Marginal Revolution: Assorted links

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Assorted links

1. Does music suffer from a cost-disease?

2. What are the best-selling classical music CDs of all time?

3. Abhijit Banerjee: Where is development economics -- and education -- heading?

4. Dalton Conley: What have we learned about poverty?

Posted by Tyler Cowen on March 23, 2007 at 01:18 PM in Web/Tech | Permalink

Comments

I am APPALLED at the social engineering advocated in the Conley article. I understand that there are many folks out there - especially the ones inclined to head up sociology and political science departments, that would like to "fix" poor folks, but those of us who live in the neighborhoods they disrupt and sometimes destroy with their plans don't appreciate their efforts.

Posted by: anne at Mar 23, 2007 1:32:25 PM

It's just plain depressing to read Dalton Conley's long, learned article about causes of poverty around the world and see zero reference to Lynn and Vanhanen's "IQ and the Wealth of Nations."

It bespeaks a lack of moral seriousness about a serious problem.

Posted by: Steve Sailer at Mar 23, 2007 2:07:58 PM

Seizing on a small point in echo to the above on the "poverty" article.

If housing is re-jiggered in reference to access to jobs, I wonder:

In a dynamic economy, jobs are created and destroyed without much advance notice. When the patterns change, then what'cha'wanna bet, artificial "jobs" would be invented by government to justify the invented housing design? And (cynically) further, what if the influx of problematic workers (no, of course all the poor are not problematic workers, but some proportion are) hastens the shift of employment out of that area?

Why am I picturing, for a variety of reasons, 30 years down the line of this policy, deserted and dysfunctional areas, with the social engineers scratching their heads? A kind of ideological reverse-Midas syndrome...

Geography is interesting, but its "fixedness" in no way exempts these same-old arguments from the flux of change in incentives and responses.

And an ever-greater reach of government programs seeking to duplicate the 2-professional-parent schedule of classes and play dates?! Again, wha'cha'wanna bet some coercion arises, the broader population of children must be brought in to leaven the mix in this net, via truancy laws or other methods?

Nothing would make me happier than to hear that this professor has moved to half-time employment and now spends the leisure on one-to-one tutoring of a struggling child. I do not mean this as a chicken-hawk specious argument, only that I quake for the poor who are repeatedly poked from a distance with these policy sticks.

The interventionist-nonsense machine creaks ever onward! Depressing, inasmuch as I am much in favor of improving the lives of the poor!

Posted by: who, me? at Mar 23, 2007 2:44:58 PM

This article about cost-disease seems to make a big deal about a simple situation. The cost of performance is more or less constant, while the cost of competing goods like recordings and manufactured products goes down. Performance suffers from the competition but benefits from increases in disposable income. Does it really need any more analysis than that? And is it really worthy of a new term like "cost disease"?

Posted by: Tony at Mar 23, 2007 3:30:00 PM

Might the relatively expensive fixed labor input for performances lead to more investment in other inputs as well, the Alchian-Allen effect in a sense. Big concert halls come to mind.

This might explain the growth of blockbuster movies - fewer movies are made but each at enormous cost. In other words, if you are going to pay the talent $10MM, you are more likely to have extravagant special effects. The high cost of labor is thus still a low portion of total costs.

Posted by: bastiat at Mar 23, 2007 4:35:45 PM

I had no idea Nana Mouskouri was so popular.

Posted by: Anderson at Mar 23, 2007 4:57:54 PM

I'm with Tony on rising input costs of live performances competing with falling costs of recorded performances. So what? The poor buggy whip maker became an auto worker and the live performer became a recording artist.

Higher education also faces high labor factor shares and rising opportunity costs of time for workers. Fortunately for us higher ed workers, an alternative that substitutes technologically for labor has not yet made inroads (TVs in classrooms never lived up to their promise but this Internet thingy might).

Are high and rising costs the reason that either the arts or education are subsidized? I thought the nominal reason was that they generated positive externalities. The public choice reason being that the benefits are focused and the costs are diffuse.

Posted by: MW at Mar 23, 2007 5:09:51 PM

ok, i'm confused. i thought non-free recorded music was the buggy whip and that live performance and t-shirt sales was the future. when did that change?

Posted by: DK at Mar 23, 2007 5:29:32 PM

Re, Banerjee, is there really that much uncertainty about why certain economies develop faster than others? How ivory tower would one have to be to have had the political and economic profiles of Botswana and Zimbabwe in 1980, both of which had about the same GDP per capita, and given a just a couple of contingencies about their political evolution, not predicted that one country wouldn't be much farther than the other 25 years hence. Maybe they couldn't have precisely predicted that the freer, more stable country would be exactly six times better off, but come on.

Posted by: M. Hodak at Mar 23, 2007 5:45:04 PM

Re: M. Hodak

There is a growing consensus that economic institutions matter in the development of a country. But, how do you change your institutions? The inefficient rules currently in place benefit those who would change the rules.

Posted by: anon at Mar 23, 2007 6:17:14 PM

The cost disease premise is fundamentally flawed.

Imagine one guy who makes paperclips, and one guy who plays the piano. Imagine that the paperclip guy has to make ten paperclips to afford to buy a ticket to hear the piano guy, and he can make ten paperclips an hour.

A machine is invented that allows the paperclip guy to make 100 paperclips in an hour. The paperclip guy's productivity goes up, while the piano guy's doesn't. Except that the price of paperclips also FALLS, so that now paperclip guy has to sell 90 (or 110, or whatever) paperclips to go to the concert. The guy still has to spend roughly an hour's worth of wages to go to the same concert.

Obviously the amount that the price of paperclips falls is crucial to determine whether the ratio of the ticket price to paperclip wages goes up or down, and when you get into a real world economy with more goods and a more complex division of labor, it gets really complicated, but the point is, the ratio can go up OR down. Just because the productivity of a physical laborer goes up and a concert musician's productivity remains the same, does NOT mean that the relative cost of the concert musician's labor will automatically rise.

Indeed, labor productivity has gone WAY up in the last 200 years, and I cannot believe that the AVERAGE musician's wage has gone up in any sort of proportional way.

In focusing on the need for subsidy of opera and classical music, despite attendance rates, you only underscore the fact that there are already more performances of such music than there should be. Live performances of classical music and opera are inefficient goods, in that they cost more to produce than people are willing to pay. As such, we should be producing less of them, not more. While this may be painful for opera and classical music fans to hear, the answer lies in your own pocket. Either pony up and pay to go to more shows, or stop complaining, don't tell the rest of us that we should pay for something we don't even get to see (or want to see).

Posted by: Doug at Mar 23, 2007 8:29:06 PM

By AVERAGE musician's wage, I mean his wage relative to other workers.

Posted by: Doug at Mar 23, 2007 8:34:49 PM

Wouldn't "cost disease" apply to many other, thriving, professions? How many more meals per night can a famous chef make now than 50 years ago? How many more papers can an academic write now than then?

Posted by: Mike Beversluis at Mar 25, 2007 9:17:33 AM

I figured a far better example of such a "cost disease" is prostitution. The wage there inevitably rises with average wages because you are directly buying labor. What's their equivalent of mass-produced recordings?

Wait, don't answer.

(Sorry, I know this is a family blog, but it's a far better example than music.)

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