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052: Be Passive and Prosper with Marco Santarelli

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We are a culture of robots created by the industrial revolution. Our current public educational system was modeled after a system created by the Prussians in the early 1800s and was imported to us during the industrial revolution by guy named Horace Mann. This system was then fine tuned by a group of 10 guys at Harvard in 1892.

Let’s take a step back and look at how this system works. Imagine a child stepping onto a conveyor belt in 1st grade. That child goes to 12 different stations that represent 12 grades in our school system. At each station, the child stops for a year and gets doused in pre-packaged education deemed appropriate for each age cohort. I’m sure you remember high school where there was a sequence of courses that you took depending on your grade level..ie geometry in 10th grade, etc.

At the end of the 12 years, you have a finished product–well at least your supposed to. Some obviously fall of the conveyor belt a bit earlier than expected. However, assuming a child makes it to the end of the conveyor belt, they are then sorted out. The finest will be patted on the back and get shipped off to a new factory for a little extra polish. That factory is of course college and, potentially later, professional school. I’m sure you get my analogy here.

It”s actually an ingenious system if you look at it through the lens of an industrialist. And my point here is not to say the system is wrong. It is certainly the best system we know. My point is to simply point out the methodology by which we become educated. It is like we are a bunch of robots that were created by this industrial educational factory. This factory is rigid and does not allow for a significant amount of flexibility in education.

Now the people who come out most successful in this factory are those who excel at doing exactly as they are told and absorbing the information they are fed most efficiently. They are constantly being given positive feedback. Society commends them for not failing–for consistent success. That constant positive feedback creates a Pavlovian feedback loop where these people who are particularly good at school essentially know no other way to learn that to be taught formally and given a roadmap to follow.

Now here is one flaw in the system. What if the factory forgets a key component while that child gets sent down the conveyor belt–say for example, financial education. Or even worse—say that financial education is taught but the curriculum was written by Wall Street?

That is the paradox confronting many high paid professionals today. They excel throughout their lives and do everything right in school. They get the accolades and the titles like doctor or lawyer. But…many haven’t a clue how to teach themselves anything outside of their own professions. Instead, they rely on conventional wisdom since this is the societal norm and the right thing to do. In terms of financial education, they hesitate to learn things for themselves as that’s not what they are supposed to do. Some do it anyway and end up digesting the crap that is current investing paradigms.

A few brave souls will try to get a broader perspective. They might start to realize that the whole personal finance thing–what they were led to believe was part of the common curriculum and therefore truth, was in fact nothing more than a creation of the banks. They, of course might get ridiculed by their family and friends for thinking outside of the Wall Street box. If they survive the scrutiny, they might get lucky enough to find a community like ours that is willing to consider “alternative investments”–namely tangible assets that don’t don’t disappear when there is bank failure.

Some of them might start thinking about investing in real estate and might even run into today’s Wealth Formula Podcast episode that can help them get started small with turnkey rentals. I hope you enjoy the show.