(Updated, 6-18-18)
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 deserve the massive tax cut they just got from Trump and the Republicans. Never mind the massive federal deficit and the overwhelming need for investment in social safety net programs and public education and infrastructure. What does America need most? More people building iron gates around rich people's mansions, or more people rebuilding roads and bridges that everybody uses? Never mind that 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 the federal spending cuts proposed by Republicans will offset the number of new private sector jobs that result. Never mind that lower and middle-class incomes have been stagnant for a long time, and that the old "rule" that wages are set by labor supply and demand does not work anymore.
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. Evidence mounts that income inequality is not just damaging our democracy: it is hurting Americans' mental and physical health. (See an Economist Magazine article about this problem here.)
Politics in Washington today is driven by Republican Tea Party theology. They seem to believe it is God's will for the rich get richer, and that those of lesser means deserve their lot. 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 and cruelly, surely a Master of Divinity can contribute to the discourse, in the interests of middle-class people, poor people, old people, students, and the disabled – the people who are paying for the sins of these crass politicians.
So to this public debate I contribute this concept: the Burklo Limit. BL for short. Pronounce BL 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 be said to have earned through the expense of their 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 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. 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 outrageous fortunes, has much to do with smoke and mirrors. Hype. Jive. Trickery. Cabals of people strive to maintain a façade of legitimacy for this illegitimacy.
Why do corporate executives get paid so outrageously? Because they belong to the same class of people who pay them. 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 when it comes to the 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. All to the good, both for the conversation about compensation and taxation… and for me!
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