Bill James Calls For Revolutionary Changes To The American Economy

Over at his website, Bill James has a fun feature called "Hey Bill," where he answers questions from readers. Sometimes these have to do with esoteric baseball topics and sometimes they have to do with other things, such as the ongoing debate over James's idea to fundamentally change the structure of the American economy.

It started with a correspondent asking James—who's always been a bit slippery about his politics, but seems generally to be what used to be called a Perot voter, once claimed to have been a Mike Huckabee supporter, and is certainly not a bleeding heart—how he'd solve the problem of outrageous executive pay. James's solution, it turns, is straightforward:

I suppose it is quasi-socialist of me, but I do favor a "10 to 1" law stating that no company may pay any employee more than ten times as much as it pays any other employee, on a full-time basis. Enforceable by lawsuit: If your company pays anyone else ten times more than they pay you, you can bring suit against the company AND against the person who is excessively compensated.

James, you'll note, isn't calling for a maximum income or anything like that. He's simply suggesting the implementation of a rule governing the practices of private companies. There are many such rules, because the right of private actors to do what they'd like has to be weighed against the consequences for the public. This is why companies can't form monopolies or fire people for being black.

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As you might expect, James's readers have been raising various objections. While much of the discussion is behind a paywall—this would be a good time to mention that a subscription to James's site is worthwhile and inexpensive!—here are a few highlights.

One reader invoked "the law of intended consequences" to explain that James's proposal would dry up the supply of shitty jobs, because an executive whose company was paying people badly would be able to make only 10 times what the badly paid people were making. James's reply, in part:

There is not and never will be any shortage of scutwork jobs. The economy is drowning in scutwork jobs.

Another reader suggested that this law would just lead to prosperity for consultants offering ways to get around it. "When you try to go against the free market," he wrote, "you make it worse. If Karl Marx couldn't figure it, nobody can!" James replied with an extended analogy involving the prohibition of brass knuckles as an answer to the problem of street violence.

No matter what law is proposed, someone will come up with ways to evade the law; that's an argument against any and every law, therefore not a reasonable argument against this particular law. The real question is, would the law help? There are companies that pay their CEOs $300 million a year. Do you really think a company can easily evade a law of this nature by paying everybody they want to keep $30 million a year and contracting out everything else? No company could survive operating in that way, because nobody actually has a value of $300 million a year; the people being paid $300 million a year are merely exploiting power relationships within the company to take advantage of the labor of others...

Another reader, following on, chastised James for stating that nobody is worth $300 million a year. What about the great heroes of capitalism—the innovators? he wanted to know. Surely someone who cures cancer is worth $300 million. James's reply here is worth quoting in full.

If you discovered a cure for cancers in one year, the executive who runs your research company would make far more money from the discovery than you would. How do you feel about that? People who work for large companies, many large companies, not all, but people who work for these companies that have sold out to superstar executives... those people know very well that if they do something important from which the company makes a lot of money, the country club set will steal the profits and pay them off with a pittance. This is the reality of the current system. It DISCOURAGES innovation, it discourages creativity, it discourages hard work, on the theory that this is merely a free enterprise system at work. It is not a free enterprise system at work at all; it is a travesty of a free enterprise system. 120 years ago, companies built monopolies to control markets, and claimed that this was merely free enterprise at work. It wasn't, of course; monopolies are not the free operation of the market, they are the destruction of the market, the blockage of the market. I believe in free enterprise, I believe in capitalism, and I believe in Milton Friedman, but this is NOT capitalism and it is not free enterprise; it is organized theft.

Stating that our present economic system is an arbitrary arrangement organized largely around the principle that powerful people should be able to extract a lot of money from society irritated various readers. This led to good things like James lighting one reader's straw man on fire ...

As many of you have pointed out, there are manifest dangers inherent in trying to regulate income. I'm not trying to regulate income; I'm trying to prohibit the Country Club set from stealing the labor of working people. Also, didn't you promise to stop e-mailing me about this?

... and responding as follows to another who suggested that executives are just working people like anyone else:

No, they aren't. People being paid a million dollars a year are not "working" people... executives who are paid a million dollars a year to run hospitals are not "working people"; they are common thieves. All of them. The fact that there is no law prohibiting what they are doing is a mere oversight.

It should be noted that James is less advocating for a specific law than against a kind of greed that has clear, harmful effects on society and which isn't illegal mainly because acting on it was, until fairly recently, so strongly against prevailing norms. Still, this is where we are, America. It's down to Bill James to explain that the sort of wanton greed that leads to a CEO making more than a thousand times an average salary isn't just wrong, but something other than an expression of pure market imperatives; that capitalism is a set of arbitrary rules that can and should be adjusted if they're not working for the benefit of the public; and that a principal function of government is to interfere in markets for the public good.

Among the first and most necessary functions of government is to regulate markets—"Markets" in a primitive sense, meaning to regulate the currency, to make sure that people who are operating grocery stores and bakeries are honest, to make sure that goods and services which are sold are safe, but also "markets" of a more complex nature, like stock markets. In the late 19th century there were horrible, bloody conflicts between labor, on the one hand, and very wealthy businessmen, on the other hand, who were trying to establish monopolies and trying to prevent the development of unions. The government had to step in, sort out the conflicts and say, "OK, you can have THIS, labor movement, but you can't have THAT, and you can have THIS right, business, but you can't have THAT, and, by the way, no monopolies." Despite the many and obvious faults of government in that era, they (government) did that well; they sorted out who had which rights, established order, and set the markets to running. This is, if not the FIRST function of government, among the first.

Bill James for Senate.

[Bill James Online]

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