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Legal Eagles

Legal secretaries are finding it tougher to get jobs

And right on the heels of my last post, I come across this Wall Street Journal article on legal secretaries, a profession that has long offered a decent middle class income to women (and a few men) with high school diplomas or associates degrees. Suddenly, that seems to be shrinking:

Steve Bryant is still hunting for permanent work more than four years after he was laid off from his legal secretary job at the New York office of Latham & Watkins LLP, which slashed more than 250 staffers at the height of the recession.

Mr. Bryant has tried to burnish his résumé, obtaining a college degree and a paralegal certificate from Hunter College in New York. Despite roughly 20 job interviews, and a slew of job applications, he has landed only lower-paying work as a temp. He and his wife were leaning on credit cards until her work as an architect picked up in recent years.

"She's keeping us afloat. Thank God for that," said Mr. Bryant, 58 years old.

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Educational Inequality

Some college degrees are more equal than others

My first (and alas, last) cover story for Newsweek was on whether there's a college bubble.  I got a lot of pushback from college professors, as you might imagine.  Now Peter Orszag is asking essentially the same question:  "why are so many college graduates driving taxis?"

Tyler Cowen suggests the answer is not that the value of the degree is falling, per se, but rather that the variance of the returns to education is rising.  

Quick tutorial for those of you who didn't major in finance:  the expected value of an investment that returns exactly $100 every year is the same as that of an investment which has a 50% chance of delivering $50 in any given year, and a 50% chance of delivering $150.  But the second has much more variance than the first.

In terms of college education, what that means is that some people get very high returns, while others get low or negative returns.  Looking at the mean or even the median can thus be misleading.  If Bill Gates had walked into my office back when I was a tech consultant, both the mean and the median would have gone up, but that wouldn't necessarily have made it a good idea to go into technology in the summer of 1999.  

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Announcement

A sad farewell

This week will be my last with the Daily Beast.  I'll be blogging here today, and there's one more feature to run, but after that, well, that's all she wrote . . . at least for Newsweek and the Daily Beast.

It's been an amazing year with some fantastic editors and a lot of great stories to cover, but this summer, I'll be moving on to Bloomberg View, where I'll be blogging about . . . economics, business and public policy, with a little bit of cooking thrown in.  I'm excited to join the great team over at Bloomberg, but obviously very sad to be leaving this one.  I've worked with some amazing people, from our fearless leader Tina Brown, to magazine editors Tunku Varadarajan and Justine Rosenthal, and my own editors Damon Linker and Sarah Blustain.  Then of course there are my amazing colleagues like Eli Lake, Mike Tomasky, David Frum, Michael Moynihan, Daniel Gross and so many others that I can't fit them all in one post.  

I've also had the honor of one of the last Newsweek cover stories, and written some pieces I couldn't have done anywhere else, like our 5,000 word feature on the problems with later marriage.  I'm so grateful to Tina Brown and the rest of the team at Newsweek for giving me the opportunity, to my editors who made my pieces better and better, and all the people I've learned so much from.  And to all of you guys, who make this blog possible, and enjoyable.

In the interim you can find me at my personal website, meganmcardle.com.   I'll be blogging there while doing the final edits on my book, The Up Side of Down (forthcoming from Viking in February!  Makes a wonderful gift!  A fabulous doorstop!  Excellent for checking erosion in gullies!) Then in mid-July, I'll be starting at Bloomberg.  I hope to see you there.  

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Some Things Are Beyond Punishment

Punishing parents whose kids have gun accidents will not promote gun safety

Justin Peters, who runs Slate's crime blog, has been on a crusade against people who leave guns where kids can find them.  I am all for promoting gun safety, but Peters takes it a bit farther: he wants family members punished if their kids get their hands on a gun and shoot someone.  Even he, however, is taken aback at the news that Louisiana is preparing to try a woman for murder because her child found a gun and shot herself.  

I’m glad Smith is being held accountable for her daughter’s death. Parents who allow guns into their homes need to bear responsibility for what their children do with those guns. While initial reports made it seem like the gun belonged to Smith, it now appears that the gun may have belonged to a family friend who was temporarily storing it at Smith’s house. Either way, it doesn’t matter. Smith allowed the gun into her house. She’s responsible for what happened with it.

But “bearing responsibility” doesn’t mean “lock her up and throw away the key.”

Here I must disagree.  I don't see that any purpose is served by punishing this woman.  She has already had the worst possible thing happen to her.  In what sense can the government "hold her accountable" in any way that is not dwarfed by her own conscience, and memory?

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What Are We Going to Do About Carbon?

Despite the president's big speech, the answer remains "not much"

At 1:30 today, the president will make a big speech outlining his plans for carbon control.  It involves using the EPA's regulatory power to slap emissions controls on power plants, and minor additional subsidies for renewables, and speeding up permitting for clean energy projects. Conservatives are predictably huffing about lost jobs, while liberals are blaming Congressional Republicans for not signing onto a bolder but more economically efficient plan, such as a carbon trading scheme.  My take is somewhat more laconic: this just doesn't matter much.  It's a way for Obama to please environmentalists in his base, and maybe get a footnote in the history books for doing something about global warming.  But the odds that this initiative will noticeably slow global warming are pretty slim.

My basic take on global warming is that on the science, liberals are the realists, while the right has spent too long in denial.  (Yes, I'm familiar with the skeptics' arguments, and I agree that folks like Michael Mann and Peter Gleick have behaved very badly, but let's be honest: most Republican politicians are not having arcane debates about modeling assumptions, decisions under uncertainty, and the philosophy of science.  They are ignoring a fairly compelling body of science because they don't want to even talk about doing something.)

But on the policy side, the conservatives are the realists and the liberals generally let wishful thinking drive their pronouncements.  Kyoto goals were met, but mostly thanks to three factors we probably can't repeat: the exhaustion of Britain's coal deposits,  the collapse of the Soviet Union and the shuttering of Eastern Europe's vilely inefficient industrial base, and the 2008 financial crisis. (Just in case you're tempted to argue "But without Kyoto, they would have risen!" let me point out that the United States, which didn't sign Kyoto, is also enjoying carbon emissions below their 1997 level)  

Since 2005, when Europe's carbon trading scheme launched, I have been hearing that the program has just now gotten over its initial launch difficulties, and is now on the verge of really doing something serious about carbon.  Apparently, we're still verging.  Meanwhile, thanks to emerging markets, especially India and China, global emissions are rising at a brisk clip.  Periodically, the Chinese government makes noises about controlling emissions, and breathless articles are written treating these noises as if they were statements of fact, proving that the Chinese government is far ahead of the United States on environmental issues (even as they build hundreds of new coal plants!)  Upon closer examination, these statements turn out to be vague noises, not hard promises.  Or it turns out that the Chinese are keen on controlling the particulate pollution that is choking their cities (I do think they're serious about this, but serious as in "they're going to install stack scrubbers" not "they're going to stop burning coal".)  

Neither the costs nor the benefits are entirely obvious

Like half the other journalists in Washington, I was pinned to Scotusblog this morning, waiting to see what the Court would say about affirmative action.  it turns out the answer was . . . not much.  They remanded the case back to the lower court, saying that affirmative action programs have to pass strict scrutiny, and neither the University of Texas nor the court had really tried applying strict scrutiny.  

I was all set to write a big post talking about What This Means for America, but there's little meaning to be had out of this remand.  So let me talk instead about what affirmative action means for America, and the Americans who live there.  

There's a certain irony in the fact that white students usually bring these affirmative action lawsuits (and that defenses of affirmative action are often framed in terms of white privilege).  The evidence seems to show that if completely race-neutral admissions policies were adopted at colleges and universities, the admissions rates for blacks and hispanic would fall dramatically . . . but the admissions rates for whites wouldn't change much.   The primary beneficiaries would be Asian students, who would fill nearly four out of five of the extra admissions slots.  

One of the oddest facts about college admissions is that everyone seems to be aware that colleges have imposed restrictive admissions quotas to keep Asians underrepresented in their student bodies, akin to the "Jewish quotas" which used to exist at Ivy League schools until the 1950s.  But no one seems particularly bothered about systemic, institutionalized racial discrimination against a large group of Americans.  I'm not even aware of any concerted effort by Asian community groups to shame universities into stopping this.  

Interviews are a remarkably bad way to predict job performance. Why are we still doing them?

You're no good as an interviewer.  

No, wait, don't protest.  All those interviews you do for new employees are terrible at predicting subsequent job performance.  It's a scientific fact.  And no, I'm not picking on you.  Job interviews are just not very useful.  An interview is a very good way to figure out whether someone is agreeable, charming, and knows the correct answer to stupid questions like "What is your greatest weakness?"  ("I work too hard".  "It's taken a long time for me to learn to delegate rather than just kicking it up to 110 hours a week."  "It's hard for me to tell people 'no'.")  It doesn't tell you whether they are actually hard working, or honest, or supportive of their team members when things go wrong.  A job interview may help you weed out the very worst candidates--I still remember the chap who interviewed for my old tech firm, and brought out a big, soggy meatball hero which he started chomping as he talked, because he said he hadn't had time for lunch.  But other than that, they don't do much good.  I say you're no good as an interview because no one is very good at sorting the wheat from the chaff.

Which is why I was amused to see this interview on Google's hiring practices making the rounds.  Yup, it turns out that Google isn't any better at doing interviews than anyone else:  

Years ago, we did a study to determine whether anyone at Google is particularly good at hiring. We looked at tens of thousands of interviews, and everyone who had done the interviews and what they scored the candidate, and how that person ultimately performed in their job. We found zero relationship. It’s a complete random mess, except for one guy who was highly predictive because he only interviewed people for a very specialized area, where he happened to be the world’s leading expert.

Companies don't publish all their results. How can we get more information into the public domain?

It's always been a bit of a puzzle to me that the government has pharmaceutical companies conduct clinical trials for new drugs.  Oh, it's not really that puzzling--clinical trials are very expensive, and having the companies do it keeps the cost of the trials off the government's books.  But this seems like false economy.  No matter how ethical the pharmaceutical companies are--and I, for one, do not think that they are comic book supervillians eagerly poisoning their customers--the incentives are skewed.  Pharmaceutical companies have a strong personal interest in not finding out that their drugs don't work, or don't work as well as competitors.  That's not their fault; it's just the hard fact of human nature.

One of the biggest complaints that critics have is that companies have an incentive to selectively publish data.  Say you commission a head-to-head trial of your drug against an older generic.  If the trial shows that your drug does better, smashing--publish away!  And if your drug doesn't do so well?  Just file that study away in a locked filing cabinet stuck in a disused lavatory with a sign on the door reading "beware of the leopard".  

A group of researchers is attempting to tackle this problem head one.  Here's their plan:  

Endorsed by both the BMJ and PLOS Medicine, the Restoring Invisible and Abandoned Trials (RIAT) initiative is the brainchild of Peter Doshi, a postdoc in comparative-effective research at Johns Hopkins University (JHU), who wanted to do something about the fact that only half of all clinical trials are published. Doshi and his colleagues have already gathered 178,000 pages of previously confidential trial data on several drugs that came into the public domain thanks to legal battles or the policies of the European Medicines Agency, which has been releasing trial data in response to requests since 2010.

Labor markets aren't adjusting to the disappearance of certain kinds of work

Last Friday, I wrote a piece about When Work Disappears.  On twitter, by email, and in the comments, I got pushback.  Wasn't I committing the Lump of Labor Fallacy, assuming that the jobs that were disappearing meant permanent unemployment?

No, but I can see why people were worried.  Let me explain.  

For starters, let me define the Lump of Labor Fallacy for those who don't fill their spare hours by reading classical economics texts. Or rather, let me let The Economist define it for you.  From their excellent Economics A to Z, also available on the web:

One of the best-known fallacies in ECONOMICS is the notion that there is a fixed amount of work to be done - a lump of LABOUR - which can be shared out in different ways to create fewer or more jobs. For instance, suppose that everybody worked 10% fewer hours. FIRMS would need to hire more workers. Hey presto, UNEMPLOYMENT would shrink.

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When Work Disappears

What do we do with people whose livelihoods are destroyed?

Paul Krugman has a column today on a topic you don't normally get much of from economists:  sympathy for the Luddites.  Back in 2001, when I sat in on my last formal economics class, this was about as daring a proposition as "Sympathy for the Devil" was as an album title.  

A dozen years on, I don't think it's quite so edgy.  I'd guess that Paul Krugman of 2000 would probably have given short shrift to the idea that we should listen to Luddite complaints.  So would Megan McArdle of 2000.  Both the later versions, much to my surprise, seem to have changed their minds.  

What's happened in the intervening ten years?  Some of my more dour readers suggest it's the fact that I've moved to Washington.  But I moved to Washington from Manhattan, hardly a bastion of free market sentiment.  And besides, I haven't stopped thinking that markets are the best way to handle voluntary cooperation.  

But I have started worrying about what's taking place at the bottom of the economy.  In much of the industrial world, it seems to be increasingly difficult for people to earn a decent living without a fairly elite set of skills--or an elite set of credentials that mimic skills, like a BA in English Literature from an Ivy League institution. The ability to earn a decent living, either yourself or as part of a family, is one of the basic criteria for a decent life.  (And yes, before you ask: I think trust funds can be just as toxic as lifetime welfare benefits.)

Kaiser Permanente's bids look expensive compared to competitors. Why so high?

Kaiser Permanente is one of the places that always gets cited as a model by health care reformers.  It's the biggest insurer in California, using a model that ended up being the basis for the HMO revolution.  Kaiser owns its own hospitals, pays its doctors a salary, and provides the "continuum of care" that everyone says they want from our fragmented health care system--and does it at a reasonable price.  So it's a bit surprising to see the LA Times report that this model citizen submitted some of the highest bids for California's health care exchanges.  

What's going on here?  There are two rival explanations.  The first is that the other companies on California's exchanges responded to pricing pressure from the state by slashing access to their networks.  Blue Shield, for example, submitted a plan to Covered California which offers access to only 36% of their physician network.  Kaiser can't do this so easily, because they don't have a group of primary care physicians, a group of gastroenterologists, and so forth, from which they can choose the cheapest bidders for their exchange plan.  Kaiser's system is a densely woven web; you can either have access to all of it, or none of it.  And giving folks access to all of it costs money.  

The other explanation is that Kaiser is doing a fine bit of cherry picking.  Poverty is associated with poor health.  And if you're one of the highest priced plans on the exchanges, you're not very likely to pick up a lot of poor customers.  

These theories aren't mutually exclusive, of course; Kaiser executives may have fretted about the problems of splitting up their network, and then stopped trying when they realized that all this would do would add a lot of very expensive and hard to treat new customers to their rolls.  

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It’s in the Genes

The Supreme Court rules that you can’t hold a patent on natural DNA. What now?

This morning the Supreme Court handed down a big ruling in the biotech world: companies can patent synthetic DNA, but they cannot patent genes that they've identified from natural human chromosomes. This has big implications for how biotech research will fare in the future.  

The case centers around Myriad, which has patents on BRCA1 and BRCA2, genes that are linked to a very high risk of breast cancer. This has been in the news a great deal recently because of Angelina Jolie’s decision to have a double mastectomy after testing revealed that she carried the BRCA1 variant. Myriad’s patents make this testing more expensive than it would be if the information were in the public domain.

As a matter of law, the Supreme Court justices seem to me to have gotten it right. You can’t patent the law of gravity, no matter how long it took you to puzzle out the math. Identifying patterns in human genes seems very similar to identifying natural laws, which can’t be patented. Myriad's argument—that its patent was on the copies of human DNA that it made in order to test them—is rather thin.

The economics, however, are trickier.  

Not all threats are equal, and numbers aren't the only important difference.

My friend Conor Friedersdorf had a typically thoughtful essay last week in which he argued that we are giving up too much liberty to fight terrorism.  Terrorism is a tiny threat compared to many more ordinary causes of death:  

Of course we should dedicate significant resources and effort to stopping terrorism. But consider some hard facts. In 2001, the year when America suffered an unprecedented terrorist attack -- by far the biggest in its history -- roughly 3,000 people died from terrorism in the U.S. Let’s put that in context. That same year in the United States: 71,372 died of diabetes. 29,573 were killed by guns. 13,290 were killed in drunk driving accidents

I am broadly in agreement with Conor that we are giving up far too much liberty to fight terrorism, with the NSA's incredibly broad data-collection programs being only the latest example.  To add insult to injury, much of what we're doing isn't very effective--Americans are still taking off their shoes in every airport line because of a failed attempt to use shoe bombs ten years ago.  X-raying and partially undressing its citizens millions and millions of times a year in order to foil a plot that was foiled not by the TSA, but by passengers who wondered why this guy was trying to set his shoes on fire, is beneath the dignity of a great nation.

Jeffrey Goldberg, however, pushes back on the common libertarian tactic of comparing terrorism deaths to ordinary risks, and arguing from there that we basically shouldn't try to do much about terrorism:

Demographic Decline

Will the Young People Go Home Again?

Europe's periphery is losing its best young workers. What happens if they don't come back?

Young workers are fleeing Europe's periphery for the richer countries in the center.  A lot of analysts are worried about what this means for European welfare states, but Karl Smith tells them no to worry; eventually, those young people will be back:  

I am not that worried – at least about the fundamentals. The danger I see is that “deficit hawks” will use the exodus of young workers to push painful but unnecessary benefit cuts. In the short run this is likely to cause some ugly accounting but in the long run chances are better than fair that the young people will be back. Though it may be difficult to envision now, this is setting up a situation where wages and profits will be especially attractive in the periphery in the years to come.

There are a couple of ways to get to this result but I think the following will be the easiest for most folks to swallow. Lots of old Spaniards are going to mean a relatively high demand for things old Spaniards like to buy, like Spanish doctors. This increases the demand for doctors and raises their wages. That, in turn, increases the demand for things that well-to-do Spanish doctors like to buy, like fancy restaurant meals. That increases the demand for Spanish chefs, waiters, busboys etc. The process reverberates through the whole economy, making Spain an especially attractive place to live and work.

I love counterintuitive economics, but I am unconvinced.  And the reason I am unconvinced is that we can actually observe what this looks like right here in the United States, where labor mobility is high, and as a result, you have fairly substantial segments of the country which basically consist of old people, poor people, and a thin middle class of government workers sandwiched between them.  They look like my mother's hometown, Newark, New York.  

501(c)(5) applications have spiked even higher than the groups the IRS was targeting.

We've heard that the targeting of conservative groups by the IRS was necessary because there was a big spike in applications from conservative groups.  I've explained why I think this is a lousy excuse.  Among other reasons, if you  you look at the Inspector General's report, you'll see that applications for new 501(c)(4) groups didn't really start to rise until 2011, long after the targeting started. But looking over the IG's report, I just saw something else interesting:  the number of 501(c)(5) organizations, which is the IRS code designation for labor groups, really exploded in 2012.  The number of new applications nearly doubled from its 2009 level.  

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I can think of no good explanation for this.  Yes, 501(c)(5) groups, like 501(c)(4)s, got a lot more freedom to engage in political activity after the Supreme Court's free speech decision in Citizens United.  But why found a labor group rather than a 501(c)(4)?  The requirements are more onerous, and post Citizens, the advantages are not great.  I mean, yes, you can take payroll deductions, but only if you actually manage to organize a company.  And organizing drives are not exactly going gangbusters these days.

This could signify a lot of things: a renewed drive by labor, or some wrinkle in the tax code that I'm not aware of.  Any way you look at it, though, an interesting tidbit to chew on. And of course, one would like to know if any BOLOs were issued for new labor groups.

About the Author

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Megan McArdle

Megan McArdle is a special correspondent for Newsweek and The Daily Beast covering business, economics, and public policy. A former senior editor at The Atlantic and writer for The Economist, Megan has a diverse work history including three small startups and a disaster recovery firm at Ground Zero.

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