7 ms·

"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 cl

by anm89 7y ago

"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 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? When I was an econ undergrad and I would hear absurdly naive logic like this I always thought it was a sign that I didn't understand some complicated underlying concept. But it's just nonsense. I still don't understand why people don't call this obvious absurdity out.

smith0000 7y ago
Workers aren't paid according to the market value of their work but rather for what they can demand in the labor market and what it costs to produce and reproduce their labor. That hasn't changed. Also, if anything, per capita demand for classical music is less now that it was a century or two ago. Baumol's cost disease is a powerful explanation for why people like doctors, musicians, and nanny's seem to be paid more now than they were before. Don't dismiss it out of hand.
- keenmaster 7y ago
  Baumol’s cost disease might be a true phenomenon, but it makes artificial constraints not he supply of labor all the more insidious. The cost of a doctor or nanny is going up, but Congress + the AMA artificially limit the amount of medical residencies. That’s one small reason why the medical industry is broken. There are also many regulations that serve to increase the average price of a nanny. Musicians, on the other hand, were subject to intense technological disruption. They offer a fundamentally different product with different methods of distribution. I don’t think they are a good illustration of Baumol’s cost disease.
  - keenmaster 7y ago
    Constraints on the supply of labor - sorry for the typo
i_am_proteus 7y ago
Seriously. They also ignore the fact that the productivity of classical music performance has increased. Four musicians and their instruments can perform a string quartet for a crowd the same today as they could in 1850. Four musicians and an engineer with instruments and recording gear can record that track today and make it available to the masses via one of a number of media vehicles-- and that recording and those mechanisms are different today than they were in 1995, than they were in 1965, and it's something that was entirely impossible in 1850.
- deleted 7y ago
  [deleted]
- skybrian 7y ago
  You might also think about the effects of amplification and large video screens that can allow some live performances to reach more people. But we should ignore that, because the point of the comparison is to find something that hasn't changed between now and then and compare the cost of labor. This is of course cherry-picking, but it's not intended to be typical. It's a striking example.
- rahimnathwani 7y ago
  In your example, you have two groups of four musicians, one with an engineer, and one without. - Group A has the same productivity as a similar group from 1850 - Group B (with the engineer and recording gear) has way higher productivity due to mass distribution Because the two labour markets are connected (people can move between markets A and B), the folks in Group A have gotten pay increases due only to the increases in productivity in market B.
  - anm89 7y ago
    If you honestly believe that the salaries of musicians are tied to the efficiencies at which they can produce units of music I have some bridges I'd like to sell you.
LudwigNagasena 7y ago
Did you dismiss physics for the same reason? A perfectly elastic ball rolling down a frictionless plane, how absurd!
- deleted 7y ago
  [deleted]
- lkrubner 7y ago
  In every class that I took, any such example was always introduced with "Not that a perfectly elastic ball actually exists" whereas with this Baumol effect they are suggesting that this is a real thing in the real world.
- wazoox 7y ago
  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, so how stupid should I be to doubt such a little thing?
  - Firadeoclus 7y ago
    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.
    - dragonwriter 7y ago
      > 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. 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.
asdasdafsg 7y ago
Did you drop out?
- anm89 7y ago
  I did not. I hold a degree in economics and another in anthropology.
bleh123 7y ago
Precisely. When you also factor in the productivity derived from an increased access to learning resources on the internet and industrial scale production of equipment that would have been unimaginable in the early 19th century. . .OF COURSE the productivity of almost all fields of the arts has increased significantly. The concept of a performance isn't limited to the few minutes the artists are on stage, the quality of the performance and what it takes to get there are built over years and this has been very nicely democratized over even the past decade than at most times in Human history.
barrkel 7y ago
> Do they really believe the value of playing music is derived solely from the effort to produce it If you remember anything from your economics courses, you should remember that in an efficient market, the price of something should decline to its marginal cost of production, due to competition undercutting the overpriced competitors. Your point might be relevant if there are wild swings in the demand for music.
- anm89 7y ago
  And has that happened? Instead top trained musicians command huge salaries and people pay out the ass to see them. "In an efficient market" Well we aren't living in a perfectly efficient vacuum so who cares? You are point in case what Im talking about. You believe that the sanctity of your theoretical view of the world is more important than what happens in the real world. I could argue about what happens to musician salaries if they all were covered in butter and learned how to fly. It would be about as useful of a conversation as debating perfectly efficient markets. Economics truly earns its reputation as the dismal science.
  - papln 7y ago
    Read up on what "dismal science" means. https://www.investopedia.com/terms/d/dismalscience.asp https://www.investopedia.com/terms/d/dismalscience.asp
    - anm89 7y ago
      Good read, I was not aware of that. I still feel it is somehow apt.
barry-cotter 7y ago
> 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 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-are-the-prices-so-damn-high_v1.pdf 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.
- deleted 7y ago
  [deleted]
- roenxi 7y ago
  The interpretation I like, which is basically a restatement of the Baumol effect, is that the value of something like music isn't remotely in the work done but in how the listeners feel about it. The market is effectively determining that modern musicians are more productive than the musicians of old because they are entertaining more economically productive people and the market is valuing the entertainment with reference to who the audience is. Similarly with the rich countries; the people supporting highly productive advanced economies get more, because markets value outcomes more than inputs. It is hardly fair, but at that level fairness is cripplingly expensive.
raverbashing 7y ago
> When I was an econ undergrad and I would hear absurdly naive logic like this I always thought it was a sign that I didn't understand some complicated underlying concept. But it's just nonsense. I still don't understand why people don't call this obvious absurdity out. This explains a lot about how MBAs mismanage things (and people are afraid to call their BS) Latest incarnation of this seems to be "how to make money with dropshipping" (they're just forgetting that the actual value they provide is close to 0 and the bubble is probably going to burst)
deleted 7y ago
[deleted]
crdoconnor 7y ago
I always thought the fact that it described rising wages and living standards as a disease pretty clearly indicated that there was something wrong with them.

by anm89 7y ago

smith0000 7y ago

Workers aren't paid according to the market value of their work but rather for what they can demand in the labor market and what it costs to produce and reproduce their labor. That hasn't changed. Also, if anything, per capita demand for classical music is less now that it was a century or two ago. Baumol's cost disease is a powerful explanation for why people like doctors, musicians, and nanny's seem to be paid more now than they were before. Don't dismiss it out of hand.

keenmaster 7y ago
Baumol’s cost disease might be a true phenomenon, but it makes artificial constraints not he supply of labor all the more insidious. The cost of a doctor or nanny is going up, but Congress + the AMA artificially limit the amount of medical residencies. That’s one small reason why the medical industry is broken. There are also many regulations that serve to increase the average price of a nanny. Musicians, on the other hand, were subject to intense technological disruption. They offer a fundamentally different product with different methods of distribution. I don’t think they are a good illustration of Baumol’s cost disease.
- keenmaster 7y ago
  Constraints on the supply of labor - sorry for the typo

i_am_proteus 7y ago

Seriously. They also ignore the fact that the productivity of classical music performance has increased. Four musicians and their instruments can perform a string quartet for a crowd the same today as they could in 1850. Four musicians and an engineer with instruments and recording gear can record that track today and make it available to the masses via one of a number of media vehicles-- and that recording and those mechanisms are different today than they were in 1995, than they were in 1965, and it's something that was entirely impossible in 1850.

deleted 7y ago
[deleted]
skybrian 7y ago
You might also think about the effects of amplification and large video screens that can allow some live performances to reach more people. But we should ignore that, because the point of the comparison is to find something that hasn't changed between now and then and compare the cost of labor. This is of course cherry-picking, but it's not intended to be typical. It's a striking example.
rahimnathwani 7y ago
In your example, you have two groups of four musicians, one with an engineer, and one without. - Group A has the same productivity as a similar group from 1850 - Group B (with the engineer and recording gear) has way higher productivity due to mass distribution Because the two labour markets are connected (people can move between markets A and B), the folks in Group A have gotten pay increases due only to the increases in productivity in market B.
- anm89 7y ago
  If you honestly believe that the salaries of musicians are tied to the efficiencies at which they can produce units of music I have some bridges I'd like to sell you.

LudwigNagasena 7y ago

Did you dismiss physics for the same reason? A perfectly elastic ball rolling down a frictionless plane, how absurd!

deleted 7y ago
[deleted]
lkrubner 7y ago
In every class that I took, any such example was always introduced with "Not that a perfectly elastic ball actually exists" whereas with this Baumol effect they are suggesting that this is a real thing in the real world.
wazoox 7y ago
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, so how stupid should I be to doubt such a little thing?
- Firadeoclus 7y ago
  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.
  - dragonwriter 7y ago
    > 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. 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.

asdasdafsg 7y ago

Did you drop out?

anm89 7y ago
I did not. I hold a degree in economics and another in anthropology.

bleh123 7y ago

Precisely. When you also factor in the productivity derived from an increased access to learning resources on the internet and industrial scale production of equipment that would have been unimaginable in the early 19th century. . .OF COURSE the productivity of almost all fields of the arts has increased significantly. The concept of a performance isn't limited to the few minutes the artists are on stage, the quality of the performance and what it takes to get there are built over years and this has been very nicely democratized over even the past decade than at most times in Human history.

barrkel 7y ago

> Do they really believe the value of playing music is derived solely from the effort to produce it If you remember anything from your economics courses, you should remember that in an efficient market, the price of something should decline to its marginal cost of production, due to competition undercutting the overpriced competitors. Your point might be relevant if there are wild swings in the demand for music.

anm89 7y ago
And has that happened? Instead top trained musicians command huge salaries and people pay out the ass to see them. "In an efficient market" Well we aren't living in a perfectly efficient vacuum so who cares? You are point in case what Im talking about. You believe that the sanctity of your theoretical view of the world is more important than what happens in the real world. I could argue about what happens to musician salaries if they all were covered in butter and learned how to fly. It would be about as useful of a conversation as debating perfectly efficient markets. Economics truly earns its reputation as the dismal science.
- papln 7y ago
  Read up on what "dismal science" means. https://www.investopedia.com/terms/d/dismalscience.asp https://www.investopedia.com/terms/d/dismalscience.asp
  - anm89 7y ago
    Good read, I was not aware of that. I still feel it is somehow apt.

barry-cotter 7y ago

> 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 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-are-the-prices-so-damn-high_v1.pdf 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.

deleted 7y ago
[deleted]
roenxi 7y ago
The interpretation I like, which is basically a restatement of the Baumol effect, is that the value of something like music isn't remotely in the work done but in how the listeners feel about it. The market is effectively determining that modern musicians are more productive than the musicians of old because they are entertaining more economically productive people and the market is valuing the entertainment with reference to who the audience is. Similarly with the rich countries; the people supporting highly productive advanced economies get more, because markets value outcomes more than inputs. It is hardly fair, but at that level fairness is cripplingly expensive.

raverbashing 7y ago

> When I was an econ undergrad and I would hear absurdly naive logic like this I always thought it was a sign that I didn't understand some complicated underlying concept. But it's just nonsense. I still don't understand why people don't call this obvious absurdity out. This explains a lot about how MBAs mismanage things (and people are afraid to call their BS) Latest incarnation of this seems to be "how to make money with dropshipping" (they're just forgetting that the actual value they provide is close to 0 and the bubble is probably going to burst)

deleted 7y ago

[deleted]

crdoconnor 7y ago

I always thought the fact that it described rising wages and living standards as a disease pretty clearly indicated that there was something wrong with them.