The Story of America’s Education System and the New Gold Rush
Challenging the value of a system that’s seldom challenged
On January 24, 1848, James W. Marshall found gold at Sutter’s Mill in Coloma, California. The Gold Rush started shortly after.
About 300,000 people moved to California either from the east or by sea.
San Francisco exploded overnight. It went from a population of 200 in 1846 to 36,000 in 1852. Everybody was after gold. Everybody wanted their ticket into the good life.
The influx of all these people rendered demand for a new economy; steamships, trains, roads, churches, places to stay.
The kicker: Information traveled very slowly 170 years ago. The first to hear about the gold were those relatively close to the scene. These were the lesser-known “forty-eighters”. They amounted to no more than about 500 people, the earliest gold-seekers, collecting the most easily accessible gold. Inflation-adjusted, some of these early miners were probably gathering tens of millions of dollars worth of gold each day.
By 1849, most people had heard, and the influx began. The word had permeated the world: There was gold in California.
Outside the early miners, merchants were making far more money than those mining in 1849. One of the wealthiest men at the time in California, Samuel Brannan, was a “tireless self-promoter, shopkeeper, and newspaper publisher”.
A tax was passed in California in 1851, mostly targeting Latino miners.
A small businessman named Levi Strauss started selling denim overalls in San Francisco around 1853. That name might be familiar today.
The others who reaped great rewards during that time were in retail, shipping, entertainment, lodging, and transportation.
Restaurants were kept busy.
People needed to move around to get to the mining sites from the coastal towns.
People needed to ship their work and their goods and their personal belongings around.
People needed a place to eat and sleep.
Boardinghouses, food preparation, sewing, and laundry were highly profitable businesses. If a woman was running these places, they were generally paid even more by men at the time —the appeal of a woman doing the work yielded instant trust.
In a small window of time, the only people who made a modest profit from mining were those doing it in medium to large groups of workers. The owners of gold-mining companies were some of the few reaping the largest rewards.
Ironically, a large amount of fool’s gold, or iron pyrite, was found during those years, too. Given its abundance, it was a relatively worthless mineral most people confused for actual gold.
So while a few miners were smart to make great money during that time, most made very little compared to what they already had coming into California. We call it the California Gold Rush, but the people making money were the ones providing services for the miners.
Today, almost every one chases a degree.
The necessity of formal education is not so unlike the Gold Rush almost 200 years ago:
This Forbes article documents that educational costs are growing eight times faster than wages. Eight times.
Student loans are the largest growing debt category among any we have today.
Tuition to Harvard was $150 a year in 1915. It’s almost $50,000 today.
New York University was $125 then, $47,750 today.
MIT used to be $250. Today, it’s $46,000.
You might be thinking that I’m telling you school is a scam. Quite the contrary, I think school is probably a source of gold. I think its original intent is, by design, incredible. But nobody is giving us gold today. They’re prorating you at record gold prices but they’re offering you iron pyrite when you complete your 4-year stay in exchange for a piece of paper.
A few smart people do graduate from college successfully. But, like the Gold Rush, it doesn’t even matter what you’re majoring in for the vast majority. There are amazing colleges, but the Harvards and the Yales are only a tiny microcosm of colleges. There are over 5,300 colleges in the United States. Each school charging kids the equivalent of a salary just to attend classes to gain knowledge they’re never going to use in the real world.
It takes hindsight to see that the California Gold Rush was a great time to sell miners pickaxes.
In the same vein, it took Amazon a long time to realize that the answer for a successful business was to sell other businesses the opportunity to strike gold.
Education is today’s pickaxe sale. They’re promising kids a bright future. People are giving their insight on which majors might get you to the right places. The short answer is that there are a tiny amount of spots in the most elite institutions. Figuring out what angle to strike your pickaxe is just re-arranging the same problem in a different way.
For the vast majority of humanity, they’re slaves to the financial system that gave them an extremely expensive pickaxe they’re still financing well after the Gold Rush ended.
It’s a rediscovery of fool’s gold.
You don’t need to learn to sell the pickaxe in life. Throughout your college years, learn to find ways to either get rid of the pickaxe completely or subsidize it to the lowest price possible.
This doesn’t mean that you don’t need college; it means you need to pay attention to how the world is changing while you’re in it.
Plentiful gold is often in the strangest — and least expected — of places.
Here’s a cool piece of history many people don’t talk about: Donald Trump’s fortune originates out of the Klondike Gold Rush. This is north-western Canada, sometime between 1896–1899. But it isn’t a story about mining. Frederick Trump, Donald Trump’s grandfather found himself in Bennett, Canada, where he and a partner built a brothel. A One-stop-shop for miners who wanted booze, food, and women after a long hard day of work. Even Trump’s grandfather understood that the real gold wasn’t in time spent striking rocks.