The Stakeholder Society
by Anne Alstott and Bruce Ackerman
A better title for this book might be The Santa Claus Society. The authors argue for giving an $80,000 gift to all non-criminal high school graduates at age 21, earlier if they attend college, working out to a cool $255 billion a year at the time of publication.
Alstott and Ackerman plan to fund their plan with a two percent annual wealth tax. Bad idea. Wealth taxes punish individuals who invest, provide jobs and build infrastructure while rewarding rich hedonists. Someone who works 60 hours a week building a small business could get stuck with several thousand dollars a year in wealth taxes. A professional athlete spending his five million dollar a year salary on parties, jewelry and vacations would be free from wealth taxes.
The authors' lofty rhetoric conflicts with the truth. Their “equal opportunity for all” is merely an equal dollar gift for most Americans in their late teens and early twenties--an unequal opportunity, unmerited freedoms at the expense of others' freedoms. The authors allege their plan serves every American, ordinary Americans, young Americans, the less well-off, good consequences and good rights, while arbitrarily faulting other plans (wage subsidies, for example).
Stakeholder Society offers little research to support its claims. Research on young lottery winners, and what they did with five and six figure winnings, might prove fascinating. I doubt 21-year-olds will turn around after blowing $80,000 and say, “Okay, I blew it. Sign me up for that $5.85 an hour job with 25 percent taxes on top. As for my pregnant girlfriend, I’m gonna put every single penny of my income toward our family. I sure am glad we set up our society this way.”
The government has already given out trillions in unmerited gifts. Experience indicates that federal gifts do not make people stakeholders. It makes them lazy, greedy, hostile, defensive, resentful and alienated. Welfare farmers are not grateful reciprocators. They are angry brats who consider themselves rugged individualists.
The authors' conclusions would not lead to gains in “education, entrepreneurship and strong, stable families.” Most 21-year-olds do not yet know enough about their professions to succeed as entrepreneurs. Sure, they could open hot dog stands on street corners, but we might be saturated with micro-retailers and micro-retailing does not spur economic growth. Micro-retailers glut the streets of poor nations. Working class 28-year-olds working 60 hours a week to support families, who never got the $80,000 gifts, will be pleased to see their college student neighbors brand new luxury goods thanks to the government. The authors write that “Edmund Phelps is a kindred spirit.” I find that preposterous.
The authors’ launch numerous straw person attacks on consequentialism. I know of no consequentialists on the planet who argue for the things Alstott and Ackerman claim. Consequentialism would not gladly give $51 to a rich individual rather than $50 to a lower-income worker. Hello? There is an idea called declining marginal utility. Utilitarians do not say sending Jews to death camps was right because it made most Germans proud. Do these two authors have any idea how much harm goes on in a concentration camp? Pride is negligible on the benefit side.
Individuals proud to see innocents suffer tend to make life horrible for multitudes of others in the long run, something consequentialists abhor. Consequetialism does not have all the answers, but it is not the monster the Alstott and Ackerman concocted. Those ignoring the fact that free lunches are not free should not be writing economics books. Not recommended.
—Book review article by J.T. Fournier, last updated July 26, 2009.