Exactly, it sounds to me that the causation may very well run the other direction, if at all.
Low economic growth implies low interest rates, high indebtedness, high asset prices and extended asset duration[1]. Therefore it is so much more important to look at your contracts carefully, because they matter so much more.
If you don't see it then imagine what a true 0% (or around -1%, to account for risk premium) riskfree interest rate across the entire duration means. It means, for example, that it theoretically makes sense to level entire mountains just to create more farmland or to build slightly faster highways because it will pay back over hundreds of years. Imagine negotiating such deals!
[1] this is not just my opinion, but also the opinion of 2012 Jerome Powell; you can find it in FOMC transcripts from before he became the chairman of the Fed.
>it theoretically makes sense to level entire mountains just to create more farmland or to build slightly faster highways because it will pay back over hundreds of years
Is that not what we are doing, in the US and elsewhere? Creating massive debt, the proceeds from which are plowed into real estate development via cheap loans, infrastructure stimulus bills, etc.
Absolutely, though of course it's not even close to leveling mountains yet.
It's much worse in some places than in the US. For example the Swiss 50 year bond is currently priced at -0.36%, and this is "high" given recent yields history. Switzerland is already buying nearly every financial asset it can with printed money, including US stocks, but the credit markets don't give a damn. Swiss mortgages have theoretically infinite duration (you never pay it back by design). Austria has some extremely low yielding 100 year bonds despite not having existed yet for 100 years (in the current form). The deflation is just too strong.
Correlation might not prove causation (is anything in economics proveable?) but it does strongly suggest a relationship. It doesn’t take fanciful thinking to theorize a relationship here. It might be that both greater numbers of lawyers and lower economic activity are caused by something else (like more regulation), or that lower economic activity creates more lawyers.
Fine, but you could just as easily flip the arrow or come up with a common cause to come up with a plausible narrative. In areas with low economic growth, lawyers are a high status, high earning potential field, and so why not go into that field? Maybe areas with autocratic leadership see both more complex laws and lower economic growth, leading to a necessity for more lawyers overall.
Observational studies like this are not sufficient to answer these sorts of questions even if you can use them to come up with cute, cheeky headlines.
But what do lawyers actually create that would be part of any economic growth. It seems to me that they are just toll takers for access to justice and bureaucracy.
I am well aware that correlations can be spurious, but they can also be related. I’ve noted a very strong correlation between my use of a hammer and the number of nails in my wall...
Low economic growth implies low interest rates, high indebtedness, high asset prices and extended asset duration[1]. Therefore it is so much more important to look at your contracts carefully, because they matter so much more.
If you don't see it then imagine what a true 0% (or around -1%, to account for risk premium) riskfree interest rate across the entire duration means. It means, for example, that it theoretically makes sense to level entire mountains just to create more farmland or to build slightly faster highways because it will pay back over hundreds of years. Imagine negotiating such deals!
[1] this is not just my opinion, but also the opinion of 2012 Jerome Powell; you can find it in FOMC transcripts from before he became the chairman of the Fed.