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<nettime> Frank Pasquale: NYT Financial Advice: Be an Unpaid Intern Thro
nettime's_avid_reader on Fri, 23 Mar 2012 02:23:45 +0100 (CET)


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<nettime> Frank Pasquale: NYT Financial Advice: Be an Unpaid Intern Through Your 20s (Then Work till You're 100)


<http://www.concurringopinions.com/archives/2011/11/new-york-times-financial-advice-be-an-unpaid-intern-through-your-20s-then-work-till-youre-100.html>

   New York Times Financial Advice: Be an Unpaid Intern Through Your 20s (Then
   Work till You're 100)

   posted by Frank Pasquale

      Jason Mazzone has already addressed the main shortcomings of the
      latest N.Y. Times article by David Segal on law schools. I'd like to
      situate it as part of a neo-liberal ideology developing at the
      Times and other scriveners for the powerful.

      If you pair the basic message of Segal's piece ("law students and
      professors aren't doing enough to raise corporate profits") with that
      of Ed Glaeser's anti-retirement musings in the same pages
      ("work into your 90s"), the ideology starts to emerge. Labor economist
      Mark Price pithily suggested it:

        Law schools couldn't possibly teach the wide range of firm specific
        skills that law firms need . . . . And yet you have a writer
        [pushing] propaganda that the big law firms are tired of paying for
        on the job training.

        On the other hand it is at least comforting to know that law firms
        are not that different from firms in Manufacturing or Health Care[;]
        that is[,] they would prefer that somebody else pay for the skills
        that make them profitable.

      This is a classic problem of uneven bargaining power familiar
      since the 1920s.* Why are wages falling while productivity is
      rising? Because firms realize they can fire current workers, shift
      their duties (unpaid) to frightened current employees, and reap the
      profits of having one person do the work of many. It's another form of
      "shadow work" that contributes to the time bind so many
      Americans find themselves in. When 65% of economic gains go to
      the top 1% of the population, it's not too hard to discern this
      dynamic.
      Of course, a firm can only pile so many unbillable hours onto existing
      employees. So what's the next step? Start calling beginning work an
      "unpaid internship." Complain that "kids these days" don't know a
      thing; they're "zero marginal product" workers; they don't deserve
      to be paid till they're truly experienced. (At the end of a long line
      of traineeships, some may find themselves discarded as "too old" or
      "overqualified" for what is now defined as an "entry-level" position.)
      This is a wonderful strategy for cutting the budgets of corporate legal
      departments. But it only spells doom for attorneys caught up in the
      corporate games once reserved for blue collar labor.

      The Political Roots of Rising Un- and Underemployment in the Legal
      Industry

      Mazzone has complained that Segal doesn't know enough about legal
      education. He's also too narrowly focused on it. There is no question
      that, in many sectors, there are fewer positions for attorneys. Many
      journalists have attributed the decline to the creeping influence of
      "skill-biased technological change" and outsourcing: e-discovery can be
      done by computer or by the asymmetrically open Indian legal
      market. These trends do undermine some firm business models. But James
      K. Galbraith has already demonstrated the weaknesses of the
      "skill-biased technological change story" in many contexts. Moreover,
      the biggest driver of legal unemployment is political: the wholesale
      dismantling of tort, contract, and administrative remedies for
      corporate wrongdoing.

      As I observed back in 2008, it would be shocking if an ideological
      movement to shut the courthouse doors to the injured failed to threaten
      lawyers' livelihood. To build on that: maybe there are less jobs for
      finance lawyers because the Justice Department has systematically
      failed to prosecute egregious white-collar crime. A "tort reform"
      movement has made the price of violating the law a mere cost of
      doing business for thousands of companies. When banks can get away with
      robo-signing and foreclosure fraud, why should they hire
      attorneys to ensure that their paperwork is actually valid? Even an
      ostensible regulator, the OCC, isn't bothering to launch a serious
      investigation in areas where deeply troubling practices have
      already been documented.

      Corporate promotion of tort reform, deregulation, and arbitration
      has saved businesses many costs, including legal fees. But it has also
      increased the fragility of our food and drug supply chains, accelerated
      a financial crisis that has already cost the US trillions in lost
      output, and reduced opportunities for attorneys to fight to assure that
      business is conducted in a fair and societally beneficial way.

      To ignore the political roots of the decline of both law and the
      rule of law in the US (and its obvious impact on attorney
      employment) is to fail to even begin a serious analysis of young
      lawyers' problems. Segal acts as if corporate defense is the heart and
      soul of legal work. He never considers how legal education works to
      prompt legal challenges to corporate wrongdoing. No one will have a job
      defending corporations if there aren't well-trained attorneys applying
      old law to new corporate wrongdoing. That takes creative thought, a
      chance to learn the policy behind law, and engagement with current
      industry trends. It's not something to be drilled into people by
      projecting bar prep rote back into law school.

      Law as a Cost

      Throughout Segal's article, another pair of assumptions creeps in. Law
      is presented as a cost, a series of niggling and none-too-important
      hoops to jump through to get down to the real business of mergers and
      deals. Law professors' research is dismissed as pure self-indulgence,
      as we are once again treated to Justice Roberts' witty dig at articles
      devoted to Kantian Bulgarian evidence law.

      Segal never stops to ask: Why might a Justice like Roberts want to
      discredit the legal academy? Maybe it's because, while colleagues of
      mine were trying to nip the housing crisis in the bud, a phalanx of
      deregulators on the Supreme Court came up with a politicized
      preemption decision that let the good times roll for America's most
      predatory banks? Maybe it's because law professors actually have the
      time to document how radically Roberts and his allies have diverged
      from precedent? Perhaps it's because Roberts, after long years in
      corporate practice, sees law profs' efforts to reinterpret old statutes
      and doctrines in light of new harms (a far larger part of legal
      scholarship than the high theory he laments) as one more nuisance for
      the clients who made him a rich and powerful man?

      But we need not even engage with these politically sensitive questions.
      Rather, we might wonder: why does philosophy stand in for Segal as
      archetypical legal scholarship? When I first heard Justice Roberts
      lament the tragic dearth of practical articles, I marveled: has he ever
      taken a look at Sharona Hoffman's or Nicolas Terry's cutting edge work
      on digital medical records? This emerging field raises critical
      questions about the balance between privacy and innovation. We cannot
      permit our digital health infrastructure to be constructed solely
      according to the corporate interests of whatever vendors and providers
      happen to be most powerful at the time. We desperately need more
      work like Hoffman's and Terry's to guide us through the thicket of
      administrative and technical issues raised by electronic medical
      records.

      I can think of figures as eminent and important-to-practitioners as
      Terry and Hoffman in five areas of health law and four areas of
      intellectual property law off the top of my head. (Ever heard of Pam
      Samuelson, Mr. Segal?) Yet Segal is apparently ready to write off the
      entirety of legal scholarship because someone, somewhere had the
      temerity to write about Kant.

      I can understand why a writer at the New York Times might want to lash
      out at maladaptive institutions. Segal is daily subjected to his
      paper's opinion pages, which peddle one irrelevant or stereotypical
      piece after another from their tenured moderates. (You learn more from
      Dean Baker's critiques of them than from the articles themselves.)
      Thursday Styles reports on the 0.1%'s lifestyle intently,
      breathlessly tracking the price of Birkin bags as if it's news the rest
      of us can use. The Gray Lady is becoming less the paper of record than
      a chronicler of the conventional wisdom and consumption of the wealthy.

      What Next?

      Law students, like many others today, face a grim job market almost
      without precedent. But I think proposals like Segal's--making students
      start corporate-type work earlier and earlier--will only exacerbate the
      problem by providing an ever-larger pool of free labor for firms. We
      need a bigger picture view of an economy where professional and
      rentier incomes in general must deflate to match the diminished
      buying power of strapped lower and middle classes.

      Debt is the critical financial issue of our age. Mortgage debt, student
      debt, credit card debt, medical debt, sovereign debt---all are causing
      social upheaval. Debt often seems like a standalone menace, a black
      hole sucking money (and thus time and opportunity) from the indebted.
      But behind every mortgage statement is a servicer, distributing those
      funds to buyers of income streams. Debt is the shadow side of wealth,
      as Margaret Atwood memorably portrayed it. You don't have to immerse
      yourself in the accounting equivalences of Modern Monetary Theory to
      figure this out.

      Congress addressed two major sources of debt recently. The credit card
      provisions in the 2009 CARD Act and Dodd-Frank offered some weak
      disclosure provisions. Look at your statements, and you'll see exactly
      how many years it will take you to pay off the balance if you stick to
      minimum payments. Basic consumer protections are in place, but there is
      not much substantive relief for debtors.

      However, the ACA addressed medical bills much more comprehensively. I
      think its provisions can be a model for balancing obligations of the
      individual and society in other essential areas, like housing and
      education. In brief: for unemployed individuals (or those who are not
      offered affordable insurance by their employer), health insurance
      exchanges will offer various health plans. Thus the notorious
      "individual mandate:" these persons will need to get insurance or pay a
      fine. But the government will offer help, in two ways.

      First, to help pay for the premium, advanceable tax credits will ensure
      that no one pays too much of their income for insurance. How much is
      too much? A family of four with earnings under $40,000 should not be
      paying more than around 6.3% of income for premiums; for those
      making around $85,000, the rate rises to 9.5%. (Here is a
      calculator with rough estimates of how much individuals and
      families need to pay at certain levels of income.) This is essentially
      an income-based payment scheme, for people making up to 4 times the
      federal poverty level. Moreover, "those with incomes below 250
      percent of the poverty line will also receive cost-sharing assistance"
      on the other side of medical bills: the copays, coinsurances, and
      deductibles not covered by an insurance policy. The formula is complex,
      but the bottom line is that the federal government assists in paying
      these costs based on income, as well.

      Income-based repayment schemes are a part of education financing
      now, though many have complained that they are not sensitive enough to
      other costs of living. Making income-based repayment more fair, and
      considering other legal changes in this area, are very important
      political issues. Housing policy should also be more open to
      income-based payment of mortgages, offering options ranging from
      "rights to rent" to direct principal modifications.

      The key point here is that the owners of the income streams from
      student debts, mortgages, and other sources are playing a dangerous
      game if they think rights to payments are as sacrosanct, as, say,
      the AIG bonuses. They may think that they can continue to squeeze
      the indebted to pay 60 or 70% of their income each month for housing,
      insurance, and loan debts (and for the dubious right to claim as an
      asset something that will eventually be worth far less than what was
      paid for it if current debt deflation continues). But the larger
      economic implications are disastrous. Consider Steve Keen's diagnosis,
      as related by George Monbiot. Keen believes that both the Great
      Depression and the current crisis "were triggered by a collapse in
      debt-financed demand:"

        Aggregate demand in an economy like ours is composed of GDP plus the
        change in the level of debt. It is the sudden and extreme change in
        debt levels that makes demand so volatile and triggers recessions.
        The higher the level of private debt, relative to GDP, the more
        unstable the system becomes. . . . In the 1920s, private debt rose
        by 50%. Between 1999 and 2009, it rose by 140%. The debt-to-GDP
        ratio in the US is still much higher than it was when the Great
        Depression began.

      We are in the midst of a great readjustment. For decades we've been
      told that our economic model, as persons, was to act like corporations
      do, accumulating assets and rights to payment. In fact, this
      "ownership society" was a mirage, providing great wealth to a few
      at the very top and precarity to the rest. There is no way to guarantee
      a secure future all on one's own. Social structure, norms, and
      bargaining power matter.

      Neither law students nor law schools can preserve their own future
      simply by better learning how to serve the corporate interests that
      would like to eliminate all profit-menacing regulation and tort claims.
      Economic security is an inevitably political question, which requires a
      coordinated political response--not one more effort to legitimize
      corporate wage-slashing with a simple story about "unskilled" workers.
      Before the Times treats us to another "what's wrong with law schools"
      story, it might want to investigate the forces of deregulation and
      volatile financialization that kneecapped not only the legal job
      market, but employment prospects generally. No one needs another piece
      legitimizing the "young people don't deserve to be paid" meme of the
      radical right, in the guise of snide snark about out-of-touch law
      professors.

      *I've addressed these imbalances many times in posts on Law &
      Inequality. See, for instance, Power & Productivity After the
      Great Recession; Inequality and the Great Recession).


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Opinions LLC, a Pennsylvania Limited Liability Corporation.



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