Friday, August 29, 2003

Legal Tulips

Many years ago Holland experienced the famous or infamous Tulip Bubble: tulips suddenly became popular and individual tulips commanded the equivalent of thousands of dollars. So the story goes.

More recently -- in the 1990s -- the stock of dot coms whose only apparent assets were their internet addresses achieved market valuations of billions of dollars.

Now it is the legal world's turn. Not too long ago federal judges, law school administrators, and some other people decided that both students and judges were spending too much of their time each year either applying for or evaluating applications for judicial clerkships. So it was agreed that at certain times of the year there should be a moratorium: applications for clerkships with judges should not be sent, received, or considered at certain times of the year.

A moratorium of this sort is about to run out shortly; a present moratorium expires on September 2.

Guess what. The line is forming. Thousands of applicants and law school placement offices are waiting to mail their applications on September 2.

Not by using the U.S. Postal Service, mind you. No: nothing less than Federal Express will do. And same day delivery.

Some applicants and placement offices are not content with even that. Some applicants, it is said, are planning (with the encouragement of law school placement offices) to hand deliver their applications bright and early on the morning of Tuesday, September 2, 2003.

It doesn't stop there: applicants are also being urged, it is said (by the most reputable {if not sensible} sources) to try to arrange for personal interviews on September 2; viz., to be interviewed by the judges of their choice on September 2.

This just goes to prove that if almost everyone wants something, that something must be worth something? Else why would almost everyone want it?

Question: What is a judicial clerkship worth?

Would you sell your soul for one?

The frenzy is enough to drive me back into the arms of a medieval just price theory: some things, just intrinsically, are not worth a damned lot. (How would you like to spend two years in the law library of some "prestigious" appellate court -- after spending three or so years in the library of some "prestigious" law school? Exciting, eh?)

Well, there's some profit in all of this, yes there is: whether we like it or not, we will all learn something again about the emerging science of ...? Chaos theory? Complexity? But fractal theory? No, that doesn't sound right. It's ... oh, you know ... maybe it's that froth theory stuff, bubbles (literally) and all that. Or? ... Wait a minute, I have to do some internet research.

Pause. ... Time passes .... Diddle, diddle. ...

Hi. I'm back. Here it is (the explanation, the model):

irrational exuberance!

At more length:
Economic reality is rife with nonlinearity, discontinuity, and a variety of phenomena that are not so easily predicted or understood. At the same time the broad coherence of economic systems is more impressive than ever in the face of such phenomena. The order of the economy appears to emerge from the complex interactions that constitute the evolutionary process of the economy.

These phenomena have come to be labeled as complexity in economics. Even what seems simple in economics generally arises from behavior not reflecting rational expectations; we live in a world that reflects the enormous variety and diversity of humanity in their knowledge, attitudes, and behaviors, interacting with each other in an enormous range of institutional frameworks. What emerges in the aggregate may have little to do with what happens at the individual level. But this aggregate cannot be simply described by some set of aggregate equations. It emerges out of the soup of the individual and particular with all its multiform interactions and peculiarities.

J. Barkley Rosser, Jr. & Edward Elgar, eds., "Introduction: The Emergence of Complexity in Economics," Complexity in Economics, (2003), Complexity in Economics.

Or perhaps direct analogies to stock market crashes will help explain the judicial clerkship madness? See, e.g., Didier Sornette, Why Stock Markets Crash: Critical Events in Complex Financial Systems (January, 2003).

Coming soon?: "Hey! Clerkships for sale!"

Good Lord.