The Cost Disease : Why Computers Get Cheaper and Health Care Doesn’t
The idea behind Mr Baumol’s theory revolves around the fact that “productivity is increasing in all sectors of the economy, so it takes less time, man power and money to create things.” However in industries like computing, manufacturing and biotech, productivity has increased at a much faster rate compared with service industries such as healthcare, catering & education. In these industries the product on offer or service being provided is customised, therefore has an irreducible labour component as a result.
Cars can be made by robots in a high tech factory because each model is almost completely standardised by the manufacturer. However, robots cannot perform neurosurgery, heart transplants or kidney replacements which are non standardised and require different processes and components every time.
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