The New York Times has another interesting story on News Corporation and its hacking scandal, this time reporting on a lawsuit that claims News of the World stole a scoop from two competitors by hacking a flack’s phone. Fun story.

More important: Remember when Rupert Murdoch & Co. claimed the scandal was all the fault of a rogue reporter?

Now the Times reports that evidence in a lawsuit suggests that one of the top editors may have actually done some of the hacking himself:

Evidence in Ms. Phillips’s case also suggests that Mr. Edmondson, the former news editor, had a central role in the hacking operation. The name “Ian” appears in court papers on several photocopied pages from the notebooks of Mr. Mulcaire seized by the police in August 2006.

The new documents, people familiar with the case say, support allegations that Mr. Edmondson specifically directed Mr. Mulcaire to gain access to Ms. Phillips’s phone — and may have hacked her phone himself.

— The Washington Post’s Steven Pearlstein zeroes in on an interesting idea from Tyler Cowen’s mini-book: That much of the economic growth in recent decades has been a mirage. And no, not just a financial-industry induced delusion, either.

It is no coincidence, he writes, that during the recent decades of slow growth in incomes and productivity, three of the fastest-growing sectors of the economy have been education, financial services and health care. And while government statistics show productivity in those sectors growing at the same pace as the rest of the economy, other data suggest otherwise.

Although the United States spends at least twice as much on health care, per person, as other industrial countries do, Americans do not live any longer and often have measurably worse health.

Although spending on education has doubled in recent decades, average scores on standardized math and reading tests have remained about the same.

And what does the average American have to show for all that innovation and job growth in financial services over the past 20 years? A series of booms and busts that has left stock prices roughly where they began.

For Cowen, the central economic reality of the past three decades is that median household incomes have barely budged, even after adjusting for inflation and other factors. And his hypothesis is that too much money and talent and effort have gone into sectors where real productivity gains are hard to find.

— The Wall Street Journal reports that Wall Street pay will hit a new record this year, just two years after it nearly killed the economy and forced us all to bail it out with trillions of dollars of cash, loans, guarantees, and subsidies.

In 2010, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal. The total is up 5.7% from $128 billion in combined compensation and benefits by the same companies in 2009.

But I don’t get this paragraph:

The increase was fueled by a revenue rebound as the financial crisis recedes in the rearview mirror. At 25 large financial firms that have reported full-year results, revenue rose to $417 billion, another all-time high, even though last year’s 1% increase was just a fraction of the industry’s revenue jolt from 2008 to 2009 as trading and investment banking sprang back to life.

The pay increase was fueled by a 1 percent increase in industry revenue? That doesn’t seem right.