On the cost disease that's hard to count

On string quartets, regulatory overkill, and the ways to stifle innovation all by accident

The concept of Baumol's cost disease holds that the cost of some services will rise even without improvements in quality because the work itself cannot be achieved more efficiently, and the people performing the work have to be incentivized to choose doing it over doing other work for which wages are rising. There are, for instance, only so many surgeries that a surgical team can perform -- the cap on productivity is relatively immobile.

■ At the extreme end of the example, there's no way to increase the productivity of a string quartet playing a piece of music with a known tempo. Three people cannot play all four parts adequately, and playing the song at twice the tempo won't enhance the experience of the audience. Despite these hard limits, musicians' wages have to rise or else they will find work doing something else -- perhaps composing music for YouTube videos.

■ There may be something even more sinister than Baumol's cost disease, though: Whereas the cost disease isn't anyone's nefarious design, there are certain occupations where people are rewarded for halting the progress of others.

■ It is generally easier to destroy than to build; look no farther than any war. Destruction can happen in a moment; reconstruction can take generations. When an economy induces too many people to become obstacles to productivity, it asks implicitly to become hamstrung and listless.

■ Lee Kuan Yew could be an autocrat, but he also knew how to make sure Singapore could grow economically, despite its meager natural resources: "Those with good minds to be scholars should also become inventors, innovators, venture capitalists, and entrepreneurs; they must bring new products and services to the market to enrich the lives of people everywhere."

■ There are disruptive forces all around, both in the public and private sectors, who are rewarded mostly for getting in the way of initiative shown by others. Americans need to be on the lookout for drift in that direction, particularly as people get their hands on the levers of regulatory and other legal powers and see opportunities to favor their own preferred outcomes. It's already easy for that kind of creep to settle in as large private firms see opportunities to squeeze out rivals not by innovation but by litigation (and contract-terms inflation).