(Interestingly, some of the situations described are shades of "man marries his maid", like the mothers who stop working to take raise their children). That's

(Interestingly, some of the situations described are shades of "man marries his maid", like the mothers who stop working to take raise their children). That's not really the same thing. The point of "man marries his maid" is that after the marriage GDP goes down in spite of an increase in economic activity - the maid continues cleaning his house, but also cleans his pipes. Women staying home for family work is a real change in economic activity. Domestic labor may not be properly accounted for, but it's not a no-op as with the man marrying his maid. In any case, merely tracking production and ignoring the paper cost of transfers is a fairly valid way of looking at things. I don't fully agree with it, because I do consider it a cost when a productive worker loses some of his productive capacity, even if another person gains an equivalent amount. So I certainly do want some penalty on the actual amount transferred - but you are certainly right that this should be sum(tax(i) - transfers_to(i)), not sum(tax(i)) (where i represents a given person). I'm definitely feeling like an idiot, ignoring one of the most interesting comments on post. You've definitely given me something to think about.