I want to make a controversial statement. Lawyers are killing the North American economy.

A few things up front. First, my wife is a lawyer, my sister is a lawyer, my brother-in-law is a lawyer, my best friend is a lawyer, heck I used to be a lawyer. Second, I will be making a number of ad hominem arguments. There is no way to go deep on all of the points I wish to put forward. Third, my comments are general. There are lawyers who create value. There are also smokers who live to 100. Most are good people. Most mean well. Most are good parents and friends.

I would describe lawyers, as many have, as parasites. I mean it in the literal sense however. Other parasites include bankers, accountants, pr firms and vc firms. Not all parasites are bad. Just like in nature, some of them are extremely valuable members of the ecosystem. But they are parasites. They do not create things. They create structures that allow them to extract value from things. Unfortunately, when too many parasites try and live off of the same host eventually the host becomes unhealthy and both the host and the parasites suffer. Think here of the economy as the host.

Before I turn to some examples, let me give my theory of causality. For a number of systemic and societal reasons the North American educational system has produced a huge number of lawyers. This is true both in absolute numbers and in relative numbers. Relative to other countries and relative to other professions. Lawyers also tend to be smarter than average. Humans are generally Darwinian in that they are amazingly adept at survival. Thus, we have had an oversupply of smart, Darwinian parasites. Nature takes its course. They create systems that benefit themselves to the detriment of the economy generally. They are good at it. Almost without exception they do it in a way that maximizes both the size of the pie they can eat as well as the number of individuals impacted. This ensures that very, very few individuals feel the impact beyond that of a few crumbs while the parasites enjoy all-they-can eat desserts. Even better, they control the making of the societal rules just in case.

Am I suggesting a grand conspiracy amongst all lawyers? Of course not. This is the "Invisible Hand" at its finest. Each individual parasite is motivated to engage in exactly the behavior that will allow the system to work to all the parasites greatest advantage.

Now for some examples. These are in random order as they all tend to be equally offensive. I also note there is a germ of good policy in each of these categories. It is just the current implementation that sucks (just in case anyone thought this was a plea for anarchy).

Intellectual property. IP as a concept was originally intended to keep ideas in the public domain while creating enough incentive to allow creators a fair return for their creativity. Over time it has come to take on a completely different character. Software and business process patents are a massive threat to innovation. Copyright now exists to support cartels that are effectively at war with their customers.

Personal injury litigation and contingency fees. Originally intended to allow individuals to take on big corporations. Now an industry in and of itself with numerous examples that Lewis Carroll could not have made up. The defendants are almost exclusively insurers who serve as perfect conduits for spreading the pain across society broadly. Personal injury lawyers are now some of the richest individuals in the United States.

Class actions. See personal injury litigation, except add that, as opposed to personal injury, the plaintiffs rarely see any of the payoff. The parasites certainly do.

Securities litigation. Has now created a huge base cost around being a public company. This raises the level necessary for companies to have access to public capital. At a time when the economy is more and more moving to smaller and smaller business units, access to capital structurally favors larger and larger units. This is an economic distortion that will be expensive going forward.

Tax law. There is a whole world of subsidies and exemptions that favors the large and the wealthy. The more Byzantine the system, the greater the tithe that goes to lawyers. My recent favorite is Income Trusts in Canada. These are creatures of statute that essentially allow slow/no-growth businesses to use a trust structure to avoid taxation at any level. They have essentially shifted massive amounts of (somewhat dear) capital in the Canadian economy away from a normal growth distribution and towards low/no-growth businesses. There will be HUGE scandals in the next 24 months (IMHO) that will, on a relative basis, be larger than the S&L scandals in the US. The cost of waste from the scandals will pale in comparison to the damage done to the Canadian economy by the redistribution of capital away from growth.

Politics. Of lawyers, by lawyers and, too often, for lawyers. Most politicians are lawyers. The whole campaign finance system is a classic regulatory regime that lawyers are best at traversing. Most importantly, they share a headspace with lawyers. They understand well the world view of a parasite. They tend to move back and forth between politics and practicing law thus ensuring a strong Darwinian support for the complex systems they jointly create.

I could give another half-dozen examples, but won't bore you (further).

Coming back to the Darwinian thing, lawyers, since they are smart, and generally well-meaning (generally) they do an absolutely amazing job of rationalizing each and every one of the above areas. There is a germ of truth in all of their defenses. They are trained to make their arguments well. They are motivated to do so as they do not want to see the negative in what they do. They are much more motivated than you or I are on the other side of these arguments. My personal experience has been that the longer they do it, the more invested in the defenses they become. Completely human. Completely understandable.

To me the contrast is engineers. engineers are trained to create things. To build things. To make something where nothing was before. Lawyers are trained to find problems where none existed before ie to create systems that support more lawyers (Darwin, propagation of the species and all).

I really want my children to be engineers not lawyers.

In China IP laws are nearly non-existent. Ideas are free and are shared by need (although not necessarily political ideas!). The rate of innovate-copy-rinse-repeat is extremely high. The society produces engineers at massive rates.

In North America IP laws are extremely stringent. Ideas are owned and sharing tends to get you sued or jailed. The rate of innovate-copy-rinse-repeat is relatively low. The society produces lawyers at massive rates.

Who would you bet on for the next ten years?