Tag Archives: cost disease

Ever since the Minnesota Orchestra lockout began, I’ve read a lot of articles on arts administration. (And from a unique perspective, too: not as a board member or an employee or a union shill, but as a concerned audience member.) Once in a while I’ll disagree with a particular point, debate it with friends, and then tuck the insights away.

But. Last month I read an article that made me say “wait a minute…” so many times, I knew it could be used as bloggy fodder and discussion. It’s called Baumol’s Cost Disease Is Killing Me, and it was written by management consultant Duncan M. Webb. I feel very strongly that post-Minnesota, people who are still talking about Baumol’s Cost Disease in the way that Webb does are doing themselves and the institutions they advise a disservice. So I thought I’d take the chance to think out loud about some of the points he raises…from an audience member’s point of view.

Webb’s entry begins:

I first read Baumol and Bowen’s The Economic Dilemma of the Performing Arts some 20 years ago, almost 30 years after it was first published in 1965. The theory was fairly straightforward: the problem in our sector is that because there are no productivity gains associated with the creation of the work (it takes the same time and energy to rehearse and perform a Brahm’s Requiem today as it did when first performed in 1868), and because costs always increase over time and earned revenue growth is limited by a range of market forces, we are doomed to fall further and further behind, essentially forcing the more aggressive pursuit of contributed income just to balance the budget. And the problem is progressive, meaning that every year we fall a little bit further behind. This phenomenon has come to be known as Baumol’s Cost Disease.

Let’s start at sentence number two. It takes the same time and energy to rehearse “a Brahm’s Requiem” now as it did in 1868?

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