By Dave Anderson
One of my good friends from undergrad recently completed his Canadian law degree. Another friend from undergrad just completed her US law degree and is waiting for the bar results. Another good friend from undergrad is strongly considering going to law school next fall. All three of them are smart and reasonably ambitious on most days of the week. None of them were interested in law as a first choice career. They went into law because that is a good spot for very intelligent and ambitious individuals who can not find viable first choice career options to go if they don't have great quantatative or over-inflated degrees of self-confidence to go into finance. Law and finance have been the career sinks for smart kids who want to make professional money but don't have too many first choice options. Both of those fields are on the whole redistributive fields instead of creation fields. There are some positive growth side-effects to good lawyers and good bankers, but most law and finance is shuffling and risk avoidance instead of value creation.
Professor Bainbridge notes that there is a serious over-supply of new lawyers and proposes to reduce the number of new slots in law schools to correct this labor market glut:
Following a fairly standard s-curve model, the demand for lawyers grew faster than the population and economic expansion would have predicted, driven by the aftermath of those shocks. Over the last couple of decades, however, the market for lawyers has adapted to those shocks. Because there have been no comparable major exogenous shocks affecting the demand for lawyers, the market has matured. We would therefore predict that growth in the demand for lawyers would slow until it reaches a level that can be sustained by population and economic growth. ...
If law in fact is a mature industry, we face a problem of systemic oversupply....
Unfortunately, the growth in the number of law schools and size of entering classes at many law schools was premised on the assumption that the demand for lawyers would continue to rise at the high rate characteristic of the period, say, 1960-1990. Because that growth rate was artificially high due to the exogenous shocks of the preceding decades, the number of law schools and large law school class sizes no longer make sense.
Law and finance should not be the default options for individuals of high educational attainment but no good first choice options. It is not good for the US economy, it is not good for the individuals; we either need a growing economy with more first choice options available or a different set of second choice defaults that are actually involved in creating interesting things.
The bigger issue is that professions which create new wealth have been actively denigrated by the ruling elite. Lawyers and financiers within the elite have made themselves even more wealthy by reducing real professions from aviation to engineering into tenuous, poorly paid, dead end tracks that reduce people into burned out shells long before retirement. Reducing the production of lawyers is an important step, but turning things around would mean making value creation careers attractive enough that sane people would want to pursue them.
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