>Insofar as the public sector is less productive,
>efficiency dictates a shift of resources, but this
>assumes the pre-existing level of resources was
>efficient to begin with and abstracts from how
>income growth might affect preferences for this
>or that.
>
>Baumol's story could be used to defend increased
>public sector costs. It boils down to, look, if
>you want your kid to have the same math teacher
>you had, you have to recognize the old boy could
>make a lot more now then before. The out-migration
>of skilled women from this sector previously mentioned
>goes to the same point.
>
>I think laying Pritchett and Summers on Baumol is
>a bit much. After all, Baumol has read Capital
>three times.
Not Baumol, who seems like not a bad sort, but the NBER guy and the uses to which his paper could be put. I'm tempted to say that once you use the language of productivity to talk about the public sector, the battle is already half lost.
Doug