One of the most remarkable aspects of the last few generations is that for the first time in human history, at least to this degree, stuff has been getting cheaper while human labor gets more valuable. It’s a technology-enabled humanist revolution! At the same time, labor-intensive sectors like healthcare and education have become more expensive relative to the declining price of goods. Economists call this the “Baumol effect,” though it’s sometimes referred to as the “cost disease.” But economist Alex Tabarrok joins the show to discuss how that curse might actually be a blessing in disguise and how the Baumol effect radically disrupts our preconceived notions about effective government policies.
Why are some prices getting higher while innovation causes the lowering of other prices? Why has the price of education gone up? What is the Baumol Effect? How can we substitute for skilled labor?
Further Reading:
Why Are the Prices So Damn High?, written by Eric Helland and Alexander Tabarrok
Marginal Revolution
Stubborn Attachments, written by Tyler Cowen
Related Content:
The Automation Revolution is Upon Us, Building Tomorrow Podcast
Will Artificial Intelligence Take Your Job?, Building Tomorrow Podcast
On Innovation: Don’t Ask for Permission, Building Tomorrow Podcast
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