This reminds me…

Tom DiLorenzo wrote recently on this blog: One of my favorite old Austrian-themed articles is “Misleading Calculations of the Social Costs of Monopoly Power” by Steven Littlechild in the Economic Journal around 1980/81. He destroys the idea of static estimates of deadweight loss with a disequilibrium framework. His stake-in-the-heart comment was to quote Arnold Harberger as saying that he has no idea whether the profits he was measuring were equilibrium monopoly profits or disequilibrium competitive profits, but that he will simply assume they are all monopoly profits! And that article by Harberger (AER, 1954) is considered to be a classic of Chicago empiricism.

This reminds me of Gwartney and Stroup saying that any divergence between male and female incomes, or pay scales, after attempting to control for other possible explanatory variables, is due to sexist discrimination. In other words, the error term explains gender discrimination. I wrote to them both about this, saying that the error term is an error term. It indicates lack of knowledge. It is illicit to attribute it to anything at all, let alone discrimination. Neither replied to me.

For those interested in this episode, go here:

Block, Walter E. 2008. “The Idea Police vs. Walter E. Block: A (Not So) Funny Thing Happened To Me in Baltimore.” November 18; https://www.lewrockwell.com/block/block112.html; https://www.lewrockwell.com/orig5/top-ten.html; https://www.lewrockwell.com/orig5/top-ten-nov8.html

The Best of Walter E. Block