Late Gen-X Nostalgia

Speaking of Grad PLUS Loans…

This weekend, the Times both accepted the Bennett hypothesis and chose not to condescend to us about the “paradox” of how underemployed law grads can refuse to work for people who can’t afford to pay them. That’s really remarkable. What more can I say?

Okay, one point, an emphasis. When I wrote that applying the gainful employment rule to all law schools would cause fifty to close in short order, I was clearly being conservative. $50,000 in discretionary income is a lot of money, even for law school graduates.

And since we’re on the topic of student lending, the Department of Education updated its student loan data through the 2014-2015 academic year. I’ve updated the Student Debt Data page accordingly.

The big findings are that (a) people are borrowing less money from the federal government:

Amount of Federal Loans Disbursed

…But (b), Grad PLUS borrowing hasn’t changed much in the last year.

In the last two years though, the number of Grad PLUS borrowers has grown (+2,540) while the total amount borrowed has fallen (-$140 million). It only amounts to about $500 per borrower, but who knows, maybe it’s due to fewer law students? I wouldn’t be surprised.

Finally, in the same week that I bought my first car I realized after years of listening that Galaxie 500’s “Blue Thunder” is about a man’s love for his car, and the Route 128 reference indicates it’s an homage to the Modern Lovers’ “Roadrunner.” (I’m terrible at discerning lyrics; it’s usually not what I listen for in music.) I really dig how “Blue Thunder” denies the listener the chorus until the very end.

I prefer the album version, but how could I not post an ’80s video?



…Is what I think about now whenever someone brings up the economics of Star Trek. For those unfamiliar, the title refers to a character from Star Trek: The Next Generation, Tasha Yar, who grew up on a politically collapsed colony populated by … rape gangs! Think Mad Max only ham-fisted. It’s also a reference to the 2007 combined tour of the bands Ifihadahifi and Replicator, “IfIHadARepliTour.” Yup, a show I never saw was so memorably named it stuck in my head for eight years.

Today’s “Economics of Star Trek” adventure appears courtesy of The New York Times, “A ‘Star Trek’ Future Might Be Closer Than We Think.” Reporting on the upcoming book Trekonomics– I know, I know, I hear you groaning in agony at your screens.

Okay, so the Times interviewed one of the authors and claimed:

When everything is free, said Mr. Saadia, objects will no longer be status symbols. Success will be measured in achievements, not in money: “You need to build up your reputation, you need to be a fantastic person, you need to be the captain.” People will work hard to reach those goals, even though they don’t need a paycheck to live.

Wrong. When you have teleporters—and set aside the obvious philosophical issues of voluntarily walking into a disintegrator beam so a duplicate of yourself can be incarnated somewhere else—you will have crime, mass terrorism, mayhem, and social collapse. Come on folks, show a little realism about human motivation.

So, now that we’ve dismissed the subject on the merits, we can pick it for less entertaining reasons. Let’s look at Star Trek without transporters. Would objects no longer be status symbols? Would people live to work and not work to live? Would we have … “post-scarcity”?

Hardly. We’d squabble over all the stuff that we can’t replicate, just like today. That’s the rub with productivity: There isn’t a whole lot of difference between mass-producing stuff cheaply versus for free. However, stuff that can’t be produced or easily substituted, i.e. positional goods, won’t disappear. This is precisely why I believe the concept is so important and write about it so frequently. Indeed, Trekonomics‘ author’s assertion that everyone needs to be the captain proves my point and discredits his: We can’t all be the captain. Someone will need to clean up replicator spills, so the future looks more like Red Dwarf than Star Trek.

Consequently, you’re going to need to produce something more substantial than menial labor to afford the location costs to live in San Francisco, Star Trek‘s preferred Earth location. But if the landowners of Trek can get everything they want for free, then we’re back to the robots-substituting-for-workers problem that I’ve addressed before.

And don’t waste your time arguing that people can always leave Earth for more space. That’s just kicking the can forward and ignoring the fact that even when land is free, poverty still exists in urban centers. Henry George observed this in the 1870s (and he cut his chops in San Francisco). At some point, “post-scarcity” stories only work if you tap location values. Nothing less will do.

Ultimately, “Economics of Star Trek” discussions raise two questions. One is concerned with filling the gaps created by the showrunners’ (mis)understandings of political economy, and the other is applying existing social science knowledge to the show. The first question disserves the show. It’s aspiration, not social theory. The second question, going by the author’s quotations, still needs work. We’re a long way from the characters chatting about how in the 21st century people actually believed consumption taxes were a good idea.

Oh, and since I’m talking about Ifihadahifi, here’s its Scott Walker protest song:

No Bubble, Just ROCK!!! Vol. 12

Mellow is the Bubble

I’m trying to cheer myself up after I was laid off from my one day on the job at J.D. Premium Loan LLC yesterday, and since I haven’t done a music post since October—goodness!—I feel I should cheer all of us up.

David Kilgour’s, “Today Is Gonna Be Mine,” is great song for getting yourself together before heading out to work.

…But I’m more partial to the Dirtbombs’ cover of “Fire in the Western World.”


LSAT Tea-Leaf Reading: February 2015 Edition


No. LSAT Takers, 4-Testing Period Moving Sum

20,358 people took the LSAT in February, up 859 (4.4 percent) from 2014. Notably, that’s growth in two consecutive testing administrations. Wow indeed.

This ends our LSAT year with 101,689 total LSAT takers, which is a record low going back to 1986. Back in those days, you said you were listening to Springsteen’s Born in the U.S.A. or Heart’s eponymous album, but we all know couldn’t take Barbra Streisand’s The Broadway Album and the soundtracks to Miami Vice and Rocky IV out of your tape deck. (Cultured readers from my age bracket will recognize how Rocky IV‘s villain’s theme closely resembles that of Unicron’s from the Transformers movie of the same period: Both were crafted by Vince DiCola.)

Back to less exciting 2015, I think there’s a little room left for LSAT takers to drop, but applicants aren’t shying away from law school as they were in the past. They’re down a mere 7 percent from this time last year.

No. Applicants Over App Cycle

It’s unlikely they’ll weigh in at fewer than 50,000, so it looks like we’re pretty close to the bottom if we’re not there already. Who knows, though, maybe it’s just people thinking they could get into elite law schools.

For some perspective on the law school crunch, here’re the trends since the 1960s.

Enrollment, LSAT, & Application Data

The only unobvious insight I can give you from this chart is how amazing it is that peak LSAT in 2009-11 just did not translate into peak applicants. Much of it is due to non-first-time test-takers, but it’s a real harbinger for how things will look going forward. We may be at the applicant trough, but folks, they ain’t coming back.

Site Update: ‘Law School Tuition Data Going Back to 1996’…

…Can be found on the “LAW SCHOOL COST DATA (1996-)” page.

Formerly called ,”Tuition Increases at All ABA Law Schools (1999-),” or something like that, I’ve revised this site’s renowned tuition data page. Biggest changes include:

  • Tuition data for each law school going back to 1996 and up to 2013
  • Percentages of full-time students paying full tuition at each law school
  • Percentages of full-time students receiving the median grant or more at each law school (as stated in the Official Guide)
  • Tuition levels discounted by the median grant at private law schools that aren’t Brigham Young
  • A bunch of carefully sculpted dispersion charts and tables showing changes in law school tuition since 1985 or 1996 with the annual Stafford loan limit
  • And no tuition projections. I know they were popular. I know they gave me easy page views, but I don’t think any forward projection based on past data will be accurate anymore given that tuition increases are slowing down now. Also, the necessary methodology page was truly boring to write, and if anything, you folks deserve more “No Bubble, Just ROCK!!!” posts than me being bored on my own blog.

Don’t worry though, the URL is the same as before, so anyone linking to it will find the same information.

Tracking this kind of information on the back end is becoming harder as law schools (a) are socialized by public universities (meaning a change in status), (b) change their names (sometimes to sound more “hashtaggy”), and (c) contemplate splitting into multiple campuses. I’m sure consolidations are on the way as well. As it is, gathering their exact, full names was easily the most tedious aspect of this update. Easily.

Like, law schools, if you can hear me, please put your complete, full name on your main pages. Not in logos, and definitely not ending in “[law school name] Law” as though your school’s name is in fact the title of a law. To pick on one example, when I read “Wayne Law,” I thought about The Wonder Years taking place in a Michigan law school with Fred Savage, Jason Hervey, and Danica McKellar, the awesomest mathematician alive.

Which reminds me: Law schools, I’m into women as much as the next gynephile, but you do realize you put a lot of women on your main pages. There’s a certain … lack of originality to seeing attractive young women on the law school Web sites.

Wait, what am I complaining about? Strike that.

Okay, I should add—and this is very, very, very important—because the data page is so long (which is by design and I have no interest in changing) it doesn’t load well in Mozilla Firefox. If you scroll down far enough, at some point the screen turns black and the numbers are unreadable. It doesn’t crash the browser, but it doesn’t make the site easy to read. It does, however, work in Google Chrome. I don’t know if it works well on other browsers. Frankly, I don’t care at this point. Chrome is free; I prefer Firefox; whatever; we’re done here.

No Bubble, Just ROCK!!! Vol. 8: 1997 Edition

Mellow is the Bubble

Still working on that ABA task force report, but a few weeks ago when I reminded you all that back in 1997 you were listening to the likes of Barbra Streisand, LeAnn Rimes,Shania Twain, and Chumbawamba, you passionately denied me. One of you went so far as to write:

I’m waiting for the “No Bubble – Just Rock” post that graces us with Shania Twain. I suspect that has about as much chance happening as the admins have of getting 40,000 lemmings to sit for the LSAT again.

Taking this as a challenge, I listened to Come on Over the following Saturday morning. Yeah, 40,000 LSATs isn’t worth subjecting you lost souls to the Nice Guyism of,  “If You Wanna Touch Her, Ask!”

Instead, I looked through my meager collection of 1997 music and found that I already used many of the bands in earlier NBJRs. Strange coincidence, I guess. So, here’s what I came up with.

We have the Sea and Cake, which I only started listening to a month ago.

Then Sleater-Kinney

…And what I was listening to at the time, the Makers:

How Much Is the Land in America Worth? (Redux)

The land-taxers I know are pleased with Wonkblog’s decision to hand “land value taxation” its coveted “most worthwhile yet hopeless policy crusade of the year” award for 2013. I guess the land value taxation pilot program Connecticut approved last June isn’t good enough. However, Wonkblog courteously acknowledged Mason Gaffney’s work on the subject.

Aside from linking to the Slate post on the topic that I discussed back in October, Wonkblog linked to another one from December in which Matthew Yglesias informs us that his correspondents told him that the Federal Reserve’s Flow of Funds report contains enough data to calculate the value of privately held land in the U.S. The number? $14.488 trillion. He concludes:

So who cares? Well, you should care. This number is high enough that it tends to confirm that [sic] view that taxation of land and other natural resources, supplemented by pollution fees and things like congestion charges could replace all taxes on labor and investment and still fund an ample welfare state and public sector.

Lamentably, Yglesias doesn’t show his readers why $14.5 trillion in land value “tends to confirm that view that taxation of land and other natural resources … could replace all taxes on labor and investment.” Indeed, his statement implies that the only thing standing between handing every American a citizen’s dividend equivalent to median household income is a posse of mustachioed landowners.

Alas, this is not how land value taxes work, but Yglesias’ vague editorial provides an opportunity to discuss the difference between “land value” and “land rent.” Land rent is the annual amount one pays to use land. Land value is the purchase price of real estate absent improvements. Land rent is like annual income; land value is like lifetime income once you’ve accounted for your JD premium. The ratio of land rent to land value is the “capitalization rate,” a percentage that differs among cities. Basically, it’s the discount rate; the higher it is, the lower the land value.

When Georgists talk about taxing land rent, the calculation is easy: Just multiply the rental value by the percent to be taxed. Let’s say we have a parcel that rents at $100,000 annually. Divided by a capitalization rate of 5 percent, its land value is $2 million. If we want to tax 80 percent of the land rent, we get $80,000 in land rent tax. Easy-peasey.

Now, like the typical Slate reader you’re thinking, “Why not tax land values instead? Wouldn’t an 80 percent tax on that yield $1.6 million?” And it’d be a good question—two even. The reason is that the amount taxed gets subtracted from the rental value, so as the land rent tax goes up, the land value drops. The rental value, however, remains the same. Here’s the equation:

Land Value = (Rental Value ­– Tax Amount) / Capitalization Rate

So taxing $80,000 from our parcel leads to a net rental value of $20,000 divided by a 5 percent capitalization rate and we get a land value of $400,000, not $2 million. If we want to express the land value tax as a percentage, then we modify the equation:

Land Value = Rental Value / (Capitalization Rate + LVT Rate)

…And then solve for the land value tax rate. In our case, it’s a 20 percent land tax on a $400,000 parcel, not an 80 percent tax on a $2 million parcel. Got it? Good.


So we have a $14.488 trillion chunk of land that Yglesias believes tends to confirm the view that land taxes can finance an ample welfare state and public sector. Unfortunately, he gives readers neither his estimate of the land’s rental value nor that of the capitalization rate he used to close the accounting identity detailed above.

I can help. I’ll assume a generously low capitalization rate, 3.88 percent, the same as the current yield on 30-year T-bills (the aforementioned Gaffney recently demonstrated that wealthy people get much lower discount rates than poor people). We get a mere $562.1 billion in taxable land rent, which isn’t even enough to cover the federal deficit.

Now’s the part where Slate readers might question why Yglesias thinks this is sufficient to finance an ample welfare state and public sector, but they wouldn’t realize that government at all levels collected about $4.3 trillion in taxes in 2012. Add that back to annual GDP and we have $21.1 trillion to work with. How much of that is land rent? Again, we’ll have to fill in the annual rental value because Yglesias does not. Let’s say it’s only 20 percent, and we get $4.2 trillion in taxable land rent and at our 3.88 percent capitalization rate, $108 trillion in pretax land value.

You can tweak the capitalization rate and the percent of land rent as a share of GDP, but I think 20 percent is too low, if only because by the time you tax the land value down to $14.5 trillion as we do now, governments get less revenue than under the current tax system. This is implausible. Raise the percentage of GDP that goes to land rent to 30 percent, and you have well over the $5.7 trillion U.S. governments currently spend. Anything more is Hanukkah.

Of course, none of these calculations account for the increases to national income by recovering the deadweight losses imposed by our current tax system or the costs of administering it. Nor do we know if the Fed’s assessments undervalue land, which I—as does Gaffney—bet they do because hiding wealth in land is a time-honored practice. So yes, we should be confident that there’s enough land value (plus other rents, like spectrum rights, mineral rights, IP rights, etc.) to finance government and the welfare state, but a $14.488 trillion land value assessment alone is insufficient to prove it.