The Stakeholder Society: What's At Stake? Oh, Just Our Freedoms

In their book, The Stakeholder Society, Bruce Ackerman and Anne Alstott--professors of law at Yale and Harvard, respectively--make a simple proposal: the government should, as a matter of right, give every American that finishes their high school studies and has no criminal record eighty thousand dollars that is paid over four years and that may be used however each individual chooses.

From the authors’ perspective, the conclusion that necessitates their plan is that every American citizen’s opportunity to succeed is far from similar or equal. Their plan attempts to achieve better levels of justice, equality and freedom by adequately redistributing wealth, claiming, of course, that this improves the equality of opportunity. They argue that with this right to a stake of eighty thousand dollars each American now has a fair opportunity to succeed.

America has always prided itself upon the theory of capitalism, and at the core of the capitalist economic system is the concept of the “invisible hand.” The hand of the system that the authors propose is, in contrast, anything but invisible. But the authors never intended for it to be. They don’t think that the equality of opportunity can be left to an invisible hand. And to that extent, though it serves a worthy and noble cause, their proposal is at first un-American, sounding in fact a lot like the formulation of some sort of socialist, even communist, society.

While I think it is true that equality of opportunity cannot be left to an entirely invisible hand, I also think that the hand of the plan of the authors becomes entirely too visible. I imagine, then, that to the authors I’m a “skeptic” or a “hardheaded libertarian.” Notwithstanding, I think there is something to be said about the invisible hand, and, as I see it, their proposal reaches its hand too far into the lives of Americans.

Pointing to a dramatic increase in economic inequality over the last few decades, the authors declare the failure of trickle-down economics and market their proposal in a way that seems to dare America to make good on its promise of equal opportunity. That opportunity, of course, could never easily be made to be perfectly equal, and the grant of eighty thousand dollars doesn’t do much, under certain circumstances, to equalize opportunity. Taking everything that Ackerman and Alstott say as true, their proposal, as it is, can fall short of its lofty goal. Even if every American is given a stake of eighty thousand or otherwise unfair results--or, put more appropriately, instances of unequal opportunity--aren’t beyond imagination.

Take, for example, Jagger, a well-off and academically successful eighteen-year-old high school basketball star. Because Coach K prophesizes that he may need Jagger to beat West Virginia in next year’s NCAA tournament, Jagger receives a scholarship to play basketball at Duke. Now, Jagger will (if he’s smart, and he is) invest his eighty thousand, because he does not need to apply it to his tuition.

Meanwhile, Rori can apply some of her eighty thousand for her tuition at Florida State but not all eighty thousand because she has a child to take care of while in school.

Worse, Garfield cannot apply any of his eighty thousand for his tuition at Georgetown because he has to use all of his eighty thousand to cover large medical expenses. He may not even be able to go to college.

This is the problem of equaling only the opportunity while disregarding the circumstance. And if the authors’ plan is altered to consider circumstance, it becomes that much more difficult to administer. What do you do? Give Jagger no money? Give Rori one hundred thousand? Give Garfield one hundred-sixty thousand? While it would undoubtedly make implementation all the more difficult, I don’t see how the Ackerman-Alstott plan can be implemented without taking into account how individuals use their money and make their decisions.

Jagger, Rori and Garfield all at least attempt to make good use of their stake, but that others will waste their stake is a real possibility and one that the authors brush off. If the redistribution of wealth as a combatant to economic inequality is a good thing, then redistributed wealth (taxpayer money) ought not be wasted. For example, if Alexis, an already wealthy citizen, gambles her stake away at a craps table in Las Vegas, her deep pockets make her indifferent. And the system (assuming she doesn’t gamble away a substantial amount or, worse, all of her wealth) can still get the eighty thousand back at her death. But if two tables over Robert, a citizen who isn’t already wealthy or anywhere close to it, gambles away his stake, his not-so-deep pockets render him very much affected. Robert has failed. And the system cannot get that eighty thousand back at Robert's death because the authors’ repayment plan considers ability-to-pay (i.e., where a citizen has no ability to repay his stake, he isn’t required to).

What happens then is that Robert’s kids don’t get to enjoy any fruits of his success. Robert, now without anything to show for his stake, can’t improve his children’s opportunities, as the authors say stakeholding will enable parents to do. Nor can Robert use the money to “provide [his] children with much-needed stability in their home environment.” That stability will have to come, if at all, from somewhere else. To this extent the authors’ plan has failed to provide arguably Robert but more clearly Robert’s children with equal opportunity.

Further, if everyone gets eighty thousand, no one gets eighty thousand. The playing field is just as equal, or unequal, as it was in the non-stakeholder society. As the authors say, America promises opportunity. This falls short, of course, of guaranteeing success. Giving eighty thousand to each high school graduate furthers the promise of opportunity without doing anything else to guarantee success. It is as if the authors suggest that we take two steps forward, only to take two steps back. We end up back where we started.

What I mean to say is that if the authors are concerned that the children of parents with high incomes have privileges of family, environment and education, attend elite private schools or “particularly inspiring” high schools in the suburbs and, therefore, have more opportunity than those who don’t, their proposal alone does little to right what they conclude is wrong.

Economic inequality is, of course, real and should be addressed. The question, then, is what should be done to help the most vulnerable Americans. I’m not convinced that the authors’ proposal is the way to do it and disagree with a basic premise of the proposal. That is, I do not agree, as the authors argue, that every American has the right to share in the wealth accumulated by previous generations. Again, that sounds like socialism. That said, I do agree with some of the authors’ premises, especially when they suggest that without adequate equality of opportunity the freedom of some may be pressed by others.

The challenge here is designing a plan that takes individualism seriously and that recognizes that equal opportunity starts with similar educational and economic opportunities. And because I believe that education in a lot of ways begets economic opportunities, I offer that taking a look at education, a fix that the authors dismiss, is perhaps a more appropriate approach.

If opportunity is the door, education is the door knob. I imagine, then, that if Americans had an equal opportunity to turn the door knob, they’d have an equal opportunity to open and walk through the door.

Fixing education begins with making an elite education more available and more affordable. This way, Rori may be able to raise her child and go to school without worry of tuition costs, Garfield can go to Georgetown and Robert’s children don’t have to suffer because their father gambled away their future.

Ackerman and Alstott set out to create a social engineering mechanism that furthers libertarian principles. If freedom comes from government handouts, I imagine they accomplish what they intend to. But freedom is when the government does not interfere in the lives of citizens.

At once, the authors advocate for a reduction of governmental action in people’s lives while pushing paternalism, and profess a respect for private property while requiring involuntary transfers of wealth in their plan. The grant of eighty thousand dollars to young adults means little more than improving consumption possibilities, not equalizing opportunity.

I don’t, as the authors do, dismiss fixing education to do more to equalize opportunity, and I couldn’t agree more with the authors when they say that “our society’s failure to make such basic investments in its youngest and most vulnerable citizens is simply scandalous.” And to that end, I am of the opinion that fixing the very broken education system of this country will do wonders to equalize opportunity and to help America make good on its promise.

But I’m no Ivy Leaugue professor of law.