Baumol Effect Is A Blessing, Not A Disease

Economist Alex Tabarrok recently made an interesting post on Baumol’s cost disease.  The concept usually explained by noting that since it doesn’t take any less time to perform a string quartet than it did when Beethoven wrote it, orchestras have no way to save money by taking advantage of advances in productivity and efficiency.

Tabarrok comes at it from the perspective that it is only more expensive to perform a string quartet now because productivity has increased in other industries.

The Baumol effect is easy to explain but difficult to grasp.


Growth in average labor productivity has a surprising implication: it makes the output of slow productivity-growth sectors (relatively) more expensive. In 1826, the average wage of $1.14 meant that the 2.66 hours needed to produce a performance of Beethoven’s String Quartet No. 14 had an opportunity cost of just $3.02. At a wage of $26.44, the 2.66 hours of labor in music production had an opportunity cost of $70.33. Thus, in 2010 it was 23 times (70.33/3.02) more expensive to produce a performance of Beethoven’s String Quartet No. 14 than in 1826.


The focus on relative prices tells us that the cost disease is misnamed. The cost disease is not a disease but a blessing. To be sure, it would be better if productivity increased in all industries, but that is just to say that more is better. There is nothing negative about productivity growth, even if it is unbalanced.

If that is a little hard to understand, he uses a more relatable example to point out that “…over time prices have very little connection to affordability.”

If the price of the same can of soup is higher at Wegmans than at Walmart we understand that soup is more affordable at Walmart. But if the price of the same can of soup is higher today than in the past it doesn’t imply that soup was more affordable in the past, even if we have done all the right corrections for inflation.

So just because a ticket costs more than it did years ago, doesn’t mean it is necessarily less affordable. Granted, it may still be a bit more difficult to get the funds together than in the past. I have had people tell me they were able to see Broadway shows for $15 at one time. While I suspect they may be mis-remembering how much of their weekly salary that $15 represented, it wouldn’t surprise me to learn that tickets today are a greater portion of the weekly salary for that same job today. The production values are likely a lot higher than people saw when they were paying $15 so the ratio of value to money spent is probably fairly good.

Based on Tabarrok’s explanation, the concept that certain artistic expressions are fated to be an increasing burden on society because they can’t be executed with greater efficiency is not valid. Productivity growth in other areas provides the capacity to support those artistic expressions.

Does Gazing Out From The Belly Of A God Provide New Perspective?

There was an interesting video on Shanghaiist in the last week about a hotel whose architect designed three giant deities for the facade to combat rumors that the building was constructed on a cemetery.

The three deities, Fu (福), Lu (禄), and Shou (寿), represent the three attributes of a good life, “prosperity,” “status,” and “longevity,” respectively. They were added to the design of the 40-meter-tall building by a local architect to compensate for rumors that the structure was being built on top of an old cemetery.

I will let you take a look at the video first. (Let me just say I present this mostly as a diversion and basis of idle musing rather than subject for serious analysis.)


One of the first thoughts I had was, if this was in the US, would this be considered some form of artwashing? For example, if someone had used positive imagery on a hotel constructed on a toxic waste site or some other dubious association as a way to assuage fears.

I am not trying to conflate toxic waste with human remains. Personally, I would have no problem staying in this hotel. I have worked in enough theaters that were purported to be haunted or built on sanctified land that this doesn’t bother me. The placement of the hotel and anticipated repercussions appears it has a much stronger social and cultural significance in China than it might in the US.

I just found myself musing about cultural differences. Would something along these lines this be viewed with skepticism in the US while in China it might be viewed as an appropriate gesture given the history of the plot of land.

I also wondered why a hotel might choose to go to the expense of the extra construction. Presumably people coming from out of town wouldn’t be aware of the rumors. Though if it is the sort of place that gains more business from people visiting local residents or conducting business with government or local companies rather than tourism, they might depend more strongly on word of mouth.

I was amused by the comment made by one of the residents that the building unexpectedly became a distinctive feature of the community. I was thinking to myself, how could three 120 foot high deities NOT become a distinctive feature of the community? If nothing else, you could navigate the streets in relation to where it was on the horizon.

Perhaps people did initially see the statues as a cynical use of spectacle to make money but ended up finding that it created a unique sense of place in the neighborhood.

Thinking about all this made me start to wonder how efforts at creative placemaking might appear from the outside through the lens of other cultures. Does it appear like we are trying to manufacture a sense of community where one doesn’t exist organically? (I get the image of some foreign visitor paraphrasing Regina George “stop trying to make community happen, it isn’t not going to happen.”)

Better Civic Pride And Well-Being Is Just A Short Walk Away

CityLab ran an article from The Atlantic today discussing how the availability of amenities like libraries and cafes within walking distance of your home bolstered civil society and personal well-being in that neighborhood.

A new study shows that living near community-oriented public and commercial spaces brings a host of social benefits such as increased trust, decreased loneliness, and stronger sense of attachment to where we live.

If this sounds interesting, read the whole piece because it offers much more detail about how this situation increases civic participation and trust in neighbors and local government.

These issues were on my mind Saturday as I was attending a block party in the nearby Pleasant Hill neighborhood here in Macon, GA. Pleasant Hill has been a historically black neighborhood since the professional class started building homes there in the 1870s. However, in the 1960s the neighborhood was bisected by the construction of I-75 and portion of those buried in the cemetery were disinterred. Conditions began to worsen as people moved out of the neighborhood.

Now with the widening of I-75 carving more of the neighborhood away there is attention and effort being paid to improving the conditions. A colleague of mine has been an energetic crusader in this regard and has been awarded a number of grants in support of her proposed projects.

The block party on Saturday was part of one of these projects. She and some others had gone door to door asking people what they would like to see happen with an abandoned community space. Five designs created based on that feedback were on display at the block party on Saturday. People were invited to vote for their favorite design by placing a colored dot on a poster board.

Since I know that there is often a lot of will behind building a space, but less support for operations, I was evaluating the plans for sustainability. All of them had some elements associated with artistic programming, but some emphasized the creation of community gardens. Another had some retail space with barber shops and nail salons. Another was oriented toward counseling services, study spaces and writing programs. Two of them were totally about artistic expression. There were dance studios; spaces for painting and drawing and performance spaces.

Most of the dots were ending up in the columns of these heavily arts spaces. I sighed inwardly. Those would be some great spaces, but they didn’t seem optimized for self-support. One of those designs might get built, but was there a plan to support it? (Good lord! This sounds just like the funder rational I often criticize. I have been infected!)

Besides, didn’t they already have activities like that at the much larger community center across the street?

No, actually they didn’t.

I walked across to see what was in the community center and it was quickly clear there hadn’t been any activities or staff of any kind in there for quite a few years.

This might be even more of an argument for a self-sufficient design, but it also possibly provided insight into the preferences of the voters.

People were drawn to the project designs that would provide them with what they didn’t have — a place to participate in some basic creative expression. Kids were congregating in front of the pictures of people taking dance and art classes because they didn’t have access to anything of the sort.

I was considering whether I wanted to write about this today as I walked back to my car on Saturday. The article on CityLab decided me because the idea that such places create stronger community bonds and a sense of identity aligned so strongly with what I felt I was observing.

Big Kids Play With Bigger Blocks

I saw an article on Gizmodo in the last couple weeks about scientists who designed 3,900 pound concrete structures that can be moved by a single person. As I read about cuts to arts in schools and the elimination of recess, I figured there was a need to toss out an example in support of unstructured free time.

There are a bunch of fun to watch GIFs on the article’s page, but here is a video of what they did:

As some of the commenters to the article point out, yes it is one thing to roll pre-cast objects over a concrete floor and another to quarry stone to transport over muddy ground. So while this may not entirely explain how Stonehenge, the pyramids and the Moai of Rapa Nui were created, there is some proof of concept upon which to base the design of structures to be used in emergency situations.

From my point of view, the development of the objects people are moving around have some basis in playing with Legos or other building materials and may move on to increasingly practical applications. I am sure that at some point in the past, at least one person who contributed to the design of the project was afforded the time to juggle things around in their hands to see how it all fit together and explore the properties of what they made were. Leaps of imagination and experimentation occurred until someone made a video of people rocking two ton chunks of concrete around with a light push.

Time to play with the simplest objects can result in new insights. But that is difficult to accomplish if you grow up thinking there is no value in such activities, exploration and curiosity.

This may not be the first time you heard about someone gaining insight into ancient construction techniques. A retired construction worker in Michigan demonstrated some much more compelling theories about ancient construction techniques some years ago. (I couldn’t find any better quality video than this.) He employed the same design elements of rounded/beveled edges to great effect, especially considering he was moving blocks across less prepared surfaces and using tools more readily available to anyone.

Though to use his techniques in an emergency situation, you would need much more knowledge to construct barriers and structures than with the prefabricated concrete objects in the first video.

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