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You're missing a step. Workers didn't have an opportunity to provide labor Z by random chance. They had that opportunity for a specific reason: greater efficien

You're missing a step. Workers didn't have an opportunity to provide labor Z by random chance. They had that opportunity for a specific reason: greater efficiency gains (i.e. reduced cost per unit of production) in Z than in X. In other words, something about another profession affects wages in X. This is different than intrinsic changes in X, requiring analysis beyond supply and demand for X. Somebody had to look at this phenomenon from outside that narrow micro-economic perspective before it became "obvious" (only in retrospect) to others. That happened to be Baumol and Bowen. Why not use one of their names as a convenient handle for a concept they studied and brought to others' attention? We give "fancy" names to algorithms and even whole systems in computing too, even when their details can be similarly derived from first principles. Do you think we should shun those in favor of purely descriptive names as well?

lotsofpulp 6y ago
I have no qualms with using names for it, I am curious why this specific application of supply and demand, which seems obvious to me, was designated a name. As an illustration, if milk was just discovered to be useful to make cheese, and the demand for milk rises proportionally more than the supply of milk, then the price of milk would rise. As far as I know, there is no specific name for this “phenomenon”, but there is if you substitute labor for milk? Edit: I sort of see the significance if the claim is that increases in productivity in other sectors will necessarily lead to decreases in supply of labor which will cause prices to rise overall, but is that true? I can envision a scenario where increases in productivity are putting more people out of work quicker than it is causing people to be in demand, causing wages to stagnate or fall (in real terms)? It might even be happening now.
- notacoward 6y ago
  > but is that true That is literally what Baumol and Bowen wrote about. I suggest you look to their papers for the evidence. Even those who posit that Bowen's Rule accounts for a greater share of cost increases in education (trivial to find many papers on this) accept that Baumol's Cost Disease exists. It might not be necessary or happen all the time - nobody but you claimed such - but it's definitely real in some industries or professions.
  - lotsofpulp 6y ago
    How does that square with stagnating wages for the majority? https://www.advisorperspectives.com/dshort/updates/2020/09/17/updated-u-s-household-incomes-a-50-year-perspective https://www.advisorperspectives.com/dshort/updates/2020/09/1... Is it possible that increases in productivity in other professions can reduce demand for labor in other professions (automation), increasing the supply of workers, which then suppresses wages in other professions? Would that not run counter to Baumol’s cost disease? I appreciate your time in engaging in this discourse. I’m not sure if I will have time to read their papers, but I was interested if there was a simple explanation for why I am wrong that it didn’t pass my initial smell test.

lotsofpulp 6y ago

I have no qualms with using names for it, I am curious why this specific application of supply and demand, which seems obvious to me, was designated a name. As an illustration, if milk was just discovered to be useful to make cheese, and the demand for milk rises proportionally more than the supply of milk, then the price of milk would rise. As far as I know, there is no specific name for this “phenomenon”, but there is if you substitute labor for milk? Edit: I sort of see the significance if the claim is that increases in productivity in other sectors will necessarily lead to decreases in supply of labor which will cause prices to rise overall, but is that true? I can envision a scenario where increases in productivity are putting more people out of work quicker than it is causing people to be in demand, causing wages to stagnate or fall (in real terms)? It might even be happening now.

notacoward 6y ago
> but is that true That is literally what Baumol and Bowen wrote about. I suggest you look to their papers for the evidence. Even those who posit that Bowen's Rule accounts for a greater share of cost increases in education (trivial to find many papers on this) accept that Baumol's Cost Disease exists. It might not be necessary or happen all the time - nobody but you claimed such - but it's definitely real in some industries or professions.
- lotsofpulp 6y ago
  How does that square with stagnating wages for the majority? https://www.advisorperspectives.com/dshort/updates/2020/09/17/updated-u-s-household-incomes-a-50-year-perspective https://www.advisorperspectives.com/dshort/updates/2020/09/1... Is it possible that increases in productivity in other professions can reduce demand for labor in other professions (automation), increasing the supply of workers, which then suppresses wages in other professions? Would that not run counter to Baumol’s cost disease? I appreciate your time in engaging in this discourse. I’m not sure if I will have time to read their papers, but I was interested if there was a simple explanation for why I am wrong that it didn’t pass my initial smell test.