Spreading the Wealth
- Bruce Ackerman and Anne Alstott, The Stakeholder Society, Yale University Press, 1999, 296 pages
- Jeff Gates, The Ownership Solution, Addison-Wesley, 1998, 388 pages
An ever-widening chasm between the rich and the poor exists in the U.S., the likes of which hasn't been seen since the Great Depression, when silk-hatted haves flourished in mansions and tattered have-nots languished in bread lines.
Two recently published books contend that the U.S.' feeble attempts to lessen its lopsided wealth and income disparity aren't working, and that the rich are only getting richer -- Forbes' latest list of billionaires certainly drives home this point -- while the middle class and working poor are falling farther behind.
While this observation isn't exactly breaking news, the books in question offer spirited ideas for bridging the wealth gap. The writers all agree that democracy will implode if the disparity remains so unbalanced, yet they diverge wildly on just what action should be taken.The more radical of the two books, The Stakeholder's Society, was written by a pair of Yale University Law School professors, Bruce Ackerman and Anne Alstott. The two devised a what-if scenario that meanders from thought-provoking to implausible: What if the government gave every 21-year-old a one-time "citizen's stake" of $80,000 that must be repaid upon death? Ackerman and Alstott hold that we're all products of our upbringings and our parents' positions in life. Those factors determine what breaks we get -- private schools, comfortable neighborhoods, social connections, inheritance, whatever. The $80,000, they say, would even the playing field of young adults starting out in the world and could be used for anything. Funding would eventually come from repayment upon past recipients' deaths. But in its start-up mode, this stakeholding kitty would be financed by an annual 2% wealth tax on all property of Americans who own more than $80,000 in assets. The writers detail the proposal and make passionate arguments in favor of this liberal means to an equal-opportunity end. But read the part about how retirees may have to take out equity loans on their paid-for homes to cough up their share of the wealth tax, and you'll realize this plan would never fly. So, the concept is reduced to little more than cocktail-party chitchat. Ackerman and Alstott climb even farther out on a limb in the second half of Stakeholder, outlining a proposal to dismantle Social Security and its accompanying regressive payroll tax. Social Security would be replaced with a pension system that would be based on U.S. citizenship, not on employment. ("Here, here!" say homemakers.) Financing for this system would come from a tax on the degree of privilege that Americans enjoyed as children. In short, if you were a rich kid, you'd pay a $3,800 annual privilege tax. If you were raised in poverty, your share would be $380 per year. But if there's one thing the wealthy find distasteful, it's a tax aimed right at 'em. So The Ownership Solution might find a more receptive audience among the moneyed. Gates, a lawyer and onetime counsel to the Senate Finance Committee, claims that to rid the nation of the two-tiered "Tiffany (TIF)-and-Kmart (KM)" economy, the free market must include more employee-owned companies. Not enough of today's workers are connected as shareholders to their employers, and shareholders aren't necessarily connected to the businesses they own, Gates says. He frets that institutions own nearly half of all market shares, and he likens money managers to horse traders who aren't concerned about the health of the horses but only about what price the horses will fetch when they're sold. Gates helped craft federal legislation on employee stock-ownership plans, or ESOPs, in the 1980s and remains a huge proponent of ESOPs as a way to extend riches to workers. Although The Ownership Solution is a lengthy and sometimes tedious read, it's a valuable guide for corporate executives who are contemplating offering ESOPs or for politicians who are seeking ways to effect economic change. Both books, however, leave out or dismiss as irrelevant rosier statistics like low inflation, high employment and wage increases. Gates' book, though published just last year, also is missing current data on the boom in online trading, and it doesn't address how that's affecting wealth. Couldn't easy, individualized access to the stock market via the Internet be helping to close the wealth gap? And what of our other social ills? Will giving stock to the masses or cash to young adults and old folks erase illegal drug trafficking, violent crime, lousy schools, racism, broken families or mistrust between boss and worker or citizen and government? Perhaps on some fronts: Ackerman and Alstott link their proposed $80,000 stake to mandatory high school diplomas. And juveniles would be docked financially if they commit crimes. The authors have written well-researched books filled with compelling arguments. Clearly, they believe in spreading the wealth. But will readers accept their arguments, and will their ideas ever be implemented? No doubt politicians will continue to offer up Band-Aid solutions like enterprise zones or tax credits for children. But any real change must come from the haves. After all, they own most of the money -- and most of the power.
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