William Baumol, author of 'cost disease' theory, has died

Luckily we solved this by uncoupling wages from general productivity starting in the 70s<p><a href="http:&#x2F;&#x2F;www.epi.org&#x2F;productivity-pay-gap&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.epi.org&#x2F;productivity-pay-gap&#x2F;</a>

This article presents the reasons behind cost disease as if his interpretation is accepted fact, but that&#x27;s not the case, right? Elsewhere, I&#x27;ve seen a lot more disagreement among smart people.<p>For example, he says we have to pay band members a lot more now or they&#x27;d leave for better jobs and that this also explains the rise in education costs over the last few decades. Education costs have risen about 2.5x over the last 40 years, after adjusting for inflation. Has teacher pay risen 2.5x after adjusting for inflation?

Quick question for anyone who actually studied Baumol&#x27;s theories:<p>Did he bring into consideration how some services, such as education and health care, exist in an awkward limbo between services we pay for (right&#x2F;libertarian view) and services we&#x27;re entitled to (left view), resulting in a smash up of public subsidies and political quicksand?<p>At face value, his theory is totally reasonable. BUT it seems totally reductionist to claim his drivers of cost are the only drivers (even calling them primary drivers seems foolish to me).

I&#x27;m having a hard time understanding the core of Baumol&#x27;s theory as Vox is laying it out. I identify a few premises:<p>1) Rising opportunity cost in the labor market raises the boats of all jobs (within a given grouping of jobs with low friction of employee movement)<p>2) This rising opportunity cost occurred (in the U.S.) due to manufacturing, which was well paying.<p>3) Consumer goods prices are more affordable due to increased capital efficiency relative to income.<p>4) The extra discretionary dollars from (3) are being spent on labor intensive goods, which cycles back to (1) again.<p>One point on which this loses me is the apparently hidden assumption that involuntary un(der)employment is low and stably so, and what markers of inflation we&#x27;re using. I think there&#x27;s an unexplained paradox: if we&#x27;re losing goods-producing jobs, why isn&#x27;t the competition in the service sector a countervailing force driving <i>down</i> wages?<p>Not trying to be a critic, I just want to understand this better.

Link to Wikipedia article on cost disease: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Baumol%27s_cost_disease" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Baumol%27s_cost_disease</a>

Most of this seems fairly uncontroversial. This, however<p>&gt; But a lot of service workers are doing jobs that are unlikely to ever be fully automated. Nobody wants a robot for a teacher or a nanny, for example. And even if we get software with advanced diagnostic capabilities, patients are still going to want doctors to explain the recommendations and nurses to provide hands-on care.<p>Maybe the author is taking a very short term interpretation of &quot;ever&quot; but I don&#x27;t know why these jobs are unlikely to be automated of general AI arrives.