To everyone who said that Bob won't necessarily get a raise, I think you are taking the example too literally. At some point, someone, be it Bob or the CEO or w

To everyone who said that Bob won't necessarily get a raise, I think you are taking the example too literally. At some point, someone, be it Bob or the CEO or whoever, will earn income from the added productivity which will be taxed. Also, in a free market Bob will most likely be paid a wage close to his marginal productivity -- but that is really beside the point.