4 ms·

> That would be scaling with population, not GDP. This is Baulmol's Cost Disease (https://en.wikipedia.org/wiki/Baumol_effect https://en.wikipedia.org/wiki/Bau

> That would be scaling with population, not GDP. This is Baulmol's Cost Disease (https://en.wikipedia.org/wiki/Baumol_effect https://en.wikipedia.org/wiki/Baumol_effect) in action, and it's something that advanced economies must take into account. A barber today is not much more productive than a barber in 1900, but a haircut today costs much more than a haircut in 1900, even adjusted for goods inflation. Why is today's haircut evidently more expensive? The answer lies in the labour supply. If haircuts didn't cost more today than in 1900, would-be barbers would work in goods-producing sectors that have seen real productivity growth and consequently 'naturally' improved wages. In some sectors, this has led to the replacement of labour with capital. Domestic help was once hired by the ordinary middle class, but now we have kitchen and household appliances instead. We see fewer expensive hand-crafts and more factory-produced goods. Even fast food joints try to replace human service with ordering kiosks. This replacement is much more difficult in the government sector, where transfer payments tend to relate to income rather than absolute provision of hard goods and where health-care and education are two of the sectors most affected by the Baulmol effect.

zdragnar 2y ago
Domestic help was once available because there was an extreme surplus of dirt poor people. After the economic boom due to rising productivity, there weren't enough dirt poor people willing to work for peanuts, and today things like minimum wage and various benefits programs make it easier to not work for so little money a middle class family can easily afford it. People would rather buy cheap factory goods than the more expensive hand made ones because they prefer to spend money on other things instead. Google says the average barber haircut in 1900 for a man (women often did their hair at home) was 25 cents, which is just shy of $10 adjusted for inflation. Most places around me offer basic haircuts for $20. In 1900, only the state of Minnesota had a requirement for barbers to be licensed (it was the first state to do so, in 1897). No beautician school requirement, no licensure payments, no state or federal income or sales taxes. In short, it's surprising that the rise in cost of a haircut hasn't been higher. I think there's something to Baulmol's theory, but there's a lot of hand waving that isn't really supported as well by the examples given here or elsewhere that I've seen. That, or the effect isn't all that it is claimed to be; it's almost tautological that as supply of workers for a low paying job dries up, the wages for the job have to go up to retain workers.
- anticensor 2y ago
  In most of the world, a haircut averages at $5.
  - watwut 2y ago
    Not in Europe or any other developed country. Haircut is that cheap when worker lives on super low wage.
  - BrandoElFollito 2y ago
    In France the average man cut is between 15€ and 30€. You can find cuts at 8-10€ in poorer areas. For reference, a visit to a family doctor is 30€, 28€ is reimbursed (you pay 2€ effectively)
    - miohtama 2y ago
      The cost of goods does not change. It just means someone else is paying the 28 EUR part
      - BrandoElFollito 2y ago
        Yes you are right of course - my main point was about the cost of an MD visit. The reimbursement part was just to flex about how our health insurance is good :) (unrelated to the discussion)
    - PoignardAzur 2y ago
      > You can find cuts at 8-10€ in poorer areas. It's not about poor areas. My city is middle-class AF and there's a 8€ barber there. It's just that they have a list of exactly one haircut they apply to everybody, and a few more shaving styles.
      - BrandoElFollito 2y ago
        Sure, this will depend on the region. I am west of pairs (middle-class AF as well :)) and the cheapest haircut is 13€ in a somehow shady place without any fancy information about the kind of haircuts. Barbers are crazy priced (because hipsters and whatnot) and the typical chain (Jean Louis David) is 30€ or so.
throwawayqqq11 2y ago
> [wiki:] The rise of wages in jobs without productivity gains results from the need to compete for workers with jobs that have experienced productivity gains This implies that higher productivity gains result in higher wages, which is historically not the case. This explanation appears to only establish a weak correlation (productivity->wages) and stick to it where other factors like cost of living better explain even regional differences. Or what do i miss?
aakinesia 2y ago
I've never heard this applied to the healthcare sector, in the way that doctors think about it their salary. I'm a MD and hear this as an explanation that other MDs give for their compensation i.e. "I would/could have done ibanking instead of neurosurgery, therefore my compensation..." Unfortunately, MD compensation has more to do with a bottleneck in residency spots (post-medical school training), part of which may be artificially tight from lobbying efforts, but also there are real physical barriers to scaling up medical education. there are only so many operating rooms where a resident can be safely assigned and supervised. However, I think there is a grain of truth to MD's perception of the Baulmol effect, just in the opposite direction. Despite claims of healthcare being privately-funded, about half of healthcare dollars in the US originate with a government agency of some form. This does not taking into account the fact that healthcare organizations don't pay taxes (501c3), get government-provided free labor (aforementioned residents), and have a workforce educated through government financing. Though not one-to-one, our salaries are impacted by what medicare/medicaid sets as procedure-related reimbursements. Though no MD could live off of medicare payments alone (I think total reimbursement for a PCP visit is $125), its a proxy, and is one of the big reasons why proceduralists (surgeons, anesthesiologists) make more than the thinking specialties (infectious disease, rheumatology). So - I think Baulmol here works in that the public/govt who agree to some compensation for MDs that is commensurate with other high-paying fields. There may be some perception that top students would actually choose ibanking over neurosurgery based on compensation, so the public is willing to pay in the same ballpark. Whether that belief is true is another conversation - and whether we really should be sending top students to medicine (where they tend to despise their job and look elsewhere for intellectual stimulation) is another story as well.

zdragnar 2y ago

Domestic help was once available because there was an extreme surplus of dirt poor people. After the economic boom due to rising productivity, there weren't enough dirt poor people willing to work for peanuts, and today things like minimum wage and various benefits programs make it easier to not work for so little money a middle class family can easily afford it. People would rather buy cheap factory goods than the more expensive hand made ones because they prefer to spend money on other things instead. Google says the average barber haircut in 1900 for a man (women often did their hair at home) was 25 cents, which is just shy of $10 adjusted for inflation. Most places around me offer basic haircuts for $20. In 1900, only the state of Minnesota had a requirement for barbers to be licensed (it was the first state to do so, in 1897). No beautician school requirement, no licensure payments, no state or federal income or sales taxes. In short, it's surprising that the rise in cost of a haircut hasn't been higher. I think there's something to Baulmol's theory, but there's a lot of hand waving that isn't really supported as well by the examples given here or elsewhere that I've seen. That, or the effect isn't all that it is claimed to be; it's almost tautological that as supply of workers for a low paying job dries up, the wages for the job have to go up to retain workers.

anticensor 2y ago
In most of the world, a haircut averages at $5.
- watwut 2y ago
  Not in Europe or any other developed country. Haircut is that cheap when worker lives on super low wage.
- BrandoElFollito 2y ago
  In France the average man cut is between 15€ and 30€. You can find cuts at 8-10€ in poorer areas. For reference, a visit to a family doctor is 30€, 28€ is reimbursed (you pay 2€ effectively)
  - miohtama 2y ago
    The cost of goods does not change. It just means someone else is paying the 28 EUR part
    - BrandoElFollito 2y ago
      Yes you are right of course - my main point was about the cost of an MD visit. The reimbursement part was just to flex about how our health insurance is good :) (unrelated to the discussion)
  - PoignardAzur 2y ago
    > You can find cuts at 8-10€ in poorer areas. It's not about poor areas. My city is middle-class AF and there's a 8€ barber there. It's just that they have a list of exactly one haircut they apply to everybody, and a few more shaving styles.
    - BrandoElFollito 2y ago
      Sure, this will depend on the region. I am west of pairs (middle-class AF as well :)) and the cheapest haircut is 13€ in a somehow shady place without any fancy information about the kind of haircuts. Barbers are crazy priced (because hipsters and whatnot) and the typical chain (Jean Louis David) is 30€ or so.

throwawayqqq11 2y ago

> [wiki:] The rise of wages in jobs without productivity gains results from the need to compete for workers with jobs that have experienced productivity gains This implies that higher productivity gains result in higher wages, which is historically not the case. This explanation appears to only establish a weak correlation (productivity->wages) and stick to it where other factors like cost of living better explain even regional differences. Or what do i miss?

aakinesia 2y ago

I've never heard this applied to the healthcare sector, in the way that doctors think about it their salary. I'm a MD and hear this as an explanation that other MDs give for their compensation i.e. "I would/could have done ibanking instead of neurosurgery, therefore my compensation..." Unfortunately, MD compensation has more to do with a bottleneck in residency spots (post-medical school training), part of which may be artificially tight from lobbying efforts, but also there are real physical barriers to scaling up medical education. there are only so many operating rooms where a resident can be safely assigned and supervised. However, I think there is a grain of truth to MD's perception of the Baulmol effect, just in the opposite direction. Despite claims of healthcare being privately-funded, about half of healthcare dollars in the US originate with a government agency of some form. This does not taking into account the fact that healthcare organizations don't pay taxes (501c3), get government-provided free labor (aforementioned residents), and have a workforce educated through government financing. Though not one-to-one, our salaries are impacted by what medicare/medicaid sets as procedure-related reimbursements. Though no MD could live off of medicare payments alone (I think total reimbursement for a PCP visit is $125), its a proxy, and is one of the big reasons why proceduralists (surgeons, anesthesiologists) make more than the thinking specialties (infectious disease, rheumatology). So - I think Baulmol here works in that the public/govt who agree to some compensation for MDs that is commensurate with other high-paying fields. There may be some perception that top students would actually choose ibanking over neurosurgery based on compensation, so the public is willing to pay in the same ballpark. Whether that belief is true is another conversation - and whether we really should be sending top students to medicine (where they tend to despise their job and look elsewhere for intellectual stimulation) is another story as well.