...Perhaps it all depends on the "relevant dimension" that money is actually being considered in! In low income terms, for instance, a twenty dollar bill actually holds a lot of "power" in certain important respects, and that is the mindset I want to tap for this little thought expedition. Yes there is of course the marginal utility factor, but economies in scale have considerable (untapped) potential to give power to small incomes everywhere. In some contexts a small income can do things once seemingly unimaginable, in that it provides adequate representation for vast amounts of productive economic activity which has been subjected to high levels of both intra and extra institutional coordination.
One only need walk into a dollar store, fill a small bag and bring it home, then spread out the contents to consider the travels and activities each product was subjected to before - say - a twenty dollar bill was sufficient to make it all worthwhile on the part of numerous parties involved. By no means are such activities limited to those who took part in creating of the product: they also support the transportation aspects of the product itself. For the most part, these products not only represent desired choices and actions, they generally need little insuring or safeguarding, for they can be readily replaced. What's that you say, these products are no big deal? That's the point, they were produced as though they were not. But we tend to produce local products as if they are somehow a big deal beyond the fact that we also need them in basic ways.
So when we consider the opposite end of the spectrum in non tradable goods, William Baumol's criticisms seem extremely mild, given the actual inverse condition that exists for the realm of most services and non tradable product in local economies. A twenty dollar bill would be a joke for many such offerings...and that amount would scarcely cover any time on the part of one person, let alone an intricate network of economic activity. How did we go from spontaneous group coordination and reasonable product offerings on the one hand, to the growing struggle over "livable" incomes required just to support non tradable local services offerings?
Medical product especially exists in a completely captured market. There is a tremendous difference in actual costs of production and the rent that is also part of knowledge based capture, in particular. Because services have become such a large part of the marketplace and don't have the dependable pricing of earlier forms of tradable product, considerable volatility now occurs in pricing at consumer levels. Providers of medical equipment, in particular, may not be so quick to reveal actual costs of production that would result in more accurate measurement capacity for monetary policy needs. Such pricing structures far exceed what one would actually expect for the components utilized in a truly free marketplace. And, in the U.S., Medicare is presently being forced to spend its dwindling reserves on such equipment at an alarming rate.
A great example of this extremely inverse production reality is the hospital thrift store, which is frequently set up in the vicinity of a city hospital. Volunteers - with considerable effort, are able over time to provide monetary support for a small percentage of the hospital's activities. Consider how many second hand clothes and other goods these volunteers might actually have to sell, before they are able to purchase, say, a piece of equipment the hospital can use.
Even though these goods are being sold for the second time and thus not a part of GDP, it is still quite a contrast to think how many human hours went into the work of sewing the clothing, compared to that one piece of hospital equipment and its limited time factor, which took thousands of hours to compensate in resold goods. The same principle applies with carefully gathered donations for healthcare needs of all kinds. In the U.S. a twenty dollar donation may buy little more than a fraction of someone's time. Somehow, monetary equivalence for our time and the coordinated use of capital just need to thought through differently.
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