Steve (“econopundit“) Antler says that Baumol’s Cost Disease is the basis for a new form of class warfare, pitting service producers against goods producers.

Much of what’s normally called “technical progress” is actually the “iron law” of service pricing in action. Postwar advances that replaced household servants with home appliances evidenced this law. We can say the same for the desktop computer revolution. Machines replace people as people get more expensive…

The Democratic Party is quite close to a grand alliance of service-providing re-distributors. The Republicans, on the other hand, seem fast becoming the party of goods-providing producers.

Beyond the tendency for government workers to prefer political parties that favor big government, I am not convinced that economic interests will determine voting behavior in the way that Antler describes. However, if the Republicans are to become the party of goods industries, then they will be the minority party. Just as agriculture has declined to a small share of employment and GDP, the same thing is happening with the goods industries.

For Discussion. Will technological progress ever lead to rapid productivity growth in service industries, such as health and education?