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Baumol's Cost Disease

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Re: Baumol's Cost Disease

#51

Post by duxup »

In a way, I thought about this when I changed my career the last time.

I had worked in what I will call "high end" tech support for some proprietary (and some less proprietary) networking equipment.

My job generally paid great and customers paid big support contracts, good deal for a good 20 years. But Tech Support is never glamorous, executives eventually think of them as just problems (even if they're solving problems) because that's all they hear. Quality management jumps to other more glamours departments and so on.

I was not so sad when a layoff occurred (company sold for parts and most of support was cut because more people on balance sheet looks costy). eventually and I learned to code late in life and got a new job / career.

Amusingly while I was learning to code a former coworker. (one of the people developing the products) at a company who bought some of the products I supported for a good 20 years reached out and said I should apply for a remote support job. I wasn't enthused but I did thinking they might make a good offer ... I never heard anything back. I was maybe one of 100 people who worked on those products in that capacity, I could have gone to work and done the job fabulously in an instant. Former coworker asked around was told "he doesn't have masters degree in CS". I wonder how those CS masters guys cost?

I got a lot of stories from that coworker how support was a complete disaster for a long long time at that company.

People rightfully complain about tech support, and I always think "Yeah they're bad because anyone who knows how to do it ... does not stick around."

Re: Baumol's Cost Disease

#52

Post by dang »

Related. Others?

The Baumol Effect and Jevons paradox are related - https://news.ycombinator.com/item?id=45955879 - Nov 2025 (67 comments)

Baumol Effect - https://news.ycombinator.com/item?id=43065115 - Feb 2025 (1 comment)

The Baumol effect - https://news.ycombinator.com/item?id=35220758 - March 2023 (77 comments)

Why are the prices so damn high - https://news.ycombinator.com/item?id=33150094 - Oct 2022 (2 comments)

Baumol Effect - https://news.ycombinator.com/item?id=24812620 - Oct 2020 (99 comments)

Baumol Effect - https://news.ycombinator.com/item?id=20443675 - July 2019 (62 comments)

William Baumol, author of 'cost disease' theory, has died - https://news.ycombinator.com/item?id=14284466 - May 2017 (33 comments)

Baumol's Cost Disease - https://news.ycombinator.com/item?id=12679629 - Oct 2016 (1 comment)

Is productivity the victim of its own success? - https://news.ycombinator.com/item?id=11964673 - June 2016 (57 comments)

Baumol's Cost Disease: Why Artists are Always Poor - https://news.ycombinator.com/item?id=972082 - Dec 2009 (14 comments)

Re: Baumol's Cost Disease

#53

Post by michaelt »

bigbadfeline wrote: post #46
derf_ wrote: post #4

The submission is titled with "Cost Disease", though the Wikipedia article has the more neutral term "Effect". But it is important to remember that money is a relative resource, not a real resource. If some sectors of the economy become drastically more efficient, and some do not, overall society has become wealthier , even if the prices in the latter sectors rise a lot.

> If some sectors of the economy become drastically more efficient... overall society has become wealthier That's a weird one - what's your metric for the "wealth of overall society"? Stock market indexes can't be it because those are subject to extreme levels of unreported inflation and gaming. How can you measure something that is subject to extreme inflation when that inflation is not only unmeasured but not even…

If the orchestra performs less often because the violists have better paying jobs in a factory making the latest and greatest TVs, more homes will have the latest and greatest TVs.

Of course, this relies on the assumption most work - and hence most productivity - is a net social good. If the violinists have instead got jobs operating an orphan-crushing machine, that would be a bad thing. But hopefully your society is structured in such a way that the average worker is contributing to the prosperity of their local community.

Re: Baumol's Cost Disease

#54

Post by michaelt »

yunyu wrote: post #34
wat10000 wrote: post #32

Earlier quoted context omitted.

The only way this should happen is if it’s a fake arthritis treatment meant to detect doctors who learn about treatments from advertising instead of legitimate sources, so they can be prevented from practicing medicine.

What are legitimate sources in your definition? Should physicians be expected to spend all their free time reading every single study in every medical journal or conference, even for niche areas that they don't usually encounter? Should the average diabetic/arthritic patient need to obsessively pore over academic reports to stay informed about their condition? Should advertisers be banned from sponsoring journals or…

Doctors should learn about new drugs the traditional way - physically attractive drug company reps taking them out for expensive dinners and gifting them branded golf equipment.

Re: Baumol's Cost Disease

#55

Post by ghaff »

wat10000 wrote: post #48
yunyu wrote: post #34

Earlier quoted context omitted.

What are legitimate sources in your definition? Should physicians be expected to spend all their free time reading every single study in every medical journal or conference, even for niche areas that they don't usually encounter? Should the average diabetic/arthritic patient need to obsessively pore over academic reports to stay informed about their condition? Should advertisers be banned from sponsoring journals or…

I don’t know what counts as legitimate sources. I’ll let the professionals figure that one out. > Should advertisers be banned from sponsoring journals or conferences? It baffles me that you apparently think this is some kind of zinger. Yes!

Journals less commonly but pretty much every conference out there of any scope is sponsored by companies. In fact, absent sponsors, very few conferences would exist other than small volunteer-run ones.

Re: Baumol's Cost Disease

#56

Post by wat10000 »

yunyu wrote: post #50
wat10000 wrote: post #48

Earlier quoted context omitted.

I don’t know what counts as legitimate sources. I’ll let the professionals figure that one out. > Should advertisers be banned from sponsoring journals or conferences? It baffles me that you apparently think this is some kind of zinger. Yes!

Got it. So you want attention to be controlled by the whims of academic/government/publishing bureaucrats or black-box ranking algorithms who are the arbitrators of legitimacy. I can't say I agree with that opinion, but different strokes for different folks.

I’m very confused. Why would “black-box ranking algorithms” be on the no advertising side?

Medicine has a pretty good system for getting knowledge out to doctors as far as I can tell. I fail to see how advertising contributes to this in any way. Banning advertising is the opposite of controlling attention.

I’d like a total ban on all advertising, but I at least see some merits in the discovery argument for consumer goods even if I don’t agree with it. But saying advertisement is necessary so doctors can find out about new treatments? I hope this is just subtle satire, because, what?

Re: Baumol's Cost Disease

#57

Post by adam_patarino »

zeroonetwothree wrote: post #33
adam_patarino wrote: post #15

Earlier quoted context omitted.

Yeah you’re right, that’s fair. I just think people don’t behave that rationally. I’m not moving away from my kid’s grandparents because my local costs have gone up, for example. There exists greater friction with many of the items in red than the highly automated ones. My question is how linked is this friction to the lack of automation? With text books and meat packing there are few players due to consolidation. Th…

At some price level you would move. Of course there are probably many more people that would move before you so that situation may not arise in practice. Economics works on the margin.

Sure but there’s a significant change in price that I can withstand before moving. My point is there’s less price sensitivity for some of these items. And because of that I wonder if that affects the amount of automation suppliers invest in.

Re: Baumol's Cost Disease

#58

Post by wat10000 »

ghaff wrote: post #55
wat10000 wrote: post #48

Earlier quoted context omitted.

I don’t know what counts as legitimate sources. I’ll let the professionals figure that one out. > Should advertisers be banned from sponsoring journals or conferences? It baffles me that you apparently think this is some kind of zinger. Yes!

Journals less commonly but pretty much every conference out there of any scope is sponsored by companies. In fact, absent sponsors, very few conferences would exist other than small volunteer-run ones.

If attendees aren’t willing to pay the full cost then maybe the conference isn’t providing enough value and we’re better off without it.

Re: Baumol's Cost Disease

#59

Post by ghaff »

kmeisthax wrote: post #45
SubmarineClub wrote: post #41

Earlier quoted context omitted.

> Actually, if you're just looking for "a skilled job" trade school is a better bet than college now. Better for whom? And better in what sense? Long-term, on average, post-college careers still blow the trades out of the water in earnings. In my case certainly, if I had bought into the “trades are better!!” online rhetoric I would be making far less money than I am now, and I get to work remote.

> Long-term, on average, post-college careers still blow the trades out of the water in earnings. That average has a lot of outliers. There are a handful of degrees which almost guarantee you gainful employment. Like, someone getting a law degree or prepping for hospital residency will make waaay more money than maths, liberal arts, or anything on PhD track. The latter do not have anywhere close to the same job prosp…

Law in the US is actually not that great an overall profession in terms of compensation if you're not talking top schools, white shoe firms, and a prestigious clerkship.

Re: Baumol's Cost Disease

#60

Post by yunyu »

wat10000 wrote: post #56
yunyu wrote: post #50

Earlier quoted context omitted.

Got it. So you want attention to be controlled by the whims of academic/government/publishing bureaucrats or black-box ranking algorithms who are the arbitrators of legitimacy. I can't say I agree with that opinion, but different strokes for different folks.

I’m very confused. Why would “black-box ranking algorithms” be on the no advertising side? Medicine has a pretty good system for getting knowledge out to doctors as far as I can tell. I fail to see how advertising contributes to this in any way. Banning advertising is the opposite of controlling attention. I’d like a total ban on all advertising, but I at least see some merits in the discovery argument for consumer g…

> Medicine has a pretty good system for getting knowledge out to doctors as far as I can tell.

Yes, it does - it’s called advertising. In the US, the average promotional spend per physician exceeds $20k/yr. As a result, a lot more patients are able to quickly benefit from new medications like Dupixent or Ozempic as a result of wider awareness.

Suppose we banned Google ads and you are searching for a plumber. You are now entirely at the whims of whoever designs the ranking algorithm on Google/the Yellow Pages, who has nothing at stake here. Meanwhile, advertisers have to bid for your attention - making them at least somewhat aligned with your buying intent.

The same applies for doctors searching for state of the art diabetes treatments. It’s hard to say that relying on a fuzzy notion of “legitimacy” (or entrenched status-quo cliques) is a more fair system.

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