Basic Economics For Lawyers…
It’s the free market, Instapundit. Countries don’t pay lawyers or engineers, but their constituent elements do. And as they need them, and they put their money on the line to purchase their services. Lawyers must be getting paid what they are getting paid because thatÃ¯¿½s what the market values their services at, and the same with engineers.
In a word, wrong. The problem here is percisely what Glenn Reynolds noted today, “the market for lawyers not that free”. Coleman completely and totally skirts the issue of the ABA and the fact that to practice law one needs to pass the bar exam. No bar exam, one cannot practice law. That in effect restricts entry into the market and reduces supply and pushes up the prices. Ron responded with this,
Oh, pshaw, Glenn! Maybe the market for law professors isn’t free, but the market for lawyers?
Sorry, it is still wrong. There is less competition in the market for lawyers than there would be without the bar exam requirement. One could try to make the argument that the bar exam ensures that those who do practice law know what they are doing. I find this suspicious in that lawyers are not periodically retested to assure potential clients that a lawyer has stayed abreast of the latest events in his area of speciality. And even if the argument is true it does not negate the fact that the bar exam reduces competition which grants each practicing lawyer a certen amount of market power.
The bottom line is that things like licensing requirements and so forth restrict entry, make a market less “free” and raise prices. There is the possibility that such things will raise the welfare of the consumer, but that is either secondary or non-existent. Basically, it is a type of rent seeking. And rent seeking can be characterized as obtaining un-earned economic benefits via manipulation of the economic environment than by trade. And ironically, I bet if we looked, we’d find lawyers behind most instances of rent seeking.