Re:Baumol Effect
by asdasdasdas5453 on Sunday October 18, 2020 @08:19AM
(#24817283)
" This is pretty much what I wanted to write. How come productivity is measured in dollars when exchanging goods/services, but constant units when this Baumol thing comes up?"
From an economist perspective there is no difference between the two. Money is just a convenient metric to be able to compare the value of multiple goods.
You don't think of you salary as the power to buy X burgers or Y beers but really it is what it is. It is just easier to say I earn XXXX$.
The difference is the price, no?
If I get paid 100 for playing a concert on one day, but 120 another day, did I get more productive? Either way I produced the same number of concerts, but got 20% more payment.
Measured in concerts my productivity was the same. Measured in other goods it went up.
The simplest way to resolve the paradox is that you have a society that becomes more productive over time, and that everyone shares in the increased productivity due to the negotiation process. If you can fish and I can cook, and you discover how to 10x your fishing output while I sit on the beach, you are still going to give me more than whatever amount of fish I got before.
The other thing about Baumol - not his fault - is you often see it quoted as a sort of club to beat people with if you don't like how they make their money. And the fact that it's an economist gives it a respectability that makes people hesitate before asking more.