Jared Bernstein writes:

Let me be, I hope, totally clear: for Brad, Alan, and any other economist, merit=marginal product. Thus, principle one is very simply arguing that while a central tenet of economics is that your income is equal to the marginal value you add to the economy, reality is otherwise. Your bargaining power—your ability to claim more than your marginal product or get stuck with less—is an ever-increasing determinant of economic outcomes.

But I am not really a real economist! I am an ex-interdisciplinary social science major who thought it would be fun to become a professor, and figured out in time that the job market for young economists was booming while that for history and poli sci Ph.D.'s was totally cr---- out! (And there was my freshman roommate Larry, who had found this brilliant and charismatic young MIT professor--think of the professor in the movie "21" with hair, with youth, and without the evil.)

I think it is a bad long-run mistake to associate "merit" with "marginal product" and to talk about how various political and sociological frictions drive wedges between market incomes and "merit." Politics and sociology profoundly shape marginal products by shaping factor supplies and who gets the income that then shows up as demands.

After all, the outsized compensation packages of CEOs are quite likely close to their marginal products--organizations like Blackstone pay as much when they hire a CEO for a private equity company as the market pays the CEOs of publicly traded firms. But I don't think that it is right to say that their immensely higher wealth than that of their near-peers is due to immensely higher merit.

And remember the Bengal famine of 1942--war interrupts the trade routes, so millions of landless laborers' marginal products fall to zero because there are no markets for the staple export crops they grow for their landlords. But nobody would say that they "merit" their zero incomes and so their deaths by starvation...

I prefer to take my stand with Gandalf the Grey, and say that "merit" and "desert" are not proper guides to what things and opportunities one should have, or what one's destiny ought to be: "'He deserves death!' 'Deserves it! I daresay he does. Many that live deserve death. And some that die deserve life. Can you give it to them? Then do not be too eager...'"