Via Kay, at Balloon-Juice, I see this:
When I was reporting out my New Yorker piece, I spoke with Akhil Reid Amar, a leading constitutional scholar at Yale, who thinks that a 5-4 party-line vote against the [Affordable Care Act’s] mandate would be shattering to the court’s reputation for being above politics. “I’ve only mispredicted one big Supreme Court decision in the last 20 years,” he told me. “That was Bush v. Gore. And I was able to internalize that by saying they only had a few minutes to think about it and they leapt to the wrong conclusion. If they decide this by 5-4, then, yes, it’s disheartening to me, because my life was a fraud. Here I was, in my silly little office, thinking law mattered, and it really didn’t. What mattered was politics, money, party, and party loyalty.”
Uhhmmm . . . yeah. It’s sad that Professor Amar is having to go through this, but it is only what I went through years ago. If you devote yourself to a profession like the law for any reason other than money, then you are a fool and a naif and real people should kick you in the ribs and laugh at you.
Mark Twain once wrote something like, “Any man who is a master of his profession is contemptuous of it.” I used to think that what Twain meant is simply that people who are masters of a particular job later find it so easy that it is not challenging. But now I think he meant something more profound and darkly cynical: that there is no nobility to be found in anything that pays well, that every profession modern society claims to revere is, at heart, a massive scam. That what we really respect is the guy who can steal as much money as possible from the less savvy, the less savvy who exist only to be despised by all right-thinking people. I think Twain was saying that anybody who really understands their job also necessarily understands that their profession turns them into thieves and crooks and liars.
I was a finance major when I was an undergraduate. This was back in the 1980’s, and I believed in the idea of financial markets. I believed especially in Ben Graham’s idea of value investing: find a company whose shares are trading at below their bankruptcy value, and buy it. Let me explain that . . . .
If a company has $1.5 million in assets, and $0.5 million in debt, then it is has a net worth of $1 million. That is the measure of its equity. If its equity has been divided into 1 million shares, then each share has a value of $1. So if those shares are trading at, say, 50 cents, then they are massively undervalued; for 50 cents you can purchase something that is worth a dollar. Even if the company were to be broken up the very next day and sold for scrap, you’ve doubled your money.
This makes sense.
Of course, situations like the one I’ve just described are not found very often. What I’ve described is the equivalent of finding a 15th century Spanish doubloon whilst walking on the beach. By and large, equity markets are very efficient and so you don’t really see a lot of unclaimed doubloons. If you want to go hunting for them, you have to invest a lot of time. How efficient is that? Well, that depends on the amount of time you have to invest, the value of your time spent doing other things, and – most importantly – the amount of capital you have at your disposal.
Let’s suppose you have $10 million to invest. Let’s further suppose you will need to spend 5 years of your life painstakingly hunting through financial data, company books, and balance sheets before you find that 2-for-1 financial doubloon. At the end of five years, you will have doubled your money. That’s a $10 million payoff – the equivalent of earning $2 million for each year you sat around on your ass hunting through financial documents. Not bad!
But let’s say you have only $100,000 of your own money to invest. Now you’ve spent 5 years making $100,000 -- $20,000 per year. $20,000 isn’t anything to sniff at, but it’s still not really a great salary.
But let’s say you – like most people – don’t have $100,000 to play with. It’s more realistic to imagine you’ve got $10,000 to invest. If you spent five years of your life looking for a chance to double that money, then you’ve earned $10,000 over those five years -- $2,000 a year. That is a truly shitty salary.
Which is why most people cannot spend all of their time looking for investment opportunities – they just don’t have the capital to make that expenditure of time worthwhile. Instead, they turn their money over to “professionals,” whom they trust to have the time to look into this kind of stuff and make better decisions for them. They figure that by pooling their monies with other small investors, there will be enough capital to invest that makes it worthwhile to do the hard, data-tilling spadework that is necessary for successful investing.
Or at least that is what I thought when I was graduating from Chapel Hill in 1990. I was one of those guys who didn’t shy away from numbers and math, and I had done very well as a finance major. One of my professors told me he had contacts on Wall Street, and that he was sure he could get me a job with Salomon Brothers (if this is before your time, just know that it was eventually gobbled up by the CitiGroup leviathan). I had gotten tired of living hand-to-mouth, of never having the money to ask a girl for a date, and decided this seemed like a good idea. But my parents wanted a professional in the family and they bribed me to go to law school, about which more later.
But I understood financial markets, or, at least, how they are supposed to work, and so I paid attention to the financial news over the years. What I saw astonished me: an endless series of asset bubbles being inflated, for no discernible reason other than that these inflations could line the pockets of the financial geeks
(like me!) who supposedly were doing the tiresome spadework for which we rewarded them with our savings.
Back in the 90’s, during the dot.com speculative bubble, I must’ve gotten 3 or 4 cold calls a day in my office from some investment firm trying to get my money. And why not? I was a young and therefore supposedly still naive professional making a good salary – exactly the kind of guy ripe for plucking.
My favorite of these conversations went something like this:
INVESTMENTDIPSHIT: Mr. Wells, I’m calling about investing your money in the stock market. Have you seen what the Nasdaq is up to?
INVESTMENT DIPSHIT: Well, this is an opportunity to take advantage of that. I represent an investment outfit that specializes in “technical analysis.” Do you know what that is?
INVESTMENT DIPSHIT: You do?
ME: Yeah. It’s the opposite of value investing. It’s numerology, basically. You guys look at the last 6 months or 5 years or whatever of a stock’s movement to find patterns, and then you bet on the patterns. But humans can find patterns in anything; that’s why we have Rorschach tests. Finding a pattern doesn’t necessarily mean there is one. What you do is about as worthwhile as attempting to discern the future from sheep entrails, but you call it “technical” to make it seem special. It’s not. It’s make believe.
INVESTMENT DIPSHIT: . . . . . . .
ME: . . . . . . .
INVESTMENT DIPSHIT: So . . . you’re not interested, then?
ME: No. Thanks for calling.
That was really an astonishing time. During the dot.com/Nasdaq bubble, I was involved in an 8-week state court trial. I remember my partner checking his beeper at least once every hour to get a feel for how “the market” was doing. I remember thinking that there was no way anything of significance could have happened in the 60 minutes since he last checked his beeper, and then realizing that this is how the new market works: by feeding on immediacy. People are being conditioned to crave constant stimulus – which is the opposite of what investing is supposed to be about. Banking is supposed to be a stolid, solemn, risk-averse business. But we’ve turned it into a casino and nobody seems to care.
I guess just because serious, stolid, risk-averse investing is boring. Why not lose all your money? It’s exciting!
Like I said, my parents bribed me to go to law school. I was 22 years old, and they bought me a convertible and told me they would give me more spending money if only I enrolled in law school immediately and didn’t bother going to work for a living on Wall Street.
(Which, really, is kind of ridiculous. I get the feeling that what my parents want more than anything is for me to be rich, and calling me off of Wall Street back in 1990 is only about the worst piece of advice possible if the goal is to simply make a lot of money. I suspect that my parents were victims of a 1950s mindset – already being eliminated, as fallout from the Reagan Revolution kept destroying the New Deal policies that made Middle-Class America possible – that insisted only “professionals” had real job security.)
I got the car, but I don’t recall seeing a lot of additional spending money. But that was okay, because I tested through the roof on the LSATs, and William and Mary not only gave me a scholarship but also a 2-hour a week job that kicked a good bit of money my way. My parents might not have been sending me checks, but the school was.
The thing is . . . I really liked the law. William and Mary insists on its first-year law students showing up a week before classes begin (we called it, disparagingly, “law camp”), and we were forced to sit through an interminable series of lectures on “what law school is about.” One of the underlying subtexts to each of these lectures was: A lot of people go to law school because they don’t know what else to do with themselves, and they hate it. If this is you, don’t stick around. If you don’t want to be here, just go.
“Holy crap!” I thought, “they’re talking about me.”
But then the first week of classes started and I realized that – at its best – the law is about trading ground on different policy points. Safety, or freedom? Don’t let the liberals/conservatives mislead you (by the way, I am a huge liberal) that really is a choice. Not one or the other, but deciding where to draw the line. This is the nutcutting that is the heart of any really good debate. (One of my uncles is a conservative. He and I talk politics constantly and have a really good time doing so; he and I disagree on only about 2% of the things we discuss, but that 2% is why I am a liberal and he is a conservative. The 2% is important, even crucial, but the 98% we can agree on is important too.)
I absolutely soaked law school up. Man, did I like that stuff! I liked the policy arguments, I liked the reasoning implicit in making any good argument, and – surprise, surprise! – it turned out that I liked being on stage making those arguments. I am a ham, and I absolutely loved having a jury or a judge’s sole attention while I won them over. I believed in the law, the same way I once believed in finance.
If there is anything that bugs me about my law school career, it is a memory I have of being home for Christmas vacation and talking with my dad as we drove somewhere one night. He listened to me talk for a while about how much I liked law school, and then asked “Do they teach you, in law school, that the judge is more important than the law?”
“Uhmmm . . . . no. They teach us the law. They teach us that the system is what’s important. That even if you get a crazy judge, there is always the appellate process to put that right.”
“Huh. See, that’s not been my experience.” And then he went on a long diatribe about how the system had screwed him over back when it came to his ex-wife. (He’s my step-dad.)
“Well,” I said, in my naivete, “that’s gotta be an outlier. The system doesn’t really work that way.”
I’ve thought about that conversation for years. It seemed odd to me that a person so adamant that I go to law school as opposed to – I dunno – getting a job and earning some money, would even then have been so cynical about the profession. Did my parents push me into this for . . . . the title? If they thought the law was a ruse to begin with, why insist that I do the job? This is one of the reasons I suspect they were more interested in me being rich than in me being happy.
It also bugs me to no end of description that it turns out my dad was right.
Let me tell you about the case that forced me to confront the fact the law is mostly a scam designed to help the already powerful stay powerful. As Professor Amar, quoted above, indicates, Bush v. Gore was a giant tell. Bush v. Gore opened with a statement to the effect that “nothing here in is supposed to be considered precedent. We are only deciding this because we want to decide it, but you can’t hold us accountable for anything we say later on.”
Wow. Just . . . wow.
But I already had lost my faith in the law, because of an employment issue just a few years before.
About 10 years ago, when I was still working as a partner at my old firm down in Miami, I was approached by a couple of Miami-Dade police sergeants. They wanted to know if they had a case against the county for unpaid overtime. You see, the county classified them as “management,” which meant they were not subject to overtime protection; they were “exempt” employees. And yet, the county still would dock them one or two days’ unpaid leave for various disciplinary reasons. They asked me to look into the legality of all this.
I did, and I was psyched! At the beginning, this looked like a huge ka-ching! case for an enterprising young lawyer. Y’see, here is how it works . . . .
(1) Supervisory personnel who are paid a salary are not required to be paid overtime. The reasoning is that – if you are being paid a salary – then you are being paid for doing a job and not for doing the hours. If you can do your job in 10 hours, then you still get paid a weekly salary; you are not an hourly employee. Of course, that means if you need 50 hours to do your job, you don’t get overtime. You are not being paid by the hour.
(2) However, some unscrupulous employers will try to classify everybody as “salaried,” in order to work them to death and not pay out any overtime at all.
(3) So, a couple of rules were put in place to prevent that kind of stuff. One of the most important of these rules is the “less than one week without pay ” rule. If an employer suspends an employee for less than a week – say, 1 or 2 days – and does not pay the employee for that time, then the employer obviously considers the employee to be an hourly worker, and not a salaried worker. The employer obviously believes that it is not paying the employee to do a job, but instead to show up for work. There is a difference.
So when the Miami-Dade police sergeants told me that they had been working 60 and 70 hours without overtime, but were still subject to being suspended less than a week without pay, I realized that they had a very good case. Miami-Dade clearly did not consider these guys “salaried” employees, but were only claiming them that way in order to avoid paying overtime.
Let me repeat that: they didn’t want to pay overtime to the cops who are responsible for keeping us safe.
But it gets even better. In researching this stuff, I went back to the Federal Register. The Federal Register is how the federal government allows people to discuss and argue against proposed federal regulations. Although you would never know it from watching Fox News, the federal government does not “shove regulations down your throat.” When a new rule is being considered, it is first proposed on the federal register and anybody – anybody – has 90 days to complain about it, suggest changes to it, or support it.
When overtime regulations for cops and firefighters were first proposed the Miami-Dade government argued against them. The county argued that restricting its ability to selectively dock pay from its “paramilitary” force would hamstring its ability to enforce discipline. Now, you may agree or disagree with this reasoning, but the point is that this argument was raised and it was rejected. So not only was Miami-Dade breaking employment law with respect to its own cops, but it knew it was breaking the law and doing so anyway.
This kind of blatant disregard for workers’ rights triggers a second provision under the Fair Labor Standards Acts, and awards the plaintiffs three times their actual damages. It is intended to be a warning to unscrupulous employers: do not mess with your workers. Ka-Ching!
But . . . it went downhill from there.
As I dug further into the law surrounding this case, I came to a horrible ruling. Back in the early 90’s – when I was still working for the federal court – another judge had been presented with precisely this situation. That lawsuit didn’t involve cops, but it did involve state “managerial” employees who had been denied overtime pay. A group of six sued the City of Sunrise (it is within the federal Southern District of Florida, as is the City of Miami) for lost overtime wages. Their total claim – for all six plaintiffs – was for about $80,000.
The city hired lawyers and defended against the suit for a year and a half. Eventually, the federal judge (I knew that guy) was about to rule against the city. So the city then took advantage of what is called the “safe harbor” provision of the Fair Labor Standards Act.
The safe harbor provision was intended as a good idea. Remember how I mentioned that employers that intentionally violate the FLSA get hit for three times the damages? Well, the safe harbor provision allows employers who honestly made a mistake to avoid that penalty. Essentially, it was intended to be used by employers who didn’t realize they were screwing their employees over, cottoned to their mistakes, and paid the money back. “Sorry, didn’t quite know what I was doing,” seems to have been the theory.
But not for the City of Sunrise. Right before losing its case, the City turned around and paid the plaintiffs all the money they had been asking for. The City then asked the judge to rule in its favor on the non-payment of overtime because the plaintiffs had been rendered whole. The judge granted the motion, and that should have disposed of the case. The plaintiffs got what they were entitled to, the City learned a powerful (and expensive) lesson, and everybody walked away the better for it.
Except, not really. No, what really happened was that after the City won summary judgment against the plaintiffs – essentially for conceding the entirety of the plaintiffs’ case against it – the City sued for its attorney fees. You see, under the Fair Labor Standards Act, whoever technically “wins” the lawsuit is entitled to collect its fees. Since the City of Sunrise “won” by conceding it had to pay the plaintiffs $80,000, that meant the plaintiffs were on the hook for the City’s more than $150,000 in attorneys’ fees.
Now, this doesn’t make a lick of sense unless you were around in the Southern District of Florida back in the early 90’s, and you remember the fiscal crunch every single municipality was facing back then. Hell! I think the State of Florida even took over Miami for a while. Back in the early 90’s, the idea that the City of Sunrise would be bankrupted for – I dunno – stealing from its employees, was unthinkable. So a judge found a convenient way to prevent that from happening.
Of course, that “judicial reasoning” stayed on the books, and is now law. I had to tell my cops that I couldn’t represent them and that it wasn’t in their best interests for me to represent them.
“Understand how this is going to work,” I explained. “Say each of you is owed $40,000 case. All the City has to do is run up $200,000 in legal fees (which won’t be hard), pay you the $40,000 it owes, and then you will each be on the hook to the City for $50,000 in legal fees. More then the city owes you. You guys have a case, but you can’t bring it. It literally will cost you more money than it is worth, and I guarantee you that the city knows it. That’s why it can screw you. Sorry.”
Yeah. A “noble” profession.
I am forty-three years old, and these days I bathe people, help them eat, and help them clean up for themselves when they cannot clean up on their own. It is a job that nobody pays me even close to what I was making as a lawyer, and nowhere near what I read about assholes on Wall Street making.
Yesterday, my lab partner in Microbiology broke out the old chestnut about how “If you aren’t a conservative before you are 30 you have no heart, and ifp you aren’t a conservative after 30 you have no brain,” and I told him that I had heard that one before, but it is working the opposite for me. I started, I believe, as a huge, hard-core conservative, but as I get older I am turning increasingly liberal.
And I think a large part of that is my growing realization that most of what we are asked to do in Real Life is to scam other people. When I hear “conservative” what I hear is “grow up and scam people like we do. Don’t be a naif.” Despite the fact the banksters ruined our economy, they are still on my TeeVee and we still apparently are supposed to think they have something to say worth listening to. And don’t even get me started on the explanations I’ve had to recite to explain to people about how I used to be a lawyer and now I’m working the hospital hallways trying to help others.
(Seriously . . . the next time someone asks me about that I’m going to point out that if you are – like me – more than 40 years old and you still think that “making money” is the entire point of your existence then you are a small-souled individual.)
I am working at a hospital. I work nights on the weekends. A large part of what I do is very basic stuff – I bathe people, I wipe people who cannot attend to themselves, I feed people who cannot handle spoons.
The weird thing? The job I do now is undoubtedly more important than any of the jobs I used to do, and yet it pays far, far less. My suspicion is that it pays far less because there is no wiggle-room for the graft that is what humans truly admire. If I were still a stock trader or a lawyer, people would pay me more because they would think that I must be up to something.
But I just tend to patients, and there is no graft there. There is a reward, but there is no profit.