21–30 of 69 posts
You can't automate a "personalized" task (a medical examination, panting of a building, a legal consultation, etc)
"they pointed out that the same number of musicians is needed to play a Beethoven string quartet today as was needed in the 19th century; the productivity of classical music performance has not increased. On the other hand, the real wages of musicians (as in all other professions) have increased greatly since the 19th century" This seems painfully naive to the point of farce. Do they really believe the value of playi…
Did you dismiss physics for the same reason? A perfectly elastic ball rolling down a frictionless plane, how absurd!
"they pointed out that the same number of musicians is needed to play a Beethoven string quartet today as was needed in the 19th century; the productivity of classical music performance has not increased. On the other hand, the real wages of musicians (as in all other professions) have increased greatly since the 19th century" This seems painfully naive to the point of farce. Do they really believe the value of playi…
The Baumol Effect is about relative, not absolute prices. Musicians may have become more productive over time but producers of goods have become much, much more productive. So services increase in relative price over time while goods decline.
It’s analogous to the Balassa-Samuelson Effect. Services are cheaper in poor countries than in rich ones because the entire economy is less productive. As it becomes more productive the leading sectors bid up the average wage to get higher quality workers ,or just more of the same quality, and the low productivity sectors either disappear or raise their wages to keep their labour, passing on the costs to consumers.
That it’s a change in relative rather than absolute prices is the entire point of the Baumol Effect.
If you need a refresher with applications to the American Economy Alex Tabarrok wrote a short book on it recently, Why Are The Prices So Damn High?
https://www.mercatus.org/system/files/helland-tabarrok_why-a...
If you look at nothing else check out the first graph, on page ten. Services have gotten more expensive and goods cheaper, housing excepted, for over 50 years.
I've seen a lot of recent analysis related to baumol effect. The analysis usually looks into productivity gains, finds none then that declares baumol cost disease. But I feel like this is incomplete. We need to know why we don't see productivity gains. For instance the nature of live music is that it's unscalable (excluding larger venues) but pharmacists can't be scaled due to regulations. And a lot of the broad stat…
Isnt it usually about services? Like teachers or massage therapists or barbers. There's a limit of how many people one of them can serve a day. Shops (including pharmacies) have probably become more effective - look at Amazon. A lot of shopping is online which is surely more productive (for example - you can buy without driving there first). The Economist had an article on the topic recently: https://www.economist.co…
It seems they they mostly focus on healthcare and education. And while the babysitting aspect of teaching can't be made more efficient the teaching aspect can be. Flatiron for instance costs less than my Alma mater per semester, and is teaching programming at 2-4x the rate I learned in undergrad.
I don't think there is any reason other undergrad/grad programs can't be made similarly more efficient.
And healthcare is obviously an ocean of waste and inefficiency.
Earlier quoted context omitted.
Did you dismiss physics for the same reason? A perfectly elastic ball rolling down a frictionless plane, how absurd!
In physics courses, it's pretty clear that perfect balls and frictionless planes aren't actually real. OTOH, I recently had a debate with an economist that nearly insulted me because I doubted that infinite GDP growth was possible in a finite world; you "simply" need to infinitely enhance value of goods and services, which is perfectly possible because it hasn't been proved impossible. Plus it's taught in Econ 101, s…
Edit: In any case, GDP growth shouldn't be a policy target.
Earlier quoted context omitted.
In physics courses, it's pretty clear that perfect balls and frictionless planes aren't actually real. OTOH, I recently had a debate with an economist that nearly insulted me because I doubted that infinite GDP growth was possible in a finite world; you "simply" need to infinitely enhance value of goods and services, which is perfectly possible because it hasn't been proved impossible. Plus it's taught in Econ 101, s…
There is no known limit to GDP growth because GDP growth doesn't just depend on an increase in material goods, and value judgments can change over time. Thus it is theoretically possible that after a whole series of "this year is better than last year" growth you end up exactly where you started as values shift. Edit: In any case, GDP growth shouldn't be a policy target.
Not really, since real GDP growth is measured in value relative to a like-goods price index.
> In any case, GDP growth shouldn't be a policy target.
It shouldn't be the exclusive policy target, but it makes plenty of sense as one positive factor in the big optimization function. Ceteris paribus, output increases are desirable.
If increased productivity (of everyone in a profession due to some new technology) means less people are needed in a given profession, demand for employees decreases and thus wages go DOWN along with product prices.
Also the "natural equilibrium state" for wages is for them to be all equal regardless of profession because otherwise people would have trained for and went to a more profitable career until wages are equalized, and this only doesn't happen because people are not equal and changing careers is costly.
So the "Baumol cost disease" seems like a pretty reasonable observation instead of being somehow paradoxical.
"they pointed out that the same number of musicians is needed to play a Beethoven string quartet today as was needed in the 19th century; the productivity of classical music performance has not increased. On the other hand, the real wages of musicians (as in all other professions) have increased greatly since the 19th century" This seems painfully naive to the point of farce. Do they really believe the value of playi…
> This seems painfully naive to the point of farce. Do they really believe the value of playing music is derived solely from the effort to produce it and not from how many people consume it and under what circumstances it is consumed? The Baumol Effect is about relative, not absolute prices. Musicians may have become more productive over time but producers of goods have become much, much more productive. So services…