While this was an interesting point in economics, Baumol's
"solution" to the problem is enlightening. Since many sectors, such
as food and technology have become cheaper they enable us to spend a greater
percentage of our wealth on services, like health care. Therefore, even if
health prices continue to rise, we, as a society, can continue to pay for it
and still have our lives be better off in the long run. The question for the
Orthodox Jewish community would be, does this rosy future apply to us as well? For
years the Orthodox Jewish community has spoken about a "tuition
crisis" (I put it in quotation marks because we need to stop calling
everything a crisis, even if it is something that must be dealt with as soon as
we find a viable solution. Calling everything a crisis makes problems seem like
they are ephemeral concepts). Since, at least in general, we send our children
to Jewish private schools starting in 1st grade, the continuous increase in
prices has continued to create a strain on the community (they have risen to
about 20K a year per child). However, perhaps, as the book would argue would be
true in general, we will continually be better off despite the fact that
education is taking up a greater and greater percentage of our livelihoods. If our
community was like all others I would have to assume that it would be true, and
perhaps it is. However, I think there are two reasons why we are not in the
position to sit on our laurels and assume that the "tuition crisis"
is truly a problem despite it looking like "the cost
disease". Firstly, we are paying for education both for ourselves
that is ever increasing, while also separately paying ever increasing
costs for public education, which many of us do not directly use. Secondly,
many of the sectors that in general are part of the progressive
sector, fall into the service sector in our community. The most glaring one is
meat. The slaughtering of meat needs to be done in a personal way by a
qualified individual, and it is therefore now unsurprising to me,
based on your thesis, that the price of Kosher meat continues to rise. Rather
than pretending I can answer if we are truly in a predicament or it just seems
like a problem like the cost disease does, I decided to ask Dr. Baumol himself.
He answered:
"Dear Mr. Reinstein, Thank you very much for your illuminating
message. Since I too am Jewish (though not orthodox), I am particularly
concerned about the issue you raise. And, indeed, though my analysis
does, I believe, apply to the community as a whole, it unfortunately does not
imply that all groups of society will have their legitimate interests protected.
These are certainly matters that will require careful analysis and the design
of appropriate remedial measures. I will certainly seek to think further
about the problem you raise.
With best
wishes,
Will
Baumol"
First of all, it is awesome
that he is Jewish, considering the impact he has had in recent economics. Also
he answered remarkably quickly, which I was not expecting, but was extremely
nice. In any event I hope he does continue to think about the problem because,
after reading his book, would be very confident in possibilities he may bring
up. If it is a problem, I hope we, as a community, can solve it, or at least mitigate it soon.
