Baumol’s cost disease tested once again

Services should, over time, rise in price compared to manufactured goods.

Or, to cast the same story another way, one hour of services labour should, over time, cost about the same multiple of manufacturing labour. Obviously, it’s not one hour for one hour, as some services jobs are more difficult, more distasteful, whatever, than some manufacturing jobs (and vice versa). But the ratio should stay static-ish, the increasing productivity of manufacturing hours leading to manufactures being less expensive per unit than services output.

Hmm:

The first exhibit in the museum has a painting on the wall of a 400-year-old Chinese trade ship in Thailand. Wooden buckets of rice sit in front of it, the payment used for sex by sailors.

“Sex work was legal back then,” Apisuk says. “Sex would cost 15 kilos of rice. That much rice costs roughly 1,050 baht [£20] today. So the price hasn’t changed.”

Not perfect but appears about right.

8 thoughts on “Baumol’s cost disease tested once again”

  1. “But the ratio should stay static-ish, the increasing productivity of manufacturing hours leading to manufactures being less expensive per unit than services output.”

    Well you say that but…
    The financial services sector I started my working life in, stockbroking, has benefited from computerisation to the degree that 95% of the actual work involved has disappeared. And the difficulty of the remaining 5% has decreased to the point, I wouldn’t be surprised if chimps could hack some of it.
    Yet the cost of the financial service has risen.

  2. So Much For Subtlety

    15 kilos of rice seems a bit high. I bet you could have bought the whole girl, not just half an hour of her time, in China back then. Thailand, not so sure about it.

    When people condemn sex work, they are saying “my sex is better than your sex”, she says.

    Ummm, yes. Obviously. So?

    “You are a sex worker, right?” she asks. “But unfortunately you don’t get paid.”

    She has never heard of alimony.

  3. It’s tragic that we haven’t been able to make any significant efficiency gains in rice cultivation in 400 years.

  4. So Much For Subtlety

    Andrew M – “It’s tragic that we haven’t been able to make any significant efficiency gains in rice cultivation in 400 years.”

    There are parts of Thailand where that isn’t funny.

  5. 1,000 baht would get you something, but it wouldn’t be very pretty and likely not clean. 2,000 baht would get you something which is both, and you could probably argue that down to 1,500 baht if you were in low season. So, not far off at all.

  6. “You are a sex worker, right?” she asks. “But unfortunately you don’t get paid.”

    She has never heard of alimony.”

    Or Magnet Kitchens.

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