Comment by twoodfin
21 hours ago
Healthcare, housing, education all have gone up despite increased productivity.
The hypothesis of Baumol’s Cost Disease is that these industries are exactly where we should expect prices to rise because they’re still dependent on low-productivity-growth human labor.
Baumol's Cost Disease is about relative costs. We are talking about productivity enabling absolute reduction in costs. Don't mix them up.
We were talking about infrastructure costs under increasing labor productivity. Now what are we talking about?
If the premise is that AI won’t improve productivity in industries like healthcare, education, and housing construction, then why are we worried about “the dead economy”?
No. You are getting it backwards. The premise is: even if AI improves productivity, we the people are not going to benefit from it.
The mistake you are making is that you are assuming that a system where productivity per unit of labor is higher automatically translates into increased global output. It does not. This idea of a dead economy theory is precisely the concern we are heading to a world where machines can make practically everything on the cheap, but it won't matter because the moneyed class won't need to satisfy the demands of the general populace.
4 replies →