Baumol's cost disease: Anyone here not buy it?

[richardhutnik]

badgenome said:

richardhutnik said:

Read more on Baumol's Cost Disease.  The argument there is that Is NOT the case.  Yes, the government can make it worse, but it is a systemic issue that can happen in markets, even if free, if certain conditions exists.  To say that the government alone is responsible for it is false, if you consider Baumol's arguments valid.  The thing is that, you can't just have markets fix everything, if resourses are both needed and lacking, and the standard of living rises to make the demands on them so.  Well, you can have a free market situation, but the end result is the services get priced out of market, so people end up lacking basic services like health coverage, because they can't afford it.  Lack of government intervention doesn't reverse this.  That is the issue with Baumol's cost disease that needs to be refuted here.  This is post Hayek's work. 

Neither does government intervention reverse this, especially if the intervention is counterproductive, and both destroying the price system and stifling the very innovation that is needed to drive down prices would seem to be exceedingly counterproductive.

Baumol says that the biggest danger with the cost disease is not the disease itself, as it almost cures itself because the growth of buying power is still outpacing the increasing cost of things, but in reactionist responses to it. So as long as we don't do anything drastic, like shift resources from the public sector to the private or start excessively rationing, everything will eventually be hunky-dory. That seems... ridiculously, wildly Pollyannaish.

Baumol doesn't oppose a nationalized health system to insure universal health care and enable the poor and middle class to get healthcare.  It is important to show where he is opposed to day.  He did state reactionary situations such as price controls, adn other things, can make it worse.  

Hmm... it seems your reaction to it isn't that it isn't going to happen, but that the belief the free market will sort it out itself, is seen as absurd.  It semes like you don't believe the cost disease will work itself out.