What is the most that anyone’s labor is worth?
And does it matter?
I ask these questions because of the dogma that dominates politics in this country today. It posits that rich people should not pay any more taxes than they do now, much less have any of their tax loopholes closed. Never mind the massive federal deficit and the overwhelming need for investment in social safety net programs and public education and infrastructure. Never mind that, in fact, rich people are at least as much “job exporters” as they are “job creators”. Never mind that the number of public sector jobs lost through federal spending cuts will be greater than the number of new private sector jobs that result.
Politics in Washington is being driven by something other than facts and common sense. Supposed friends of the business class are making decisions that run counter to the interests of capitalists, to say nothing of harming poor and middle-class people. The very last thing our economy needs now, in the midst of a recession, is a huge federal spending cut. Shouldn’t we wait till we’re in a boom economy to trim the size of government, if it must be done at all? (Subtitle of today's headline about the drop in the stock market, in the LA Times: "Investors are spooked by the prospect of even modest federal budget cuts in an anemic recovery".)
Politics in Washington is being driven by Republican Tea Party theology. Theology being my domain, I take this as an invitation for a person like myself to weigh in on these matters. If the political party of capitalists can behave this irrationally, surely a Master of Divinity can contribute to the discourse, in the interests of poor people, old people, students, and the disabled – the people who are being asked to pay for the sins of our politicians.
So to this public debate I contribute this concept: the Burklo Limit. BL for short. Pronounce it any way you want: I can take it. I’ll explain a bit later why I coined this term. (Hint: it has to do with coins.)
The Burklo Limit is the rough maximum dollar figure that a person can earn through the expense of time, effort, and skill in a year. Any income beyond the BL represents a failure of the labor market and a danger to democracy. Four times the BL equals the rough maximum dollar value of assets that any individual can possess without causing significant damage to the capitalist system and a free society, by over-concentrating wealth and the power that goes with it.
The Burklo Limit is not a clear, fixed amount. For the sake of freedom, for the sake of encouraging hard work, skill, and ambition, it should be a very high figure and it should not be permanently defined. I would argue that the BL hovers around $28,000,000 a year, give or take $10,000,000. $28 million is the average earned income (roughly as defined by IRS) of the top 50 incomes of athletes in America, according to Forbes Magazine (May 2011). I suggest that the incomes of top athletes reflect something akin to a market-based, skill-and-effort-based valuation. There’s a certain level of “meritocracy” in professional sports, moreso than in many other highly compensated occupations.
The Burklo Limit challenges the idea that whatever anybody is paid is a reflection of the actual value of their labor in an idealized free market. First of all, it’s important to note that there really is no such thing as a pure free market, nor will there ever be one – not even in the least-regulated economies. All markets are distorted by many forces, including monopolies, crime, cultural factors, religious factors, government interventions of many sorts, and bad habits. This is yet another reason that the Burklo Limit never should be a fixed figure, and that it should be assumed to be very liberally large. To posit the existence of the Burklo Limit, at any level, is to admit that all markets are imperfect, that all markets function irrationally in some way. Indeed, this is the very point of the Burklo Limit: that there always will be people who make more money than they possibly could earn.
Therefore there is no moral, religious, cultural, nor practical economic reason not to tax the heck out of any money people make beyond the Burklo Limit. Nor is there any reason to hold back on any tax policy that would cut into assets that exceed four times the Burklo Limit. Nor, for that matter, is there any reason that America should not go back to the tax structure that existed during the Clinton presidency, when rich people, including those with incomes well below the Burklo Limit, paid higher tax rates than they do today. Going back to the reasonable rates of that era would take us a long way toward resolving our nation's financial challenges.
Now we come to the reason for the name of the Burklo Limit.
First of all, the reason some people get incomes far beyond the BL, and amass assets far beyond four times that amount, has much to do with smoke and mirrors. Hype. Jive. Trickery. Cabals of people, whether highly organized or not, who work hard to maintain a façade of legitimacy for the illegitimate. Donald Trump has his own TV show, created to maintain the fantasy that he earned his money, when in fact he befuddled much it out of politicians who went along with his outrageous schemes to get tax money to fund his real estate developments early in his career. Without public funds to back up his projects, he would have squandered the money he inherited from his daddy, to no good end.
Why do corporate executives get paid so outrageously? Because they are the people who pay themselves. They serve on each others' boards of directors. They insulate themselves from the scrutiny of small-time investors. Big-time investors have an interest in maintaining inflated compensation. It’s a racket that exists outside any model of an ideal labor market.
Indeed, hype and fantasy feed the upper end of the labor market, even at levels far below the Burklo Limit. The lecture circuit is one example. I have colleagues who work the lecture circuit system masterfully. They are brilliant at marketing themselves, quite apart from the quality of their presentations. Indeed, their skill in selling themselves is more important than content in terms of the amount of money they make.
It is to this end that I came up with the name for the Burklo Limit. It’s time I got into the game with the big boys and girls. What I’m doing here is blatant, crass, unabashed self-promotion. How can you have a meeting in which the Burklo Limit is discussed, without at least being tempted to invite the coiner of the phrase, and paying him the attendant coinage? Indeed, part of my hype is my lecture fee: a very modest 1/100th of the daily income (261 working days a year) of a person earning the Burklo Limit. If, for the sake of example, that limit is $28,000,000 a year, that means $28,000,000 divided by 261 = $107,279 a day (a fantastic sum, yes?), divided by 100 = $1,073 (humble by comparison, yes?) for a day’s presentation (travel, etc, expenses not included – and my wife comes with me). The institution inviting me to speak must declare publicly what it estimates as the Burklo Limit. I would not be surprised if progressive church groups chose a low Burklo Limit, and paid me a lower speaker fee as a result. Nor would I be shocked if a convention of hedge fund managers came up with a Burklo Limit an order of magnitude larger than what I suggest here, resulting in a fee large enough to put my daughter through graduate school. All to the good, both for the conversation about compensation and taxation… and for me!
(Below is my graphic description of how the Republican Tea Party conducted itself during the crisis it created over raising the federal "debt ceiling". It's also a visual depiction of the contradictions of claiming to be pro-gun, pro-life, hyper-Christian, anti-tax, anti-government, and hyper-patriotic all at the same time....)