Comments on: Vacuum-packed cassoulet

By: Lawrence Krubner

Lawrence Krubner — Fri, 07 Nov 2003 15:50:18 +0000

“Why does “progress” lead to some things being worse? …We put up with it, and spend the money we saved on something else, but we know if we’re honest with ourselves that something of quality has been lost.” Less nuanced than what I’m used to from Chris Bertram. I suppose this meant merely as a rhetorical question. The obvious answer, if one was needed, is that given a choice, on the one hand, between cars, cell phones, faxes, and the other wonders of the modern age, and, on the other hand, really good cassoulet’s, people have chosen the wonders of the modern age. Related questions might be why firms fire millions of workers during booms, as happened in America in the 1990s, even during the late 1990s, when labor was tight. And the answer is that no matter how much the economy is booming, there will almost always be at least a few sectors that are in long-term structural decline. So too with progress more generally: no matter how much things are getting better, there will always be a few things getting worse.

By: Mike

Mike — Wed, 05 Nov 2003 06:24:35 +0000

I would disagree with one point about higher education: “the real thing” most certainly did not “used to be available to everyone at reasonable prices”. One may decry the decline in quality of higher education—but to do so (“in the old days, a college education was the real thing”) might imply a sneer at those who followed James Meredith, or those who have benefited by the increase in enrollments brought about by the G.I. Bill. But I’m quite aware your point is about the rush to technological “improvements” for situations wherein they may not apply, and would be inclined to agree.

By: Kieran Healy

Kieran Healy — Tue, 04 Nov 2003 20:39:24 +0000

It’s a pity you can’t write two otherwise identical versions of this post, only with one talking about the ‘Baumol effect’ and the other talking about intersectoral differences in the organic composition of capital, and then note any differences in the reception of the argument.

By: Cheng-Jih Chen

Cheng-Jih Chen — Tue, 04 Nov 2003 20:03:51 +0000

There's an old Slate article talking about the Baumol effect on labor-intensive culture, such as opera. The article notes that, for the perceived high price of opera tickets, and political will to reduce this cost, you probably have to have a subsidy for, uh, opera production. There's one form where the government decides it wants more of a particular type of opera and writes checks to support it, and one where the government provides tax deductions for charitable contributions to non-profits. The former may lead to complacency among opera houses, the later may lead to more dynamicism, but also to a greater reliance on popular operas and superstars. Also in Slate is an old Krugman piece giving a good, standard lay description of the Baumol effect as it applies to the entire economy. Because of relative productivity increases in the capital-intensive sectors, the total output of that economy increases, given the same inputs (labor). People will therefore have more disposable income, and can use this income to buy more of the relatively expensive labor-intensive goods. In our case, you can buy more real cassoulet; they're priced much more than they used to be, but, say, TVs are priced much less than they were before, so with the savings you have from your TV consumption, you can spend it on cassoulet. One thing the simple Baumol model doesn't talk about is the secondary effects of the increasing relative prices of cassoulets. The increased prices will draw in producers, which may drive down the price of cassoulets, but may also reduce the quality of cassoulets, as you've pointed out. As you noted, the long term effect of defining cassoulets down may result in high-end cassoulets being wiped from the mass market, as the skills required to make them, and the palates needed to demand them, may fade away.

By: dsquared

dsquared — Tue, 04 Nov 2003 18:54:25 +0000

An admirably clear explanation of the Baumol Effect. For anyone who’s interested in looking up the source, it’s Artis & Eltis “Britain’s Problem: Too Few Producers” or some such, a big influence on Keith Joseph.