From The New York Times: http://krugman.blogs.nytimes.com/2012/07/09/what-you-add-is-what-you-get/
Paul Krugman
July 9, 2012
July 9, 2012
The Romney fundraiser in the Hamptons continues to inspire much justified hilarity. Matt Yglesias
has fun with whining rich people complaining that they are the engine
of the economy, pointing out that quite a few of the whiners make their
money in ways that arguably does very little for growth — say, by
running funds that collect so much in fees that they leave investors
worse off.
There is, however, an even broader critique of the
whole keep taxes low on jobcreatorsenginesoftheeconomy thing — it
doesn’t make sense even when the rich really earn their money. I’ve
tried to make this point before, with regard to optimal top tax rates,
but without as much success as I’d like; so let’s try it again.
So,
imagine a Romney supporter named John Q. Wheelerdealer, who works 3000
hours a year and makes $30 million. And let’s suppose that he really
does contribute that much to the economy, that his marginal product per
hour — the amount he adds to national income by working an extra hour —
really is $10,000. This is, by the way, standard textbook
microeconomics: in a perfectly competitive economy, factors of
production are supposedly paid precisely their marginal product.
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