Business & Economics: July 2012 Archives
I'm so glad I didn't go to law school.
Things began to change in 2010, when the recession more fully impacted law firms, affecting the Class of 2010 in many ways, including a marked shrinking of summer classes in 2009. This resulted in the right-hand peak eroding back to 18% of reported salaries, and the left-hand peak bulking up to almost half (48%) of reported salaries. The erosion continued in 2011, with $160,000 salaries accounting for 14% of reported salaries, and $40,000 -$65,000 salaries accounting for over half (52%) of reported salaries.
The legal profession is collapsing because it's so easy to outsource the work. Just because your client is in New York doesn't mean your paper pushers can't be in India, China, Alabama, or wherever.
Sure, it's the same for some kinds of engineering, but not all....
Investor Peter Thiel asks if Google's and Apple's piles of money mean that we're at the end of technology, or if we're being stifled by regulation. Said Thiel:
I'm Libertarian, I think [technological stagnation is] because the government has outlawed technology...I think we've basically outlawed everything having to do with the world of stuff, and the only thing you're allowed to do is in the world of bits. And that's why we've had a lot of progress in computers and finance. Those were the two areas where there was enormous innovation in the last 40 years. It looks like finance is in the process of getting outlawed....[Google] has 30, 40, 50 billion in cash. It has no idea how to invest that money in technology effectively. So, it prefers getting zero percent interest from Mr. Bernanke, effectively the cash sort of gets burned away over time through inflation, because there are no ideas that Google has how to spend money....
if we're living in an accelerating technological world, and you have zero percent interest rates in the background, you should be able to invest all of your money in things that will return it many times over, and the fact that you're out of ideas, maybe it's a political problem, the government has outlawed things. But, it still is a problem....
the intellectually honest thing to do would be to say that Google is no longer a technology company, that it's basically ‑‑ it's a search engine. The search technology was developed a decade ago. It's a bet that there will be no one else who will come up with a better search technology. So, you invest in Google, because you're betting against technological innovation in search. And it's like a bank that generates enormous cash flows every year, but you can't issue a dividend, because the day you take that $30 billion and send it back to people you're admitting that you're no longer a technology company. That's why Microsoft can't return its money. That's why all these companies are building up hordes of cash, because they don't know what to do with it, but they don't want to admit they're no longer tech companies.
My take is slightly different. I think the "world of stuff" is too highly regulated and that this does strangle innovation, but even more generally I think there's a ton of uncertainty out there right now. No one knows who the next victim of government "help" will be, so people sit on their cash and wait. Sure, the cash loses value due to inflation, but that's better than getting smacked down by the government.
(HT: Marginal Revolution, who has the transcript.)
