Marginal productivity is not about dessert

A propos of the Chan-Zuckerberg initiative to save in taxes while pretending to care about the public good, following on the leads of Gates, Buffett, and others, and also of the discussion on whether Trump’s fortune would have been best served by his taking his inheritance and plugging it in a passive indexed stock fund, I feel that I need to clarify this for those of us trained in the habits of mind of the economists:

One may think that a person’s marginal contribution (which in an idealized competitive environment translates into her/his income) is attributable to that individual and, therefore, the individual deserves it. But this is a big fat fallacy. One can argue that the marginal product results from the addition of that individual to the “production function” just as much as one can say it results from the pre-existing conditions, the individual producers already in the mix, the capital infrastructure, etc. Since the individual in question is not responsible for the pre-existence of her/his technological and social context (the product of prior history), then there’s no theory of dessert here.

Decomposing in one’s mind a complex phenomenon into its more elementary parts does not reduce it to them in reality. The actual phenomenon is an “emergent property” of the elements in mutual interaction.

Update: This entry expands on an idea I posted on my Facebook page regarding this piece in Die Spiegel:

My ironic comment on Facebook was:

It is “their” money (replies the Die Spiegel’s philistine), money which they made all on their own, by themselves, with no help from anybody else, with no help from workers or from the rest of society or from the legacy of prior generations of humans who bled, sweated, and cried rivers. They could have made just as much money had they been living alone in some other solitary planet, like cosmic Robinson Crusoes. In fact, living alone in some other planet, they would have made substantially more money, since they would not have had to pay any taxes to anyfreakingbody. Ship them to Mars so they can thrive unencumbered by any social more.


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