Critical Assessment of Stakeholding Debates - Essay Example

Critical Assessment of Stakeholding Debates Introduction There has been heightened debate on the relevance of public policies in addressing the issues of income and wealth distribution in the society. Advancement in technology and the prevalence of globalisation have drastically transformed the structure and definition of the labour market in the 21st century. In the current framework of the labour market, individual citizens are faced with increased income inequality and related forms of social injustices. The emergent concept of stakeholding has been at the centre stage of ideological and political discussions on social public policies. The concept of stakeholding stipulates that every citizen upon attainment of an adulthood age, 21 years as proposed by Ackerman and Alstott, should receive a considerable lump sum one-time grant from the government. The amount given should be sufficient to qualify one as a significant wealth owner. Ackerman and Alstott recommended that the amount should total $80,000 in the United States (Ackerman et al, 2006). This essay is aimed at critically assessing the theoretical and practical debates concerning stakeholders grant in relation to basic income or assets. The Presented discussion will be addressed in the context of African American society in the United States. Debates on stakeholding The need for contemporary public policies has been necessitated by the transformative nature of the current labour market. Sherraden (2005) argued that market risks no longer impact directly on collective intermediary, government and insurance institutions but affects individuals and consequently their families. The current framework of social welfare has proved ineffective as witnessed from the deterioration of means tested program systems and lack of will by the governing institutions. Therefore, Ackerman and Alstott noted that the introduction of stakeholding would lead to progressive redistribution of wealth among members of the society (Ackerman et al, 2006). According to Paxton and White (2005), social policy campaign by egalitarian crusaders of has been focused on the redistribution of resource ownership. Proponents of stakeholding as form of social policy argues that highly privileged individuals inherit wealth from their parents while children from poor backgrounds are likely to continue languishing due to absence of inheritance. In such a scenario, underprivileged African Americans have been left without prerequisite resources to attend colleges and universities. Arguments by Ackerman and Alstott have been evidenced by the extent of income disparity between the minority groups and the white community in the United States. According to a CNN report, white Americans have 22 times more wealth than African Americans. The report also indicated extensive disparity between White’s household worth that stood at $ 110 729 and African American’s household worth that was $ 4995 in the year 2010 (Cnn money, 2014). Consequently, with this meagre disposition of wealth, African American heirs commence their adulthood without proper opportunity and resource foundation. Issuance of stake grants to all citizens would thus provide individual with fair distribution of resources when beginning their adulthood. Therefore, the adoption stakeholding as public policy will lead to mitigation of the detrimental effects of household income disparity. The provision of all citizens with a stake of $ 80,000 irrespective of one’s race, sex or abilities would create a standard springboard for every citizen to launch their careers. In addition, continual success of stakeholding programs will result to facilitation of asset building. Due to low income and household net wealth, the poor are conspicuously inactive in asset creation. They lack the financial capacity to buy houses, invest in private sector and further buy insurance packages. Issuance of $ 80, 000 will encourage asset building among African American and Hispanic communities hence establishing financial security. Criticism by Ackerman and Alstott (2006) focused on the definition of social justice by proponents of social democracy. The authors argued that social democrats equate payment of workforce to social welfare of the society. However, Ackerman and Alstott were quick to criticise this view based on the provisions that not all members of society are employed. Therefore, if social welfare were to be defined by payment of labour force then what would constitute social welfare of mothers who are predominantly nurturing their children and unemployed youths in the society? Consequently, formulation of public policies based on these premises would be highly flawed. Elaborate view of social welfare should encompass all spheres of the environmental factors affecting members of the society. Arguments by Ackerman and Alstott out rightly amplified the plight of caregivers of whom majority are women. Existing systems of public social policies seem to disregard the effect of work interruptions by family duties. In the United States, social security system determine individual’s sum of retirement security based on the value of paid work. Women who have spent most of their time nurturing their children thus end up with meagre retirement benefits. On the contrary, the framework of stakeholders grant as proposed by Ackerman and Alstott would provide women with equal resources allocation irrespective of the person-hours worked. Similarly, assessment of the concept of stakeholding as documented by Wright (2006) transcends workforce social welfare by offering universal freedom of choice. Theoretically, the provisions of stakeholding provide one with the liberty to choose what to do with the stake. Wright (2006) noted that these provisions could empower the less skilled labour force in the community by enhancing their financial security. This claim is justified by fact that stakeholders of grant independently decide whether to venture into other forms of investments or squander the money on leisure without being subjected to stringent conditions. In their writings, Ackerman and Alstott further argued that stakeholding encourages the development of long-term consumerism perspectives by individuals (Ackerman et al, 2006). According to the author, possession of a lump sum amount of $ 80, 000 enables individuals and especially young adults to formulate long-term strategies. However, monthly basic income as proposed by Parijs Van would limit the amount of funds disposable after catering for one’s expenditures. It is agreeable that stakeholder’s grant is likely to set into motion the formulation of strategic plans and goals by individuals due to financial security from stakes. In contrast, monthly basic income only suffices short-term upkeep of individuals who are already subjected to meagre income. Implementation of basic income as form of social public policies would thus discourage savings by individuals. The sustainability of stakeholding as a form public policy has also been fiercely criticised by scholars. In his argument, Parijs Van and Vanderborght (2010) identified transnational migration as hindrance to sustainability of unconditional basic income. Transnational migration leads to instability of existing tax base by either strengthening or weakening the base. According to Parijs Van and Vanderborght (2010), in most cases unconditional basic income and also stakeholding policies entails redistribution of income from highly paid individuals to the lowly paid members of the society. Parijs Van and Vanderborght (2010) therefore argued that well paid members of the society might be enticed to migrate to states that promise increased returns after taxing. Consequently, as result of massive migration from a given country, the tax base ultimately becomes too weak to support unconditional basic income and stakeholding schemes. Therefore, prudency is paramount in the implementation of stakeholding forms of public social policies. Recommendations by Parijs van to reduce taxation on highly paid individuals are thus highly warranted in order to sustain stakeholding and unconditional basic income. Additionally, further proposal to equate benefits to the amount of contributions collected could also mitigate the effects transnational migration. However, in his proposal, Parijs Van failed to address fact that tying benefits to amount of contribution could thwart the extent of true redistribution of income (Ackerman et al, 2006). Further discussions on how to address the concerns of income distribution recommended globalization of income. However, such mechanism could only be feasible in the theoretical context. The applicability of universal framework income has been met with sharp criticism. Stakeholding on a global extent should accommodate the complex heterogeneity of cultural background and market dynamics under varying market forces. Another challenge of a universal scheme could be appropriate identification of grant value. This could be subjected to varying inflation values over the globe, as a given amount may seem sufficient for African economies yet insignificant in African American communities. The debate on universal stakeholding has thus proved to be premature in terms of existing political framework and economical platforms. In contrast to Ackerman and Alstott’s assertion, Sherraden (2005) argued that redistribution of income could not solely alleviate the economical disparity in the society. He asserted that ownership of assets was paramount in the efforts aimed at closing the inequality gap. Sherraden’s reasoning is exemplified by notable wealthy dynasties in the society where individuals with high-income posses numerous assets which may include homes, real estate, automobiles and business ventures. In addition to their stable lively hood, these assets provide financial security. Redistribution of income schemes tend to offer short term solution to financial constraints facing underprivileged members of the society while creation of assets ensures long term investment and possession of financial security. Such security guarantees one financial freedom and provides the means by which others could be alleviated from poverty through employment, charity and education. However, Sherraden (2005) was quick to caution that asset acquisition should not in any form be interpreted or regarded as a short term substitute of the income redistribution policies but must always be considered as a pertinent complement. Consequently, one may disagree on the role of assets in comparison to basic income by reasoning that sufficient income facilitates the acquisition of assets hence income schemes ought to take precedence in the implementation of stakeholding policies. Similarly, without proper mechanisms that offer individuals sources of income or means of creating assets, poor households will continue to exists in a vicious cycle of poverty. Inevitably, in the same manner in which rich children inherit resources from their parents, children from underprivileged backgrounds also end up inheriting poverty from their parents. The debate against and for stakeholding as a form public social policy has raised concerns over the treatment of death and subsequent execution of social welfare packages. According to Ackerman et al (2006), one time issuance of lump sum amount of $ 80,000 guarantees adult freedom and independence of enjoying their opportunities without limitations of finance. On the contrary, social justice schemes structured to grant individuals payment of basic income in form of monthly stipends are subject to lifespan of individuals. Furthermore, monthly income stipend encourages unequal distribution of income since individuals with longer lifespan would end up enjoying higher grants compared to those who died at younger age. This principle contradicts the beliefs of egalitarian system that campaigns for universal citizen endowment. Young and Mulvale (2009) also recommended that the distribution of citizen’s income should take the form of one lump sum payment. Stakeholder’s one time grant payment of $ 80,000 will hence ensure that every citizen is equally allocated their rightful resources and opportunity irrespective of their health circumstances. Critical examination of the lump sum payment structure indicated that immediate family members of the deceased beneficiary could further utilize the fund left unlike monthly basic payment that is terminated upon death. However, it is the same premise of freedom offered by the stakeholding grant that has elicited fierce opposition from critics of stakeholding. Given that provisions of the stakeholders grant lack stringent conditions that regulate the usage of the fund, many fear that beneficiaries are likely to squander the amount. In particular, Parijs Van raises his concern over the possibility of young adults “blowing” their stakes on leisure as opposed to investing in income generating activities (Ackerman et al, 2006). Undoubtedly, stakeholding grant offers excessive freedom to beneficiaries without elaborate framework on expected expenditures. It is pragmatic for the governing institutions to appreciate the autonomy of individuals but also should recognize variant decision-making choices by citizens. It thus alarming to realize that the resultant effectiveness of the scheme would largely be pegged on the choices made by the beneficiaries. In some scenarios, individuals may end up living in the same conditions before being awarded the grant. In response to Parijs Van claims, Ackerman and Alstott argued that individuals should not be deprived essential resources due to their independent choices (Ackerman et al 2006). He added that criticism and opposition of the entire stakeholding program based on misdeeds by a portion of the population would result to limitation of rightful resources to those deserving the grant. His argument is therefore in accordance with the core principle of social justice that everyone is entitled to real freedom that encompasses even the freedom of choice. To address the problem of misuse, Ackerman and Alstott proposed that individuals who have misappropriated their grants forfeit their rights to qualify for another grant when faced with subsequent financial constrain. Le Grand and Nissan (2003) further related the framework of social justice policies to the structure public health policies. According to Le Grand and Nissan (2003), public health policies constitute preventive policies and curative policies. In terms of social justice polices, curative policies are primarily aimed at balancing social justice and further enhancing economic efficiency through the reduction of the difference of income distribution by use of fiscal measures to mitigate the effects of poverty and inequality already present in the society. On the contrary, preventive public policies are intended to curtail the onset of poverty and income inequality in a given social structure. Le Grand and Nissan (2003) further noted that curative policies were ineffective in addressing social injustices such as income inequality and asset disparities. They added that implemented of curative policies demanded more political lobbying for successful execution. Le Grand and Nissan (2003) therefore classified stakeholding as a preventive social justice policy. Evidently, examination of stakeholding objectives reveal inherent attributes of preventive measures. First, the policy is aimed at facilitating provisions of equal resources and opportunity to individuals at the beginning of their adulthood. Secondly, the grant serves as an incentive for working and creation of assets that result to financial stability and security. However, to some extent one may consider stakeholding as curative policy. In a set up of African American community, stakeholding is chiefly implemented to correct existing social injustices facing the minority groups. Stakeholders grant is aimed at providing African American household with the means to secure basic income and create assets. Surprisingly, poverty and income disparities are already prevalent in most communities hence any social policies implemented in these societies seek to correct social injustice already existing. In her examination of contrasting arguments by Ackerman and Parijs Van, Pateman wrote that stakeholding did not offer sufficient democracy (Pateman, 2002). She lamented that prevalent debates on stakeholding were focused on social justice that had been inappropriately inclined towards republicans, liberals and utilitarianism proponents. These debates have disregarded the framework of democracy in their framing of public policies context. Birnbaum (2010) noted that basic income as opposed to stakeholding offered more freedom especially to women. In his criticism of stakeholding, Pateman (2002) noted that stakes could not effectively break the link between employment and income based on the methods of distribution. However, unconditional basic income would facilitate monthly payment without employment. The author concurs with Ackerman and Parijs van assertion that basic income and stakeholding enhances citizens’ freedom through creation of opportunities and availability of resources. Consequently, the three authors differ on their definition of individual’s freedom. Pateman (2002) was quick to note that individual freedom constituted self-government that was politically centralised and founded on democracy. In contrast to stakeholding, unconditional basic income offers individuals the opportunity of being freed from employment. This applicability would be deemed suitable for housewives who have been wrongly considered as unemployed yet actively engages in household chores and nurturing of children. In addition, Parijs van countered Ackerman’s argument that basic income would result to immediate consumerism perspective by arguing that the breakage of link between the labour market and income would sensitize individuals to refrain from excessive expenditure on material goods. The linkage of stakeholding programs to citizenship by Ackerman and Alstott has also elicited criticism from Pateman. Pateman argued that Ackerman and Alstott referred to economic citizenship when they asserted that every citizen was entitled a stake, “one citizen one stake.” Pateman faulted the analogy by stating that stakes are normally inform of onetime payment while citizenship and voting rights are reserved for the rest of one’s lifetime. Pateman therefore asserted that basic income best described the analogy of citizenship since basic income payments were to be paid at regular intervals until the death of an individual. Pateman hence likened basic income to universal suffrage. In contrast to benefits offered by stakeholders grant, minority groups such as African American stand to benefit from routine short terms schemes of social policies. The continual accessibility of basic income leads to creation of financial security that ultimately facilitates participation of African American in social welfares affecting their society. Claims by Pateman to incorporate aspect of democracy in the matrix of social justice were further echoed by his labelling of basic income as a suffrage right. Implementation of stakeholding policies further presents pragmatic risks that may results to instability of essential institutions. The effects of stakeholding programs on the market labour pose serious threats to economic development. In his studies, Wright (2006) noted that stakeholding programs would result to weakening of work incentives. Individuals presented with favourable stakes are likely to avoid employment. In a scenario where individuals are subjected to meagre income and deplorable working environment, beneficiaries are likely to prefer unemployment. The case of Malibu surfer best exemplifies the debate on work incentives. The surfer chooses to quit employment in order to enjoy surfing on the coast due to the guaranteed expectation of income benefit. Economical structures and production system in the market are likely to experience strain if a larger portion of the population abandons employment to survive on income benefit or stakes offered by the government. Consequently, proponents of stakeholding programs have responded by stating that under practical conditions disincentive effects of the programs are insignificant to the market dynamics. Another argument asserted that stakeholding leads to diversification and liberalisation of labour market hence employers are likely to improve incentives being offered to prospective employees. Conclusion The prevalence of social injustice despite existence of social public policies such as the means tested schemes has elicited debate over the effectiveness of predominant frameworks of social welfare. Stakeholding has been proposed as an alternative form of social public policy aimed at redistributing pertinent resources among members of the society. Proponents of stakeholding as a form of public policy, in particular Ackerman asserted that every citizen was entitled to a stake of their his/her country’s endowment. It has been noted that the variation of income and asset possession at the beginning of adulthood directly results to income inequality and disparity between individuals in the society. Therefore, stakeholding is intended to correct this social injustice by provide all citizens with the means to acquire opportunities and create assets through the issuance of stakes at the early stages of adulthood. However, the implementation of stakeholding schemes have been met with fierce opposition from critics despite the obvious merits it presents. Stakeholding provides individuals with financial security and further facilitates the acquisition of assets by underprivileged members of the society. Nevertheless, Parijs van and Pateman arguments identified unconditional basic income as a better form of public policy than stakeholding. The major concern of stakeholding critics seem to focus on the excessive freedom of choice offered by the framework of stakes. Critics argued that the stakes are likely to be misused by individuals hence a failure on the intended purpose of empowering individuals financially. However, examination of the stakeholding schemes offers minority groups and in particular, the African American communities the means to participate in social welfare debates and political arenas so as to further agitate for additional social public policies that will address social injustices facing the society. References Ackerman, B. A., Alstott, A., Parijs, P. V., & Wright, E. O. (2006). Redesigning Distribution: Basic Income And Stakeholder Grants As Alternative Cornerstones For A More Egalitarian Capitalism. London, Verso. Ackerman, B. & Alstott,A. (1999). The Stakeholder Society. New Haven, Connecticut: Yale University Press. Birnbaum, S. (2010). Radical Liberalism, Rawls And The Welfare State: Justifying The Politics Of Basic Income. Critical Review Of International Social And Political Philosophy.13, 495-516. Cnnmoney, (2014). Worsening Wealth Inequality By Race. [Online] Available At: Http://Money.Cnn.Com/2012/06/21/News/Economy/Wealth-Gap-Race/ [Accessed 9 Jun. 2014]. Le Grand, J., Nissan, D. (2003). A Capital Idea: Helping the Young to Help Themselves.The Ethics of Stakeholding, Houndmills, Hampshire: Palgrave Macmillan, Parijs Van, P. & Vanderborght Y (2010). Basic Income, Globalisation and Migration. Proceedings of The Basic Income International Conference, 27-28 University of Louvain. Pateman, C. (2002) Freedom and Democratization: Why Basic Income Is to Be Preferred to Basic Capital. American Political Science Association Annual Meetings. Boston. Paxton, W., & White, S. G. (2005). The Citizens Stake: Exploring The Future Of Universal Asset Policies. Bristol, Policy. Sherraden, M. (2005). Inclusion In The American Dream:Assets, Poverty, And Public Policy. London: Oxford University Press. Wright, E. (2006). Two Redistributive Proposals—Universal Basic Income And Stakeholder Grants. Focus, 24(2), Pp.1-5. Young, M. & Mulvale, J. (2009). Possibilities   And Prospects:  The Debate Over  A Guaranteed  Income. An Economic Security Project Report. Read More