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Saturday, April 1, 2000

The Stakeholder Society by Bruce Ackerman and Anne Alstott

True Equality of Opportunity Is a Chimera

Yale University Press • 1999 • 296 pages • $26.00

This book amounts to nothing more than a new version of how to take wealth from some and give it to others in the name of “social justice.” Its principal theme is that Jefferson’s proclamation in the Declaration of Independence of equality and freedom of all people cannot be realized in the United States because of the wide disparities in wealth and income that naturally occur in a market economy.

The authors, professors of law at Yale, complain that there can be no true “equality of opportunity” when the children of parents with high incomes have “unjust privileges” of family, environment, and education that enable them to speak “fluent and standard English,” attend “elite private schools or a prosperous high school in the suburbs,” and be “surrounded with eager guides to the skills of social advancement and the mysteries of college education.” Because children of the not-so-wealthy and poor do not have those advantages, Ackerman and Alstott lament, they do not have “equal opportunity.”

To address that timeworn complaint, the authors propose to give every American a one-time “stake” of $80,000 on entering college or reaching the age of 21. Subsidies resume later in life with a $670 per month “citizen pension” on reaching 67. The latter handout is supposedly justified because everyone has “a right to a dignified retirement” irrespective of work history and financial preparation. Those welfare measures will, the authors assert, build a strong sense of “community” needed to counteract excessive individualism. Americans, they say, suffer from an “infatuation with individual rights.”

Naturally all this largess must be paid for, and the authors advocate two wealth taxes that they call a “trusteeship tax” and a “privilege tax.” The “trusteeship tax” would be used to pay for the $80,000 “stakes” and would be raised or lowered enough each year to guarantee that enough money would be in the “stake holder” fund to pay everyone who becomes “entitled.” The “privilege tax” would “require each American to pay a tax based on the degree of privilege that she enjoyed during her childhood.” Privilege would be measured by “the amount of money that his parents earn while he is growing up.” (Besides their financial egalitarianism, the authors insist on equal treatment for pronouns!)

To keep “too much” wealth from accumulating in any private hands, they also call for a tremendous reduction in the lifetime tax exemption on gifts, from the present $650,000 to $50,000. And to make sure that money doesn’t escape their tax net, they advocate a limit of $1,000 per recipient per year for holiday and birthday gifts. Imagine a solemn IRS agent saying, “Grandpa, you can’t give Johnny that tricycle—it puts you over the annual gift limit.”

Our brave redistributionists issue this stirring cry, “Against the cynicism of the age, we are not embarrassed to announce our message: by the taxes they pay as well as the stakes they receive, Americans should be prepared to reaffirm their common commitment to economic citizenship as an enduring aspect of a revitalized political identity.”

So if you had been wondering if leftists still wrote books laying out new plans for society according to their grand visions, the answer is yes. The Stakeholder Society reaffirms Hayek’s point that the lessons of sound economic reasoning must be relearned in every generation. Absurd plans like this have been advanced many times before and intellectually demolished, but we cannot rest.

Ackerman and Alstott assert that their scheme promotes “social justice,” freedom, and respect for private property. However, as Hayek forcefully argued, social justice is a nonsensical mirage. Moreover, freedom does not come from government handouts, but entails the absence of government interference with your life. And respect for private property could hardly be encouraged by the incessant involuntary transfers of wealth that their plan necessitates.

Most of all, the authors are badly confused about equality. They are hung up on the term “equality of opportunity.” Jefferson’s “equality” in the Declaration is, of course, what Hayek called isonomia—equality before the law. Philosopher Robert Nozick called it process equality, which he carefully distinguished from end-state equality. The authors pursue the latter of those mutually exclusive concepts.

There’s a lesson here. Classical liberals sometimes carelessly misrepresent isonomia as “equality of opportunity.” But given the unavoidable differences in the means available to families as they bring up their children, true equality of opportunity is a chimera. Ackerman and Alstott exploit the ambiguity surrounding equality of opportunity to sell their version of collectivist redistribution while claiming to represent the middle ground between libertarianism and utilitarianism. Classical liberal arguments based on “equal opportunity” are vulnerable to such exploitation. The words we use to express our ideas, as well as the ideas themselves, have consequences.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.