tag:blogger.com,1999:blog-11488416.post9021392666389002561..comments2023-10-23T18:40:13.347-04:00Comments on CLASS BIAS AND RANDOM THINGS LAW REVIEW: Not Buying What You are Selling: Law School EconomicsJeffrey Harrisonhttp://www.blogger.com/profile/11647017160134065739noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-11488416.post-37492122360501958422011-07-20T09:53:37.458-04:002011-07-20T09:53:37.458-04:00Thanks Alan, I think you point out two of the bigg...Thanks Alan, I think you point out two of the biggest problems with the market analogy-- student loans and public subsidization. Both of these shelter students from the real cost of their investments. Take them away and the market would be more compelling. In fact, the idea of loaning money to a business likely to fail makes no sense. Why make loans to those who want to invest in what is increasingly like a losing business?<br /><br />Nevertheless and despite your doubts, the market does appear to be working. Application rates are significantly down suggesting there is some market driven behavior out here. Plus, it takes the market time to work. When the market for Ph.D.s dried up you twenty or so years ago, it took several years for the sellers to leave the market or otherwise contract.Jeffrey Harrisonhttps://www.blogger.com/profile/11647017160134065739noreply@blogger.comtag:blogger.com,1999:blog-11488416.post-29292248743094157122011-07-19T21:40:12.693-04:002011-07-19T21:40:12.693-04:00I think you're addressing two separate but rel...I think you're addressing two separate but related questions:<br /><br />1) Why is there demand for law school?<br /><br />2)Why is the supply for law school what it is?<br /><br />I think that both these questions imply that law school education somehow resembles a market or is controlled by market forces. The opposite seems to be true. There are certainly buyers and sellers of legal education but the cues they follow have nothing to do with market forces. Students, consumers of legal education, don't treat law school like a businessman treats a piece of equipment he wants to purchase. Students don't normally investigate the utility of their "purchase", how they can amortize the costs or ask about a return policy in case the product they receive ends up not meeting their expectations. The UCC does not apply to consumption of law school education.<br /><br />This is why I think it's almost silly to talk about certain things, like law school, in market terms. The consumption of law school education, as it turns out, is more often than not irrational from a cost/benefit standpoint. Yet students keep going, because cost/benefit analysis isn't what they're concerned with (or they fail to consider it altogether). Students go because they can, because the financing is out there, and the burden of repayment seems miles away. This is another reason the market analogy is silly. If a business secures financing for a venture and the venture goes belly up, the business can potentially discharge the loan and start fresh. This isn't the case for student loans. In other words, the consumption of law school education, because of the distortions federal policy has created, is nothing like a market. If students are going to be blamed for acting irrationally as consumers and not thinking through the long term repercussions of their decisions, shouldn't they at least have remedies under the same rules as other consumers? And if student debt is supposed to be toxic by design, shouldn't it come with a clear and manifest warning of its toxicity, like a pack of cigarettes?<br /><br />And as for the sellers, well when there are buyers, market theory suggests that someone will be waiting attentively, ready to take the buyers' money. Can you blame them?Alanhttps://www.blogger.com/profile/10551315908729726597noreply@blogger.com