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This is nonsensical. The Baumol effect is just supply and demand for labor. The monetary system in use does not change whether or not supply and demand work this way.

You also appear to be conflating the notion of "hard" vs "soft" money and the notion that one should be paid based on the economic gain of your output to others. Those are orthogonal concepts. Their only commonality is that the economic consensus on both notions is that they are wrong.

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I just don't see how productivity gains (e.g. automation) in an industry would lead to increased demand for workers in that industry. I feel like it should be the opposite.

Maybe except for brand new industries in the early stages but then I don't think productivity is measurable in such young industries because there would be no meaningful productivity metric to use to make any such analysis.

In theory, productivity gains on automobiles leads to cheaper cars and increased car sales. So an increase in workers is possible.

But I agree that looks like a questionable assumption. If the productivity improvement changes car prices from $250K to $25K, sure the assumption will work out. But not sure $25K to $24K would work out.

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