Disco Demolition Night, Comiskey Park, Chicago, July 12, 1979.
Here are some primary sources for additional research.
…Is probably Ralph Bakshi’s best movie. I watched it on YouTube a few weeks back along with Fritz the Cat, which was disappointing because it was like a Woody Allen movie without Allen’s neurotic characters’ comedic qualities. Loved the animation though.
Anyway, if you’ve been directed here about the law graduate overproduction page, please read the article I wrote for The Am Law Daily a few weeks ago. It’s more thorough, includes the number of annual bar admits, is professionally edited, and it helps pay my bills more than the blog does.
Other than that, I’ve got nothing else right now. Until I do, I won’t make you sit through Heavy Traffic, but for readers who know the site, here’s some more New Wave.
Also, Heather Christian has talent. She wrote the score and performed in a play I saw last year called Mission Drift, which told the story of America through land bubbles. Of course I liked it.
…can be found on the Am Law Daily.
In other news, there won’t be many new posts (to the extent I have time to churn them out) as I’m committing myself to updating the law school tuition data page. It can’t be done at once, so I’m doing it piecemeal. I’m going in reverse order and am up to Virginia.
For you, though, I’m showcasing one of those songs that’s been in my head for years but couldn’t place it. I heard it my local watering hole and the bartender told me what it was.
The ALM people also asked me to provide them with a head shot, indicating their affection for me. What they did not realize is that although I am handsome (when I shave and put a shirt on), I’m not at all photogenic, and it took my photography crew more than one attempt to get a decent picture of me. Alas, it was long after my previous haircut, so I look like Lobot.
Anyway, I wrote this article while listening to the Flamin’ Groovies on repeat, so you should too.
Did I mention that this is post #250. Nice.
So I saw the first Softies show in 12 years. It was a real treat. I was so inspired that I started banging chords on my guitar. Then I realized that Jen Sbragia has something I don’t: talent.
But when it comes to spreadsheet charts on the other hand … here’s some original research on the Am Law Daily.
And for music, no one knows sorrow like Rose Melberg:
Marche lays into the privileges Boomers have received over the years.
I try not to indulge in intergenerational warfare, but if I do, I try to be honest about the score. Marche overreaches in points like this.
“Only 58 percent of Boomers have more than $25,000 put aside for retirement, so the rest will either starve or the government will have to pay for them.”
There are three things to say about Boomers.
(1) They lost all their equity in the housing bubble. They meant to Ponzi their land off to young people–which is a problem in itself–but that won’t happen because young people have no money and little desire to buy underwater houses in a short-sale.
(2) The Boomers paid for their Social Security. It came out of their paychecks. They deserve it back. For example, when Marche writes:
“The biggest boondoggle of all is Social Security. The management of entitlement programs, already weighted heavily in favor of the older population, has a very specific terminal point that coincides neatly with the Boomers’ deaths. The 2011 report by the Social Security trustees estimates that, under its current administration, the fund will run out in 2036, so there’s just enough to get the oldest Boomers to age ninety.”
We should call bullshit. (a) Social Security is a pay-as-you-go system. (b) The trust fund was set up to ensure that there was enough money in it for Boomers to retire on; it was never meant to last forever and most of the scheduled benefits will continue to be delivered after 2036 because there will still be younger workers paying into the system. (c) We can increase the payroll tax brackets (or add new top ones for the super earners) to recover the shortfall. So no, Social Security isn’t a boondoggle.
(3) If the median Boomer has little in assets (slightly greater than $25,000), then the above graph is misleading. Marche concurs in part:
“This is no conspiracy; no nefarious backroom deal by political and corporate overlords. The impasse of the moment is, tragically, the result of the best aspects of the Boomers’ spirit. The native optimism that emerged out of the explosively creative postwar world led them to believe that growth would go on forever; that peace and prosperity were the natural state of things.”
The reality of the situation isn’t that the Boomers were overoptimistic, nor are we doomed to decline. This situation occurred because a minority of Boomers are parasites and did cut backroom deals with political and corporate overlords. They hosed other Boomers during the Dot-com and housing bubbles, and now they’re feasting on the young. This is the ideology of America: Make money without having to build anything that people need.
Here are six ways to get back on track for everyone:
(1) Close the trade deficit, even if that means adopting bold ideas such as Keynes’ recommendation of an international currency like the “Bancor.”
(2) Adopt a universal healthcare system like every other civilized country, i.e. one that doesn’t pay for every single frivolous medical test and procedure but doesn’t tell poor people to shut up and die.
(3) Tax rents, not wages and interest. Shift taxes onto land values as Henry George argued. Force landowners to build on their property. Reurbanize America. Rent out the EM spectrum, geosynchronous orbits, and taxi medallions. Tax pollution and congestion. Enact severance taxes on those who harvest our natural resources. Return our shared property in the form of a citizen’s dividend like the commie-run Alaska Permanent Fund. Stop extending copyrights because Disney Corp. can’t come up with anything better than Mickey Mouse. In fact, recognize that we no longer live in the Holy Roman Empire. Copyright is obsolete. Embrace the future with new ways of supporting the arts and the public domain. Publicly fund drug research instead of giving away patent monopolies, and let depressed people smoke pot instead of paying out the nose for SSRIs. Use Linux instead of Windows or Snow Leopard.
(4) Reduce people’s housing and student debt burdens.
(5) Decisively confront global warming.
(6) Stop building aircraft carriers to fight the Soviet menace. Bring the troops home.
See? Society saved. 下課.
On a slightly brighter note, here’s Japanese mega-group L’Arc~En~Ciel at Madison Square last Sunday. No, they didn’t play for a week straight to sold-out crowds like Yes did in 1978, but they sure were glammed out. My seats were in the third tier (there’s that phrase again…) perpendicular to the stage so I got to watch an audience watch a show. Truly an alienating experience.
Economist Mark Thoma writes,
“If the distribution of income is distorted by monopoly power, political power, and other market failures (e.g. taking advantage of informational asymmetries to sell questionable assets to unsuspecting customers who are reassured by triple A ratings, and so on), then taxing away some of the money and redistributing it to where it would have gone without the distortions is justifiable.”
Hm, that parenthetical sounds familiar … like a stripped-down, academic version of something you’d read on your friendly neighborhood scamblog. It’s not too much more of a stretch to skip the tax and force the recipients to pay the money back directly to the buyers via the judicial system. Same result, different mechanism.
Dear Mark Thoma, you are hereby banished from appearing opposite Matt Lauer on Today. Any more outbursts like this and we’ll revoke your Boomer credentials.
(Also, the irony of writing this post while listening to the Beatles’ 1965 masterpiece, Rubber Soul, is not lost on me.)
I received a letter from my law school subtly informing me that my name would be placed on “the permanent donor wall located near the entrance” if I gave a gift or commitment of $5,000.
The same day, the ABA Journal published Bill Henderson’s article titled, “The Law School Bubble: How Long Will It Last if Law Grads Can’t Pay the Bills?” in which the author writes in a section called, “ENDGAME”:
“Given the likelihood of some form of curb in federal student lending, there are gut-wrenching times ahead for law schools—even those that continue to enjoy a surplus of applicants … [T]he U.S. Bureau of Labor Statistics acknowledges a shortage of [doctors and dentists] and a growing glut of lawyers. Further, the Bureau projects that these shortages and surpluses will continue over the next decade.”
I don’t bring this up to attack my law school specifically—mine’s not alone in asking for alumni donations—and it’s no secret that my dollars are better spent on rent, groceries, and Screaming Trees’ discography than to have my name placed on a wall for vanity’s sake. Rather, I wonder aloud if lawyers who do have the disposable income and the class/professional/generational identity will gift their law schools money after reading Henderson’s argument that law schools are over-enrolled, overbuilt, yet devouring excessive amounts of federal debt money nonetheless.
I have four thoughts on Henderson’s article.
(1) The law graduate surplus is not new. Here’s how Henderson characterizes the situation:
“Youthful overoptimism, bleak job prospects for college grads and the entry of several more universities and for-profit businesses into the legal education business are some of the root causes for the supply-and-demand imbalance in entry-level lawyers.”
The Bureau of Labor Statistics wrote in 1996:
“During the 1970s, the annual number of law school graduates more than doubled, outpacing the rapid growth of jobs. Growth in the yearly number of law school graduates tapered off during the 1980s, but again increased in the early 1990s. The high number of graduates will strain the economy’s capacity to absorb them.”
I repeat this point once again because (a) it still shocks me, and (b) it not only illustrates the scope of the law school bubble, but it also speaks to the ABA’s carelessness. Although I wrote last week that the Association’s Section of Legal Education’s accreditation system doesn’t cause tuition hikes, that doesn’t mean it’s blameless for the situation the profession is now in. The ABA was in the best position to inform the public that there were too many law graduates and it could’ve encouraged existing law schools to taper enrollments while dissuading universities from initiating new programs on frivolous justifications. It may’ve even been able to hamper enrollments by requiring more undergraduate prerequisites the way medical and dental schools do. These steps might not’ve worked, but contrast them to the ABA’s current ideology, which to this day has been to encourage access for anyone at any cost.
Now, the costs are coming in, and worse, otherwise excellent economists tell us that the ABA is greedily engineering a lawyer shortage contrary to the evidence. Catastrophe and ignorance do not combine for effective solutions, and the ABA will now have to manage both.
(2) Speaking of the ABA, Henderson hints at the question that’s been slowly festering: Will the ABA, ED, and Congress throw indebted law grads under the bus?
“Although IBR may be viewed as a boon to law students, law school graduates may view it differently—15 percent of their monthly income paid over more than half of their career span is a severe burden, especially if the sought-after gains in earning power fail to materialize…”
“Still, scrutiny by the scamblogger movement and legal and mainstream media may speed up the process. One plausible outcome has the Education Department using its accreditation authority to force law schools to demonstrate, as a condition of receiving federal loan money, a minimum threshold of employability and income upon graduation.”
I’m more in the boon category than Henderson. When I enrolled, law school debtors had to make the monthly payments or watch the interest capitalize onto principal forever, so I still see IBR as better than the world without it. Plus, it’s now 10 percent of disposable income, and I’m guessing that a lot of people who have a few kids will see their monthly payments drop to the level of a utility bill they don’t discuss. They’ll worry about the income tax issues later, but that’s a long way off and there is an insolvency exclusion in the tax code.
Still, his is a fair point: there is no justice in forcing someone to pay a debt for something they cannot directly use. The whole point of student debt is to increase human capital more quickly so the economy can benefit from it sooner. If there is little human capital created or it’s unnecessary, then it’s morally wrong to force people to pay a cent for their degrees. Such is the risk of making unsecured loans.
However, look at Henderson’s prediction of ED more rigorously regulating law schools. What does this do for “Andrea,” the twice laid-off 2009 law school graduate the article uses to illustrate the problem? Sure, fewer law grads in the future shrinks the bottleneck and increases the present value of her law degree, but even if that were to happen tomorrow, are we really supposed to believe that lawyer salaries will rise to the point that she’s making payments on a 25-year monthly plan and not on IBR? It’s unlikely to happen, which is why we should be leery of partial fixes. Unfortunately, I doubt the ABA will start advocating for those it’s effectively abandoned. It should.
(3) Speaking of solutions, we have a law school dean who does not like them:
“Mark Grunewald, interim dean of the law school at Washington and Lee University, thinks any blanket restrictions on federal student lending would be disastrous and unfair. ‘There are real differences among prospective law students’ economic circumstances, and new blanket restrictions on lending could hurt those most in need of financial support,’ he says. ‘It’s also unclear what the legal employment market might look like after a general economic recovery. Market forces may ultimately prove to be a better corrective.'”
Washington and Lee’s tuition has grown 35 percent over the inflation rate since 2004, above $40,000. Three years then buys two years today with no discernable increase in quality. Between 2004 and 2010, its full-time student-faculty ratio dropped roughly 18 percent to 9.5. Washington and Lee could easily provide cheaper legal educations without risking its accreditation, but it chooses not to. If Dean Grunewald were serious about ensuring access, he could persuade W&L’s Board of Trustees to invest in its students by giving them free legal educations conditioned on them paying 10 percent of their salaries back for 10 years. If this causes Washington and Lee to lose money or close, so be it. It’s not the federal government’s problem if a law school doesn’t increase human capital.
But the part that riles me is the “blanket restrictions on federal student lending” being “disastrous and unfair.” Does Dean Grunewald also think the blanket restriction on discharging student debt is “disastrous and unfair”? I bet not.
(4) Henderson writes:
“Unless the government’s actuarial assumptions on student loan repayments turn out to be correct, federal funding of higher education is on a collision course with the federal deficit.”
It’s worse than this: the government knows its actuarial assumptions are wrong. The Congressional Budget Office directly told Congress that its accrual accounting methodology overstated the revenue of student loans, and when it used fair-value accounting it found the government loses 12¢ on the dollar on average over the next decade. This is without including IBR in the mix, so we’re looking at somewhere around $120 billion in losses on top of the drain on the economy that comes from zombie-debtors making good on bad debts rather than spending on houses and kids toys.
The CBO adds:
“The costs of income-contingent repayment, or of loan forgiveness or forbearance, are generally higher on a fair-value basis than under [accrual] accounting, because borrowers are more likely to take advantage of those opportunities in economic downturns, when the value of the forgone payments is greatest. (Page XI)”
I hope the student debt write-down Henderson writes about isn’t far off, but until then our lawyers are left with two worlds, side by side. In the one hand, the dean’s letter and the name on the wall near the door? Or in the other, Bill Henderson’s shameful law school debt factories?
I choose Screaming Trees.
(Oh, and this is my 200th post. Yay!)
Filed under: Uncategorized | Tagged: Bill Henderson, Bottleneck Argument, Higher Education, Human Capital Contracts, Income Based Repayment, J.D. Overproduction, Late Gen-X Nostalgia, Law School Over-Expansion, Legal Education ROI, ROCK 'N' ROLL!, Scam Blogs, student loans | Leave a comment »
I rewrote my post from Monday for the Am Law Daily. It’s much better than the original with thanks to the Center for American Progress’ Julie Margaretta Morgan’s paper, “What Can We Learn from Law School?” Morgan lead me to a 2009 GAO Report on law schools that I hadn’t known about.
Here’s a link to the essay:
Also, to all you New Englanders out there, because I wrote about New England School of Law, here’s one of Boston’s finest musicians (it’s a good city for music).