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NYU and the art of the gouge

[ 113 ] June 9, 2015 |


I have a piece on a protest being launched by more than 400 NYU faculty members to the so-called Sexton Plan, aka John Sexton’s ongoing transformation of NYU into a kind of real estate hedge fund backed by federal educational loans:

Prostitution comes in many forms. Consider the story of a New York University student, who finds that her school — the most expensive in the country — has raised prices yet again, and that she needs $2,000 she doesn’t have to remain enrolled. She visits the financial aid office, where an administrator literally laughs in her face. “He couldn’t believe,” she says, “that anyone would have trouble raising such a small amount.”

Desperate, she turns to Seeking Arrangement, an Internet site where rich, often married, older men search for young women who are willing to “date” them in exchange for various gifts. The NYU student felt she had no choice in the matter: “It was either that, or drop out” she says. She soon discovers she’s not alone: “It was a hard choice; and I’m not the only one who had to make it. When I finally got the nerve to tell my roommates I’d been doing it, they told me they’d been doing it too.”

This cautionary tale from the new Gilded Age is just one of several similarly disturbing stories from “The Art of the Gouge,” a 14,000-word report published by a group of more than 400 NYU faculty members. They are fed up with seeing a distinguished research university transformed into a multi-billion dollar student loan-funded vehicle for real estate speculation — one used by top administrators to pay themselves seven-figure salaries, as well as other lavish perks.

The faculty’s protests are focused on the so-called Sexton Plan. NYU’s president John Sexton is pushing to expand the university’s already-extensive investments in Manhattan real estate by spending mind-boggling sums on yet more Greenwich Village projects, including $1 billion on a single new building.

Of course NYU is just somewhat ahead of the curve, as the MMB consultants would put it:

Now in a sense it’s unfair to single out NYU, since the school under Sexton has merely been engaging in a somewhat more extreme version of the incredibly expensive pursuit of ever-more revenue that has consumed so much of contemporary American higher education.

For example, Yale’s tax filings have just revealed that the school gave departing president Richard Levin an $8.5 million going-away present when he retired in 2013. The lump sum payment — given to an administrator who had been drawing a salary of more than $1 million per year — was defended on the basis of the claim that, comparatively speaking, Levin had been working for Yale practically for free: “He could have been in investment banking, he could have been in venture capital, he could have run a corporation,” claimed former Proctor & Gamble CEO and Disney chairman John Pepper, who was part of the managing board that approved the payment. “Obviously, if he’d gone into other fields, the compensation would be orders of magnitude greater.”

This is all part and parcel of the increasing corporatization of the American university: Just as in the case of grotesquely overcompensated CEOs, we must pay university administrators millions, because the logic of “the market” dictates that it’s necessary to do so to compete for supposedly scarce talent.

The consequences of all this for the American university are far-reaching:

The invidious effects of this money-mad system are legion. A relatively trivial one is reflected in Pepper’s rationalization for Levin’s compensation: because university presidents spend all day and half the night sucking up to billionaires, they feel poor when they get paid a lousy $1 million per year.

A far more serious problem is the unspoken, and even to some extent unconscious, incentives and distortions created by a system in which university budgets become increasingly dependent on the continuing generosity of the wealthiest Americans. Those incentives rarely come in the form of an explicit quid pro quo. But one doesn’t have to be a young woman in desperate financial straits to realize that rich old men generally expect to get something for their money.

In this regard, the contemporary university increasingly finds itself “seeking arrangements,” as it were, that inevitably lead it into various compromising political, ethical, and intellectual positions.



[ 41 ] June 5, 2015 |


According to this ABC story, Dennis Hastert sexually abused Steve Reinbolt, the manager of the high school wrestling team Hastert coached, throughout the four years Reinbolt was a student at Yorkville High School, where Hastert taught between 1965 and 1981. Reinbolt graduated in 1971 and was born in August of 1953, so apparently the abuse started when he was 14.

Reinbolt died in 1995, so he is not “Individual A” in the indictment against Hastert.

Hastert, who by that point had been in the House for eight years, showed up at Reinbolt’s funeral. Reinbolt’s sister Jolene confronted him immediately after the service, and Hastert’s reaction left no doubt in her mind that the story Steve told her back in 1979, about how his first sexual encounter had been with Hastert when he was a high school freshman (this would be at a minimum statutory rape under Illinois law), was in fact true.

Jolene tried to expose Hastert in 2006, at the time of the Foley scandal. She approached ABC with the story, but ABC didn’t run it, because according to the network it couldn’t be corroborated at the time. This should raise some questions about how much, if any, further investigation ABC did, given that it’s extremely likely that Hastert victimized more than two of his students.

I can only imagine what Jolene (her last name isn’t given in the ABC story) went through in 1998, when Hastert was chosen to lead the impeachment of Bill Clinton. That she seemed to believe — probably correctly, given how all this subsequently played out — that she was powerless to do anything about that travesty at the time is a telling commentary on how powerless ordinary citizens feel before the majesty of the law, and the arrogant invulnerability of the good and the great.

On the Run

[ 146 ] June 4, 2015 |

on the run

Last year sociologist Alice Goffman published a widely-praised book, On the Run: Fugitive Life in an American City. Here’s a part of Alex Kotlowitz’s NYT review:

“On the Run” is, first and foremost, a remarkable feat of reporting. Its author, Alice Goffman, a young sociologist, had an ethnography assignment for an undergraduate class at the University of Pennsylvania, and she, the daughter of the renowned sociologist Erving Goffman (1922-82), didn’t take it lightly. She hung out with an older African-American food service worker at the university, and one thing led to another. Before long, she had moved into an apartment in a poor, largely black neighborhood in Philadelphia, her housemate a young man whose family lived down the block. Goffman became such a part of the fabric of the community that she was harassed by the police, witnessed someone getting pistol-whipped, was even set up on a blind date. And all the while she was furiously taking notes, trying to make sense of what at first glance appeared to be utter chaos going on around her.

But where others might see bedlam, Goffman finds patterns, even logic. When it becomes clear that many of the young men won’t go to the public hospital for treatment — she recounts watching one of them prone on his kitchen table, having a bullet removed from his thigh by a neighbor who is a nurse’s aide — Goffman begins to ask questions and learns that the police often loiter near the emergency room, scanning the visitors list, looking to arrest anyone who might have an outstanding warrant. This could be a metaphor for what Goffman comes to realize: The young men in this community feel hunted. Their mental energy is spent trying to elude the police, so much so that they impart words of advice to younger siblings, including this from a man Goffman calls Chuck, speaking to his 12-year-old brother: “You hear them coming, that’s it, you gone. Period. ’Cause whoever they looking for, even if it’s not you, nine times out of 10 they’ll probably book you.” Chuck’s warnings, it becomes clear, have merit. In fact, Chuck’s brother receives three years’ probation when he’s given a ride to school in what turns out to be a stolen car. Many of the men Goffman encounters have recently been released from prison and are on parole. And as she points out, our parole and probation system is set up for people to fail. She introduces us to Alex, whose parole stipulations forbid him to visit his old neighborhood or be out past curfew. It’s as if the system is just waiting for his first misstep, ready to pounce.

The book sounds fascinating and well worth reading for all sorts of reasons. Now Northwestern law professor Steven Lubet has raised some serious questions about the book, and the project from which it came, in two book reviews, and a response to Goffman’s response to those reviews. Lubet’s objections, in ascending order of seriousness, are:

(1) Several incidents described in the book sound highly implausible, and in light of that Goffman appears to take a too-credulous attitude toward her informants.

(2) Lubet apparently believes (although he does not come right out and say so) that at least one incident that Goffman claims to have witnessed herself didn’t actually happen.

(3) Lubet believes that another incident, if it happened as described in the book, led to Goffman herself committing a very serious crime:

Taking Goffman’s narrative at face value, one would have to conclude that her actions – driving around with an armed man, looking for somebody to kill – constituted conspiracy to commit murder under Pennsylvania law. In the language of the applicable statute, she agreed to aid another person “in the planning or commission” of a crime – in this case, murder. As with other “inchoate” crimes, the offense of conspiracy is completed simply by the agreement itself and the subsequent commission of a single “overt act” in furtherance of the crime, such as voluntarily driving the getaway car.

I sent the relevant paragraphs from On the Run to four current or former prosecutors with experience in Pennsylvania, New York, New Jersey, and Illinois. Their unanimous opinion was that Goffman had committed a felony. A former prosecutor from the Philadelphia District Attorney’s office was typical of the group. “She’s flat out confessed to conspiring to commit murder and could be charged and convicted based on this account right now,” he said.

In a response to these criticisms, Goffman appears to be re-characterizing the latter incident, in ways that Lubet finds troubling:

Now she has written a response to my critique, and I am even less certain how much of the book is true. Goffman essentially admits that she embellished and exaggerated her account of a crucial episode, which should leave even the most sympathetic readers doubting her word. . .

Goffman objects to my efforts1 to verify stories in the book by consulting public defenders, prosecutors, and police officers, but how else was I to do it? She argues that my critique is based on a “hierarchy . . . of people at the top,” while disregarding “the claims and experiences of the people at the bottom,” but that is not so. I do not discount the lives and experiences of Goffman’s subjects, I simply question the accuracy and reliability of her own reports about them. It is important to hear from “people at the bottom,” as Goffman puts it, but we do not have to take her words on faith. Thus, I have attempted to obtain as much information as possible from available sources.

I would have been happy to interview Goffman’s subjects, but they are all pseudonymous. I would be pleased to review her field notes, but she has shredded them. I might at least be able to read her dissertation, but she has sequestered it.

Indeed, Goffman does not even name the hospitals or schools—which cannot possibly be confidential—where the alleged events occurred. If no one is allowed to get information from official sources—and I would hardly call public defenders “people at the top” of the criminal justice hierarchy—then we are stuck taking Goffman’s word for it, as she has made her book impossible to fact check. That is not how journalism, or responsible scholarship, is supposed to work.

As I said, I haven’t read On the Run yet, and I’m not offering any opinion on the extent to which, if any, Lubet’s criticisms are well-grounded. But they seem worth noting.

What’s wrong with the finances of American legal education, nutshell edition

[ 18 ] June 3, 2015 |


University of Virginia press release:

The University of Virginia announced Monday that Paul G. Mahoney will step down on June 30, 2016 after eight years as dean of the School of Law and return to teaching and scholarship full-time. During his tenure, Mahoney advanced the school’s reputation as one of the nation’s top law schools by leading efforts to strategically expand the faculty, launch curricular innovations, enhance support for students and set records in fundraising. . .

During one of the toughest recessions in U.S. history, Mahoney helped bring the Law School’s capital campaign to a successful close in 2012, surpassing the $150 million goal by more than $20 million. More than half of alumni participated in annual giving during each year of his deanship.

The Law School’s endowment – which funds scholarships, professorships and other academic initiatives – had a market value of $463 million on June 30, 2014, which makes it the fifth-largest endowment among the nation’s law schools. Despite the recession, the Law School’s endowment on a per-student basis has grown a remarkable 55 percent during Mahoney’s tenure. . .

Throughout, Mahoney has overseen an operation focused on keeping costs as low as possible for students. The Law School was the only top-10 law school recognized for its administrative efficiency in a recent ranking by U.S. News & World Report.

Mahoney became dean of UVA Law in 2008. All figures below are in 2014 dollars.

UVA non-resident tuition in 2007: $43,958

UVA non-resident tuition in 2014: $54,000

UVA resident tuition in 2007: $38,249

UVA resident tuition in 2014: $51,000

Percentage of students who were paying sticker tuition in 2007: 38.3%

Percentage of students who were paying sticker tuition in 2014: 62.2%

Approximate average effective tuition (sticker minus discounts):

2007 non-resident: $34,000
2014 non-resident: $45,350

Effective tuition for non-resident students rose by 33.4% in constant dollars

2007 resident: $28,249
2014 resident: $42,300

Effective tuition rose for residents by 49.7% in constant dollars

Expendable endowment income per student in 2007: $13,400 (2014$)

Expendable endowment income per student in 2014: $20,800 (2014$)

Effective tuition plus endowment income in 2007 was approximately $45,400 per student in constant dollars

Effective tuition plus endowment income in 2014 was approximately $65,200 per student in constant dollars

National reported median starting salary for class of 2007 law graduates who reported a salary: $75,069 (2014$)

National reported median starting salary for class of 2013 law graduates who reported a salary: $63,480 (2014$)

These salaries represent the medians for law graduates who were employed full-time and reported a salary, a category which in both years included less than half of all graduates. The real median salaries were much lower.

Now UVA is an elite law school, which means that outcomes for its graduates are quite a bit better than the national averages, but:

(1) The school’s employment numbers aren’t nearly as good as they were back in 2007, before most big law firms had figured out they could outsource almost all their document review work etc.

(2) Does anybody think that the 43.6% increase in revenue being generated per student at the school over the last seven years has produced an equivalent improvement in any aspect of whatever value UVA Law “adds” as the economists say?

(3) The fact that UVA and other elite schools are always charging absurdly more than they were a few years earlier (this is true for any period going back to the 1950s) means that dozens of schools with terrible employment outcomes will be charging absurdly more than they were a few years earlier, because it has been decreed that a bad private law school shall charge 20% less than whatever elite schools are currently charging.

I’m not picking on UVA here, or on Dean Mahoney. It and he are just playing the higher ed game as it’s currently structured, which means measuring success almost exclusively by the extent to which an institution is spending more money this year than it did last year.

Still, characterizing all this as a system that is “focused on keeping costs as low as possible for students” is a bit much, even by the standards of contemporary higher ed propaganda.

(h/t JDU).

Buying the silence of crime victims

[ 68 ] June 2, 2015 |


I have a piece on what it means to claim that Dennis Hastert was being subjected to an extortion attempt:

Suppose Individual A calls a lawyer, and tells the lawyer his story. The lawyer calls Hastert, and tells him he wants to talk to Hastert’s lawyer. The two lawyers then negotiate a settlement, in which, in exchange for a payment, Individual A agrees to sign a release, waiving any legal claims he has against Hastert. Such an agreement would certainly include a non-disclosure provision, making the payment contingent upon Individual A’s promise not to disclose the existence of the agreement. All this is perfectly legal, which means the agreement would be enforced by court orders if necessary. But of course the whole point of the agreement is to make it unnecessary for any legal action to ever be filed. In effect, Hastert and Individual A are entering into a contract to bury evidence of Hastert’s crime, in exchange for money.

Now suppose Individual A calls Hastert up and tells him, “if you don’t pay me $3.5 million, I’ll call a press conference and announce that you molested me when I was your student. But if you pay me, I promise to keep quiet.” This is extortion, which is a serious crime. (By the way, if Hastert agrees to this arrangement and then reneges, Individual A can’t go to court to enforce the agreement, because criminal contracts aren’t legally enforceable.)

On one level, the distinction between these two situations is perfectly clear, as Richard Nixon used to say. On another, it’s troubling that we allow people to buy silence regarding their crimes, as long as the appropriate paperwork is drawn up first.

Dennis Hastert was forced to stand in line at the bank at least 106 times to withdraw hush money in cash

[ 202 ] May 30, 2015 |


The SPECIAL FEBRUARY 2014 GRAND JURY further charges:

The allegations contained in paragraphs 1(a)-1(l) of Count One of
this Indictment are realleged and incorporated herein.

Beginning no later than July 2012, and continuing until on or around December 6, 2014, in the Northern District of Illinois, Eastern Division, and elsewhere, JOHN DENNIS HASTERT, defendant herein, did knowingly and for the purpose of evading the reporting requirements of Title 31, United States Code, Section 5313(a) and regulations prescribed thereunder, structure and assist in structuring transactions at Old Second Bank, People’s State Bank, Castle Bank and Chase Bank by withdrawing and causing the withdrawal of $952,000 in United States currency in amounts under $10,000 in separate transactions on at least 106 occasions; In violation of Title 31, United States Code, Section 5324(a)(3).

Who is the real victim here?

Seriously now:

I realize Hastert isn’t a lawyer, but how does a guy who was at the top of DC food chain not realize that this isn’t going to work?

What happened is that Hastert started withdrawing $50K in cash at a time to pay off his extorter. Protip: if you’re going to cover up malfeasance via cash transactions, bone up on your banking laws first. Banks have to report cash transactions of $10K or more. So after Hastert took out more than that on several separate occasions, bank officials had a chat with him (He had the legal right to make such withdrawals, but part of the banks’ reporting obligations is to try to figure out why the nice old man down the street keeps coming in every second Thursday with a suitcase and asking the teller to fill it with $50,000 in unmarked bills).

After it’s explained to him that the bank has an obligation to report these transactions to the IRS, Hastert gets the bright idea that he’ll just go to the bank a lot more often, and take out slightly less than $10,000 each time. They’ll never catch him now! Except the federal government also has a rule that structuring transactions with malice aforethought to avoid the reporting requirements is illegal.

On top of all that, lying to the feds about why you keep taking out suitcases full of cash from your many different bank accounts is also a crime all by itself.

Again, how does someone like Hastert not know this already? In particular, how does he let himself be interviewed by the FBI without his lawyers there?

I guess there’s a pretty obvious answer, under the circumstances, to the second question.

How did baseball’s milestone marks get created?

[ 209 ] May 29, 2015 |


Specifically, why is a player’s 3000th hit such a big deal, and when did it become one?

Over the next couple of weeks, Alex Rodriguez will provide an excellent example of the arbitrariness of the career milestones that occasion different levels of media attention.

Rodriguez is about to drive in his 2000th run. He will be only the third player, after Aaron and Ruth, to do so (if you don’t count Cap Anson’s years in the National Association as major league stats, which I don’t because he was a bad guy).

Meanwhile, he’s also about to become the 29th player to get 3,000 hits. The latter achievement is going to get a lot more media attention, because somewhere in the distant past (apparently shortly after Sam Rice retired while 13 hits short) 3,000 hits became The Official Mark of Baseball Greatness. How and when did this happen?

A similar thing happened (quite a bit later I’m guessing, since only two three players had reached the mark prior to 1960) with 500 home runs. In the pre-internet days, when we had to walk five miles to school through six-foot snowdrifts, and baseball statistics were primitive and hard to come by, those were the two milestones that counted. (For pitchers it was and remains 300 wins, probably because 300 is 3000 divided by ten).

Relatedly, I was a fanatical baseball fan and something of a baseball stats geek as a teenager in the 1970s, and I literally don’t remember hearing anything about Aaron passing Ruth to become the all-time RBI leader, which according to the record books happened sometime early in the 1975 season (Of course Aaron’s 715th home run the year before was one of the biggest sports stories ever).

A side issue in all this is the extent to which the steriod era has or is going to destroy the magic of 3000/500 in the mind of the members of the BBWA, who control the politics of glory, in re the Hall of Fame.

. . . in comments, several people argue that RBI are context-dependent in a way that hits aren’t, and that therefore the career hits leaderboard is a better measure of greatness than the list of career RBI men. Except:

Top ten RBI leaders who aren’t in the 3000 hit club:

Al Simmons
Frank Robinson

Top ten hits leaders who aren’t in the top 29 in career RBI (equivalent to career 3000 hit list):

Eddie Collins

Obviously the second group is made up of great players, but just as obviously career RBI is a better proxy for all-time greatness than career hits.

An academic matter

[ 202 ] May 28, 2015 |


The Michael LaCour affair reminds me that I know of several flat-out crazy and/or evil people who have managed to make it big in the academic world. Or maybe this is just an observation about the world in general. In any case academia seems to have its own peculiarities, some of which are illustrated by the following story.

X and Y are both on the market for an entry-level academic position. For various intellectual, sociological, and psychological reasons they are to a significant extent rivals for the same tenure-track slots, which are very scarce and extremely competitive.

X and Y both get initial interviews at Very Prestigious University (hereinafter VPU). Y gets a second interview at VPU; X does not. X then tries to destroy Y’s chances of getting a job at VPU, by engaging in an astonishingly malicious fraud, which among other things involves inventing supposed harsh criticisms of Y’s work, and attributing these imaginary criticisms to members of the faculty at VPU.

Y doesn’t get the job at VPU. It turns out that, for reasons not relevant here, Y not getting the job wasn’t actually caused by X’s fraudulent scheme. Still, under slightly different circumstances the scheme could have had its intended effect. (The analogy with the LaCour matter would be if the paper had been rejected by Science, and then the fraud had been discovered before it was submitted elsewhere).

By the end of the hiring season, Y has gotten a tenure-track job at another school, while X has gotten a position at Fairly Prestigious University. At this point Y knows about X’s fraudulent scheme, but doesn’t know X’s identity. Just after X and Y start their new jobs, Y finds out who X is.

Y consults with various academic mentors. This process leads to these events coming to the attention of Prof. A, who threatens to out X if X does not acknowledge X’s guilt to Y, and to X’s new employer, FPU. X then confesses to Y and to FPU.

X and FPU then enter into an agreement. X agrees to leave FPU, and FPU agrees not to disclose what X has revealed to FPU about X’s fraudulent scheme to destroy Y’s job prospects at VPU. (FPU also agrees not to reveal the existence of any agreement between FPU and X).

By the end of the academic year, X has secured a new job at Got Played University. X gets this job with the help of glowing recommendations from various people at FPU, who know why X is leaving FPU. At this point nobody at GPU knows anything about the true circumstances of X’s departure.

Four years later, X is a Rising Young Star, and is up for early tenure. X has now gotten into a bizarre fight with another member of GPU’s faculty, which results in X filing a frivolous complaint with a government agency against this faculty member. This faculty member has many friends throughout academia, at least one of whom knows the story of X and Y. The friend provides a detailed account of the incident to GPU’s dean.

The dean calls the dean at FPU, to try to confirm the story. The dean at FPU refuses to discuss the matter (or the existence of any such matter etc. etc.). GPU’s dean then decides that he can’t pursue the matter further, because all he has to go on is a second-hand story from somebody at another institution who won’t go on the record about any of this. (GPU’s dean actually knows Y personally, but does not contact Y). X then receives tenure at GPU.

There are several other baroque or perhaps gothic twists to this little tale. Here are just a couple:

At the same time X is going through the tenure process, A decides to use X – who he doesn’t actually know — to attack Z, an anonymous internet critic of both A and X. A accuses Z of engaging in behavior similar to that which X engaged in toward Y, although Z’s behavior is “similar” only in the same sense that taking a questionable tax deduction is similar to robbing someone at gunpoint.

A has discovered Z’s identity, and decides to disclose it to X, even though back when A was threatening to expose X’s fraudulent scheme, he speculated both about X’s mental health, and about what effect exposing X would have on X’s apparently fragile mental state. A probably suggests (this is speculative) to X that X file an administrative complaint against Z. In any case, A praises X in a public and fulsome way for pursuing this course of action. (When praising X A does not, needless to say, reveal that he knows X has engaged in vastly worse behavior than anything Z has done).

While pursuing this administrative action against Z — which, like X’s complaint against X’s colleague at GPU, ends up going nowhere — X publishes a number of polemics upbraiding Z and others for engaging in the same general type of malfeasance that X had committed against Y, although again, X’s behavior was exponentially worse. (Recall that X is doing all this at the very same time X is going through the tenure process).

I’ve confirmed the details of the story with three different people who had first-hand knowledge of the events. I also spoke to GPU’s dean, and asked him what he planned to do if he learned X was under consideration for a job at another school. He told me he would have to think long and hard about that.

On one level, I can’t really blame him that much for his ambivalence. After all, there are dozens of people – certainly most everyone at FPU and GPU, and of course Y – who know much if not all of this story, and yet it remains off the official record. Why? For one thing, X is an obsessively ambitious person, of apparently questionable mental stability, and who wants to get tangled up with somebody like that, especially once the person has tenure and is close to unfireable?

For another, rationalizations in these situations are always at hand: while it’s true X’s behavior, had it been known at the time, would have absolutely barred X from ever getting a tenure-track job, maybe it was an otherwise inexplicable one-time act, brought on by exogenous factors which have since been dealt with, cured, or what have you. (This seems to me about as likely as Michael LaCour having been a scrupulously honest fellow until he suddenly had some sort of breakdown, but whatever).

Anyway, I’m not going to attach names to this story, at least not at this time, in part because a couple of at least mostly innocent bystanders have asked me not to. For what it’s worth, in my view the single biggest villain in all this – that is if we assume on principles of interpretive charity that X and A are more crazy than evil — is FPU, and especially its dean, who agreed to offload X onto GPU by covering up an incident which should have permanently precluded X from getting hired for any academic job. But there’s more than enough blame to go around.

Finally, this matter, like the LaCour affair, raises questions about how common these sorts of breakdowns in systems designed to protect academic integrity are. As in the case of LaCour, this story illustrates that institutions like academic tenure must function to a significant extent on the basis of an assumption that those participating in the process are doing so in good faith, even when doing so is inconvenient or costly to them.

It was obviously convenient for FPU to lie to GPU about X, and it would have been costly, in various at least short-term senses, for GPU to deny X tenure after they discovered what FPU had hidden from them. And so here they, and we, are.

Wait, FIFA officials take bribes? Next you’ll tell me bankers rig the financial system

[ 107 ] May 27, 2015 |


Acting on an indictment by the U.S. Justice Department, Swiss police arrested several top FIFA officials, including two vice presidents, during an overnight raid in Zurich on charges of corruption Wednesday.

The U.S. investigation targets alleged wrongdoing that spans 24 years. U.S. prosecutors issued arrest warrants for 14 people, on charges ranging from money laundering to fraud and racketeering. They include FIFA officials who took bribes totaling more than $150 million and in return provided “lucrative media and marketing rights” to soccer tournaments as kickbacks.

A few hours later, Swiss authorities said they have opened a separate criminal investigation into FIFA’s operations, this one pertaining to the 2018 and 2022 World Cup bids, which went to Russia and Qatar respectively. Ten people are being questioned.

The criminal proceedings come as members of soccer’s scandal-plagued governing body gathered for an election Friday that could give its leader Sepp Blatter a fifth term.

Blatter isn’t among those being charged. But he was among those investigated, and officials say that part of the probe continues.

The election will go on as planned, FIFA said — as will the games in Russia and Qatar.

“The timing may not obviously be the best, but FIFA welcomes the process,” FIFA spokesman Walter De Gregorio told reporters.

The collapsing economics of solo legal practice

[ 101 ] May 25, 2015 |


Benjamin Barton, a professor at the University of Tennessee Law School, has generously some shared tax data he’s collected on the earnings of lawyers in private practice. Prof. Barton’s new book, GLASS HALF FULL: THE DECLINE AND REBIRTH OF THE AMERICAN LEGAL PROFESSION will be published next month by Oxford University Press. Here’s OUP’s summary:

The hits keep coming for the American legal profession. Law schools are churning out too many graduates, depressing wages, and constricting the hiring market. Big Law firms are crumbling, as the relentless pursuit of profits corrodes their core business model. Modern technology can now handle routine legal tasks like drafting incorporation papers and wills, reducing the need to hire lawyers; tort reform and other regulations on litigation have had the same effect. As in all areas of today’s economy, there are some big winners; the rest struggle to find work, or decide to leave the field altogether, which leaves fewer options for consumers who cannot afford to pay for Big Law.

It would be easy to look at these enormous challenges and see only a bleak future, but Ben Barton instead sees cause for optimism. Taking the long view, from the legal Wild West of the mid-nineteenth century to the post-lawyer bubble society of the future, he offers a close analysis of the legal market to predict how lawyerly creativity and entrepreneurialism can save the profession. In every seemingly negative development, there is an upside. The trend towards depressed wages and computerized legal work is good for middle class consumers who have not been able to afford a lawyer for years. The surfeit of law school students will correct itself as the law becomes a less attractive and lucrative profession. As Big Law shrinks, so will the pernicious influence of billable hours, which incentivize lawyers to spend as long as possible on every task, rather than seeking efficiency and economy. Lawyers will devote their time to work that is much more challenging and meaningful. None of this will happen without serious upheaval, but all of it will ultimately restore the health of the faltering profession.

I hope to discuss Barton’s data and conclusions in more detail once I’ve had a chance to read the book. Here I’m going to focus on some striking numbers regarding the changing economics of solo legal practice.

Solo legal practice represents a particularly crucial aspect of the economics of the legal profession, because it’s by far the single most common job for lawyers to hold. 75% of all practicing lawyers are in private practice, and half of these people are solo practitioners (the other half is made up of partners and associates in law firms of all sizes, along with lawyers who work for businesses and other non-government entities). This means nearly two out of every five practicing lawyers are solos. (Given this, the fact that almost nobody in legal academia knows anything about solo practice would seem to be suboptimal, at least from the perspective of a professional training school).

Barton’s data reveal that the average (mean) compensation of solo practitioners has declined sharply over the past 25 years:

Earnings of solo practitioners

These numbers are particularly striking when juxtaposed with the change in average (mean) wages of American workers (Note that these figures are for all employees, including part-time workers. They include employer contributions to employee pension plans). This graph represents the percentage relationship between average solo practitioner earnings and the average wages of all American workers:

percent of average salary

Note that these are mean, not median, earnings. Median wages for all US workers (full-time and part-time) in 2013 were about $28,000, and I would expect a similar percentage discount between mean and median solo practitioner earnings, since the most successful solos are among the very highest earning lawyers. This suggests the median solo practitioner is making less than $35,000 per year. Which, given what has happened to the cost of law school over the past 25 years, is another problem:

Public law schoo tuitionPrivate law school tuition

NFL changes extra point rule to make it 3% less boring

[ 91 ] May 19, 2015 |

super bowl

The NFL had a chance to improve its anachronistic extra point rule, but ended up barely modifying it. PATs will now be snapped from the 15. The only other change in the rules is the adoption of the college system whereby blocked kicks and turnovers off two-point attempts can be returned by the defense.

Given that NFL kickers now make about 95% of their 30-35 yard FG attempts, this change is adds almost no extra strategy or uncertainty to the post-TD ritual, which already takes up too much of that increasingly precious portion of airtime during NFL broadcasts not dedicated to advertisements.

A better rule would have done away with PATs altogether, while awarding seven points for a touchdown. Teams would have the option of going for an eighth point from the two-yard line, at the cost of having the TD reduced to six points if the attempt failed.

No, faculty salaries have not actually gone up, part infinity

[ 44 ] May 14, 2015 |


There’s really no excuse for this kind of thing in the age of the internet, when you can look stuff up in five minutes that 20 years ago would have taken weeks to track down:

Sarah Maslin Nir’s extraordinary two-part exposé, in the Times, of the rotten pay and terrible working conditions in New York’s nail-salon industry is full of revelatory and shocking details. Who, for instance, would believe that, in 2015, there are businesses in the city running classified ads advertising that they pay a mere ten dollars per day? But one of the most surprising, and economically telling, facts in the piece is also among the most mundane: namely, that the price of a manicure hasn’t budged much, if at all, in the past two decades.

This wouldn’t be surprising if we were talking about, say, personal computers, or even automobiles. In those industries, businesses get consistently more productive over time, thanks to things like automation, better information technology, and incremental innovation. Such advances mean that workers in those industries can make a lot more stuff per hour than they could two decades ago. The number of hours it takes to build a car, for instance, has plummeted since the nineteen-seventies. This allows companies to pay workers more (and/or to increase their profits) without raising, and often while cutting, prices.

There are many industries, though, that don’t experience this dynamic. These include labor-intensive service businesses, like nail salons, in which it’s hard, if not impossible, for workers to become more productive over time. After all, it takes as long to cut hair, tailor a suit, or give a manicure today as it did twenty years ago.

The economic problem that companies in these industries typically face is that, in order to attract workers, you need to pay them roughly as much as they could earn doing other kinds of work. If you don’t, they will, in theory, take other, better-paying jobs. In effect, the rising wages of workers in industries where productivity is rising set a relative benchmark for workers in all industries. (That’s why the average tenured professor is paid considerably more today than he would have been twenty years ago, even though he isn’t any more productive.) So companies in the service sector have to raise wages, and the only way to do that while keeping profits steady is also to raise prices. This is what economists call “Baumol’s cost disease.” You can see it in many service businesses: look at the rising cost of education or health care, or even the price of a haircut, which has risen faster than inflation over the past thirty-five years.

This is James Surowiecki in the New Yorker, the magazine’s resident economics writer. He’s a big fan of citing Baumol’s cost disease, and indeed I hear this rationale all the time for why the cost of higher ed keeps skyrocketing, despite increasing rates of per student subsidization. You have to pay the faculty a lot more or they’ll go start a literary theory factory or something.

Except, on average, the people who do the teaching in American higher education are getting paid far lower salaries than they were several decades ago, back when cars were still built by teams of UAW workers instead of robots (BTW is it true that car companies actually pay production workers more, in real dollars, than they did in say the 1970s?).

Now I bet Surowiecki is at least vaguely aware of the adjunctification of academia, which is probably why he adds the qualifier “tenured.” But he’s still completely wrong. Let’s go to the tape: (All dollar figures are in 2013 dollars, which is the most recent year for which data are available)

Average salary in 1993 of all full-time faculty in American degree-granting post-secondary institutions:


In 2013:


That’s a 5.2% increase. How does that compare to the average American wage earner, who doesn’t have Baumol’s disease to help keep his or her wages up? Not too good, it turns out:

National average wage in 1993:


In 2013:


That’s a 20.4% increase.

Now things are a bit better if you belong to the exalted ranks of the tenured, although not by that much. Full professor salaries were 12.4% higher in 2013 than in 1993, and associate professors were making 7.7% more. But again, those increases are both quite a bit lower than those experienced by the average American wage earner (of course the “average” wage has been pulled up to some degree by huge increases in the wages of the one percenters, but still).

And again, average wages of the people who do the teaching in American colleges and universities — that is, the faculty — are lower in real terms than they were 20 years ago, because a much higher percentage of the faculty are part of the academic precariat.

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