How a productivity phenomenon explains the unraveling of America

The consequences of Baumol's Cost Disease

Agatha Christie once remarked that she never thought she'd be so rich that she could afford a motor car, nor so poor that she couldn't afford servants. It's a pithy encapsulation of the scope of technological and social change she lived through, and for those who value a socially mobile and egalitarian society, both of those changes probably count as progress.

What's less immediately obvious is that those changes are related to one another — but they are. In a very real sense, the increasing affordability of automobiles is what made it more and more expensive to keep servants. In our own day, though, that combination — machines getting more powerful and in-person services getting more expensive — is less likely to be reflected in greater social mobility, and less likely to feel like progress. The mysterious cause is the same as it was for the changes Agatha Christie observed: Baumol's Cost Disease.

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