SUMMERS: Yeah. Just as a point of fact, we use this so-called Consumer Price Index to measure what happens to the price of different goods. It’s an index, so it’s set at a certain level at a certain year. The Consumer Price Index for all products are set — just as a convention — to be 100 in 1983. If you look at the Consumer Price Index for television sets, it’s now about 6. If you look at the Consumer Price Index for a day in a hospital room or a year in a college, it’s about 600. In other words, since 1983 the relative price of this measure of education and health care, as opposed to this canonical product, the TV set, has changed by a factor of 100. That’s got a number of consequences. One is, since government is much more involved in buying education and health care than it is in buying TVs, there’s going to be upwards pressure on the size of government relative to the rest of the economy. Another is that, because there’s been far greater productivity growth in the production of television sets than in the production of government goods, a larger fraction of the workforce is going to find itself working in the areas where there’s less productivity growth, like education and health care.

This is the phenomenon that was first noticed by the late Princeton economist William Baumol, that’s sometimes referred to Baumol’s Disease or cost disease. It refers to the fact that if workers become much more productive doing some things, and their wage has to be the same in all sectors, then there’s going to be a tendency for the price of the areas in which labor is not becoming productive to rise. That’s why it costs more to go to the theater relative to other things that it did when I was a child. That’s why tuition in colleges has risen. That’s why the cost of mental-health counseling has risen. All kinds of activities where it takes inherently a person one hour to provide a given service and where productivity growth is defeating the point. Productivity growth in education, after all, is a higher ratio of students to teachers — which is exactly the opposite of what we all want for our kids. Those structural changes are going to define our economy.