Cost sickness
The baumolsche cost disease (by William J. Baumol , 1967, Eng. Cost Disease ) referred to the problem of poor rationalizability of services as opposed to other sectors. However, to maintain the availability and quality of services, wages have to keep pace with general wage increases, driving relative costs (and prices).
principle
Baumol distinguishes between two areas:
- Goods and services that can be easily automated. The more machines replace people, the more the amount of work required to create an additional unit decreases. Productivity grows, wages rise, but the price of products remains the same.
- The production or service consists in proportions of considerable and non-reducible human labor. Productivity remains the same, but salaries rise.
The result is a gradual increase in costs. Baumol describes it as follows: "Gradually the differences in cost increases accumulate and make personal services considerably more expensive than industrial goods."
Examples
It is hardly possible to reduce the number of teachers without reducing the quality of the teaching. Nevertheless, wages must keep pace with general wage increases over time.
The cost sickness also affects artistic services. This can be understood as follows: 200 years ago, performing a string quartet required the same amount of work as it does today. Productivity is stagnating in this area. In industry, however, it is increasing, which in turn means that the relative costs of artistic performances will rise predictably.
The problem also extends to the public sector. Wage costs are growing just as fast in the public sector as in the private sector, but the potential for rationalization is lower. Thus, there is a greater increase in costs, which results in an increase in government spending.
Effects
The cost disease primarily affects jobs that refuse to automate because they require human contact. Obviously, this becomes evident in areas of repairs, bespoke services, legal services, social services, postal services, street cleaning, security services, catering, funerals and many more. The quality of the services described is directly dependent on the amount of work invested. Baumol (2012) comments on this: “At some point it becomes difficult to reduce the time that is necessary to carry out certain tasks without reducing the quality at the same time. Anyone who tries to speed up the work of surgeons, teachers or musicians has a good chance of getting a botched operation, poorly trained students or a strange concert. "
The thesis that the increase in productivity in areas in which human work cannot be reduced automatically means a loss of quality can be observed in many places with foreseeable results: non-urgent operations are postponed, mail is delivered less often, school hours are reduced, Kindergartens are restructured, queues are formed at counters and cash registers. In the same study, Baumol writes: "The troubling moral of the story is that among the goods most threatened by cost disease are vital attributes of civilized societies."
literature
- Baumol, William J. and William G. Bowen (1966) Performing Arts: The Economic Dilemma , New York: The Twentieth Century Fund.
Individual evidence
- ^ William Baumol, "The Cost Desease. Why Computers Get Cheaper and Health Care Doesn't," New Haven (Yale University Press) 2012
- ↑ Rierre Rimbert: How productive is a string quartet? Services, Robots, and the Value of Labor. In: Le Monde Diplomatique, July 2013, page 3, accessed May 17, 2017.