Merit-Based Pay at the Law Firm

Howrey "is ditching its lockstep compensation for its associates. Traditionally, Big Law pays its associates based on seniority — $160,000 for first years, $170,000 for second years and so on. But beginning next year Howrey reportedly will introduce a merit-based system of advancement and compensation for associates."

Look, merit pay, for teachers, lawyers, whomever, is great in theory. But it's very hard in practice to make subtle distinctions in performance between people in these professions. It's not like baseball, where performance is fairly easy to measure. At Howrey, the result is likely to be that everyone who does not get the top salary will be pretty pissed, which means that most of the lawyers there will be even unhappier than usual.

Resale Price Maintenance: Per Se Rule Overturned

For a sophisticated analysis of today's Supreme Court decision overruling the per se illegality for resale price maintenance, see this post by Randy Picker. My less sophisticated take is: The new rule makes perfect sense because producers could set prices anyway if they distributed the products themselves.

Public School Funding

Here's something I don't understand. Why do we let the children of the very rich attend grade school for free? Granted, many of them go to private school, but I do know some well off people who went to public school. Why don't we make them pay the actual cost? Why subsidize (as per the last post) Warren Buffett's kids?

Tax Fairness

Greg Mankiw notes how Warren Buffett

slammed a system that allows the very rich to pay taxes at a lower rate than the middle class.

Buffett cited himself, the third-richest person in the world, as an example. Last year, Buffett said, he was taxed at 17.7 percent on his taxable income of more than $46 million. His receptionist was taxed at about 30 percent.

Mankiw points out in response:

You might wonder how Mr Buffett managed such a low tax rate. Most likely, it arose because corporate dividends and capital gains are taxed at only 15 percent. But the corporate income that funded those returns was already taxed at the corporate level, where the tax rate is 35 percent. Mr Buffett seems to be ignoring the first round of taxation.

I think that's a pretty good point. Here's another. Assuming that the receptionist has a very generous salary of 100,000 dollars a year, she would have paid 30K in taxes. By contrast, by my rough calculation Buffett paid 8,142,000 dollars. If that's not clear enough, let me spell it out: The rich pay most of our taxes.

Greg LeMond's Doping Crusade

I think it's great that Greg LeMond has been pushing so hard for today's cyclists to come clean about doping. However, what would be even better is if he would tell all about what drugs, if any, he took when he was cycling, and also what drugs he observed others taking. It would set a nice example. As it stands now, his view seems to be that he is exempt from scrutiny.

How to use Tim Wakefield

There are many great ways to use Tim Wakefield. The Red Sox have been lucky to have him all these years.

Here's one new way that just occurred to me (apologies to anyone else who has already suggested this). Have him pitch to the first 9 batters only, and do this every two or three games. Then bring in the normal starter in relief. This could be a great way to throw off every hitter's timing and swing for the rest of the game.

Catch 22

A Wisconsin professor calls Catch 22 the most overrated novel of the 20th century. I loved the book, so I feel compelled to respond to a couple of his points.

He says:

it consists of basically the same joke over and over again: military people are evil and stupid.

I didn't see it that way at all. Sure, the book was about military people, and most of them were stupid and some were evil. But I took the point to be not that "military people are evil and stupid," but rather that many people are evil and stupid and that if you put these people into the military they will continue to act that way, with potentially horrible consequences. So it's not an insult directed at military people, but a commentary on the inevitable consequences of placing ordinary people at war.

He also says:

Satire always has an intellectual point. The point here seems to be that war is a bad thing.

Again, that's not how I saw it. I thought his point was that from the individual low-ranking soldier's point of view, war is going to seem pretty awful. That doesn't mean that all wars are bad from a broader perspective. It just means that having to kill and possibly be killed is an awful experience.

Fast, Unhealthy Food

The AP reports:

Burger King, McDonald's and Wendy's are among the chains planning to defy New York City's new rule that they begin posting calories on menus Sunday.

While I'm generally skeptical of regulation, a simple rule like this one, which requires disclosure of information to consumers for health purposes, seems to impose only a small burden while creating an enormous benefit. I really hope that these kinds of rules spread around the country. On the other hand, the fast food joints do make a good point:

Fast food chains also say they have been unfairly singled because the new rule only applies to restaurants that serve standardized portions and offer nutritional information voluntarily.

There's a good argument for applying the rule across the board to everyone. To the argument that it's too much of a burden on smaller restaurants, I would say that the burden could be placed on the supplier to provide the information, and then the restuarant won't have much work to do.

Will Bloomberg Run?

Here's my take. All he has said that I've seen is "I'm not running." Seems clear to me he is not saying "I will not run." My guess: If Obama gets the nomination (or looks likes he will), Bloomberg will not run; if Hillary gets it (or looks like she will), Bloomberg will run. There's just no question that Hillary is flawed and beatable. If she's the Democratic nominee, there is an opening for an independent to jump in.

The Other Side is Unreasonable

I posted before about how Al Gore says Republicans are "assaulting reason." But it's clear that it's not only the left that criticizes its opponents as "unreasonable." Bryan Caplan, a George Mason economics professor, has written "The Myth of the Rational Voter," in which part of his thesis is that voters are too dumb/uninformed to choose limited government/free market policies. I agree with his choice of policies, but I'm not convinced that the opponents are dumb. They may very well just want a different kind of society than I do.

Death Penalty Deterrence

Death penalty proponents are fighting back against the recent wave of anti-death penalty sentiment:

"Science does really draw a conclusion. It did. There is no question about it," said Naci Mocan, an economics professor at the University of Colorado at Denver. "The conclusion is there is a deterrent effect."

A 2003 study he co-authored, and a 2006 study that re-examined the data, found that each execution results in five fewer homicides, and commuting a death sentence means five more homicides. "The results are robust, they don't really go away," he said. "I oppose the death penalty. But my results show that the death penalty (deters) — what am I going to do, hide them?"

Statistical studies like his are among a dozen papers since 2001 that capital punishment has deterrent effects. They all explore the same basic theory — if the cost of something (be it the purchase of an apple or the act of killing someone) becomes too high, people will change their behavior (forego apples or shy from murder).

I agree with these conclusions, although my main deterrence argument is more general. Having a death penalty sends a general message to society that crime will not be tolerated, and thus reduces criminal behavior more broadly than just murder.

Obama in the Lead ...

... in one poll anyway. Hopefully more to follow.

Faith in the 2008 Campaign

It strikes me that the three leading Dems may be talking more about their faith than the three leading Republicans. Very strange turn of events.

Obama Signs on to the Fair Pay Act: Ugh

I want to support Barack Obama. I like him. I think he is very intelligent. He has a lot of charisma. But I worry about his economics. Now I have more reason for concern. Apparently, he has signed on to the Fair Pay Act, which aims to require equal salaries for people in "equivalent" jobs. The theory is that jobs that are disproportionately held by women pay less than jobs that are disproportionately held by men. I have no doubt this is true. Engineering jobs pay more than librarian positions, for example. But so what? From what I can tell, engineering jobs pay more because they require more skill. Maybe this is not a good example for the Fair Pay advocates' cause, but I'm not sure which positions they have in mind. Oh, OK, I'll do a little research. According to Tom Harkin, who introduced the bill, here's an example:

For example, social workers (a female-dominated field) are paid less than probation officers (a male-dominated field) even though both jobs require similar levels of skill, effort, and responsibility.

Wow, that's the example they came up with to make their case? With no further explanation of how these jobs are equivalent? At first glance, I would have to say that probation officers have things tougher, dealing with violent criminals and all.

Anyway, the point is, Obama's support for this kind of thing is making it hard for me to vote for him. I wish he'd talk to his economics advisors about this one.

Hillary is Just Unbearable

How on earth is Hillary Clinton leading in the polls? Here's what I'm worked up about:

Clinton stood by her actions in the aftermath of former President Clinton' admission that he had an affair, including presumably her decision to stay in the marriage.

"I am very grateful that I had a grounding in faith that gave me the courage and the strength to do what I thought was right, regardless of what the world thought," Clinton said during a forum where the three leading Democratic presidential candidates talked about faith and values.

"I'm not sure I would have gotten through it without my faith," she said.

What an absolutely ridiculous poll-driven thing to say. Here's how I picture it happening. She and her advisers were sitting around talking about how to defend her decision not to leave Bill, and they hit upon the answer: Faith. It's perfect. It completely distracts from the issue AND it plays up her religious nature. Will anyone really buy this, though? Is "faith" an answer to why you did something stupid and unreasonable? And does anyone believe she actually has religious faith? I hope people start seeing through her soon.

Baseball and Race

Gary Sheffield's recent statements that MLB prefers Latin players over black players because Latinos are easier to "control" strikes me as absurd and downright silly. But it got me thinking about the various recent concern about the decline in the number of black players. I looked up the statistics, and here's what I see:


1991
White 68%
African-American 18%
Latino 14%

2006
White 59.5%
African-American 8.4%
Latino 29.4%
Asian 2.4%
Other 0.3%

Basically, there's a big drop in black and white players and a big rise in Latino players. (The number of black players does seem to have declined at a higher rate, though.) What, if anything, should be taken from this? There are certainly plenty of innocent explanations, such as MLB realizing there were many talented and Latino players out there and paying more attention to them; or Latinos now having a stronger interest in basesball than other groups. I'm not sure there is really much reason for concern based solely on these baseball statistics, though. If the decline in black participation were seen across all sports, I might be worried. But that doesn't seem to be the case.

Fred Thompson: Worth a Look

I had never really seen what the fuss was about Fred Thompson, but now Greg Mankiw points out this great defense of federalism by Thompson. It definitely inspires me to look at him more closely. But will federalism really sell with the masses? I'd like to think so, but I'm not confident.