Today, in Econ 101

I’ve mentioned many times now that it’s not the romanticism per se of amateurism’s defenders I find frustrating — I was once there too, you know — it’s the attempt to dress it up in economic clothing by folks who really don’t know what they’re talking about.  For you, I strongly recommend this piece by Andy Schwarz.  In particular, I’d love to hear you address his concluding remarks (and question):

So, class, what have we learned?

The real moral of the story is that the price of the middling college basketball player playing for the large swathe of schools outside the Top 100 is ONLY going to rise if that athlete is perceived to generate more value than the cost of a scholarship alone. His price cannot get bid up higher than someone can “afford” because if no one can afford $60, then his price will be less than $60. We know someone is willing to pay $50 (in scholarship) so perhaps his final price is $55, or $58, but he won’t sit on the market with a price tag of $60 and go unpurchased because $60 doesn’t happen without a willing bidder, and a willing bidder, by definition, can “afford” him.

And thus, I beg you dear reader, please do not argue that an open market for athlete talent will mean that no one can afford talent. Prices in markets do not come from a holy mountain and land, unchangeable and eternal, into the marketplace. They are set by bids and acceptances and unless your argument is that kids will prefer to go work at McDonald’s rather than accept a full scholarship, then no one who is worth a full scholarship today is going to lose a slot on the team because he’s suddenly “too expensive”

You only get ‘expensive” in a market if someone wants to pay you more than the old price. Which means someone CAN afford it. And if no one can afford more, then the price stays the same as before. Got it?

So please, please, please, when someone says “if athletes can get paid then only a few schools will be able to afford athletes” please ask them what the price will be of all the athletes who don’t go to those few schools and why all the poor schools can’t just offer all of the remaining athletes a scholarship, just like today?”

There isn’t a whole lot of mystery there.  It’s how life works, at least in the rest of the economy where prices aren’t being fixed.

If you don’t mind, in the responses, you don’t need to go “I don’t like paying players” on me.  I respect that position, as long as that’s all there is to it.  I’m more curious to hear your criticisms of Schwarz’ argument.