Law: March 2008 Archives

Suppose I have $1,000.

Alice decides she wants some of my money. She asks me for $400. I don't want to give it away, so I refuse. Angry, Alice points a gun at me and demands that I give her the $400--or else. Rather than be shot, I give her the $400.

Alice has taken what was mine by threatening to harm me. This is wrongful, and we usually call it "robbery."

Suppose, I have $1,000. Alice and Bob want my money. They both point guns at me and ask me to give them the $400. Rather than be hurt, I give them the money. Still robbery.

Suppose Alice, Bob, and a gang of other people want my money. They demand I give up my money or else they'll hurt me. Still robbery? Certainly. If it's wrong for one person to rob me, and it's wrong for two people to rob me--a gang of people robbing me is still wrongful. Can you buy that?

Now pretend that Alice and the gang decide that Bob really needs my $400--or at least that Bob needs it more than I do. So, the group declares that Bob should have my money. And they threaten to hurt me if I don't cough up the cash. By agreeing amongst themselves to take my money and proclaiming their reasons for doing so, does this make the robbery less wrongful? Maybe Bob wants some crack, or needs to pay bills, or wants to pave his driveway...

If robbery is wrongful, can a group of people, by mutual agreement, rightfully do something that is otherwise wrongful?

Mull it over, as you prepare your tax returns.

"A well regulated militia being necessary to the security of a free State, the right of the People to keep and bear arms shall not be infringed."

This morning, the Supreme Court heard oral arguments in D.C. v. Heller.

It's highly academic--and completely unnecessary.

RTFC.

So you've noticed the headlines too? About the recession, I mean. Wonderful.

Just thought I'd lend some depressing thoughts. The nominal rate of growth right now (r_n)--at least for 2007--was something like 2.2%. The rate of inflation (r_i was a whopping 4.1%. Please check your closet for Alan Greenspan; I'd be crying if I were him.

By the book--and I hate the book--the Fisher equation says that the real rate of return, (r_r) is given by:

r_r = r_n - r_i

Easy peasy. Apply the above data, and the real rate of return for 2007 was -1.9%. Ouch!

But here's why I'm writing this. Whenever some economic downturn comes along--as they do--magazines and articles written by witchdoctor economists scribble off book-formulas like above. Gotta roll them bones. And I start seeing things like the Fisher equation invoked in everyday reading, only to be relied upon to support some completely irrelevant assertion:

"The pantheon of economic equations, derived by people with names more famous than my own, ordains that the actual economy shall behave according to the predictions of incredibly simplified algebraic equations."

Bleh. The Fisher equation shows up in the macroeconomic realm. But if this rate identity holds true, how do microeconomic agents see the world? In the microeconomic world, these equations almost never adjust for taxes. (Even in a recession, Uncle Sam takes his share--and does quiet well.) Looking at the equation from the microeconomic point of view--and assuming r_r is the best nominal rate of return you can get--I would off-the-cuff rewrite the Fisher equation as:

r_r = (r_t)(r_n) - r_i, where r_t is your tax rate^*

Pretend your tax rate is 28.5%--as it is for many Americans. This brings your real rate of return down to a paltry -2.53%. Guess my point is, in REAL-real terms it's worse than you think. People know they get taxed. Right?

Suppose you invest $10,000 at the above nominal rate. The nominal profit from that $10,000 is about $220. After taxes, your nominal profit would be about $157. Adjusting for inflation, your real profit is $151. But wait--there's more! Your original $10,000 is now worth about $9,600 because of inflation.

That's right: the investment's value actually dropped considerably. But you'll have more physical dollars (or, at least on paper somewhere). And according to our tax laws, you have will have the exquisite privilege of paying taxes! Because the IRS doesn't let you account for "inflation tax" when calculating gain. (Not that it necessarily should...)

Sucks.

Ever played Monopoly? The rules affect the outcome of the participants playing the game. The economy is no different. If inflation is at a 30-year high, pumping $200 billion dollars into the economy is... well... what the hell? If anything, the Fed should be doing the exact opposite. Things that the U.S. should fix if it really cared about the economy: (1) Federal Reserve system, (2) Internal Revenue Code.

Hope maybe my rambling wasn't too incoherent. Happy St. Patty's day. Drink a beer: the economy is depending on it.

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*In reality, the tax rate changes as a function of gain received. Since this is an illustrative analysis about rates, wave a magic wand over the marginal tax rate and call it a constant.

Nick and I car-pooled to Baltimore for the bar examination. He posted some comments on the exam. Since I was quoted, I feel like I have some license to explain my previous comments a bit further:

Nick said it's a miserable experience. And that's true. This morning I was thinking about which requirement I would rather fulfill if it meant the grant of a law license: (1) re-take the bar exam, or (2) or receive a full rectal examination from a less-than-reputable Honduran doctor coming off of a 3-meth binge all during a magnitude-7 earthquake wherein said doctor is also covered in gasoline and set on fire. And maybe he's trying to fend off ninjas too. Perhaps said ninjas are also on fire? Whatever--it's a tough choice.

Bar associations like to say the exams are a test of minimal competence. I disagree; I've met a few sub-competent attorneys in my time. Not that wanting a state's attorneys to be minimally competent is a bad thing. But the justification for this has always been to protect the public. I just don't think the exams further that in any way.

Nick mentioned that the MPT wasn't what he expected. I didn't think this was too bad--but this was only because the last project in my advanced writing class was almost exactly
like the specific MPT question we were given. So I head some bearing. Luck of the draw--I expected the MPT to be a lot worse. And of course, even how I felt doesn't mean anything. The gradings seems pretty arbitrary--"arbitrary" is the general theme that pervades the bar exam.

And if the MPT tests how fast you can commit malpractice in 90 minutes. The MBE tests whether you can commit malpractice 200 times in 6 hours. The MBE writers have convinced themselves--by telling other people over and over--that each question they write has only one correct answer. I call bullshit on that, as every test administration has a few questions that the examiners toss out because, after the fact, two or more choices are sufficient answers. Sure, you can test the existence of legal principles, facts, procedures, etc. But when you start asking examinees to weigh subjective facts as being more determinative than another--that's a recipe for disaster. In addition, I find the MBE writers are incredibly lazy, as they don't consistely use "and" and "or," "most" and "least", and double negatives (e.g., "Which choice is not the best answer?"). Not that I hate MBE questions--I usually do really well. I'm just admitting that, yes, the process is pointless.

How would I make the process "better"? --That's a topic for a different day...

An interesting dilemma presented itself today:

Tasked with responding to an appellate case, I went about doing research on a particular point of law. Research ended--not with the result I would have preferred--citing back to the original case being appealed.

A lesser fool would give up. . .

Oh no, my friends. For I am a much, much greater fool.

I wanted to write a quick summary when I got back from Baltimore on Thursday evening. But, by that point, the bar exam was the last thing I really wanted to think about.

Foremost, thanks to everyone who put up with my crap for the past few months.

In summary, I didn't think the exam was that bad. Given the circumstances and all. I mean, in retrospect, I'm really not sure what the point of the exam is since it sure as hell does not measure your knowledge or ability to apply the law. Unfortunately, as the statistics go, 1 out of every 3 law school graduates does not pass the bar. Will I be among them? Who knows. Since the Bar doesn't actually tell you how they grade your answers, I have more faith in the output of a random number generator.

The exam was broken down into two parts: 11 essays (400 pts), and 200 multiple choice (200 points). You need 405 points to pass. I was worried about the essays the most because they're weighted more and could cover a few topics I never had classes in (family law, ick). I thought the MC would be the easier part--since I've done well-over 2,000 of these problems. When it came down to it, my expectations were completely reversed.

I thought the essays were very easy. Not what I expected at all. The 11th essay question, the MPT, and carries the twice the weight of a normal essay question. I don't like MPTs (mostly because they're time-consuming), but I thought the question was a breeze. It was essentially commenting on how an exculpatory agreement should be redrafted. Probably 50% of my law classes involved drafting and writing legal documents. Cakewalk.

HOWEVER, the Bar grades essays "holistically" on a scale of 1 to 6. "Holistically" in this case--from what I hear--means "depending on the mood the attorney--who is probably behind schedule on real work as it is--happens to be in while grading your exam." Awesome, eh?

I thought the multiple choice would be easy. After all, I've done a ton of them both in law school and during bar prep. It was completely not what I expected. At all. The fact patterns were very long and convoluted. I've whined before about the exam writers writing without specificity--but the morning session was crazy. During the break for lunch, I think the general consensus was that the questions seemed more difficult than normal. I blame it on poor exam writing. Once I could figure out what the heck the question was even TRYING to ask, the correct answer choice was easier to find. But again, the fact patterns were very long and contained a LOT of unnecessary information. The questions in the afternoon session weren't as bad, but there were still a few off-the-wall questions. Seems to be what people are reporting all around the internet. So let's hope the curve is nice.

They say the bar exam is a test of minimal competency. If you know the material, you should be able to pass easily. I guess then, I hope that I adequately demonstrated that I'm as minimally competent as possible.