parents define “success.”

What would you say is considered success? Could it be accruing more assets, money, and luxuries? Maybe more extravagant vacations? To achieve this, we must get schooled. We must learn some skills and provide some value for which we then get paid. And if we just work hard enough and get lucky enough, we can then pay to have the luxuries that make us “successful.” This is a rat in the raising (making). We think working harder = more money = more spending.

Parents need to reconsider what success looks like and teach their kids accordingly. To build wealth, we must provide value. The more value we provide, the more we can build wealth. But am I really wealthy if I don’t drive a sports car, have a huge house, or go on extravagant vacations? In 1996, Dr. Thomas J. Stanley wrote in his book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy that the real millionaires didn’t drive fancy cars, dress in expensive clothes, or own mansions. On the contrary, America’s wealthy were (are) in fact discreet, frugal, and lived below their means.

But do we parent for that? Do we parent our children to have self control? Do we teach them to become wealthy or to look wealthy? The rat race is hard. And of course we need to justify our hard work. If I’m working this hard, why wouldn’t I reward myself? That’s how we’re raised. The answer isn’t entirely in teaching kids how to make more money, but to teach them early how to keep it. We can teach them about delayed gratification, about discipline, and long-term goals. To live in the present with a preparedness for the future.

Parents have the opportunity to teach via negativa. How can my kids be successful by avoiding x, y or z? How can they stay out of trouble, avoid abusive relationships, or financial ruin? We’re so focused on the benefits of success that we overlook the inherent harms of it too. On July 22nd 2023, Nassim Taleb author of Antifragile: Things That Gain from Disorder tweeted:

TRUE WEALTH (2nd Ed)

Worriless sleeping
Clear conscience
Reciprocal gratitude
Absence of envy
Foamy coffee
Crusty bread
Inexperienced enemies
Frequent laughs
No meals alone
No gym classes
Gravel bicycling
Good digestive functions
No Zoom meetings
Periodic surprises
Nothing to hide: financial and fiscal tranquility
Muscular strength & endurance
Ability to nap
Access to a hammock

As parents (or individuals), it is our duty to redefine what “success” is. What is true wealth for you? What is a life well lived? I encourage you to think about this and make your own list.

C) Society/Culture

Finally, we need to recognize that society is structured to keep us in the rat race. Practically all companies prey on consumers’ (rat) tendencies. They know you work hard, they know you are tired, and they’re ready to capitalize on that. Like over-stimulated rats in a maze, we’re fed constant dopamine to keep us happy and eager to throw our money away for it. Remember—how else are we to justify not only our hard work, but signal our success?

Take social media. We post where we go, what we eat, what we wear, and who we hang out with. You could say we’re just sharing our lives. If so, why do we just share the successful parts of it? It’s what we have been conditioned to be. The part where we’re showing how successful we are. And you could say, well what’s wrong with that? Nothing in particular. I’d personally rather see how my friends and family have fun. But I want to bring awareness about how you might be trapped in this social rat race too.

Why must we show how much we’ve accumulated (fun, wealth, relationships)? You will know you’ve made it to the cheese when you don’t need to show it. The truth about the rat race is that it is not just a financial matter—but an emotional one.

Here’s another interesting example: when you buy a brand product, do you own the brand you purchased or does the brand own you? In marketing, brand loyalty is when a customer associates positive feelings toward the brand, trusts it, and keeps purchasing from the same brand. I’d say at that point, the brand owns you. What about your job? You get paid, but who owns your time? Capitalism has capitalized on you. And society is structured to keep it that way. Sure—we might be lucky to never be in a financial squeeze, but what if we do over time? Let’s look as some economic data.

According to the Center for Microeconomic Data: (Q4 2023) “Total household debt rose by $212 billion to reach $17.5 trillion in the fourth quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit. Credit card balances increased by $50 billion to $1.13 trillion over the quarter, while mortgage balances rose by $112 billion to $12.25 trillion. Auto loan balances rose by $12 billion to $1.61 trillion, continuing an upward trajectory seen since 2011. Delinquency transition rates increased for all debt types except for student loans.”

What do these numbers mean in terms of the rat race? If our systems work so well, why are we drowning in debt? Are we all in the rat race? What then? Of course we need stuff to live. We need food, housing, and products. Also, I’m not implying that there’s something inherently wrong about our society. We’ve come a long way, made a lot of progress, and we should be deeply grateful with all the work that has ever come from humanity. Unfortunately, the rat race is very real (we’re bred for it) and the numbers are there to prove it. Can we be raised differently? Can we escape it?

The truth about the rat race gives you a real opportunity in understanding how we are prepared for life and thus, change how you (and future generations) may need to prepare differently. Maybe instead of the American dream, you can come up with your own dream. That way we can still learn the skills we must and be active contributors to our society without the pitfalls that set us up for a lifetime in the rat race.