Sam Altman vs. a 1960s Economist: Who’s Right About AI?
- What is Baumol’s cost disease?
- Why do healthcare and education costs rise faster than inflation?
- Will AI make services like healthcare and education cheaper?
The Phoenix Symphony sold more tickets, cut its office costs, and still laid off 66 musicians. I use that story and a 1960s idea from economist William Baumol to explain why tuition, childcare and doctor’s visits keep climbing while almost everything else gets cheaper. Then I test it against Sam Altman’s promise that AI will make everything cheaper. You’ll come away knowing which costs AI can bring down, and which part of your life it will make more expensive.
Baumol’s cost disease is an economic idea from William Baumol explaining why work that depends on people’s time, such as teaching, nursing and live performance, gets more expensive over time. Technology makes factory and software workers more productive, which raises wages across the whole economy. Industries where a person’s time is the product have to match those wages without getting any more productive, so their prices rise faster than inflation. AI can lower the cost of work where a person was only the means of getting it done, such as tax prep or reading an X-ray, while the work where the person is the product gets relatively more expensive.
#futureofwork #inflation #BaumolsCostDisease #AIEconomics #ClassicalMusic #OrchestraLIfe #ArtsAdministration
