Millionaires Versus Billionaires
With the long-feared baseball lockout now official, you may start to encounter the “millionaires v. billionaires” shorthand to frame the dispute between players and owners. This framing seems to have fallen out of favor somewhat—I remember it being a very common way to talk about the 1994-95 strike, or other sports labor issues from my childhood—but you still run into it occasionally. A lot of the reaction to baseball’s pre-Covid bickering adopted this framework.
Now there is more sympathy for labor, or at least more willingness to see the nuance in these fights, so you are far more likely to see takes objecting to the “millionaires v. billionaires” framing. Some will point out that most players are not millionaires, or that the situation is more complex than fans may realize. And it is definitely true that baseball is facing some major structural issues that need to be addressed in this round of bargaining.
But I actually think “millionaires v. billionaires” is a useful way to frame these fights, even though at first glance it comes off as anti-labor. It’s typically seen as a way of dismissing any potential issues, making both sides sound like whiny rich people, and portraying them both as equally wrong. But here’s the thing: The figures are, in fact, not equal. A million is a lot less than a billion. I’m no math expert, but it’s about 1,000x less. It is certainly true that both sides in this dispute are rich, but one side is a lot richer than the other. There is no need to exaggerate the hardship of professional athletes to illustrate the disparity between the two sides.
This is an important point, because it helps illustrate that the battle between labor and capital is not simply a reductive or romantic battle between rich and poor. It’s a tempting trap for the left to play up the suffering of workers to make them seem more righteous, but it ultimately undermines solidarity by creating tests nobody wants to pass. If the only people worthy of support in labor fights are destitute and pitiable, then why would anyone want to be part of organized labor?
You will often hear purported leftists dismiss attempts to organize certain workers by insisting those workers are not sufficiently beleaguered. Why do tech workers need a union? Why do media workers? Why do grad students? These people are not sufficiently “working class” for whatever reason. Tech workers are too highly paid. Media workers are too influential. Grad students are too educated. They don’t fit our image of a union as a bunch of burly dudes in dirty clothes advocating for a living wage.
But the MLB Players Association is a reminder that being a worker is defined not by your income, but by your relationship to the means of production, and that you can be a worker who makes a lot of money and has an otherwise very enviable life. Too often people insist that anyone who advocates for workers while allowing themselves any luxury or comfort is betraying their principles. It’s reminiscent of media attempts to smear Bernie Sanders for wearing an expensive coat, or making a lot of money from his book. The goal is to equate socialism or egalitarianism with poverty so nobody likes it.
Of course, we need to be careful here, because if you start defending high salaries, then before you know it you’re saying some dumb shit like “$400,000 is actually middle class” or “Millionaires aren’t actually that rich.” In fact, let’s just drop in this chart of household incomes so we all know where we stand:
You can see here that a combined family income of $200,000 would make place in the highest 10% of American earners; $400,000 would put you near the 99th percentile.
But the point is that the real measure of your class is not where you fall on this line. It’s about whether your income comes from your labor or from capital. Max Scherzer, whose new annual salary of $43.3 million puts him literally off this chart, still derives the bulk of his income from his work, not from equity.
The reason this distinction is important is that we basically have the tools to address income inequality. Progressive taxation can work when done correctly—of course, the American tax code is full of loopholes and is poorly enforced, especially on the very wealthy, so it is not done correctly here. But we could change that if we wanted to. We could simply change the highest tax rate, or lower the threshold at which it applies, as they do in Scandinavian countries with more social democracy.
But capital income is much trickier, as I’ve written about many times. To illustrate this, compare Scherzer’s taxes to his new boss, Steve Cohen’s. Since we know Scherzer’s baseball salary exactly, most of our work is done. Obviously you have to factor any additional income he makes from endorsements and whatnot, and I’m assuming he itemizes his deductions, but it’s still not that complicated. You just apply the rate to his salary and you get what he owes. Crucially, if more money needs to be raised, you can just tweak the numbers, raising the rates or lowering the threshold where the rates kick in.
For Cohen, though, it’s not so simple. Presumably he draws a salary, possibly from multiple sources, but whatever it amounts to is a tiny fraction of his actual income. Most of his income would take the form of the increased value of his assets, which are hard to value and typically not taxed until sold. Even if he did sell an asset, you would need to know his cost basis to apply a tax—often, that information is self-reported, and easy to manipulate. You can also claim depreciation, which is particularly beneficial to sports owners. Not to mention foreign assets, or little things like the ability to have his company pay for personal expenses with little risk of getting caught.
There has been a lot of discussion of tax evasion of the rich in the last few years, with the Panama Papers and Trump’s tax returns and the debates about a hypothetical wealth tax. Obviously these are complicated issues, but a root of the problem is the fundamental divide between labor income and capital income.
Which brings us back to the “millionaires v. billionaires” divide. Because you can get to millionaire status through labor income. You probably WON’T, but it’s at least possible. If you are an elite athlete, or a super famous actor, or a megastar author, you can make millions of dollars. These figures are highly visible, so often discussions about inequality center on them and whether they have really “earned” their money. But these people are not really the problem—and to the extent they are, it can be solved by just adjusting the tax rates. On the other hand, nobody makes a billion dollars without owning something. And that is the real problem: that we allow private ownership of the means of production. The “millionaires v. billionaires” framework is a useful illustration of this problem—as frustrating as it can be to see a baseball player’s salary compared to a teacher’s or a nurse’s, you will never solve economic problems by focusing on the millionaires. It’s the billionaires you need to watch out for.
Sometimes I like to simplify socialist strategy to one step: Convert as much capital income as possible into labor income, and then just raise taxes on high earners. Every dollar that Steve Cohen is forced to spend on free agents is a dollar that has been converted from capital income to labor income. If you think professional athletes make too much money, then fine: Raise their taxes. But moving that dollar from Cohen’s pocket to Scherzer’s is part of the solution.