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Musicians are used instead of imaginary button pressers because this is a real world effect. Think about it this way...assume everyone is paid fairly for the v
by mrfredward 7y ago
Musicians are used instead of imaginary button pressers because this is a real world effect.
Think about it this way...assume everyone is paid fairly for the value of their work, no "exploitation" (although that's a tough thing to impartially define). A factory worker who does 10% of the work in producing 1000 widgets per day can enjoy a much higher standard of living than his grandfather who made 5 widgets a day with hand tools. In fact, all else equal, his standard of living could theoretically increase 20X, but in reality widget prices go down and there is a factory owner taking a cut.
A doctor who still sees 10 patients a day, the same rate her grandfather saw, will not have seen any increase in standard of living at all, unless she's charging more per patient.
- inflatableDodo 7y agoThe musician example would seemingly only work however, if you completely ignored the emergence of the recording and distribution industry during that time. There are multiple magnitudes fewer musicians per second of music being listened to, compared to the 19th century. That orchestra ends up on youtube these days.
- rahimnathwani 7y agoEven if you take into account the emergence of recording and distribution, the effect is still present. Musicians that record their music and sell it on CDs or Spotify have become more productive, for the reasons you state. But concert orchestras, who are paid only for live performances, also earn more than before, even though their productivity in unchanged. If their income didn't go up, they would shift to a (more productive) recording industry job.
- inflatableDodo 7y agoConcert orchestras aren't only paid for live performances, they also record, and musicians themselves flit between gigs and often wear a lot of different hats. There's a lot of cross pollination with musicians.
- rahimnathwani 7y agoRight, and that is why their per-hour income from live performances (with no efficiency gains) has gone up along with their per-hour income from recorded music.
- Lerc 7y agoThe modern doctor is far more productive. She's healing 10 highly productive units. In fact I think that could generalise for all service based work. Providing a service enables people to not have to do the thing themselves. As such the productivity of the service can be considered a factor of the productivity of the people they are providing the service for.
- anonuser123456 7y agoThe Baumol effect does not imply that the value of the doctor is not higher today. It just means that on a per-unit basis physicians are not more productive (and possibly less today thanks to EHR). A doctor can still only see 1 patient every 15 minutes just like they could 50 years ago. A BMW factory that produces 100 cars/day might be more valuable than a Toyota factory producing 100 cars/day, but it wouldn't be more productive on a per unit basis.
- Lerc 7y agoThat seems more like an argument to say that a per-unit measure of productivity is meaningless than anything else.
- mrfredward 7y ago>The modern doctor is far more productive. She's healing 10 highly productive units. Hence the doctor will charge each patient more money. That's the Baumol effect.
- papln 7y agoThe factory worker has a higher standard of living because everything he buys is made by other factory workers at lower prices too. Instead of ten factories with 10 workers making 10 widgets, they make 200 widgets, or 20 each. As long as they unionize to demand their stake.