The Law School Boom and Bust

 

 

The world has far too many lawyers already. A country teeming with deeply indebted lawyers is probably a very bad thing indeed.

Building a society on falsehoods, graduating people from high school when they should not have graduated, accepting people into college who should never have been accepted, flooding the law schools with people who have no business being lawyers, is not smart. But we’ve done these things in America and this dishonestly is starting to erode the underpinnings.

(From Mises)

If everyone could just have a college degree imagine how prosperous America would be? That’s the idea behind free community college tuition and cheap government insured student loan debt. There is no sense stopping at undergraduate, maybe we should all have a law degree?

Josh Mitchell writes in the Wall Street Journal about, “a business network called the InfiLaw System, backed by Chicago private-equity investors. Enrollment soared from several dozen at Florida Coastal in 1996 to roughly 4,000 at the three schools combined in 2012.”

Would-be future barristers paid tuition with a flood of student loan debt. “Federal student loans were central to the venture’s wild growth,” writes Mitchell. “Taxpayers could wind up on the hook for large chunks of InfiLaw student debt that never gets paid back, and the student borrowers face years of damaged credit.”

In a 2011 piece for mises.org, I viewed higher education through an Austrian Business Cycle lens. “College degrees are similar to what the Austrians call higher-order goods. It’s thought that a student will gain knowledge and seasoning in college that will make him or her more productive and a candidate for a high-paying career. The investment of time and money in knowledge pays through higher productivity and is translated into higher income. Higher education is the higher-order means to a successful career.”

Meanwhile, education entrepreneurs like Don Lively found student loan rent-seeking irresistible. His law schools were the fastest-growing in the country. However, Lively’s bubble popped.

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