Comment by PaulDavisThe1st

I call bullshit on this.

There are lots of reasons why US academics earn so much more than their european counterparts, but the income level of US tech employees is not high on the list, if it is on the list at all.

Also, Baumol's doesn't predict that wages in low productivity growth sectors will rise, it merely notes that the costs in such sectors do not fall, which means that whatever the sector produces (good, services, art etc) become relatively more expensive compared to other production. This is why it appears to cost so much to see the symphony orchestra, even in Cincinnati - it's not that the players all make a ton of money, it's that their productivity is flat, so the costs of the performance appear to rise relative to, say, toothpaste.

crossbody 3 days ago

I asked Gemini 3 if your statement is true and got this, as expected: "That statement is false. In fact, the prediction that wages will rise in low-productivity sectors is the central mechanism of Baumol’s Cost Disease"

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PaulDavisThe1st 3 days ago

Somebody asked Gemini 3 yesterday about a piece of music I was looking for. It said:
> Based on the details you provided—specifically the overlap with the poem "AM" (from Be Bop or Be Dead) and "Set The Tone" (from Bernie Worrell's Blacktronic Science)—the track you are most likely looking for is: "Music" by DeadbEAT (featuring Umar Bin Hassan) Released in 1992/1993 on the album Wild Kingdom, this track was a cult hit in the acid jazz/trip-hop scene of the 90s and later appeared on compilations like the influential Red Hot + Cool (1994).
Very good, except that there is no album called "Wild Kingdom" by an artist named Deadbeat, and while Hassan does appear on "Red Hot + Cool" it is on a differently named track written by himself.
So forgive me if I call bullshit on Gemini 3 as well.
However, in this instance, it is a correct summary of the most visible popular summaries of Baumol's cost disease, so there's that.
I don't think it captures the essence of what Baumol (& Bowen) were writing about, but I accept that my presentation was misleading.

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- crossbody 3 days ago
  
  LLM hallucinations are still a thing for ultra niche topics. Not a problem for topics that have sizeable wiki pages, like Baumol Effect. Here is the first paragraph from wiki: "...tendency for wages in jobs that have experienced little or no increase in labor productivity to rise in response to rising wages in other jobs that did experience high productivity growth"
  
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  PaulDavisThe1st 3 days ago
  
  The problem with this summary is that it's not actually what Baumol & Bowen were really focused on in their original paper.
  It is what most people nowadays connect with "Baumol's cost disease", but in their paper, the way in which rising productivity sectors cause wage increases in stable productivity sectors was more of a detail than the central part of their thesis. The core part was the observation that certain kinds of economic activity cannot reduce costs through productivity gains, while others can; the wage connection between them was, well, not an afterthought, but more of a consequence of the very specific sort of economic system we live in. One could imagine a society with different ways of distributing resources to labor that didn't really have this feature, and yet the same sectors of this imaginary society's would still suffer from "Baumol's cost disease".
  
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