When I was about twelve years old, I told my father that it was amazing that people actually got paid for playing the flute (my main activity at the time).
“Why?” he said.
“Because she’s amazed that someone could get paid for doing something she likes so much,” my mom said.
“No,” I said, “it’s because I’m amazed that someone could get paid for doing something so useless.”
My understanding of economics has improved a little since then, and I now think people get paid for playing the flute because there is a demand for people who play the flute. But I also know that the idea of a market for people who play the flute is complicated by the fact that many of the places that pay people for playing the flute are nonprofits, supported by donations.
I’m intrigued, then, by two related topics that recur on and off blogs (most recently yesterday, in the Chicago Tribune and on the ELS blog): (1) are judges underpaid and (2) are law professors overpaid? And I’m intrigued by the recurrence of two sorts of arguments (both of which can be seen in either the comments or main posts of the last set of links):
The Intrinsic Value Argument: Law professors are overpaid because they don’t do any work; they write useless articles; they’re not good teachers; and so forth. In other words, law professors are overpaid because what they do has little intrinsic value. (This argument shows up a lot in the comments to blog posts; for some reason it does not show up a lot in law prof blog posts themselves.)
The Comparative Pay Argument: Judges are underpaid because they don’t make as much as a first-year associate at a big law firm, or as much as a law professor. This argument seems to be that judges are important, or do something of value, or have a lot of experience, so they should make more than someone who is not important/valuable/experienced. This is a variant of the Intrinsic Value Argument.
Neither of these arguments is a market argument. A market argument might say, for example, that judges are underpaid because we do not have a sufficient supply of (good) judges. But some very smart people have suggested that there is no shortage of extremely qualified people willing to be judges (notwithstanding Justice Kennedy’s claim, which is rather insulting to sitting judges, that it is an “economic fact” that he is “losing his best judges” and “not getting the highly qualified judges that [he] want[s] in the other end coming to entry”). I’m always willing to entertain a nonmarket argument, but when it comes to something like compensation, I need some justification to do so. For example, it’s kind of hard for me to imagine that all salaries could effectively be set by someone (who? me, I hope) determining the intrinsic value of the activity for which the person was being compensated. So, here is my wish list. I would like one or more of the following:
(1) A definition of overpaid and underpaid. (I would kind of like this anyway, even for the market argument.)
(2) An explanation of why markets for law professors or judges fail and, if they do fail, why lowering law professor salaries or raising judge salaries would represent a correction to this market failure. (This might build off the fact that law professors are paid by nonprofits, and judges are paid by the government.)
(3) A non-market justification of the intrinsic value/comparative pay argument. (If you choose this, please explain either why the intrinsic value/comparative pay argument should apply in general, that is, to compensation for all jobs, or else explain why it should apply to law professors and judges and not to other jobs.)