Kurt Johnson

Discovering the Anonymous Lawyer blog made my whole week. This man is a genius. I’m not a lawyer but I’ve seen enough of the same mentality from friends and coworkers in big-time consulting/law firms/investment banks to see the truth in the satire.

If you don’t get it, or you think it’s mean instead of funny….you’ve probably never worked in one of these places….which probably isn’t a bad thing. It reminds me that many new investment bankers seem to love watching/reciting the movie Wall Street and/or Boiler Room. Even though these movies nominally vilify investment banking the analysts worship the movies as celebrations of their culture and lifestyle (and maybe even values). I have a feeling the Anonymous Lawyer is worshipped the same way by the hardcore law students trying to land a spot in a big 100-hour a week $180k firm.

I’m getting my free time back after turning in my 2nd and final business school application tonight. Among other things, I need to catch up on some photos from the last couple of months and make some postings I’ve been meaning to make. On the not-so-fun front my estimated taxes and sales taxes need to be filed next week and it’s only a couple of months before I start procrastinating seriously about studying for the Level II CFA exam.

On a completely unrelated note, I finally got around to using Bloglines a few months ago and can’t say enough good things about it. For daily news I still go directly to news sites, but for aggregating less frequent postings from the other few dozen sites I read regularly it’s a huge convenience. It’s a free service; to set it up you just need an account and the web addresses of the sites you want to read. Many sites (like this one) will publish an RSS feed that Bloglines monitors so that you can read the postings remotely without taking the time to visit each individual site and see if anything new has been posted.

I’ve updated the list of blogs that I’m reading (on the right side of this page) if you need some ideas to get started.

Becker/Posner had a post today about student loans - a special pleasure I’ll be treating myself to if my applications are successful. Their original posting is here. I added my comments to Becker’s thread but also reproduce them below.

I also saw an AP article in the Houston Chronicle today on the same topic. It touches on two different people struggling with debt from anthropology degrees and how they have not been able to find high paying jobs in their field after graduation. A recent Dilbert cartoon sums up my reaction nicely (sorry for the linkfest). Any recent/indebted graduate who claims to be shocked that high-paying anthropology jobs are in short supply should have their PhD suspended for not doing two hours of common-sense career research before they started their program. I’m all for doing what you love, but realize that a PhD in anthropology will basically leave you impoverished for life (at least by the standards of your friends who stopped going to school after a BS in engineering). Do it, love it, just don’t complain after the fact about being broke.

By the same logic, my friends who have taken jobs they don’t love in exchange for wealth have no ground to complain about how they don’t love their job - in this land of free career choices and cheap student loans they should be able to do anything they love as long as they do it well and are willing to accept pecuniary sacrifices.

My comments on Becker:
As DanT and Tom have already noted, privatizing student financing would likely result in lower borrowing costs for high income/technical professions. This seems like a fair application of the market’s cost of risk - loans to lower income non-professional degrees carry a higher default risk that the lender should be compensated for. If government determines that there is a non-economic benefit to having liberal arts majors the government should rebate some of these higher borrowing costs in the form of grants rather than indiscriminately subsidizing all study areas.

I also take the view that most of the additional aid that is granted to students ultimately becomes a wealth transfer to college administrations as they raise their prices to absorb most of the additional aid (given a lag of a few years). Thus the “real” or ex-aid cost of education to end users will remain roughly the same regardless of the aid level. This is the fundamental reason that colleges will oppose removing loan subsidies.

Finally, American colleges and governments have already made education cheap and accessible enough that affordability is no longer a rational excuse for the serious student. To oversimplify this, assume that census data indicates the value of a college education at $1,000,000 of incremental lifetime income and requires debt financing of $25,000. How many students would have taken this opportunity at a 3% finance cost but will turn it down at 6%? To any rational consumer it’s a slam dunk at either price.