Hypothetically, what would the net change to the GDP year over year be if we killed all people over a threshold age when they were diagnosed with a terminal disease?
My point is not that this would be a good idea, it's that GDP growth is not a good measure for a society across the board.
Maybe GDP growth would be higher if we could simply dump toxic waste in water supplies, and the threat of lawyers/class action suits that helps prevent that behavior hurts economic growth.
I think there are a thousand nails and you hit one of the most outstanding ones in the head. GDP is as much a metric of wealth as it is of the speed with which we consume natural resources.
If we account for externalities witha reasonable "weight" most economic activity must be operating close to or at an absolute loss
Consider an alternate viewpoint: The universe is destroying natural resources both via growing blackholes as well as by entire galaxies moving beyond our accessible light cone due to expansion.
Thus we are wasting an unfathomable amount of natural resources by delaying our transition to a space-faring civilization. And world GDP is currently the best measure we have of human technological progress.
Most of the unfathomable amount of resources being lost isn't even within traveling distance, right? And there's a massive bounty to be found in the asteroid belt here in our solar system, we could make trillions of dollars of "wealth" by transporting rare metals back here, surely?
The main reason for delays on this front seems to be a lack of long-term thinking, as well as a general disinterest in advancing space technology.
They may not be as constraining but we will still be constrained by available energy. Bending spacetime requires huge amounts of energy. So maybe instead of a light-cone it would be a warp-energy cone.
GDP growth is a questionable metric even for wealth.
For example, if two housewives join the workforce by cleaning each other’s now unattended houses, GDP shows a large increase even though the situation is (arugably) a net loss for everyone involved.
But where would that money come from? If they both clean the other person's house for $20, where does $5 in taxes come from? (Answer: from the other income earner.). So the "contribution to society" doesn't just magically appear when we make this a commercial transaction.
> Hypothetically, what would the net change to the GDP year over year be if we killed all people over a threshold age when they were diagnosed with a terminal disease?
That depends on how profitable it is to provide the treatment for terminal illnesses.
>This paper uses international cross-section data to provide a simple test of this hypothesis. Despite the crudeness of the test, the small size of the sample and possible ambiguities in interpretation, the results provide a tentative confirmation of the hypothesis.
Doesn’t sound very reliable, especially being from 1986 when we generally had a much less sophisticated understanding of the intricacies of statistics and hypothesis testing.
Conversely to the paper’s implication, too many lawyers can also be seen as evidence of a society based on the rule of the law, with strong legal institutions, processes, separation of powers and other patterns of integrity, and lack of rule by decree in any form, all of which are valuable and possibly necessary components of sustainable economic growth. In such a society, law will naturally be one of the more prestigious and attractive professions.
I’m sure there’s some optimal ratio of lawyers to scientists|engineers|teachers|builders and other productive professions, where exceeding that ratio results in lower than optimal growth. But even a society with too many lawyers probably has stronger growth than one with none.
The bigger issue is whether this is cause or correlation. As in, I believe that the figure is correct, and that more lawyers do cause less economic growth, but most of the correlation is not caused by the lawyers.
A less developed country probably doesn't have solid rule of law, and so has fewer lawyers. A less developed country also can generate fast economic growth by transferring knowledge from more advanced ones.
By contrast advanced countries have solid rule of law, and so lots of lawyers. They also can't easily grow through knowledge transfer, because there is nobody to transfer knowledge from. They have to generate new knowledge themselves.
I would therefore suggest removing GDP/capita as a confounding factor first.
That said, lawyers are economic sand. The main purpose of lawyers is to make other lawyers be needed. And lawyers are good at convincing themselves that they were needed. We would be better off with fewer lawyers. If you don't believe me, consider the phenomena of patent trolls. What do they add to anyone other than themselves?
> Conversely to the paper’s implication, too many lawyers can also be seen as evidence of a society based on the rule of the law, with strong legal institutions, processes, separation of powers and other patterns of integrity, and lack of rule by decree in any form
Well, it means strong legal institutions. But...
Take criminal law, for example. Lots of lawyers mean that each criminal gets their day in court. That's good. But a law-abiding society would be better.
Or take contract law. Lots of lawyers mean that, if the other party violates the contract, you can sue them. But wouldn't it be better to have a society where more people just did what the contract said, instead of trying to find ways to weasel out of it?
Even with respect to the government, yes, when they overstep their bounds, we can take them to court, and we can even win and make them stop doing whatever they're not supposed to. But really, it would be better if they just stayed within the constitutional parameters of what they're allowed to do.
In all these cases, it's good (really!) that we can have our day in court, in a system that is at least relatively fair. The lawyers are the sign of a healthy legal system. But they're also the sign of an unhealthy society, that is restrained by court cases rather than by doing the right thing.
There are plenty of new small industries where everyone is copying each others ideas and making better products... all until someone hires a few lawyers and starts sending out threatening letters, and suddenly all innovation stops because everyone would prefer to keep making current products than to make new products and be bankrupted by a lawsuit for copying someone else's ideas...
There are many times in my career that I have seen that as soon as lawyers get involved, all innovation stops.
This isn't a new problem. There's a very good example of intellectual property retarding socioeconomic development in the industrial history of the steam engine.
Early steam engine development was a collaborative endeavor, with various engineers building on the ideas of others to make incremental improvements in steam technology. Then came Bolton and Watt, who used patents to stop the development of steam engines superior to their own products.
The Bolton and Watt patents prevented the development of steam railway engines, and in so doing delayed the beginning of the railway era--and all the societal development it created--by twenty years or more.
Intellectual property law is a gift to monopolists. It is not a social good.
> Beyond the optimal number of lawyers, however, the effects of their work are negative. In this graph, the optimal number of lawyers per 1,000 white-collar workers is said to be about 10; because the US has about 14, it has an excess.
Today we might have a slightly lower excess. The number of lawyers per 100,000 people has been stable since the 1980s. Meanwhile, the fraction of white collar workers has gone up a bit.
I would counter to say your supposition would depend on how those lawyers are employed. If they were corporate lawyers I would struggle to see how a glut of those would tend towards the aspects of society you've listed. I wonder what the ratio of employment of lawyers looks like.
This reads to me like a textbook case of a note (and the referenced paper) that should not have gotten published. In addition to the introduction you cite, the note also says:
> This measure is certainly not without its shortcomings.
and
> Indeed, we would be surprised if someone could not come up with a specification and/or sample which might even support the opposite conclusion.
> Doesn’t sound very reliable, especially being from 1986 when we generally had a much less sophisticated understanding of the intricacies of statistics and hypothesis testing.
I just wanted to note - statistical analysis is not a new or groundbreaking thing. A lot of these tests have been around for decades or centuries[1] and experimental design ditto. Honestly, it being from so long ago actually gives me a bit more faith in the results since gaming statistics to get a click-bait headline and more funding has become a cottage industry in recent years.
I'd also guess that when a society is just establishing itself (i.e. in the process of moving from 3rd -> 1st world status, to put it crudely), they probably have a comparatively low number of lawyers to engineers/scientists. This also tends to be a very high growth phase. In other words, there's a correlation/causality problem here, where all societies tend to go through a high growth phase as they urbanize and industralize, and that phase also tends to be under-developed legally relative to the slower growth late phase.
This. Whilst the hypothesis is plausible, there are plenty of other reasons for diminishing returns to growth in more developed states which are difficult to distinguish.
Skimming through the short paper its basic regression attempts to control for differences in development by including variables for other development indicators, but it's a very small sample skewed by Korea, Japan and especially autocratic-era Taiwan reporting low levels of [formally qualified] lawyers. The authors even comment they 'would be surprised if someone could not come up with a specification to support the opposite conclusion'!
As a former lawyer, this makes a lot of sense to me. America in particular has an insane number of lawyers. The bar exam isn't actually that hard to pass (look at the pass rates for native English speakers, they're high) and there are 100s of law schools, so the market is flooded with bad lawyers looking to scratch a living. This results in a lot of bad lawsuits being filed, shoddy legal work that bears costs long into the future, and a general legalization of many aspects of business that probably often doesn't need to happen.
In addition to the all of the bad legal work, the best lawyers also often go to the "white shoe" law firms. In America, these law firms hire out their legal capital to corporate world that engages in beating down consumers and competition, which is resulting in an increasingly monolithic and sclerotic economy.
Putting aside is-this-right-or-wrong?: this is unsurprising: lawyers (many in my family), police, doctors, sales people, etc represent mechanisms to reduce more problematic inefficiencies in our society. No one (including lawyers I know) wants lawyers; but a world-with-lawyers is better than a world-without-lawyers. Doctors: why do you go to the doctor? To improve your body? Almost never; it's always to reduce problems or prevent them, a cost you only incur because of the fallibility of your body. Sales people: imperfect information in society. Police: lovely folks; would be much better if we didn't have people being assholes so that we needed police.
Then add in all of the secondary effects of exploitation/corruption of these not-productive-and-shouldn't-exist positions...
Further for every $1 you spend on an attorney, someone else has to spend $$ and the society has wasted that $$$ plus that time, none of which is productive.
On the other hand, get rid of lawyers and you're going to spend $$$ on mercenaries...
Most medicine does seem to be about fixing what's broken in your body (which is what you described), but some medicine is about bring your body to a healthier state. (Or maybe that's just "fitness"?).
I suspect it's possible to have a society where doctors focus on improving the health of people rather than focusing on fixing things when they break; and I suspect there's a way to adopt that mindset with lawyers, as well. Police too, actually - if police are social workers first, and enforcers last.
Doctors are “only fixing things” only because people are presenting with broken bodies. There is already a huge shift towards preventative medicine. But no one goes to see their doctor when they’re asymptomatic with their unhealthy life choices. Doctors are already doing the best they can with what they’re given.
> Further for every $1 you spend on an attorney, someone else has to spend $$ and the society has wasted that $$$ plus that time, none of which is productive.
I’m not sure that money spent on lawyers is, by any measure, money that society has wasted.
Every dollar that society spends is a dollar that society earns. Economic activity isn’t a pie that is split up and expended. If I give you a dollar to do something and then you give it back to me to do something else, we’ve generated $2 in GDP with a single dollar bill.
Besides, lawyers are providing an important service of ensuring that the rest of the economy can chug along with confidence. Also, how many lives are saved because of conflicts resolved by law instead of lawlessness?
The ability to transact confidently is a very valuable service.
> On the other hand, get rid of lawyers and you're going to spend $$$ on mercenaries...
The true alternative for most people is they’re out the additional baked in cost of the lawyers and they can’t afford their own lawyer to “even the odds” so it’s asymmetrical warfare.
Well, not entirely. They benefit from that 'baked in' cost as well, companies and individuals are less willing to be negligent or exploitative because of the fear of lawsuits.
True of the police as well: calling them doesn't benefit me much, but they do play a role in making the streets (relatively) safe at night.
In both cases we might imagine a better way of doing these things, I'm speaking about the world we happen to have.
Theoretically and ideally, doctors improve the lifespan and health of human beings beyond what natural selection gave us. In an ideal world, the budget for social healthcare would just collapse due to incredibly effective medicine.
Whereas lawyers and police must deal with the imperfection of people and society, no matter how much it is reduced.
I had an interesting conversation with someone where I laid out the physics of a certain phenomenon that allowed an athlete to perform better. Their answer: "Well, that's all science. Like global warming."
It's very depressing to run into this type of conversations. I think we'd be well served to fight scientific arguments with scientific arguments, rather than with cynicism.
The numbers in that Tweet are way off, because what it counts as "lawyer" isn't the same thing in all countries.
Take Japan, which it says has only 24 lawyers per 100k, compared to 396 per 100k in the US. Japan has several licensed non-lawyer professions that do a lot of work that in the US has to be done by lawyers.
In addition, a very large number of people in Japan study law as undergraduates, then go into corporate jobs where they are allowed to handle corporate legal matters that would require a lawyer in the US.
Exactly, it sounds to me that the causation may very well run the other direction, if at all.
Low economic growth implies low interest rates, high indebtedness, high asset prices and extended asset duration[1]. Therefore it is so much more important to look at your contracts carefully, because they matter so much more.
If you don't see it then imagine what a true 0% (or around -1%, to account for risk premium) riskfree interest rate across the entire duration means. It means, for example, that it theoretically makes sense to level entire mountains just to create more farmland or to build slightly faster highways because it will pay back over hundreds of years. Imagine negotiating such deals!
[1] this is not just my opinion, but also the opinion of 2012 Jerome Powell; you can find it in FOMC transcripts from before he became the chairman of the Fed.
>it theoretically makes sense to level entire mountains just to create more farmland or to build slightly faster highways because it will pay back over hundreds of years
Is that not what we are doing, in the US and elsewhere? Creating massive debt, the proceeds from which are plowed into real estate development via cheap loans, infrastructure stimulus bills, etc.
Absolutely, though of course it's not even close to leveling mountains yet.
It's much worse in some places than in the US. For example the Swiss 50 year bond is currently priced at -0.36%, and this is "high" given recent yields history. Switzerland is already buying nearly every financial asset it can with printed money, including US stocks, but the credit markets don't give a damn. Swiss mortgages have theoretically infinite duration (you never pay it back by design). Austria has some extremely low yielding 100 year bonds despite not having existed yet for 100 years (in the current form). The deflation is just too strong.
Correlation might not prove causation (is anything in economics proveable?) but it does strongly suggest a relationship. It doesn’t take fanciful thinking to theorize a relationship here. It might be that both greater numbers of lawyers and lower economic activity are caused by something else (like more regulation), or that lower economic activity creates more lawyers.
Fine, but you could just as easily flip the arrow or come up with a common cause to come up with a plausible narrative. In areas with low economic growth, lawyers are a high status, high earning potential field, and so why not go into that field? Maybe areas with autocratic leadership see both more complex laws and lower economic growth, leading to a necessity for more lawyers overall.
Observational studies like this are not sufficient to answer these sorts of questions even if you can use them to come up with cute, cheeky headlines.
But what do lawyers actually create that would be part of any economic growth. It seems to me that they are just toll takers for access to justice and bureaucracy.
I am well aware that correlations can be spurious, but they can also be related. I’ve noted a very strong correlation between my use of a hammer and the number of nails in my wall...
I wonder how much this has to do with clarity-of-law?
AFAIK, you don't really need (many) lawyers in CA to fight an employer's non-compete, since CA has ruled so clearly on it. (Although AFAIK you do need a lawyer just to navigate the courts-as-bureaucracy).
AKA, you need lots of lawyers to litigate on unclear laws, you need fewer to litigate on clear ones...?
In which case # of lawyers is a measure of the unclarity of the laws (and difficulty in engaging the courts); and it might be that lack of clarity that has a bigger impact on the economic growth...?
I think it may be more to do with a different but simple phenomenon: the growth and maturation of countries.
When a people/country are starting out "from scratch" with little material wealth, of course most of their economic growth are focused on material advances -- getting people to produce more, make technological innovations, infrastructural gains. Postwar USA (and Europe) people's economic activity was just to build up society. (broad strokes of course)
As a country gets older and more mature, and its material needs are reaching 90+% satisfied (by some subjective measure) then what happens? People have wealth, interests, commercial activites, and they start disputing with each other over it. Legal activity increases while primary production activity no longer dominates an economy.
So naturally, you observe that legal/professional services increase and of course at some point you'll experience a flattening or decrease of raw economic growth as a country can't sustain 10% growth every year. Then you think "oh, the lawyers caused this". But that's not interpreting the effect correctly.
I would wager you'd see an increase in the number of doctors and their economic activity, or artists, or musicians, etc. too.
Somewhat related; "The Viva Frey and Robert Barnes" livestream. Robert Barnes is a civil rights lawyer, and often talks about how corrupted, political and bipolar the current US judiciary has become.
An alternative hypothesis is that legal complexity breeds demand for lawyers. But even that is obviously too simple: The highly regulated EU has fewer lawyers than the laissez faire US. One would have to dig into the incentives of tort law, patent law, etc. to find specific drivers of complexity.
Higher regulation doesn't necessarily mean more complexity. It might even simplify things as things are already codified in the laws and less time is spend on searching and arguing about precedents and so on...
Also whole legal systems affects the complexity. So it's not easy to compare between systems, not to even talk about countries.
Is this just saying that Intellectual Property (IP) protections stifle economic growth, but with more steps?
I think it's pretty well understood that IP protection helps innovation to a point, but if you go to far it actually stifles growth and innovation more than not having any protection at all. If you have a ridiculous system of IP laws that allows pharmaceutical companies to avoid ever releasing anything into the public domain, you're going to also need an army of lawyers to enforce your draconian laws.
If there is causation, we still don't know whether lawyers cause falling growth or whether something else that causes falling growth (like declining trust) also causes rising demand for lawyers.
Depends on the socioeconomic status you come from. In my experience, it's "fewer jobs = ...
Working class, immigrants, and service jobs: "kids leave school to support the family"
Middle class: "kids work their ass off at school so that they're one of the few to get a job (and failing that, move back into the parent's basement until the job situation improves)"
Upper middle class: "kids go to grad school, law school, or med school to wait out the poor economy and come out with a good credential afterwards"
Wealthy: "kids call up their daddy's wealthy private equity friend and get funding to buy up a struggling small company, fire half the workforce, goose the profits, and unload it on the public markets before anyone realizes that the business's core function isn't functioning anymore."
I've met all of the above, and definitely know a lot of folks that went to law school because they weren't sure they could get a job upon graduation. (Although a more common reason for that is that they don't know what they want to do...law school is a really attractive option for liberal arts grads whose coursework doesn't really line up with anything that makes money.)
the 2012 crisis was 100% the reason i did my masters degree.
it was the same for nearly 90% of my class.
a lot of my peers decided to take a second major the moment their job offers at the bulge brackets got cancelled. a handful of seniors also went back to school after they got retrenched at the banks.
due diligence of reading at least the abstract instead of the post title
> Despite the crudeness of the test, the small size of the sample and possible ambiguities in interpretation, the results provide a tentative confirmation of the hypothesis.
I think this says more about the virtues of the American legal system, and less about the efficiency of lawyers or any trend in the quality of judgments relative to the standard.
>Here is another telling statistic: Brazil has more law schools — some 1,240 — than the rest of the world combined. And they have turned out some 800,000 lawyers — which means there are more lawyers per capita in Brazil than in the U.S.
People in Brazil go to law school not to be a lawyer, but to be able to work for the government, since many government jobs require you a Bachelor in Law.
That's what you believe, is there evidence to support your two claims? I don't think HN should be a place where people state their "beliefs" about quantitative statements without providing a single number or citation.
My point is not that this would be a good idea, it's that GDP growth is not a good measure for a society across the board.
Maybe GDP growth would be higher if we could simply dump toxic waste in water supplies, and the threat of lawyers/class action suits that helps prevent that behavior hurts economic growth.