January 16, 2019

Capital is the Ability to Buy Other People’s Productivity

“This is something more people need to understand: one of the powers of wealth is the ability to buy other people’s productivity.”

Roughly 1,000 news cycles ago—or at the beginning of January—Congresswoman Alexandria Ocasio-Cortez offhandedly proposed a 70% marginal tax rate on incomes over $10 million. The pro-wealth right wing responded in exactly the way that people expected. First, they deliberately misunderstood marginal tax rates. Second, they started complaining that a tax rate that high would be taking money away from productive people.

And that really misunderstands what productivity is, who the producers are, and how capitalism works. That’s what David Kalb was getting at in his original tweet… and what I was expanding on in mine.

You see, capitalism works like this. The capitalist has money and a means of production that he can’t operate all by himself. The worker needs money, so she sells her labor to the capitalist. She will take on some of the operation of the means of production in exchange for some of the capitalist’s money. Simple.

Let’s use Jeff Bezos as an example. He has a lot of money—he’s the richest person in the world, with an estimated net worth of more than $8 billion (with a b)—and he owns Amazon. But it would be ridiculous to think that he’s coding the Amazon website, stocking the products, taking orders, packaging things for deliver, and so on. In reality, he owns a ‘means of production’: a huge logistics system that is able to move products around the world. And he pays other people to do most of the work of… well, of making sure that huge logistics system works.

Now, let’s invent a fictional worker named Sally. Sally needs money in order to do things like buy food, pay rent, have care insurance, get access to health care, pay off her student loans, and do all of the other things that modern society demands. She does not have a huge logistics system or any other means of production. At least, she doesn’t have any means of production that would make a dent in all of her expenses. So she does what most of us do: she sells her labor to someone like Jeff Bezos. She helps operate his means of production in exchange for some of his money (or, maybe a little more accurately, some of the money that his means of production earns).

It’s a simple arrangement that most of us are used to in one way or another. Capitalism. Easy.

But it also leads to an important question: who here is the productive one? Is it the person who owns the means of production? Or is it the people who operate them? Or is it both? And, if it is both, how is the wealth that’s produced fairly divided between them?

Let’s say that Amazon employs about 500,000 people, including Jeff and Sally (it actually employs tens-of-thousands more). And let’s also say that Amazon generates $200 billion in revenue each year (it actually generates a bit less). Let’s also suppose that a lot of that—half of it—has to go to just keeping Amazon running. If we divided everything equally, that would be $100 billion shared equally among 500,000 people, or $200,000 per person each year. Simple.

Of course, it’s probably not the case that everyone is equally productive. Maybe one person is ten times more productive than someone else. And maybe it would be fair to pay that person ten times as much. So maybe some people only make $50,000 a year and some other people make $500,000 a year. Okay. Still simple.

But here’s the thing. The lowest paid worker at Amazon makes $15 an hour. Assuming a 40 hour workweek, that’s $29,120 a year. Bezos has a salary of about $81,000 a year; a pretty modest salary for the CEO of a major corporation. But he also owns about 80 million shares of Amazon stock, and he makes money every time the stock price increases. That means that he makes the salary of one of those $15-an-hour employees every 11.5 seconds.

I’m not going to do the math. But that means that if we really believe that wealth is a result of productivity, then we have to also believe that Bezos is tens of thousands times more productive than one of his new employees. And that’s just ridiculous. What makes him rich is that he is in the position to buy the productivity of his employees and, therefore, to enjoy the fruits of that productivity. As the owner of the means of production, he doesn’t have to justify his wealth. He doesn’t have to demonstrate that he produces enough to justify the money he receives; he just gets to claim that money because he owns the means of production.

Now, let’s make it worse. Let’s imagine another person who did not create and grow a company like Amazon. Let’s imagine someone who inherited a profitable company and an enormous fortune. Then, let’s imagine that person paid other people to manage that company and invest that fortune. And let’s imagine that those other people were successful and, thanks to their work, that capitalist—that person who has money and a means of production—makes the annual salary of his lowest-paid worker every 12 seconds or so. Is that capitalist productive? No. But he still benefits from the fact that he can pay other people for their productivity and claim the fruits of that productivity.

And that means that he still benefits from the argument that taxing his extravagant wealth is that same thing as taking the rewards of productivity from people who actually are productive. One of the things that capitalism tries to trick us into believing—and it has been remarkably successful at pulling it off—is that wealth is the same as virtue; that a person being rich is evidence enough that the person is smart and productive and whatever else we would like. And while that might be true in some cases, it is obviously not true in others. Wealth has nothing to do with virtue (and, in classical Christian thought, is utterly opposed to it).

As I just wrote, it is possible that some wealthy people are also particularly productive. It is possible that there is someone who is so productive that they should receive, say, a million dollars. It is possible.

But two things are definitely true. First, that many wealthy people cannot justify their wealth by pointing to their personal productivity. The only way that they can claim to justify their wealth is by pointing to the fact that they can buy other people’s productivity. And, in the end, that is justifying wealth by pointing to the fact that they were already wealthy. Second, that many people who are productive do not enjoy the fruits of that productivity. They are stuck in a system where they need to sell their productivity for less than it is worth… or, even if they can sell it for what it is worth, they can’t sell it for enough to enjoy a life anything like the capitalists who are in a position to buy it (and who are worried about the top marginal tax rates).

To put it simply, no one is productive enough to justify having the kind of wealth that someone who is worried about the marginal tax rates on incomes over $10 million has. It is possible that wealth is justified by something else, but it cannot be justified through an appeal to productivity. And that is why the argument that high marginal tax rates are not about taking money from people who are productive is garbage.

Wednesday, January 16, 2019


I’m a pastor, an author, and a nonprofit development and communications professional. My passion, my mission, and my calling is bringing people together to do good, with a particular focus on serving people who are experiencing poverty and other forms of marginalization.

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