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The magic of the market

[ 67 ] October 18, 2012 |

Master of the Universe emeritus Vikram Pandit has gotten bounced from his perch as CEO of Citigroup, but, unlike most unemployed Americans, he won’t have to worry about how to pay the bills until he can find another job.

Citigroup’s stock today is worth about a tenth of what it was trading at when Pandit took over. Indeed the company exists today only because the U.S. government saw fit to deploy many billions of taxpayer dollars to keep it from going bankrupt in the fall of 2008, after Citi and friends caused a global financial meltdown through their grotesque mismanagement of their clients’ assets.

As a token of the firm’s gratitude for the role he played in all this, Pandit is walking away with approximately $260 million in compensation. (In America in 2012, this is known as “letting the market reward performance.”).

This heartwarming success story ought to be appreciated in the context of the latest statistics regarding the distribution of wealth in America. In what follows, I’ve used the consumer price index to transform all the figures into current, inflation-adjusted dollars:

*Median household income in the US was approximately $51,000 in 2011. This means half of all households lived on $4,250 per month (before taxes) or less.
*One out of five American households, or about sixty million Americans, lived on $20,000 or less, or $1,667 per month before taxes.
*Forty years ago, median household income in the US was $47,000 per year. The poorest fifth of American households lived on $19,500 or less.
*Over the past forty years, America’s gross domestic product has tripled. When taking into account population growth, this means Americans are on average more than twice as rich as they were in 1972. But the word “average” is tricky: as the old statistics joke has it, if you’ve got one foot in a campfire and the other in a bucket of ice water you are on average comfortable.

Obviously neither average American families nor poor ones are appreciably better off in economic terms than they were four decades ago: Household income for most Americans in general, and the poorer half of the population in particular, has barely budged since the early 1970s.

So where have all those trillions of dollars in increased wealth gone? Consider: in 1972 the 95th percentile of household income was $127,500. In 2011 it was $186,000. So what Paul Ryan thinks of as the very bottom rung of the “upper middle class” is doing somewhat better for itself.

But when we look at people even Mitt Romney would think of as “well off” we get a real glimpse into where all the money has gone. In the late 1970s the richest 10,000 American families had an average annual income, in 2011 dollars, of $5.8 million per year. Today this same group’s income has increased more than five times in real terms, to an average of $30 million per year (thanks to the mysterious wisdom of The Market, Vikram Pandit has been smack in the middle of this cohort).

It wasn’t always this way in America. Between 1950 and 1965 the nation’s economy boomed – but so did median family income. Indeed, every dollar of increased GDP during these years resulted in an eighty-one cent increase in median family income, which rose from under $30,000 to nearly $50,000 over that time span, where it’s been stuck ever since.

During the post-war boom, as America got rich, most Americans shared in the wealth. Over the past several decades, the nation as a whole has gotten vastly wealthier, but the vast majority of Americans have seen little or no improvement in their economic circumstances. Instead, crony capitalists like Pandit have profited from a political system that’s more interested in bailing out irresponsible financiers than it is in doing anything about the economic circumstances of people who can’t list “almost wrecked the world economy” as a professional accomplishment.


Division series previews

[ 52 ] October 12, 2012 |

Here’s LGM’s official ALDS and NLDS previews:

American League:

Baltimore v. New York:

Much as we would like to see this series pushed to five games, the Cinderella story ends with a three-game sweep by the Evil Empire. We foresee big series from ARod and Granderson in particular, while Derek Jeter racks up a range factor that brings back memories of Nap Lajoie in 1917.

Detroit v. Oakland:

This will be a tough five-gamer, with Justin Verlander making the difference for the Motowners in the first and last game of the series.


Cincinnati v. San Francisco;

Look for the Redlegs to storm out to a two game lead, only to have San Francisco push the series to a decisive fifth game, which will be taken by Cincinnati.

St. Louis v. Washington: On paper, this is an easy win for the Nationals. Baseball isn’t played on paper. St. Louis in four.

Politics as entertainment

[ 137 ] October 8, 2012 |


This Andrew Sullivan post takes the view that the first debate has come close to handing the election to Romney. That claim — based largely as far as I can tell on the results of one three-day post-debate tracking poll — seems like a huge exaggeration, but it does highlight the essential absurdity of the whole “debate” rigamarole.

Obama has been president for four years. Mitt Romney is understood even by most of his supporters to be a political opportunist of the first order, who will use an occasion like one of these deeply phony infotainment pseudo-events to say whatever he needs to say to maximize his chances of getting elected.

That anyone — even what are described delicately as “low-information voters” — would base any part of their vote on a candidate’s performance (le mot juste) in one of these things is a sobering thought.

Time for another drink!

A blizzard of special snowflakes

[ 22 ] October 3, 2012 |

I have a Salon piece inspired by Erik’s Duke-bashing post.

The great issue of our time

[ 130 ] October 2, 2012 |

Has, somewhat surprisingly, not yet been addressed by LGM.

I have a couple of biases to declare, namely that I root for the Tigers and against stupidity, which naturally leaves me feeling torn on the Cabrera-Trout issue. (A friend of mine points out to me that exactly the same people who were arguing for Ichiro as the 2001 MVP because fielding and baserunning are so important are the same people arguing for Cabrera today because those things are too hard to quantify).

A couple of notes:

(1) It’s important not to exaggerate the scientific precision of a stat like WAR — the levels of uncertainty involved in the calculation mean that, for example, if I had a vote I would pay almost no attention to the fact that at least one version of WAR concludes that Cabrera isn’t even the most valuable player on his team this year (Verlander, by the way, has had an almost identical season to his MVP-winning 2011 year, minus the gaudy W-L record). But the gap here is enormous — basically according to advanced stats the gap between Trout and Cabrera is equal to the gap between Cabrera and an average-quality major league regular.

(2) Trout’s WAR numbers would be even higher except he missed the first 10% of the season getting into playing shape in Triple AAA after missing most of spring training with an illness. As it is he’s still having one of the best half dozen or so post WW-II seasons by a position player per this metric. And it’s certainly the greatest rookie season ever.

Slaves of DC

[ 28 ] October 2, 2012 |

“Your great-grandfather was a former governor of this state,” she said. “Your grandfather was a prosperous land-owner. Your grandmother was a Godhigh.”

“Will you look around you,” he said tensely, “and see where you are now?” and he swept his arm jerkily out to indicate the neighborhood, which the growing darkness at least made less dingy.

“You remain what you are,” she said. “Your great-grandfather had a plantation and two hundred slaves.”

“There are no more slaves,” he said irritably.

— Flannery O’Connor, Everything That Rises Must Converge —

I was talking to a journalist yesterday about the law school mess, and she mentioned interviewing a couple of people in front of American University’s law school, which according to the school’s virtual tour of its facilities is in one of DC’s more desirable areas:

Located on tree-lined Massachusetts Avenue in the District, WCL is minutes from downtown D.C. yet close to parks, trails, neighborhood restaurants, shopping, and some of the nicest residential neighborhoods in the Washington, D.C. area.

I quoted her the school’s graduating class of 2011’s appalling employment statistics — 300 of 467 graduates didn’t have a legal job, loosely defined, nine months after graduation — and described how the average member of that class had around $200,000 in educational debt (officially the class averaged $151,000 in law school debt, but with accrued interest this gets kicked to around $175K, plus undergraduate debt isn’t counted in that total).

But of course even those grim numbers are probably fluffed by things like this, sent along to me yesterday by a helpful reader:

District of Columbia Court of Appeals Senior Judicial Internship Description

Judge Blackburne-Rigsby sits on the District of Columbia Court of Appeals. Congress established the District of Columbia Court of Appeals as the highest court of the District of Columbia in 1970, and the court is the equivalent of a state supreme court. As the highest court for the District of Columbia, the Court of Appeals is authorized to review all final orders, judgments, and specified interlocutory orders of the Superior Court of the District of Columbia. To learn more about the Court of Appeals, please visit:

The Judicial internship provides an excellent opportunity to learn first-hand about the court, and hone your legal writing and research skills. Judge Blackburne-Rigsby has two full-time Judicial Law Clerks, with whom the senior judicial intern will work closely. The intern’s major responsibilities will be divided between substantive legal research and writing at the appellate level and record review. Please note that this is a non-paid position. The start date will be mid October 2012.

Qualifications: Recent graduate with excellent legal research and writing skills as well as the ability to multi-task.

Time Commitment: Must be available to work a minimum of 30 hours per week.

Interested graduates should send a cover letter, resume, transcript, writing sample and references to:

LaVerne Atiba
Judicial Administrative Assistant to
The Honorable Anna Blackburne-Rigsby
District of Columbia Court of Appeals
430 E Street, N.W., Suite 208
Washington, D.C. 20001
Phone: 202-879-2731

I would very much like to know how The Honorable Anna Blackburne-Rigsby, who is already provided by the District of Columbia with two full-time assistants who perform most if not all of the less pleasant tasks associated with her sinecure, believes it’s honorable to take advantage of the desperation of new law school graduates in this fashion.

Does it occur to her Honor that this sort of thing just creates one more barrier to entry to the legal profession to everyone but the children of privilege? Most people, after all, can’t afford to work for free while plugging a resume gap with a phony “judicial clerkship” that is likely to swell the employment stats collected by some lucky law school’s office of career services (what do you want to bet that this “internship” ends up getting counted as a full-time “long-term” position requiring bar admission?).

At least if a Georgetown or GW grad snaps it up, he or she will get kicked $15 per hour from the school. American, despite its enormous class and its $50,149 annual tuition, is apparently sufficiently penurious that it could only afford to pay for “part-time short-term” positions for 21 of the 27 of its 2011 graduates it was employing in February of this year. Thus a 2012 graduate of the school is consequently less likely to provide Judge Blackburne-Rigsby with a year’s worth of free labor than is an unemployed alum of one of the school’s more prosperous legal academic neighbors.

Purity of Essence

[ 88 ] September 27, 2012 |

This post is going to sound like under-theorized musing not as some sort of rhetorical device, but because I’m sincerely puzzled by the following question (triggered, obviously, by the last several posts and the comments to them):

Why does what any individual chooses to do with his or her vote in a presidential election ever matter in any way?

It’s obvious that at the most straightforward level of analysis my presidential vote doesn’t “matter,” if “matter” means “have an effect on the outcome.” Statements like “voting for Gary Johnson makes it more likely Romney will be elected” are true at the level of individual action in the same way that the statement “if I (Paul Campos) call up the Denver Nuggets today and ask them for a tryout that will increase the chances that I’ll make the Nuggets’ roster.” Probabilistically, this statement is true. Practically, it’s meaningless, since the odds that I’ll make the Nuggets’ roster no matter what I do or don’t do can quite safely be treated as identical to zero with no loss of practical predictive value.

I’ve sometimes wondered if this truth in the context of national elections creates some sort of collective action problem or paradox, at least in terms of any vaguely utilitarian framework of analysis, since the utility of casting a vote to any individual voter is surely negative, unless one starts tacking on caveats about psychic benefits, the potential secondary effects of otherwise completely impotent social gestures and the like.

Following such a line it’s possible I suppose to make arguments about how one’s individual vote, and in particular one’s public posture regarding that vote, could have various ripple effects that went far beyond its immediate practical effect on electoral outcomes, which again is always and everywhere pragmatically identical with “none whatever.”

Indeed without such an argument, it’s hard to see how any individual vote in a presidential election is ever anything more than the kind of “pure” (which is to say in practical terms completely ineffective) act of self-expression which those who self-consciously engage in casting protest votes are often derided for engaging in.

Continuing . . . I personally don’t believe in utilitarianism as either a descriptive or normative matter, so I don’t think a utilitarian justification for individual voting behavior is necessary. But I doubt one can be successfully maintained.

How Ayn Rand is wrecking football (and America)

[ 28 ] September 25, 2012 |

Bringing it all back home to Green Bay.


[ 17 ] September 24, 2012 |

God is apparently a union man.

[SL] Scabtacular!  I mean, I’m a Seahawks fan.   I’d like to be celebrating a remarkable win over the Packers that of course proves that Simmons was right!!!!!!1!!!1! But obviously there’s no was of celebrating a win decided by a call like that.   Even if charitably excuse the first blown call by (correctly) noting that the real refs basically never call PI on anybody on Hail Mary passes for reasons I’ve never understood, the fact that the winning “touchdown catch” was obviously an interception is rather hard to ignore.   And, of course, there were countless equally bad calls throughout the game.   But, hey, Roger Goodell can afford an extra ivory backscratcher!

I can also understand the reluctance of the Seahawks to kick the extra point — the scabs might rule that it’s worth -6 points.

QOTD:  “Watching the scab refs try to handle this game is like looking at Wile E. Coyote hold up an “EEP” sign in front of the Johnstown Flood.”

Scam talk

[ 128 ] September 24, 2012 |


Here’s an interview I did with Megan McArdle in re the law school scam and my new book on the subject.

The scandal

[ 22 ] September 24, 2012 |


If you want a glimpse into the short-term future of American legal education, take a look at what New England Law did this year with its entering class. NEL has, even by the standards of low-ranked law schools, atrocious employment statistics: only a little more than a third of the 2011 class got legal jobs (full-time long-term bar admission required; and this figure is bolstered by 15 people who listed themselves as starting solo practices), one in five graduates was completely unemployed, only four graduates out of 308 got jobs with law firms of more than 50 attorneys, and the median reported salary for the class was around $50,000, even though less than 25% of the class had a reported salary (Given these stats, it’s likely the true median salary for 2011 graduates of NEL was under $30,000.)

NEL has raised its tuition faster than almost any other private law school in the country, nearly doubling it since 2004, from $22,475 to $42,490 (these figures don’t include health insurance, which will run students close to another $2,000 if they purchase it from the school, and which they’re required to have under state law). The 2011 class had a mean reported law school debt of $120,480, but keep in mind this figure doesn’t include accrued interest, private non-government guaranteed loans, and other educational debt. Taking these factors into account, the average 2011 graduate almost certainly had at least $150,000 in educational debt, and quite possibly as much as $175,000.

The large majority of NEL grads aren’t getting legal jobs, and almost everyone who does get a legal job isn’t getting one that justifies the cost of attending the school. So what did this institution decide to do this year, given these extraordinarily dire statistics? If you guessed “raise tuition more than twice as fast as inflation and increase the size of the incoming class by 17%” you win a prize. NEL increased its incoming class from 385 to 452 students. It achieved this, while applications to law school in general were plummeting, by dropping the median LSAT score of full-time matriculants from the 53rd percentile to the 41st percentile, and that of part-time students from the 41st percentile to the 33rd (fully a quarter of the part-time admits had LSAT scores below the 26th percentile of test takers).

But we haven’t even gotten to the punch line yet, which is that the dean of this monument to catastrophic market failure is John O’Brien, who was none other than the chair of the ABA Section of Legal Education and Admissions to the Bar during the 2011-12 academic year — that is, the section of the ABA that is supposed to be regulating the conduct of accredited law schools. (O’Brien was paid $867,000 by NEL in 2010-2011).

What we have here, in other words, is the academic equivalent of what in the world of finance is known as a pump and dump operation. With an eye for the main chance that would make the likes of Whitey Bulger proud, O’Brien, who has been dean of NEL for 24 years, seems to have decided that he might as well get while the getting is good. With unlimited federal loan money there for the taking, NEL continues to jack up tuition as fast as it can, while tossing any semblance of admissions standards out the window, and not even pretending to care whether graduates are taking on life-wrecking amounts of debt in return for degrees that will rarely produce returns that justify their cost, and which indeed in many cases are going to be worse than worthless.

And while it’s true that if something can’t go on forever, it will stop, there’s still at the moment nothing to stop people like O’Brien from running educational boiler rooms. Yes the whole thing is starting to crash, but in the meantime there’s still money to be made, and lots of it. (My guess is that, as fiscal reality slowly sets in, a lot more law schools will stop trying to hold their LSAT medians, and instead admit whoever they have to admit to keep classes from shrinking even further.)

I suppose in a perverse way it’s a positive sign that a “special board” was appointed last year to make sure that O’Brien’s astronomical compensation — his salary is around three times larger than average for a law school dean — is warranted.

The only actual achievement cited by the review board is that, like a lot of bottom feeding schools, NEL has been turned into an apparently effective three-year bar review course.

NEL makes a very big deal of the fact that it spends lots of student tuition on paying SCOTUS justices to give little talks and such. There is to put it mildly zero evidence that this has produced any “elevated prestige” for the school.

As for “financial stability,” until about 15 minutes ago running a crap law school was a license to print money, and it would have taken an extraordinarily incompetent dean to fail to achieve “financial stability.”

The best part of this is citing heading the ABA Section of Legal Education as evidence that this guy is “strengthening the field” (the field, remember, being the practice of law) overall. Just imagine how bad employment stats for lawyers would have become if John O’Brien hadn’t been strengthening the field by running the Section of Legal Education.

As Michael Kinsley once observed, the scandal isn’t what’s illegal — the scandal is what’s legal.

Anarchy in Baltimore

[ 165 ] September 23, 2012 |


Tonight’s NFL game was a nice illustration of what happens when the putative authority figures in a social situation are neither respected or feared by the people they are supposed to be regulating.

Good to see the network announcers have given up on defending this crap.

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