July 16, 2011

"This is a story about the law school market, a singular creature of American capitalism, one that is so durable it seems utterly impervious to change."

A big NYT article, in the Business section, by David Segal:
There are many reasons for this ever-climbing [tuition], but the most bizarre comes courtesy of the highly influential US News rankings. Part of the US News algorithm is a figure called expenditures per student, which is essentially the sum that a school spends on teacher salaries, libraries and other education expenses, divided by the number of students.

Though it accounts for just 9.75 percent of the algorithm, it gives law schools a strong incentive to keep prices high. Forget about looking for cost efficiencies. The more that law schools charge their students, and the more they spend to educate them, the better they fare in the US News rankings.

“I once joked with my dean that there is a certain amount of money that we could drag into the middle of the school’s quadrangle and burn,” said John F. Duffy, a George Washington School of Law professor, “and when the flames died down, we’d be a Top 10 school. As long as the point of the bonfire was to teach our students. Perhaps what we could teach them is the idiocy in the US News rankings.”
Much more at the link (with a big focus on New York Law School (which is not to be confused with New York University School of Law).

The product is a law school diploma. It's not hard to supply. But why all the demand... at such a high price? There's something quite insane about it, and U.S. News creates appearance of an orderly market in which potential buyers can see the value of the thing they will buy at such a high price. Those who bitch about U.S. News are in denial about the service it provides us, creating that appearance. [And by "us," I mean law professors.]

41 comments:

Fen said...

Higher Education Bubble alert.

When the Apocalypse is over, the first people to be eaten will be faculty.

Fen said...

"But I'm an expert in Diversity Training!"

*nom nom nom*

Fred4Pres said...

Colleges and universities over charge for what they provide. It is BS and smart kids are avoiding it by carefully picking (as they should).

The very top elite schools can get away with it because their graduates generally get jobs (and great paying or very influential ones). As Scalia said, it is not that the schools are better, but the perception is the selection criteria is better.

Carol_Herman said...

More fakers claim to be doctors than lawyers.

Probably because you can put Dr. in front of your name. And, esq., at the rear ... doesn't pull in audience.

Besides, you don't have to be a lawyer to have an opinion. We see plenty of "mishigas" produced by lawyers ... that we should pass a law where someone with a credential can't get to first base.

Perhaps, obama even started the ball rolling?

AJ Lynch said...

Oh please- the NYT reporter posits that tuition could be lower but for the US News & World Report algorithm? What a gonif.

Fen said...

A Guide to Garnishing Lawyers. Denver: Tea Party Press, 2031.

nevadabob said...

Yeah, it's all US News' fault.

Not the fact you Democrat Party members are taking home $170,000 a year in taxpayer money, Ann and will retire with a million-dollar pension courtesy of workers in the United States whom you take this money forcibly from.

Can't be that.

It's that US News demon. She's the witch.

BURN HER. BURN THE WITCH AT THE STAKE!

Carol_Herman said...

Divinity carries a credential.

But if I needed to write a resume, I'd claim being a divinity specialist. You should just try my fudge.

Fen said...

BURN HER. BURN THE WITCH AT THE STAKE!

Medium well, not well done pls.

Does BBQ sauce come in cans?

Alex said...

Lawyers raise the cost of doing business, which inflates their own income. It's a dirty business.

sorepaw said...

So how much of those "expenditures per student" actually goes to the care and feeding of administrators?

When the bubble bursts, the administrators will make sure the faculty get eaten first.

David R. Graham said...

"But why all the demand... at such a high price?"

Same reason handguns and shotguns were in demand here a century and more ago: protection, crime, food, collecting in a wild land. And still are.

An irony of law and lawyers is that, past an indefinable aggregate number of them and outside a hard-to-see quality of their character, wildness intensifies. The same is true of clergy and doctor, BTW. Debasement and disease increase as their numbers and character exceed parameters no one can see for certain.

When it is too late, when their excess is on us, as today, then we see the mal-effects of their orthogenesis. Then ways are found to cut their number and correct their character. Lawyers, clergy and doctors, I mean.

Steve Austin said...

Anything that government subsidizes has above inflationary price rises.

Put in Medicare and Medicaid and an emergency room visit is now a thousand dollars.

Set up FNMA to subsidize home loans at 30 year fixed rates and now a 2,000 square foot home costs 400,000 dollars.

Provide all sorts of government guaranteed and plentiful student loans and now it costs 50,000 dollars a year to go to college or grad school.

Get the government out of subsidizing an industry and rational prices return as supply and demand take over again.

ironrailsironweights said...

Law school applications will keep climbing through the stratosphere, and more and more new law schools will open, no matter how bad the job market for new graduates may be. This is for the simple reason that law school is easy: no math, no science, no computers.

Peter

flenser said...

"a singular feature of America capitalism"

I've always suspected that the NYT is about as capitalist as the Politburo, so this bizarre assertion does not surprise me. The law school market is a guild system on steroids, a guild system closely tied to the government. It's the antithesis of real free market capitalism.

It's impervious to change because it is not very susceptible to normal market forces, any more than government in general is.

Carol_Herman said...

Hm, no computers in law schools? Perhaps. But everyone comes in carrying a laptop.

And, the firms? WOW-ZEE ... what a market for Google's databasing skills. A small shop ... Maybe, with just one credential hung by the desk? And, a Google app! You can snow back any other firm! Even the bigs ones!

You'd even have a calendar that you'd carry around on your Android or iPhone ... telling you when one of your missives hit ... And, the people on the other side? They'll get so much "incoming" ... there only way out will be via data mining.

Buy GOOGLE. Ahead, they are still going to make a killing. And, here you have a market ... overgrown ... just waiting for technology.

In the old days? You paid a secretary. Who could type a document perfectly. And, she had learned all about the various forms.

Oh, and she answered your phone. You were never "in" ... exactly.

"Ooops. The boss just walked in. Let me connect you."

Seeing Red said...

Why at such a high price?

While correlation is not causation,

Uncle Sam has very deep pockets.


When the risk was removed around 1960??? IIRC & Uncle Sam started guaranteeing loans, the risk was removed from the banks.

I think Instapundit linked to that blog post years ago.


Higher Ed is higher ed, law schools weren't immune.

Back in the 80s, IIRC, my dad told me Uncle Sam was trying to go after bad loans in the med field & Haavvaarrd refused to help.

Beneath them, so what if the US taxpayer got stiffed? It was for a good cause.

Idiots don't realize, no money, no loans....

Hey, wait.....

NO MONEY

or OPM!


wv:dingendi - we're about to get ding'd, so the party's ending.

Chip S. said...

The regulatory state deserves a full share of responsibility. As we approach a state of the world in which everybody needs a lawyer to find a way through the federal labyrinth, the demand for them keeps growing.

gadfly said...

Forget about looking for cost efficiencies. The more that law schools charge their students, and the more they spend to educate them, the better they fare in the US News rankings.

Does "publish or perish" research by our law profs constitute spending to educate students?

I sure hope that law school professors are doing lots of research because they certainly are not doing much teaching according to US Snooze.

Seeing Red said...

Anyone really read the release & sign b4 medical testing?

I sense a market.


Mine was about 2-1/2 pages & most of it didn't have to do w/me - it was what they wanted 2 do w/my info.

Add me to their fundraising list, sharing my results w/every study which asked, etc.

Then they asked if I had a will.

Trooper York said...
This comment has been removed by the author.
Chip S. said...

Colleges and universities over charge for what they provide.

I see this kind of statement all the time, but I never know what it means.

A quick search tells me that the average tuition for day students at Tennessee boarding schools is $23,150 per year. Vanderbilt, where a lot of these TN prep-school students are hoping to enroll, charges $40,320 for tuition. Supposing we can agree that it's unrealistic to expect Vandy to charge no less than a local prep school, how much more can it charge before it's "overcharging"? 30%? 50%? 75% (as is the case)? 100%?

I'm genuinely puzzled by the readiness of people who are usually pro-free-market to invoke some sort of Thomistic notion of a "just price" when discussing universities.

I would presume that in this sector as elsewhere, the forces of supply and demand are relentless.

mtrobertsattorney said...

Ironrail has a point. In general, beginning law students, while they may have a background in anthropology, sociology, business,or "____" studies, they do not have a serious grounding in what used to be called the liberal arts. Many are adept at learning legal rules and spotting when a fact situation may implicate two contrary rules, but that's about it.

It would be an entirely different matter if the first year of law school was devoted to the study of political theory (with an emphasis on the Federalist Papers), political philosophy, logic and the history of economic thought. Too many practicing lawyers (and too many judges),if asked why federalism or the separation of powers are good things, appear stymied by the question. They may know the legal rules that govern these principles allright; but they seem to have trouble getting to any deeper analysis.

flenser said...

I would presume that in this sector as elsewhere, the forces of supply and demand are relentless.

You presume wrongly then. The demand for lawyers is driven almost entirely by government. That is, by other lawyers. The thing lawyers work with is the law, and there is only one source for the law.

In addition to creating virtually all the demand for lawyers, government controls the supply of them via the needlessly restrictive process it establishes to become a lawyer. The practice of law is a textbook example of a guild system and as such is designed to minimize the consequences of negative external economic factors.

edutcher said...

I get the impression that the quality of a law school is measured by the exorbitance of its tuition?

Someone should remind these gullible students that, "You get what you pay for", is qualified by, "You pay for what you get". High price does not always guarantee high quality.

somefeller said...

AJ Lynch says:Oh please- the NYT reporter posits that tuition could be lower but for the US News & World Report algorithm? What a gonif.

No, the NY Times writer simply states that the US News expenditures per student algorithm provides incentives to keep prices high. He doesn't state that removing that tuition would be lower but for that one item, but he points out how the algorithm helps feed the problem. In other words, he does what a good reporter does, provide some facts that help illustrate a larger issue. If you're going to critique the reporter's work, it might help to engage what he actually wrote.

somefeller said...

Althouse says:Those who bitch about U.S. News are in denial about the service it provides us, creating that appearance. [And by "us," I mean law professors.]

No, those who bitch about the US News rankings and the way legal education is generally set up in this country (like Justice John Roberts, for example) are not in denial about the service it provides law professors. If fact, we know that very well and that service is part of the problem. The issue is the lack of service it provides law students, the legal profession and society in general.

murgatroyd666 said...

flenser wrote:

The law school market is a guild system on steroids, a guild system closely tied to the government. It's the antithesis of real free market capitalism.

Yes, but with one exception: for pricing the really top-tier schools, the rule of "all the traffic will bear" applies, due to high demand and limited supply. And why the high demand? Not necessarily for the quality of the education. For the connections. The friendship network. The in-crowd takes care of the in-crowd, the governing class perpetuates itself.

WV: jacta -- alea jacta est

Chip S. said...

You presume wrongly then. The demand for lawyers is driven almost entirely by government.

You use words that you don't seem to understand.

Reread your own comment, then read my first one. Then get your head out of your ass.

Carol said...

What ironsrails said. Law schools is a big statusey thing girls and girly men can do that doesn't involve math and science.

Though it would help if lawyers understood the time value of money.

flenser said...

Reread your own comment, then read my first one.

I've done so. I'm still at a loss as to what enraged you. When you get done grinding your teeth, perhaps you can explain yourself.

You use words that you don't seem to understand.

Is there any specific word which you had in mind? My mind-reading skills are not the best.

flenser said...

The regulatory state deserves a full share of responsibility.

Lawyers and the regulatory state are like peanut-butter and chocolate. Or some less tasty combination. A great many members of the regulatory state are themselves lawyers. Other lawyers, not officially employed by the regulatory state themselves, constantly file cases with the explicit intention of expanding the boundaries of that state.

It's true that without the regulatory state we'd have a lot fewer lawyers. That's why lawyers are such friends of the regulatory state.

murgatroyd666 said...

Though it would help if lawyers understood the time value of money.

Oh, they do. That's why a clever lawyer can find 12,000 billable hours in a year.

wv: chthamp -- champion of the entire Earth?

Carol_Herman said...
This comment has been removed by the author.
Chip S. said...

@flenser, The words in question are "supply and demand." If the ever-growing regulatory state pumps up the demand for lawyers, then it increases the demand for law school. So it makes no sense to say that, because big government drives the demand for lawyers, law-school tuition is not driven by the forces of supply and demand.

This point is nearly tautological, but it was initially made in response to the assertion that universities in general "over charge" for tuition. It isn't "overcharging" if it's a response to demand.

flenser said...

flenser, The words in question are "supply and demand."

I'm confident that I know what the words "supply and demand" mean, and you've still said nothing to suggest otherwise.

If the ever-growing regulatory state pumps up the demand for lawyers, then it increases the demand for law school.

Indeed. And if it also restricts the "supply" of lawyers (by making people jump through unnecessary hoops to become one) then these two things - increasing the demand and limiting the supply - will cause lawyers to make more money than they would under a free market system.

In a broader context your words were:

I'm genuinely puzzled by the readiness of people who are usually pro-free-market to invoke some sort of Thomistic notion of a "just price" when discussing universities.

I would presume that in this sector as elsewhere, the forces of supply and demand are relentless.

I'm genuinely puzzled that you seem to confuse the supply and demand created by government with free-market supply and demand. When the Politburo "demanded" that Peoples Agricultural Unit Number 53 "supply" 100 million tons of wheat, there is "supply and demand" going on there too. But those who would defend that sort of supply and demand are hardly in a position to lecture others about their lack of fidelity to free-market principles.

ken in sc said...

I don't think law school or lawyering has very much to do with modern capitalism, American or other wise. It is a hold over from the medieval guild system and is based on monopoly privilege. It needs to be reformed.

Methadras said...

So how is it that most lawyers and most state bars are gigantic vast contributors to the DNC and all of their leftard cohorts? They use capitalism to fund their marxism. Brilliant.

Duncan said...

Just read American Law and Procedure (in many volumes) by Lasalle Extension University and buy illegally copied CDs of he BAR/BRI Bar Review on Craig's list and you'll know everything you need to know.

Jason Greaves said...

I would presume that in this sector as elsewhere, the forces of supply and demand are relentless.

You are correct. However, I don't think anyone is arguing that the current prices are not a function of our current equilibrium point on the supply/demand curves. The general thrust of these posts has been to point out the artificially inflated demand curve caused by government subsidy (identical to the CRA and Freddie/Fannie's influence on the housing bubble).

It creates an artificially high demand for law school seats because of all of the students who, under free-market borrowing rates, would choose not to take out student loans, and are now flocking to get JDs.

Jason Greaves said...

Myself included