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America's Economic Malady: A Bad Case of 'Baumol's Disease'
www.dailyfinance.com ^ | 12/11/10 See full article from DailyFinance: http://srph.it/fMXqv2 | Charles Hugh Smith

Posted on 12/12/2010 2:48:36 AM PST by M. Dodge Thomas

Goods-producing industries could achieve high productivity growth as labor-saving automation and supply-chain efficiencies scaled up. But jobs in nursing and teaching required the same number of person-hours with patients or students as they did in years past. In other words, labor-intensive services had far lower rates of productivity growth than did goods-producing industries. And yet salary increases in those service sectors -- education, health care, government, to name a few -- keep pace with those in industries where raises are justified by greater productivity.

This difference has a consequence that few had noticed before: As gross domestic product rises due to improvements in goods-creating productivity, the relative share of the economy occupied by low-productivity-growth services rises, too. As productivity gains boost overall wealth in the economy, the sum spent on goods decreases as a percentage of GDP, while the sum spent on services such as education and health care increases as a percentage of GDP.

This matches what we see today: The percentage of income spent on manufactured goods such as TVs and computers has dropped, while the percentage spent on health care and education has risen sharply...

This has a direct bearing on government services' share of GDP. Since the labor-intensive productivity typical of government services isn't as responsive to capital investments as goods-producing industries, the public sector's share of the economy rises naturally. This helps explain why government's share of the GDP has expanded regardless of which political party is in power: It isn't politics; it's Baumol's Cost Disease.

(Excerpt) Read more at dailyfinance.com ...


TOPICS: Business/Economy
KEYWORDS: economics; inequality; productivity; wages
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To: M. Dodge Thomas
But jobs in nursing and teaching required the same number of person-hours with patients or students as they did in years past.

Re: teaching,..the same number of hours? WHAT NONSENSE!

Uh? Why do homeschooling parents **routinely** report that they spend less than 2 hours per day per kid? Huh? And...They get spectacularly better results.

Why do we have bright kids still sitting around high school when homeschooled kids are FINISHING their university degrees? Hm? Seems like we could cut a **lot** of teacher hours if kids, at any age, could pass a GED-like exam and be admitted to a university ( with full benefits) or an apprenticship program. Again...LOTS of saved teaching hours could be found there too!

What about those kids who are taking virtual courses by why of computer? I don't any face time with a teacher in that situation.

Then there are the kids ( I know personally) who have simply picked up a chemistry, calculus, or biology book, thoroughly studied it and passed the AP exams with the highest scores. No teacher there either!

21 posted on 12/12/2010 7:28:28 AM PST by wintertime (Re: Obama, Rush Limbaugh said, "He was born here." ( So? Where's the proof?))
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To: wintertime

Actually, home schooling is a good example of the sorts of productivity issues addressed in that article: home schooling makes sense precisely *because* educational productivity is low and highly resistant to improvement compared to many other sorts of economic activity, that’s for example why some people home school their children for “educational” reasons, but no one makes their own flat-screen monitors.

If we knew how to radically raise classroom productivity - if we could create a classroom situation which was 10x as productive as individual instruction - there would be much less *educational* incentive to home school.

Unfortunately despite high hopes attending the introduction of various pedological and technological advances classroom productivity has proved stubbornly resistant to improvement - which is likely the proponents of various “solutions” to the problem are so dismissive of everyone else’s.

And even so, classroom “productivity” (at least in the 85% of public schools that produce reasonably good results) is higher by your own standard, 2hs/day/one student equals 40/hrs/day for a twenty student classroom, so even if we assume that home schooling is twice as effective, a classroom is still several times as “productive” as home schooling.


22 posted on 12/12/2010 8:42:18 AM PST by M. Dodge Thomas
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To: 9YearLurker
I really had no idea. I thought it was just that nonexempt employees got more protections. Thanks.

Whether your exempt or not depends upon what you do. Do a web search for FLSA if your interested in reading about it. There isn't one size that fits all when it comes to this stuff. There is national labor law and state labor law that applies. Union contracts often make labor law a mute point. It is sort of like IRS law. It depends who you ask.

23 posted on 12/12/2010 9:13:40 AM PST by EVO X
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To: EVO X

That I understand. What I’ve never come across is anything limiting employers’ ability to require regular working-hours ‘face time’ of its exempt employees. That would be news to me and I’d be interested in any links you had describing such.

For independent contractors, by contrast, employers are very limited in how they may dictate their time.


24 posted on 12/12/2010 10:34:12 AM PST by 9YearLurker
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To: M. Dodge Thomas
I personally did not spend 2 hours per day per child with my homeschoolers. My **children** only spent about 2 hours in **their** formal homeschooling.

The actual time that I spent per child was far far **less** than 2 hours. Yet...Even with this minimal time investment on my part and that of the children, all 3 of my homeschoolers were in college by the ages of 13, 12, and 13. How's that for efficiency and use of time? Few teachers in institutional settings can beat that!

As I posted previously, homeschooled parents have told me that they spend **less** ( please note the word **LESS**) than 2 hours in formal homeschooling with an individual child. I know large families where the older children take over much of the teaching the younger. It was once common in one room schools of the past for the older children to help with the teaching of the younger.

As my children grew older I merely checked their work occasionally and helped to make sure that distractions in the home were kept to a minimum. Don't parents of academically successful institutionalized children do exactly the same?

Also...If bright children could start college at the ages of 13, 12, and 13 and finish B.S. degrees by age 18, ( as mine did) think of all the eliminated high school and middle school teacher jobs ( hours).

If any child of any age could take a GED-like exam and immediately qualify for university, college, or an apprenticeship ( with all the scholarship and perks of an ordinary student) that too would eliminate many high school and middle school teaching jobs ( hours).

Virtual schools, ( right now) allow many middle and high school students to take courses at their convenience, especially during breaks and the summer. That eliminates teachers and their teaching hours.

Finally, I personally know both institutionally schooled children and homeschoolers who have simply bought the book, taken an AP advanced placement course, and scored on the highest levels. ( Absolutely **no** teacher hours there!)

Wow! There is **PLENTY** of room in the existing collectivist school system to squeeze out many teaching jobs ( hours) and get better results as well.

25 posted on 12/12/2010 2:15:58 PM PST by wintertime (Re: Obama, Rush Limbaugh said, "He was born here." ( So? Where's the proof?))
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To: EVO X
If he is on salary, he should be able to leave once his work is done.

When I was a salaried emp, I was called in to work Staurday (to fix something I warned management about weeks before). When I griped, I was told that salaried employees are expected to work every day except holidays and if I got the weekend off, if was by the good graces of the company.

26 posted on 12/12/2010 5:05:18 PM PST by Oatka ("A society of sheep must in time beget a government of wolves." –Bertrand de Jouvenel)
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To: 9YearLurker
That I understand. What I’ve never come across is anything limiting employers’ ability to require regular working-hours ‘face time’ of its exempt employees.

You have to show up in some capacity. How long seems to be open to debate. At lot of that is developed from behind the scenes case law. Our HR legal beagles say you report sick leave and vacation in 4 hour increments. I've seen mention of 2 hour or even 1 hour requirements elsewhere. At one point we reported in 2 hour increments, but that was changed to 4 several years ago.

Furlough rules for exempt employees are pretty straight forward..

27 posted on 12/12/2010 5:17:00 PM PST by EVO X
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To: wintertime
I personally did not spend 2 hours per day per child with my homeschoolers. My **children** only spent about 2 hours in **their** formal homeschooling.

The actual time that I spent per child was far far **less** than 2 hours. Yet...Even with this minimal time investment on my part and that of the children, all 3 of my homeschoolers were in college by the ages of 13, 12, and 13. How's that for efficiency and use of time? Few teachers in institutional settings can beat that!

That’s a remarkable record, and I’m curious to know a bit more about it – for example if they continued to live at home, what sorts of colleges they attended, and what they majored in.

28 posted on 12/13/2010 1:52:43 AM PST by M. Dodge Thomas
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To: M. Dodge Thomas
That’s a remarkable record,

It is **common** for homeschoolers to enter college early. At one time in our nation's history it was routine for young teens to attend college, or embark on an apprenticeship and to be completely self sufficient by their late teens. After 5 or 6 generations of collectivist government schooling, we as a people, have forgotten this.

I watched an HBO special on John Adams recently. His son, John Quincy Adams at the young age of 14 was the full-time secretary to the ambassador of Russia. He was fluent in Latin, Greek, and French when he took the position, and learned Russian while working in Russia. Bright children of today could be working at similarly high level.

Collectivist government schooling **deliberately** retards the educational and social development of our nation's youth by keeping them in compulsory government playpens.

and I’m curious to know a bit more about it – for example if they continued to live at home,

Yes, they did live at home. The oldest of the three though was an emancipated adult when he turned 16. He was a nationally and internationally ranked athlete. We moved to a new state and he chose to stay and continue his college education and training .

what sorts of colleges they attended,

They first attended community college. When they had finished all college general courses and Calculus III ( by age 15) they transferred. The oldest ( the athlete) chose a local private college. The two younger children were accepted to the flag ship state university which was the most competitive in our new state. My husband and I opened a health clinic and we had the freedom to locate anywhere. We chose a site that was convenient for the two younger to continue their education and still live at home.

and what they majored in.

The two younger children earned B.S. degrees in mathematics by the age of 18. The oldest of these two then went on to earn a masters in mathematics. The youngest has chosen to continue her education by studying nursing on a part-time basis. They are both now wives and mothers.

The oldest continued training in his sport and attended college in the evenings. He studied accounting. As an older teen he stopped his training and studies for a few years and worked for our church in Eastern Europe. As a result he is completely fluent in Russian. In his early twenties he returned to the U.S. and began training again and continued to compete on the national and international levels. Even with this training and travel he finished his B.S. in accounting at an age typical of those who are institutionalized for their schooling. He is now in a highly ranked masters program and studying accounting. He no longer competes. ( He recently married, by the way.)

29 posted on 12/13/2010 12:19:14 PM PST by wintertime (Re: Obama, Rush Limbaugh said, "He was born here." ( So? Where's the proof?))
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To: wintertime

A remarkable family and a remarkable accomplishment!

Congratulations.


30 posted on 12/13/2010 3:10:50 PM PST by M. Dodge Thomas
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To: M. Dodge Thomas
A remarkable family and a remarkable accomplishment!
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Thank you.

At one time in our American history our family would not have been remarkable. That is what so sad. America has forgotten its educational heritage.

Since homeschoolers are routinely doing what our family has done, perhaps they help reawaken American innate exceptionalism.

31 posted on 12/13/2010 3:30:28 PM PST by wintertime (Re: Obama, Rush Limbaugh said, "He was born here." ( So? Where's the proof?))
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To: M. Dodge Thomas

Doesn’t really make sense. Productivity could be increasing in health care, but isn’t. It should be ripe ground for improvement, but it’s not. The goonment is MANDATING productivity increases, but nobody can agree on what the meaning of “meaningful use” is. Sound like Detroit?


32 posted on 12/13/2010 3:36:31 PM PST by ichabod1 (Hail Mary Full of Grace, The Lord Is With Thee...)
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To: cgbg

It’s only a depression if there’s a socializt standing over the economy with a pillow over its face. Which there is.


33 posted on 12/13/2010 3:42:18 PM PST by ichabod1 (Hail Mary Full of Grace, The Lord Is With Thee...)
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To: ichabod1

I’m not sure the “government” is the major culprit here, there are *huge* differences in productivity (cost for outcome) which appear to be related to other drivers.

http://www.nejm.org/doi/full/10.1056/NEJMp0809794


34 posted on 12/13/2010 5:26:15 PM PST by M. Dodge Thomas
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To: Oatka
When I griped, I was told that salaried employees are expected to work every day except holidays and if I got the weekend off, if was by the good graces of the company.

There is nothing that says they have to give any time off on a daily basis. If I was working under such conditions, I would certainly want to be compensated for it. You have to read the fine print before you sign your life away..

35 posted on 12/13/2010 5:46:59 PM PST by EVO X
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To: EVO X
You have to read the fine print before you sign your life away.

In this case there was no fine print, but the boss was just on a power trip that day - I almost always got the weekend off, except for that one time. I think he was embarrassed that what I predicted happened. When I gave him the warning earlier I was told, "Don't worry about it. That's not your job." I reminded him of that when I griped.

36 posted on 12/13/2010 5:59:57 PM PST by Oatka ("A society of sheep must in time beget a government of wolves." –Bertrand de Jouvenel)
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To: M. Dodge Thomas

Actually, I’d go along with you halfway. For a long time we’ve been saying that if the industry doesn’t get it’s act together and start agreeing on some standards, and getting rid of what we call “silos of care” (like silos of information?), Uncle Government is going to have to step in and do it for us, and nobody will like what that ends up looking like.

If only the democrat congress had been willing to listen to the industry and the people and do what was right instead of rubberstamping something that the socializt left excreted without even reading it, in fine politburo style. They really needed to have lots and lots of debate on this, lots of committee hearings, a lot more input than a bunch of proported docs in cheap white prop coats standing behind that man in the People’s rose garden,


37 posted on 12/14/2010 7:24:16 AM PST by ichabod1 (Hail Mary Full of Grace, The Lord Is With Thee...)
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