Hershberger: The reserve clause and the failure of the free market
From SABR member Richard Hershberger at Ordinary Times on July 2, 2015:
The argument quoted here is commonly heard to this day. It is dead wrong, in both obvious and non-obvious ways. The writer probably was Francis Richter, the editor of The Sporting Life and a major figure in baseball journalism well into the 20th century.
Richter was a fine sports writer. There was a fashion for baseball histories in the 1910s. His History and Records of Baseball from 1914 is the best of the lot. Richter was not, however, competent in economics. This leads to the obvious problem with his analysis. He confuses supply and demand with the idea that a more profitable business pays, or ought to pay, its employees more than a less profitable business. The argument that it does is only indirectly connected with supply and demand, and the argument that it ought to is a moral rather than an economic argument.
This is largely uninteresting: an Econ 101 mistake. My topic here is the more interesting, and controversial, underlying fallacy: that the free market principle of supply and demand can possibly work in a professional team sport.
Read the full article here: http://ordinary-gentlemen.com/blog/2015/07/02/the-reserve-clause-and-the-failure-of-the-free-market/
Originally published: July 3, 2015. Last Updated: July 3, 2015.