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Quotation of the Day…

… is from page 3 of the second edition (1985) of Deirdre McCloskey’s brilliant textbook for courses in intermediate microeconomics, The Applied Theory of Price:

The vocabulary of such ersatz economics, the economics of the man in the street, contributes to the confusion: Unions and corporations have more “bargaining power” than do their opponents and, hence, “exploit” them; a consumer can “afford” medical care, “needs” housing, and finds food a “basic necessity”; business managers maintain their “profit margins,” probably “obscene” or “unwarranted,” by “passing along” a higher wage, which causes workers to demand still higher wages, in a “vicious circle”; the protection of the American worker’s “living wage” from “unfair competition” by “cheap foreign labor” should be high on the nation’s list of “priorities.”  To understand price theory you must clear your mind of such jargon, just as to understand astronomy you must stop thinking of the sun’s “rising.”

Reading Deirdre’s textbook is among the very best ways to learn how to think truly and deeply about economic matters.  This economic way of thinking, of course, is foreign to most non-economists – a fact lamentable but understandable.  Unfortunately, and less excusably, this economic way of thinking is foreign also to many economists – people who mistake their mastery of formal logic couched in Ps and Qs, economic jargon, or econometric techniques for an understanding of economics.

UPDATE: Yann Nicolas reminds me by e-mail that Deirdre’s price-theory text is available free-of-charge on line.