It was in 1965 that Professor William Baumol, an economist, began explaining how technological advances raise productivity and naturally push up wages as workers are able to produce more goods, from hammers to coffee cups, at lower cost.
But those same increases in productivity, he found, do not apply to labor-intensive activities like concert performances, doctor examinations, college lectures, soccer matches and oil changes.
For example, he said, it takes exactly the same number of people and the same amount of time to play a Beethoven string quartet today as it did in, say, 1817. Yet the musicians who spent years studying and practicing — and still have to eat and live somewhere while doing that — cannot be paid the same as their 19th-century counterparts. Their wages, too, will rise, even though they are no more productive than their predecessors were. As a result, their work eventually becomes increasingly expensive compared with more efficiently produced goods.
There is no cure for the cost disease, Professor Baumol said, and he warned that the rising relative expense of health care, education and other essential services, including garbage collection and police patrols, would make them seem less and less affordable.