I don't think Musk is saying "as a smart person it is in your self interest to not go into finance or law", rather I interpret the statement as "as a society we incentive too many smart people to go into finance and law".
Harvard, Yale, Stanford, etc. aren't seeing a drop in the quality of applicants. I get the impression there's a very elite group that Musk would consider "smart" - and they have no issues getting into a T-14 law school.
Still don’t see your point. We need some lawyers. We don’t need millions. If the only law schools that existed were the T-14 where aggregate enrollment is like 4000 a year then that’s hardly “too many”
If all the lawyers in the world lost 10 IQ points, which were redistributed to the non-lawyers, who would lose out?
I argue that law is an adversarial profession - what matters is if you are smarter than the lawyer in the other side of the courtroom. If everyone was less good, outcomes would be much the same, and we as a society could redistribute those smart people to engineering problems where those IQ points will make the difference between inventing something useful or not.
I suppose that depends on where you live. In Canada, at least, law programs continue to have very competitive entry requirements and the market for lawyers is rather saturated meaning salaries are relatively low for post-graduate professions.
I live in the US and I've seen this anecdotally too. If you're moderately smart, didn't do much in your early career[0], and aren't technical, law school is one of the things people grasp for to level up into a real career.
[0] or took a shot at a career that didn't go anywhere, like in Hollywood or politics or any other industry built on an underclass of lied-to 21 year olds
They presumably wouldn't agree with your definition of "trapped". To reiterate the GP comment, the claim is that going into finance or law is individually rational for many smart people, but globally suboptimal at the levels we currently incentivize it.