(1) I wish we could have a tax code that could somehow discriminate between the truly productive rich and the, well, rich. While I agree with Elizabeth Warren that no one gets rich by himself, there are rare people who really do know how to spend their own money better than the government. The social returns to Steve Jobs must be remarkable.
(2) When politicians (and others) pay fealty to a market economic, their implicit assumption is that markets are competitive and exhibit, among other things, industrial (if not firm specific) constant returns to scale. But successful enterprises like Apple often exhibit increasing returns to scale, at least for awhile, and certainly do not produce commodities sold into a competitive market. Apple's innovation gives ii market pricing power, which is why it is so successful. Without that pricing power, there might never be an Apple. Yet the fact that success often requires market power implies that policies based on an assumption of a competitive equilibrium might be misplaced, perhaps disastrously so.
(2) When politicians (and others) pay fealty to a market economic, their implicit assumption is that markets are competitive and exhibit, among other things, industrial (if not firm specific) constant returns to scale. But successful enterprises like Apple often exhibit increasing returns to scale, at least for awhile, and certainly do not produce commodities sold into a competitive market. Apple's innovation gives ii market pricing power, which is why it is so successful. Without that pricing power, there might never be an Apple. Yet the fact that success often requires market power implies that policies based on an assumption of a competitive equilibrium might be misplaced, perhaps disastrously so.
3 comments:
Jobs apparently did not give much to charity, and it seems likely that he planned his estate so as to minimize taxes and leave his money to his family. (see http://www.forbes.com/sites/trialandheirs/2011/10/07/steve-jobs-appears-to-have-protected-his-estate-with-living-trusts/ and http://www.huffingtonpost.com/2011/10/07/the-history-of-steve-jobs_n_998325.html)
As you say, Jobs created large social returns. He also seems to have been significantly motivated by what he could bequeath to his family. You would like to distinguish between the "productive rich" and non-productive rich, but the non-productive rich are mostly heirs of the productive rich. The case of Steve Jobs seems to me to be evidence that taxing any of the rich will lower productivity.
The case of Steve Jobs seems to me to be evidence that taxing any of the rich will lower productivity.The social returns to Steve Jobs must be remarkable.doral real estate
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