Scam Blogs

Robots Won’t Take Your Profs’ Jobs

I’m going to weave a few themes together for you today; it’ll make sense by the end.

We begin with a friend’s comment last week about robots taking everyone’s jobs. I called him on the lump-of-labor fallacy—there isn’t a fixed amount of work to be done in an economy and therefore technology only creates jobs. You can argue the fallacy as much as you like, but don’t talk about robots taking our jobs until you’re aware of it.

I wrote about robots in the past, when Paul Krugman popularized it in December 2012. I’ve revisited it and found an interesting exchange between Sandwichman and Nick Rowe that I missed last year.

To summarize: Sandwichman argued that the lump-of-labor fallacy is really Say’s Law in disguise. Say’s Law is to me a confusing, contentious tautology that evades a concise rendition. My crack? An economy’s production supplies it with sufficient purchasing power to consume that production. Thus, under normal circumstances there can be no general surpluses, including labor. Keyensians, including Krugman, reject the strict use of Say’s Law but for some reason still point at the lump-of-labor fallacy.

Rowe countered that technology’s impact depends on people’s preferences and money. People can simply consume more of what they make, or the central bank needs to give them more money to increase their consumption. I didn’t like some parts of Rowe’s model, but his last, parenthetical paragraph closes the issue perfectly: Technology is only a problem if it displaces workers from land.

I’m starting to think that maybe just about all productivity advances substitute for land and not labor, which is good. The converse is rare, e.g. Dutch disease scenarios where technology makes it easier and more profitable to extract oil than pay workers to make stuff. The workers don’t get the benefits, unlike the landowners, and they can’t leave the country. The land question precedes and supersedes any discussion of technology.

Theme number two is “cost disease,” the explanation of higher college tuition costs on lack of productivity improvements in lecturing. The illustration for cost disease is a string quartet, which takes the same quantity of labor to produce as ever. Cost disease came up twice in the legal-education context in the last few weeks. Once by a dean claiming that scambloggers ignore it, and again by a study pointing at federal student lending as the fuel for higher college tuition, aka the Bennett hypothesis.

I chewed on these two ideas while at … the Saint Paul Chamber Orchestra, which was performing Aaron Copeland’s Appalachian Spring with some other stuff for padding. It was a real treat, and right at the finale of Mozart’s Piano Concerto No. 24 in C minor*, it all came together. It was a really rewarding feeling.

(* Mozart only composed one other piece in a minor key. I have absolutely no ear to tell keys, but it was lovely.)

So, what does last year’s lump-of-labor discussion tell us about cost disease?

We can set up a model just as Rowe did for Sandwichman, but instead of labor hours, as a good Georgist I’ll use land. 60 people live and work on 60 hectares; 30 grow apples and 30 grow bananas, one each of everything. (Numbers divisible by 12 are always good.) Nobody wants their own type of product, so they trade for the other. Someone stumbles on an apple-growing process that doubles productivity. One of three things happens:

(a) The apple growers each double their output, leaving the bananas constant. 30 hectares grows 60 apples, 30 hectares grows 30 bananas. The ratio of apples to bananas doubles to 2:1, but bananas’ share of the output has fallen to one third. The apple growers really want those bananas.

(b) Banana growers really want their apples, so 20 apple growers double their output, but 10 apple growers switch to banana cultivation. 20 hectares creates 40 apples, and 40 hectares creates 40 bananas. This situation creates an equilibrium for the ratio of apples to bananas, 1:1.

(c) Same as (b), but the 10 hectares shifted to banana production go to a third commodity. This situation is essentially identical to (a), since bananas are what we care about.

Cost disease says that higher education is like situation (a) (and (c)). Productivity “enables” people to satisfy their preferences for the same stuff when we want it to increase their purchasing power to demand new stuff. Here, the more productivity increases, the more income goes to the unproductive.

Now for the twist: If banana-production technology never improves, and people’s appetite for bananas doesn’t wane, we can say that the supply of bananas is inelastic—insensitive to changes in price. But that’s exactly what proponents of the Bennett hypothesis argue: Higher education is a positional good, so educators absorb money lent to students to buy it.

So what’s the difference between the Bennett hypothesis and cost disease? Formally, they’re the same, so the policy responses should be the same: Lending money to people to buy educations that don’t respond to price changes is no different than increasing their productivity, ergo don’t lend the money. Just as Sandwichman argued that Say’s Law is the lump-of-labor fallacy, so too is the cost disease really the Bennett hypothesis.

The function of cost disease, though, I think is different. It’s raised to neutralize the positional-goods argument implied by the Bennett hypothesis. It’s not that education is a rat race, they argue; rather, it’s that we can’t make the rat race better.

If that sounds like a non sequitur, it’s because it is, but with logic like that we needn’t worry about robots replacing the profs.

GUEST POST—Don’t Go to Law School (Unless) (Flow Chart Edition)

(Connecticut attorney Samuel Browning obtained permission from Paul Campos to create a flow chart version of the book Don’t Go to Law School (Unless). Mr. Browning’s herculean effort is displayed here as a single graphic taken from his spreadsheet with only some proofreading on my part. I have not read the book, so any unclear points and errors are the author’s own.)

Browning--DGTLSU Flow Chart (2.0)


NYT Obituaries Are a Time-Suck

Stay clear, whatever you do. While searching for Japanese filmmaker Nagisa Oshima’s obit, I ran into this one today, “Jeffrey O’Connell, Legal Scholar of No-Fault Coverage, Dies at 84“:

In 1965 Mr. O’Connell joined with Robert E. Keeton, another law professor, to write “Basic Protection for the Traffic Victim: A Blueprint for Reforming Automobile Insurance,” a book in which they proposed to do away with a system in which an accident victim had to sue another driver to collect damages, in most cases from the second driver’s insurer.

The authors proposed that the victim’s own insurance company would pay the damages instead, regardless of who was at fault. The other driver would recover damages from his own insurance company.

Except for cases of extreme loss, in which lawsuits would be permitted, suits to get greater sums would be prohibited, depriving personal-injury lawyers of a ready supply of clients.

As a result, the authors contended, everyone could be quickly compensated, and administrative costs, particularly legal ones, would be curbed. Logically, insurance payouts would drop, meaning car owners’ premiums could be reduced.

Everyone who’s taken the New York bar knows about the no-fault system, which at least was simpler to understand than the elective share statute. If I recall, accident victims can only sue other drivers if their injuries are over $50,000 and they are “catastrophic” in character, or something like that.

Does the system work? Legendary scamblogger L4L of Big Debt, Small Law says “No.”

Okay, he didn’t just say no, he wrote a delightfully satirical post in March of 2010 on the subject that I will reprint. I cannot vouch for the veracity of any of L4L’s claims, but his point that no-fault can be easily defrauded is plausible.

If anything, the insurance defense sweatshops were latecomers to outsourcing’s bandwagon. We speak from experience here, having launched our legal “career” from a $40 K a year downtown no-fault mill (no kids, that number’s not missing a digit) back in 2006. Sweet Jesus, the memories. King’s Civil Court, 141 Livingston Street, Brooklyn. The infamous 9th floor “no-fault” part.

How fondly we recall the motions being wheeled into chambers via a rusted Pathmark shopping cart, its wheels buckling under the weight of so much legal toilet paper. John, the grouchy but loveable court clerk, had Stage IV throat cancer and would hack blood while rasping at us losers to “shut the Fuck up and listen for your case” during calendar call.

He wasn’t kidding. John kept a .38 special, sans holster, tucked in the waistband of his trousers. Sometimes he’d hammer a stapler inside a steel wastebasket to get the attention of us barristers when the din of no-fault bickering crossed a certain decibel level. Hell, even a chainsaw operator would cringe at how loud that place could get. We still awake at night with ears ringing, recalling the nightmare of $347 neck-brace negotiations. Those old “dollar collars.”

That said, John was one of the few good guys you’ll meet in the miserable sewer of ShitLaw practice. He realized full well what a pathetic waste of time the entire charade was, and how poorly paid we were paid to boot. Your humble narrator’s constant complaining once led him to announce: “if you monkeys ever form a union, you’ve found your shop steward.” They just don’t make ‘em like John anymore. Blue-collar Brooklyn all the way. A Mets fan. God bless the old bastard. Cancer long since carried him away to that big courtroom in the sky.

For those unfamiliar with no-fault practice, a brief primer: It’s the legal equivalent of stamping license plates in a prison metalshop, only at lower wages and more authoritarian working conditions. In NY State, a driver’s own insurance company pays medical expenses and lost wages regardless of accident fault. This moronic idea, hatched by “policy” wonks in the NY legislature, naturally resulted in systemic and wholesale disaster. To wit:

Mobsters get two junkyard cars, register & insure them, and then recruit homeless dudes and illegal immigrants to stage minor accidents. The police are summoned, an accident report prepared, and the scammers then begin “treating” at bogus outer-borough medical mills operated by the crime syndicate. The insurance carrier is then billed for the phony “treatments” plus a truckload of phantom medical supplies like canes, neck braces, massage units, and so on. NY even allows billing for quack “medicine” like aromatherapy, acupuncture and other witch-doctor nonsense.

Like the Lilliputians in Gulliver’s Travels, these parasites teamed up to hamstring the insurance carriers. Remember kids: a cloud of mosquitoes tops a tiger’s death toll any day. The rules & caselaw all favor this infectious swamp of scammers, and billions have been stolen from NY drivers as a result of this ongoing heist. Shady collections law firms “buy” collections files from the clinics at 50 cents on the dollar, file Summary Judgment motions, and then just wait for the case to come up on calendar. For every victory, the medical mill gets an additional cash kickback. The byzantine rules and massive deluge of cases (150+ a day in Brooklyn alone) make it death by a thousand cuts for the carriers, who simply raise rates rather than pay a living wage for the cases to be properly litigated.

That doesn’t stop the occasional IDH (Insurance Defense Hero) from slipping thru now and then. All veterans of ShitLaw know the type. These barristers make up for their abysmal salaries in bare-knuckle belligerence and “fighting the good fight.” Unlike the usual hung-over, half-asleep J.C. Penney clad schlubs of ShitLaw, the IDH struts into court like Clint Eastwood entering a saloon. For their 40 K a year they’d take a bullet for Geico or Allstate, and take it with pride. Every case is like “High Noon.” One almost expects an IDH to come flying into depositions wearing tights and a Superman cape. We’ve often thought of pitching this character as an action-hero cartoon. Just imagine:

“Slower on the LSAT than a lobotomy victim, more powerless than a day-old fart, able to cut n’ paste huge motions with a single click- what’s that flying into court?

It’s a BIRD-it’s a PLANE- no, it’s the INSURANCE DEFENDER !”

Hell, we’d watch it. So would you.

Today it’s not uncommon for no-fault associates (or what’s left of them) to earn as little as 25 K a year,with turnover measured in hours opposed to months. After just 6 weeks at my first no-fault gig, I’d already risen 7 seniority notches on the letterhead. But wait: this “firm” gets even funnier:

Too stingy to buy motion-exhibit tabs, they’d instead have us cannibalize incoming papers for their office-supply content.

“Just pry apart the Velotex binding and yank the fuckers out”, said the partner. He even had a custom-bent screwdriver designed just for that purpose. We associates swapped these exhibit tabs like inmates trade smokes. An “Exhibit A” and other high-alphabet letters were always in short supply, whereas a “Q” was common as cabbage. Whenever someone quit we’d quickly plunder his desk to “stock up” on these much-needed supplies. One nasty, rodent-like guy who’d lasted 10 months had a real motherlode: eight “A’s” and eleven “B’s” stashed in his drawer. Or should I say “under his drawer.” Well hidden-the prick. For what motion he was saving them I have no idea. We called him “the squirrel.”

This dump also printed us our own cheesy business cards on that perforated cardstock you can buy at Staples. For laughs I’d bring the whole sheet into court and just rip them off as needed, like a dispenser. Once I gave this hot Wilson Elser chick a whole uncut page of them, but she never called me.

Sadly, my once-rising star was an elevator to nowhere. Insurance defense work is so boilerplate and mindless that many firms “dump” experienced associates once a certain salary threshold is reached (roughly 60-65 K). Five year’s experience isn’t worth much more than five minutes, and it’s simply more cost effective to “keep the line moving” with freshly minted suckers from Car’Bozo, Brooklyn, NYLS and other gutter schools than pay experienced associates a living wage. Now that Bangalore &Co. are handling all the paper-churning, these insurance “firms” can simply troll craigslist for per-diem clowns to show up in court and bicker over the cases for as little as $25 a file. Like the Joads in The Grapes of Wrath, these migrant barristers wander the court system like fruit pickers.

The work was beyond mindless. Like the A-Team, if you’ve seen one episode, you’ve seen ‘em all. The characters changed while the script stayed the same. Day after day, year after year, squads of TTT grads trekked off to court, got yelled at/berated by court personnel, and limped back to the office to cut n’ paste the next day’s sad mountain of paperwork together. “Lateral” options from this practice area included can & bottle scrounging, panhandling on the 7 train, or becoming assistant fry cook at Burger King.

You can read the rest here (17-20).

But I Thought There Were No Cheap Lawyers…

If you did, then I recommend Daniel Fisher’s article in Forbes, “Class-Action Firms Capitalize on Wretched Market for Law-School Grads.”

Fisher managed to find a lawyer (or two with the same name) who went from charging $500 for a fixed-fee case a few years ago to $1.5 million for 2,711 hours of “legal” work in a class action lawsuit against Citigroup—except there’s no evidence he received anything close to that kind of compensation because he was contract attorney. He was billed out at $550 per hour when according to an anonymous source on the same job the contractors were paid a $35 rate at most. If the case lasted two years, that’s about $47,500 annually. That’s not the worst salary to have in the city, but it’s one-fifteenth what he was billed at, which might vex clients and the class action lawsuit activists mentioned at the end of the piece.

I liked Fisher’s article, especially the well-deserved mention of Tom the Temp’s Temporary Attorney: The Sweatshop Edition, which might be the earliest scamblog, starting in late 2005. What’s surprising though is that Fisher added the law school tack at all because it wasn’t really necessary. The story’s really about the very large multiplier between the contracting rate and the billing rate. I suspect that if this piece came out three years ago, it would’ve noted the contractors’ student loans only in passing. Instead, in 2013 we get:

Many of the temp attorneys on the Citigroup case graduated from law school in the past five years, some of them from prestigious schools like NYU and Georgetown.


I can’t say I expected Forbes to present the legal contracting world through the eyes of Big Debt Small Law.

Seton Hall Abandons the ‘Law Is Not for Everyone’ Line

I’m back from my break, and thankfully there was very little law school-related news for me to opine on. The only nugget that deserves a quick post before I get back into gear is Seton Hall’s decision to reduce its tuition for median-LSAT/cum laude-GPA applicants for one year. Third Tier Reality gives the gist of it, but I’ll add that the school’s decision reminds me of Amir Efrati’s 2007 WSJ piece on law schools and the legal sector that interviews Seton Hall’s lawyer of the century, Scott Bullock, d/b/a L4L of the seminal scamblog Big Debt, Small Law.

In the article, Bullock characterized his six-figure Seton Hall JD as a “waste,” which is about as charitable as he ever was. By contrast, the law school’s associate dean condescended “Unfortunately, some find the practice of law is not for them. However, it is our experience that a legal education is a tremendous asset for a variety of professional paths.” The law-is-not-for-everyone mantra surfaced again from a different Seton Hall administrator in a 2010 article in The Star-Ledger.

Now, the law school is promoting its one-year-only tuition reduction program:

“The legal industry is undergoing substantial change,” said Patrick E. Hobbs, Law School Dean, “and for those who choose law, we have a duty to respond in a meaningful way – making legal education more practice oriented and employment focused as well as more affordable. Our Legal Practice Curriculum, numerous clinics, pro bono programs and comprehensive intern and externship programs address the first concerns; this tuition cut will help to answer the next, making Seton Hall Law School more affordable for those who wish to attend.”

Apparently, when criticized about high tuition and poor outcomes, simply shifting the blame onto the students for going to law school for the “wrong reasons” that the law school was powerless to filter for no longer works. Instead, law schools now have a “duty to meaningfully respond to the substantial change the legal industry is undergoing.”

This is the difference five years makes.

Veterinary School Is Safer Than Law School

One of the commenters to Ohio State law professor Steven M. Davidoff of the New York Times’ Dealbook pointed everyone to the Bureau of Labor Statistics’ Occupational Outlook Handbook, but I think it’s worth a post. Professor Davidoff writes:

Law schools have come under fire during these tough economic times, with critics saying that they leave too many graduates in debt, chasing too few employment opportunities. But it could be worse. Consider the plight of veterinarians.

The average tuition and expenses for a veterinary degree at a private school has doubled in the last 10 years to over $200,000, well above the typical cost of law school. Yet their pay remains moribund at an average of $66,469 — much less than lawyers.

But unlike law schools, veterinary school is not regularly being called a scam or bubble. In fact, applications to veterinary schools were up about 2 percent last year.

Actually law schools were coming under fire before these tough economic times going back to 2007 at least.

Otherwise, Davidoff is making a common error in law school discussions, equivocation: Not everyone who finishes law school is automatically employed as a lawyer, so their incomes (and lack thereof) are not included in government estimates of lawyers’ salaries. The BLS also excludes self-employed lawyers, which range from solos to biglaw partners, which further diminishes the scope of government’s lawyer wage data. This may be true for vets too, but it probably has less of an impact.

A quick comparison of the OOH entries should tell us why there aren’t any veterinarian school scamblogs.

“Employment of veterinarians is expected to grow 36 percent from 2010 to 2020, much faster than the average for all occupations. Job opportunities should be particularly good in government and in farm animal care.”


“Employment of lawyers is expected to grow by 10 percent from 2010 to 2020, about as fast as the average for all occupations. Competition for jobs should continue to be strong because more students are graduating from law school each year than there are jobs available.”

Digging a little deeper:

“Overall job opportunities for veterinarians are expected to be good. Although veterinary medicine is growing quickly, there are only 28 accredited veterinary programs in the United States, which produce a limited number of graduates—about 2,500—each year. However, most veterinary graduates are attracted to companion animal care, so job opportunities in that field will be fewer than in other areas.”


“Competition should continue to be strong because more students are graduating from law school each year than there are jobs available. As in the past, some recent law school graduates who have been unable to find permanent positions are turning to the growing number of temporary staffing firms that place attorneys in short-term jobs. This service allows companies to hire lawyers “as-needed” and permits beginning lawyers to develop practical skills.”

This isn’t to say that today’s vet school graduates don’t have higher debt-to-income ratios than in the past due to rising tuition, so perhaps vet school isn’t as good a choice today as it was in 1985. Many vets may be on IBR for all we know, but they have better opportunities for finding jobs as vets (36%? Wow!), which is not something we can say about 2012’s law grads.

The News-Gazette Has Not Heard of the Great Recession

Julie Wurth, “Global recession, glut of attorneys blamed for drop,” the News-Gazette

Most articles that discuss law school application cycles usually start by saying that applicants surged to law school in 2008, even though they didn’t compared to 2004. The News-Gazette‘s article, by contrast does a better job until it gets to the last half of this paragraph:

“The number of applicants shot up in 2002 and 2003 and topped 100,000 in 2004, then dropped 4.8 percent in 2005 and 7.4 percent in 2006. The assumption was the market was simply correcting, but the numbers continued to slide through 2008 as the recession hit full force, Margolis said. The number rose again temporarily in 2009, as the economy appeared to improve, but fell by 10.7 percent in 2011 after firms began to lay off lawyers and cut back on hiring.” [Emphasis LSTB]

The economy appeared to improve in 2009?

Take a good look at those last four years. The civilian employment-population ratio dropped continuously, and it’s leveled off so far in 2012. If you can see an “apparent improvement” in 2009, you have gifted eyesight.

Saying a nonexistent improvement to the economy caused the applicant uptick is a strange claim. Normally we find that law school applications are countercyclical—as the first half of the quote suggests—but the News-Gazette denies that. Why would fewer people than we’d expect apply to law school than in previous recessions? Maybe it’s because someone like Scott Bullock warned them not to, but attributing success to scambloggers is not a hypothesis the LSAC isn’t going to volunteer to the News-Gazette.

Think of the workers tomorrow.

Mark Thoma Will Never Appear on the Today Show

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.)

The Nearsightedness of Career Services

William A. Chamberlain, “Law Schools are Adapting to the Shifting Job Market,” in the National Law Journal

I think the best response to Northwestern dean Bill Chamberlain’s piece is some good old press beating.

“In 2011, law schools came under fire for charging excessive tuition, strapping graduates with unmanageable debt and for allegedly publishing incomplete or misleading employment outcomes to lure unsuspecting students.”

In 2011? More like 2007. For example, Temporary Attorney: The Sweatshop Edition started in December 2005, Big Debt, Small Law began in 2007. The New York Times didn’t precede the scamblogs. Dean Chamberlain’s revisionism gets worse.

“Just a few short years ago, jobs in the legal profession were plentiful — although perhaps we remember those times as better than they were. Many students could rely on on-campus interviews, job postings or applying directly to government offices to get their first jobs. Networking, contacting alumni, constant follow-up and frequent lack of response from potential employers were not the norm. Rejection happened, but there always seemed to be another opportunity just around the corner.”

This might’ve been true for Northwestern grads, but career services are often nearsighted. Once grads have their “first jobs,” its work is done. This is fine, but that doesn’t mean we should rely on what they say regarding the long-term value of a law degree.

“If [post-graduate employment] information becomes standardized, prospective applicants will be able to make apples-to-apples comparisons among schools and, hopefully, their decisions about pursuing law school will be better informed. Some of those pursuing the degree just for the money may be deterred, leaving those who have weighed other alternatives and are truly passionate about practicing law.”

Like many law school deans, Chamberlain believes standard economic laws do not apply to law practice; in other words, the most productive lawyers are those that work for less, and passion for “The Law” alone makes one a good attorney and creates jobs. Admissions departments also apparently have no capacity to screen out the hordes of greedy, mercenary applicants who by desiring a living wage must be incompetent attorneys. The idea that people who would make good lawyers are deciding not to apply because the profession has no place for them doesn’t cross his mind.

“One response to the market has been the proliferation of bridge-to-practice programs that fund unemployed graduates for a short time to work in public or private sector jobs … It seems more responsible, for the law schools that can do so, to provide funding for the unemployed graduate so that he or she gets legal experience and makes contacts rather than abandoning that grad to a low-paying retail job to pay the rent.”

This is the first direct endorsement of law school-paid positions for graduates. Oh what the hell, let’s call them what they are: law graduate dowries, but what I’ve read about them is that they only enroll a fraction of a graduating class and can’t possibly be sustainable. The graduates’ incomes are really their successors’ debts. One doesn’t have to ponder the veracity of Ricardian Equivalence theory to realize that this pseudo-Keynesian legal sector stimulus will reduce law graduates’ long-term living standards, IBR aside. Also, if career services personnel are so concerned about abandoning graduates why not tell admissions departments to enroll fewer students?

I must add that I’m still waiting for law schools to cook up a scheme in which they hire one another’s graduates so they can report them as employed in “academia” rather than “law school funded” positions.

“Even with high tuition and a contracted job market, the J.D. is still worth having. All sectors of the economy have been hit by the recession, but, in relative terms, getting a law degree still makes a lot of sense … [I]t remains the threshold to a worthwhile profession for those who truly want to be there.”

I have to credit Chamberlain with the backhanded closing, but it is confusing for him to worry about abandoned law grads and then close by saying that they’ll get law jobs later. If that’s the case, as a successor law student, I certainly wouldn’t want to pay for their dowries, but as I said, career services personnel are nearsighted. They do not have the credibility of Bureau of Labor Statistics when they opine on the long-term value of legal education, particularly when their work ends when graduates land their first jobs.