I Can't Believe Flight White Never Made it Big

Growing up in the DC area, it didn't took take long to figure out that my area was a hotbed of athletic talent.  By "my area", I mean roughly the 50-mile radius of DC that covers northern Virginia and Maryland up to Baltimore and its suburbs.  Outsiders usually don't realize how much talent there is in this corridor.  They look at our sorry pro sports teams and our decent but unspectacular college ones and think that the area isn't anything special. I won't write a long monologue with stories from when I was a kid, but I can say that watching guys growing up, you figure out how to distinguish pretty well the guys that you know will be NBA stars by the time they're 16 (Kevin Durant, Carmelo Anthony and, I thought, Mike Beasley), guys who will definitely make the league (Keith Bogans, Tywon Lawson and Joe Forte), and guys who might struggle to make it even though they dominated high school (anyone remember the Jewish Jordan, Tamir Goodman?).

But there is one guy I saw in high school who I'm still shocked didn't make it in a big way.  Not in the "He should have made the league but didn't" sense, but in the "I thought he'd be an NBA star" sense.  

That guy is Flight White.  James "Flight" White played his high school ball at Newport "School".  The "school" is in quotation marks because it was really a basketball team with a few classes attached.  Newport moved from building to building, and no one ever knew anyone who went there who wasn't on the basketball team.  And a SUPER good basketball player at that.  One of the best to come through Newport was Flight.  By the time, he was 15, Flight was a local legend.  I used to get my parents to drive me out to every corner of the county to see Flight play.  If that sounds nuts, it won't be in a second.  See, Flight was the best athlete I've ever seen.  Not had seen to then, but still have ever seen.  Better than Dwight Howard.  Better than Blake Griffin.  Better than Jordan in his prime.  Don't believe me? Check this out.

Yeah, that's Flight dunking from the foul line.  And, unlike Jordan's dunk from the foul line, Flight looks like he could do the same thing from three.  And he was doing the same things in high school.  But things kind of went off the rails for Flight after high school.  He went to Florida, didn't get too much run his first year, then transferred to Cincinnati, but never quite reached his potential.  He was drafted in the second round, bounced around the league for a bit, and I think plays in Europe now.  He should still be under 30 years old now, so he's probably still playing somewhere, but I'm shocked that he wasn't at least a very good NBA starter for a long time.

P-Diddy Ruined Music

In the history of music, very few people have managed to do real lasting damage.  Boy bands in the 90's were awful, but they also shriveled up and disappeared as quickly as they appeared.  Whatever talented members they had (Justin Timberlake) went into acting/making club bangers with Timbaland, and the rest shriveled up and went away.  They still made some awful crap, like this insult to music:

But, luckily, no one listened to it, and they disappeared.  Probably to make cameos on Entourage for people to laugh at.  Ringtone rappers come in waves, and they do their best to suck, but they really only impact rap.  I don't like Hurricane Chris and Chingy any more than any other rap fans, but it's hard to say that they're destroying music.

P-Diddy.  Or Diddy.  Or Puffy.  Or whatever he calls himself these days has had probably the most effective campaign to destroy all music. First, there's rap.  Now, P-Diddy isn't a very talented rapper, but he's not the worst there is.  He blows, say, Gucci out of the water.  His flow is mediocre, and his lyrics are cliche, but that just makes him a dime a dozen, not exceptionally bad.  Either way, it wasn't rap that made him famous.  He first became a big name when he established Bad Boy Records in 1993.  That's when he became famous as "The guy who stands behind Biggie in his videos chuckling and dropping 'uh-huh' and 'yeah'" in at pretty inopportune moments.  And at that point, no one really minded him anyway.  Sure, he was kind of a clown, and everyone made fun of him the same way they made fun of Jermaine Dupri for being the guy who's hanging on to every aspiring pre-teen rapper in the game.  See: Example below.

But then, in 1997, Biggie was gunned down, and P-Diddy had no clue what to do.  His cash cow was dead.  But Biggie was arguably the best rapper of his generation, and without a doubt one of the greatest of all time.  So finding another Biggie just wasn't very likely.  So P-Diddy decided the right move was... to try his hand at rap himself.  That's where he ran into a problem.  As I might have pointed out, he wasn't much of a rapper.  And, unlike Dr. Dre, whose unspectacular (though still MILES better than Diddy's) ability as an MC was overshadowed by his legendary beats and production ability, P-Diddy couldn't make beats either.  So that's when he decided to take a nuclear bomb to rap and start ripping off classic songs.  And making them not just worse, but awful.  And he didn't just do it once and disappear, the way ringtone rappers do now.  He did it over and over and over.

It started out tolerable, because he'd take old tracks from Biggie and throw them onto the track.  Also Frank Reynolds made an appearance in the Victory video.  And the video was pretty sick, so I could give him a free pass for stealing his beat from "Going the Distance" from Rocky.

But that was just the beginning.  Pretty soon he'd managed to turn Grandmaster Flash's The Message (a social commentary on gangs and a rap classic) into a  piece of steaming garbage about nothing, in which he and his buddy Mase (whose claims to fame were 1) sounding EXACTLY like P-Diddy on the track, and 2) quitting his job as P-Diddy's voice double to try to become a church minister.  Which he also quit.) made a video in which they hung out in a padded white room for awhile.

But that was just the beginning.  Other victims included I Did it for Love by Love Unlimited.  Which P-Diddy turned into It's All About the Benjamins.  Which Wikipedia describes as being about "living rich and the importance of having money."

Then there was I'll Be Missing You.  Where he took Sting and the Police's song about... stalking and turned it into... a posthumous tribute to the guy he stalked.  Then he did his best to destroy classic rock by convincing Jimmy Page's coked-out corpse to appear on Come With Me and play the guitar riff from Led Zeppelin's Kashmir.  Now, Kashmir as a song doesn't really make much sense, probably because Page and Robert Plant probably wrote it after doing a mountain of coke and then huffing all the glue at the Home Depot.  But it sure as hell was NOT about Godzilla.  But, surprise, the Godzilla soundtrack is exactly where the Zeppelin classic showed up.

And that was pretty much the last straw.  After a 3-year run of destruction, P-Diddy kind of disappeared.  Yeah, he and his soul patch still made appearances with Jennifer Lopez at award shows, and in that absurd billboard over Times Square, but he stopped trying to make music.  Unfortunately, now, every time I watch Rocky, every time I hear Sting come on, and whenever I listen to Zeppelin, I think about P-Diddy and I get angry.

Thank you, P-Diddy, for ruining music.  I hope your next album doesn't sell a single copy.

Don't believe the hype

Anything coming out of a "think tank" that has a very obvious partisan affiliation should be taken with a grain of salt.  It's not a guarantee that the numbers will be twisted, but if something looks wrong... it's probably wrong.  Brad DeLong from Berkeley points out a perfect example of this.  The Heritage Foundation put out a "report" which claimed that jobs mysteriously stopped appearing after the passage of the Affordable Care Act (health care reform).  And the nice graph they put up looks pretty impressive, too.  It shoots pretty far up, and then settles into a flat pattern.  Aha!, Heritage says, this proves that ACA destroyed job growth  Well, not quite.  Take a look at DeLong's link, and you see what the actual job numbers were.  It looks... more or less like a parabola.  Steep on the end, bottoms out, then rises a little bit.  But the rise kind of dies and starts looking more like a constantly sloping line than a parabola.

So what does the Heritage graph measure? Well, it shows the SECOND DERIVATIVE of an employment graph.  In other words, if jobs are being shed, but they're being shed more slowly than they were the month before, then the second derivative is positive.  On the other hand, if jobs are being added, but more slowly than they were before, the second derivative is negative.  ACA passed about 2 months after employment bottomed out.  It spent about two months adding jobs, then kept adding jobs after ACA, but at a constant rather than accelerating pace.  What does this mean? Well, to me, it looks a lot like this.  Fall of 2008 was the panic phase of the financial crisis.  No one was sure if we'd have an economy-- Lehman collapsed in September, and Citi, Merrill Lynch, AIG, Morgan Stanley, and even Goldman Sachs were all in danger of collapsing at some point in those two months.  By the time the graph starts (at the beginning of 2009), all of those institutions had been acquired, bailed out, or turned into bank holding companies by the Fed.  But jobs typically follow output gaps; that is, the economy didn't instantly lose every job in the recession as soon as Lehman collapsed; unemployment didn't go from 5% to 11% overnight.  Instead, it was a gradual process.  Eventually, once the Fed and Treasury had stopped the bleeding, some jobs were regained.  But, given the size of the gap the crisis left, and the debt overhang that workers and businesses now had (from their frenzied borrowing in the first 8 years of the decade), recovery was never going to be quick, vigorous and rapid.

So, what the data says is essentially this: Before ACA passed, unemployment was getting worse, but it was getting worse more slowly than it had been earlier.  After ACA passed, unemployment was getting better, but it was getting better more slowly than it had been getting worse before ACA.  Heritage wants you to believe that this should be taken as a sign that ACA killed job growth.  Looks unbelievably stupid to me.  And should to anyone whose mind isn't made up before looking at the data.

The lesson here is: If something comes out of Heritage, look at the data very closely.  It's not automatically complete BS.  But the chances are about 99% that it's complete BS. 

Is Financialization a Problem?

John B. Judis has a piece in The New Republic in which he argues that the position taken by people like MIT professor and former IMF chief economist Simon Johnson and former McKinsey consultant James Kwak about Wall Street's prominent role in the US's economic problems is misguided.  I think Judis is right in much of what he says, but it's about half irrelevant and half straw man.  His strange argument seems to suggest that those who place a major part of the blame for the economic meltdown at Wall Street's feet ignore a multitude of other problems.

I think you can boil his claim down to a cause-and-effect chain: Judis thinks that the growth of Wall Street came about as a consequence of the collapse of the Bretton Woods system 30 years ago.  With a system of floating exchange rates, the argument went, arbitrage opportunities were created (as price movements could be exploited by astute market participants such as the big banks), and financial institutions were needed more and more to help companies manage risk (for instance, by allowing companies to purchase futures to lock in prices, and developing currency swaps that protected exporters from fluctuations in currency values).  So big banks stepped up to design complex transactions for companies, and big banks' trading desks grew, as did hedge funds that could make money by exploiting market inefficiencies and profiting off of them. 

Now, I obviously don't think, like the populist left and populist right do, that evil hedge fund speculators and vampire squid banks are doing something incredibly destructive.  But I'm also not of the opinion that they're necessarily doing something incredibly productive.  I think my argument is that Judis's cause and effect chain is mistaken.  The collapse of the Bretton Woods system didn't inevitably lead to the outgrowth of big finance-- the erosion of the post-World War II regulations in the banking sector, of which the collapse of the Bretton Woods system was one, but far from the most significant, drew in smart people enamored with the big money to be made on Wall Street and created a distorted economy that needs to be fixed.

I guess the first thing to point out is that since World War II, finance has become increasingly deregulated.  The collapse of Bretton Woods was probably a necessary development, but it was far from the only one, and far from the most signficant one for this story.  There was the elimination of fixed trading commissions in 1975, the deregulation of the Savings & Loan industry (followed by an inevitable blowup) in the 80's, and the formal repeal of the part of 1933's Glass-Steagall Act separating deposit-taking banks from securities firms.  Each of those developments created profit opportunities for financial companies.  The sector grew rapidly until, as Judis points out, it more than doubled in size from the 1950's, to over 20% of GDP by 2009.

This is where some might pause and say, "So what? If finance makes money, why shouldn't it grow? Why do we care about the size of finance?" Well, I think the answer there is that finance is, ultimately, not just a service industry, but a utility.  It's absolutely necessary for the economy, but it can't function on its own, and it can certainly get too big.  Think of it this way.  Producing things like food, clothes, cars, and TVs (things we like and use), and providing services like cutting hair and curing the sick, would be extremely inefficient, if not impossible, without a good power company to provide electricity to where it's needed.  Now imagine that the power company is a fifth of the size of the economy, and its employees are the best-paid people in town.  Instead of leaving school wanting to produce cabinets, advance science, or start a new business, everyone wants to work for the power company, since that's where the money is.  And sure, there are innovations along the way-- power is provided more efficiently, companies can get lights that turn on automatically when they walk into the room, and so forth.  But the question then becomes, is that an economy that we want?

For me, the answer is no, because at the end of the day, without places to allocate the power, the power company is effectively useless.  And, while you can innovate all you want, there's only so much utility we get as a society from having a whole lot of innovation in how you can deliver power-- at the end of the day, energy is energy is energy.  And finance is a pretty good analogy: you can innovate all you want, but money is money is money.  In essence, all finance does (even if you believe that it performs all of these functions to the best of their ability, which I don't) is allocate capital to its most "efficient" uses (I put "efficient" in quotation marks because for the better part of the last decade, financial institutions decided that allocating capital to mortgages for high school dropouts and empty office towers was super-efficient).  It takes savings (in the form of deposits, mutual funds, pension funds, and hedge fund accounts) and places them into supposedly higher-yielding investments, with the result being that everyone gets paid if the investment posts a good return, while much of the risk of loss is absorbed by the financial institution.  As a utility, it is effectively useless if there aren't clients which require their services.  In other words, Goldman Sachs can't exist without Procter & Gamble, General Electric, Starbucks, Wal-Mart and Microsoft.

And I think the reason we should care about the explosion of finance is that its fat paydays move talent out of the corporations that produce goods and services directly, and towards a utility.  Fifty years ago, if you were a physics Ph.D who built world-renowned models, you dreamed of going to work for NASA and working on getting to space.  If you were a bright, innovative Harvard grad, you started your own business.  Now, that physics Ph.D is getting plucked out of the lab and handed $10 million a year by Goldman or a hedge fund to design a model which allows them to leverage small discrepancies in prices into hundred-million dollar paydays.  NASA can't compete with that salary.  But, at the end of the day, all a successful convergence trade based on that physics Ph.D's model means is that the prices of the securities or commodities being traded moved to their efficient level a few minutes (or a few hours) before they otherwise would have.  If that physics Ph.D built a successful new rocket for NASA, well, we've got a great new way to make scientific progress.  So the profitability of the financial sector actually has negative utility, as the best workers are drawn away from business, engineering and science and drawn toward finance.  So what we end up with as a society is a lot of financial innovation, but less technological innovation.  You might be able to call up Morgan Stanley and hedge against a fall in the price of corn more easily now than you could 30 years ago, but the cost is that our scientific knowledge is behind where it might otherwise be, and we don't have nearly as many entrepreneurs out starting businesses because they could leave Harvard and pick up a $100,000+ paycheck as a 22-year-old at Goldman.

So how do we resolve the issue? Is the cat already out of the bag? Well, maybe.  But I think one somewhat counterintuitive idea is to re-regulate.  I'm not smart enough to come up with a comprehensive financial regulatory regime, but if you set up dull, predictable rules that can't be easily skirted, like the ones that existed from about 1945 to the early 1970's, you end up with a financial sector that might be somewhat lazy, dull, and boring, and probably pretty inefficient, but also one that doesn't outdo itself with groundbreaking new mega-profitable opportunities that not only threaten to undermine the entire system, as they did in 2008-2009, but also doens't attract people who have skills that would be better applied elsewhere.

Now, we'll never be able to go back to the 60's, and it would be foolish to try, but the growth of high finance more or less mirrors the end of the improvement in the wages of the average worker.  From the time Reagan took office in 1980, median wages stagnated.  After 2008, they sank.  The economy grew, but it grew only at the top.  Hedge fund managers and Wall Street dealmakers got mega-rich.  The average worker was left behind.  Luckily, Wall Street had an answer for that stagnation so that the average person would keep feeling richer: leverage.  Advanced innovations in risk-taking were supposed to allow families to borrow more than they could before, without adding to the total risk in the system.  Needless to say, that idea blew up in everyone's face.  But to get back to the point, hedge fund managers will continue to exist, but regulations in other places could limit the risk-taking (and, as a result, the profitability) of other financial institutions.  And this in turn would put financial salaries back in line with those given to workers in other parts of the economy.  Consequently, innovative talent moves away from designing new ways to price options and hedge interest-rate movements and toward designing the next Google, developing the next Starbucks, or inventing the housekeeping robot.

So no, finance isn't the great beast Judis claims his critics make it out to be.  But it also isn't the most productive place to lure our coutry's best and brightest innovators.

Obama Follow-Up

Right on cue, a few hours after I finished up my Obama post, former Reagan Administration official Bruce Bartlett releases this column in the Fiscal Times calling Obama the "Democrats' Nixon" and pointing out that he's actually, you know, more conservative than Nixon was, and is actually governing from the right of center.  But he must be a dangerous socialist because... well, I don't really know.

Obama's personal style

I don't really like to write about politics because, to me, it's mostly an elaborate game.  I'm more interested in policy ideas that can be broken down into models, graphs, and numbers; and I usually look at policy judgments in terms of incentives and functionality.  But Obama's presidency is an interesting case study in pure politics, just because of just how divorced the criticism of him is from the actual policies he pursues.

Ask anyone on the right, and Obama is "dangerous".  He's a "socialist" who wants to "confiscate income" from businesses and redistribute it.  That's kind of an article of faith for those on the right.  But what's really remarkable is that not a single one of them can pinpoint anything that Obama's done that points in that direction.  In fact, purely on policy grounds, Obama is a center-right politician.  Now, there are a few lines of criticism of Obama that supposedly justify the "socialism!" claim, and I'll break thsoe down.

First, the public didn't like the idea of bailouts.  Ignoring the economics for a second (and pretty much the entirety of the financial industry agrees that, absent massive stabilization, the entire economy would likely have collapsed), it's useful to point out that the overwhelming majority of the bailouts were passed under the Bush Administration.  Under duress, a very right-leaning Administration decided that it couldn't afford to have the banks collapse on its watch, and OK'd a program that exposed taxpayers to nearly $1 trillion in losses (though Treasury eventually got repaid with interest, a fact no one seems desperate to bring up).  So either the Bush Administration is the reincarnation of the Soviet Union, there's nothing functionally different about what the Obama peoeple did compared to the Bush people.

Second, the critics are angry about "runaway spending" and "super-high taxes."  Which is another absurdity.  You don't even need a model for it.  The first step is to look at taxes.  Since Obama took office, try naming a single new tax that's been enacted.  You can't because it hasn't happened.  In the depressed economy, Obama extended all of the Bush tax cuts, and threw in some more in the stimulus.  Tax receipts are over $1 trillion below where they would have been had he done absolutely nothing and let the Bush tax cuts expire right on schedule.  And taxes in 2009 and 2010 were around 14-15% of GDP. That's the lowest rate in any two-year period since 1949 and 1950.  At which time neither Medicare nor Medicaid existed.  But what about the "runaway spending"...? Well, turns out that's bunk too.  And you realize it when you think about the issue for a second.  Where are the armies of federal workers? The stimulus featured less than $100 billion a year over two years in direct governemnt purchases (the rest was tax cuts and aid to states and localities, whose tax receipts also tanked but who couldn't borrow).  That's a little over 0.5% of GDP a year, which is negligible in the grand scheme of things.  And the number of federal workers has actually been CUT since Obama entered office (a terrible idea on the economics, given, you know, the recession).

But what about the deficit? Aren't we running big deficits and running up the debt? Well, yeah.  Here's where we play "fun with fractions."  The deficit is the amount spent by the government minus the amount taken in in taxes.  The annual deficit is then divided by the size of the economy (GDP) to evaluate how relatively big it is.  Government spending went up a little bit after the economy tanked-- a tiny bit was the stimulus, and some was automatic stabilizers like unemployment insurance that kick in when the economy is depressed.  But the amount taken in in taxes collapsed.  The economy contracted and tax rates were slashed, so the 14-15% of GDP collected in taxes in 2009 and 2010 was actually even less than it appears at first glance.  So the claim that we've got massive deficits is true (while we're not at full employment), but that's (temporarily) a good thing, especially while the government can borrow at super low rates.  But the claim that massive deficits represent some kind of monster expansion of government is complete baloney.  It's like saying that, because 6/5 is a bigger number than 7/8, 6 is more than 7 (if you think of the numerator as federal spending and the denominator as GDP).

The crux of this post, though, isn't to talk about Obama's politics per se, but to talk about his style, and the contrast to that of someone like Bill Clinton.  Temperamentally, Bill Clinton was a centrist, but he was also very much an ideas person.  Clinton's starting point when dealing with an issue was to consult his experts and get a feel for what the first-best policy was.  Obama's starting point is to consult his experts, figure out what the first-best policy is, then figure out what the Republican position was, and come up with an idea that's right in between.  It's the reputation he had as an editor on the Harvard Law Review, and it's the image that he projected when he ran for President-- as someone who would bridge the divide between the left and right and introduce a "new kind of politics."  But it turns out that what works on the Harvard Law Review doesn't work in Washington.  Obama thought Republicans would see that he was willing to compromise and negotiating in good faith and work with him to bridge the partisan divide.  Instead, they laughed, moved the negotiating goalposts further to the right, and decided that Obama's "compromise" position was the new "far left" starting point.  Then they branded him an Islamic socialist for good measure. 

The conventional wisdom used to be that it was Larry Summers who pulled the President to the right on economic policy.  Now, Larry Summers is an enormously well-respected economist, and very much a centrist.  The idea had been that, in the stimulus debate, Christy Romer (who leans left) was pushing a full $1.3 trillion package, while Summers and Tim Geithner saw the stimulus as a way to avoid economic collapse, and so they didn't even let that option reach the President's desk, telling him that only $700-800 billion was needed.  But curiously, that narrative has pretty much disappeared.  Since leaving the Administration, Summers has been on message, preaching the need for investment in new infrastructure, education, and other capital investments, while noting the US's low cost of borrowing.  In other words, he's sounded a whole lot like the much more left-leaning Mark Thoma and Brad DeLong (even Paul Krugman has more or less given up pitching the idea of stimulus; I think he thinks it's politically impossible).  And transcripts from Obama's statements from around the time of passage seem to bear out that he knew full well the size of the stimulus that was needed, dropping the $1.3 trillion figure into public pronouncements.  That indicates that it wasn't Summers that was pulling Obama rightward, but Obama himself who was reducing his negotiating position from, "What's the best policy?" to "How do I make myself look like a transcendent, non-partisan figure?"

All of this isn't to say that Obama is, per se, WRONG to want to bridge that partisan divide.  He's entitled to his views, just as anyone else is.  What IS wrong is the completely inexplicable claim that this temperamentally calm compromiser is an aggressive atheist Islamic Communist who's a half-step from turning the US into the USSR.

Follow-up to the Texas Jobs Miracle

So I wrote a post recently about the supposed Texas job boom.  My argument essentially agreed with the Paul Krugman conclusion that Texas was creating more jobs than others because it had a booming labor supply (created by a lot of immigrants who had a lot of kids who drove down wages, along with a low cost of housing and living in general that attracted people without underwater mortgages from other parts of the country).

Another way to think of this, and I think possibly a more intuitive one, is to think of the US not as a single country but as more like a continent, but with a common language and no controls on the flow of labor across borders.  The continent of America has both a unified labor market (the unemployment rate for the entire area is a rough reflection of its health), and an individual labor market for each of the 50 states.  In a sense, aside from the language barriers and lack of transfer payments from a central governing authority, we could think of the US as EU-West for the purpose of this argument.  Now, labor market numbers are hard to find, but Texas generally has a reputation for cheap labor compared to other states.  Housing there is especially cheap (due in part to a lot of open land, in part to mortgage industry regulations that came out of the Savings & Loan Crisis in the 80's, and in part due to lax zoning laws compared to places like New York), and that drives down the cost of living.  Which, as I mentioned in the last post, drives down the wages that workers can demand.  But, again as I mentioned before, companies pay wages in constant-value dollars.  So a company that makes widgets and employs a lot of unskilled labor is significantly better off basing its operations in Texas than in, say, New York.  Another way to think of it is if the Euro-zone had a federal government and factories could jump from Germany to Greece to take advantage of low labor costs.  In a sense, it's a textbook case of deflation to restore competitiveness (wages fall to counter improved productivity in other places).

Now, none of this is to criticize that aspect of the Texas model.  There are certainly good arguments to be made for cheap-housing policies like loose zoning laws and regulation of the mortgage industry, and I mostly agree with both of them.  But the narrative coming from the "Texas has a job miracle" crowd is that Rick Perry's deregulation and low taxes are creating tons of jobs, and every other state should do it, too.  That part of the claim is baloney, for a simple reason.  The US, as a whole, still has over 9% unemployment.  Say California were to decide the Texas plan was the best way to fix its job issue.  People start having lots and lots of babies.  The cost of living magically deecreases as home prices collapse.  Taxes are cut and wages drop, so workers stop moving from California to Texas.  Hallelujah! Jobs for everyone! Right? Nope.  In part, one consequence of people not moving from California (and elsewhere) to Texas is that downward pressure on wages is alleviated.  That means that more jobs may be created in California, but fewer jobs will be created in Texas.  The flow of labor slows, but the total number of jobs isn't changing.  And all of this ignores higher-paying jobs and debt overhangs-- a glut of lawyers on the market won't drive law firm jobs lower because a very big chunk of those young fresh out of law school lawyers are sitting on six figures of debt.  If law firms start paying workers $60,000 a year instead of $160,000, some will gladly take the job, but the next generation of bright Ivy League grads isn't gonna see Harvard Law School as such a desirable destination anymore.

Now, here it's useful to address the counter-argument.  That Rick Perry's "pro-business" policies are creating job gains in Texas that they aren't in "liberal" states like California and New York.  I think the way to think about this is in terms of a labor market model.  Implicit to the pro-Perry camp's claim is the idea that jobs are being created that wouldn't otherwise exist.  In other words, that businesses are seeing greater demand for their product as a result of their policies, and are hiring workers.  Imagine a labor market with a downward-sloping demand curve and an upward-sloping supply curve like this one (sorry, I'm lazy and don't want the hassle of posting images, but there's nothing controversial about it-- that's how those curves look in Econ 1 and everywhere else).  The pro-Perry claim is that the demand curve for labor is shifting out, which would mean that both the quantity AND the price of labor would rise.  The supply-side explanation (that it's cheap housing, a lot of kids being born/people moving there and loose zoning laws) says that there are relatively more jobs because there's an outward shift in the supply curve.  In that case, we'd also expect to see a rise in the quantity of labor, but the price (wages) would fall.

Now, I don't have Texas wage data available to me, but I suspect that wages in Texas haven't been shooting through the roof since the recession started...