The Stakeholder Society
Ackerman, Bruce & Alstott, Anne & JayMandle
NOT ALL BOATS ARE RISING The New Dollars and Dreams American Incomes and Economic Change Frank Levy The ressell Sage Foundation, $16.95, 248 pp. The Stakeholder Society Bruce Ackernian...
...I believe that the position adopted by Ackerman and Alstott, that success or failure in life is largely in the hands of individuals themselves, is exaggerated...
...Though The New Dollars and Dreams is a follow-up to a similar book written by the same author in the mid-1980s and is organized in much the same way as his earlier volume, it is far from a mere revision...
...There is no doubt that a widening income gap has emerged between college and high school graduates...
...Commonweal 25 September 24,1999...
...He does not rule out changes in educational policy that "have a strong market flavor...
...But whatever success is achieved in this way, it will still be necessary for social policy to do more than affirm that "some will succeed and others fail, but all will have had a real chance at the pursuit of happiness...
...To the best of my knowledge this alternative view has not been rejected on empirical grounds...
...It is not as if Ackerman and Alstott wish to do away with all safety nets...
...But at least a plausible alternative explanation is that employers pay a premium for college graduates not for any particular skills that they possess but because employers hold an increasingly negative assessment of the quality and reliability of workers with only a high school diploma...
...But the economic experience since the mid-1980s, and particularly during the 1990s, has been so different from what preceded it that Levy has been forced to broaden his explanation...
...In this regard, therefore, Levy is closer to what is needed than Ackerman and Alstott...
...But their provocative proposal to endow each individual at age eighteen with $80,000, to be used as each person chooses, is not intended primarily to address that fact...
...not with welfare, but with economic citizenship...
...In the current effort Levy remains concerned that the economy produces excessively unequal outcomes...
...Ackerman and Alstott, like Levy, are concerned with the growing maldistribution of income and report disapprovingly on the "indisputable fact that almost all of our newfound abunCommonweal 24 September 24,1999 dance has gone to the top 20 percent...
...It is their underlying objectives, and not the political feasibility or unexamined macroeconomic consequences of their scheme, by which Ackerman and Alstott's proposal should be evaluated...
...Levy's support for the basic social provision provided by the welfare state is the fundamental issue which puts him at odds with the authors of The Stakeholder Society...
...But at the same time he writes favorably about earned-income tax credits, refundable child credits for low-income families, enforcement of child support from absent fathers, greater availability of medical care for low-income persons, and the use of the public sector for employment creation in economic downturns...
...They believe that the $80,000 stake they offer each person has allowed them to transcend the dichotomy between collectivism and individualism...
...As such they should be provided with support to allow them to adjust and thrive in new circumstances...
...But he urges that an educational choice program "must work in conjunction with academic standards...
...Their liberalism, no matter how well funded, lacks sufficient active compassion for those hurt by forces larger than themselves...
...Since then, however, these favorable trends have been halted and family income growth has slowed dramatically...
...His research interests include the global and domestic distributions of income...
...Among these, Levy pays most attention to changing family patterns and what he calls the skill-bias of technological change...
...Individuals in such circumstances are principally the objects, not the agents, of life changes...
...Central to Levy's agenda is education reform...
...As they put it, "we are interested in opportunities, not outcomes...
...Levy's focus is now less on aggregate growth and more on the importance of what he calls society's "equalizing institutions...
...Particularly in an age of globalization, where economic restructuring and reconfiguration daily become more rapid, dislocations are the norm...
...The poorest 20 percent of families increased their share of total family income from 4.5 percent to 5.5 percent...
...Jay Mandle is the W. Bradford Wiley Professor of Economics at Colgate University...
...The trend to more equality in the nation's income distribution has been reversed...
...I confess skepticism with regard to the latter...
...Nevertheless he does sketch a set of policies aimed at reversing the trend to inequality...
...He agrees, for example, with at least some of the criticisms that were made of Aid to Families with Dependent Children (AFDC), musing that "a disinterested observer would indeed have to wonder whether AFDC was reducing inequality or making it worse...
...Earlier, Levy's analysis was that declining productivity growth lay behind what he called "the quiet depression...
...Included here are "public and private education, the welfare state, unions, international trade regulations, and the other political structures that blunt the most extreme market outcomes and try to ensure that most people benefit from economic growth...
...Such standards, he argues, will "give parents something most parents now lack—information on how the schools are preparing their children for the labor market...
...Increased equality in opportunity is the principle which motivates The Stakeholder Society and that is a desirable goal...
...They write "our first concern is not with safety nets but with starting points...
...Levy insists that his book is economic history, not one intended to recommend corrective policy...
...They write that all adults make mistakes and when those occur "churches and other institutions of civil society should play a leading part in helping people in trouble," leaving the state to play a "backup role...
...In this the authors offer a reconceptualization of redistributionist goals...
...Their proposal does include a universal retirement system, albeit one set at a minimal level...
...Acknowledging that this will result in a relatively low level of assistance, they nonetheless write, "it is a hard call, but one that must be made: it is more important to ensure that all Americans enjoy more equal freedom to shape their lives than to give more generous relief to those who fail the test of freedom...
...Beyond this, Levy urges changes in the welfare state...
...At best it does so indirectly, because their principal objective is to secure equality of opportunity and to do so with an approach whose impact is "to break the hold of a familiar vision of the welfare state in America...
...Their program, they write, is "based on the community's obligation to give each person equal respect by providing her with equal resources to develop her unique talents...
...By 1996 the share of family income received by the poorest 20 percent of families had declined to 4.2 percent, the lowest level since 1949...
...But today, at a time when Business Week celebrates the emergence of a "new economy" fueled by what it describes as a "technology-driven productivity boom," that explanation no longer works...
...Jay Handle_____________ Between 1949 and 1973 the median family income in the United States rose in real terms from $18,800 to $40,400...
...They declare that "as liberals, we believe that each citizen should be free to shape her outcomes as she thinks best...
...The Stakeholder Society Bruce Ackernian and Anne Alstott Yale univercity Press, $26, 296 pp...
...At the same time, the distribution of income, though remaining markedly unequal, became more egalitarian...
...It is this unsettling experience which motivates both of these books...
...not with misfortune, but with opportunity...
...But in their desire to accommodate, if not co-opt, American individualism and to de-emphasize the role of social safety nets, Ackerman and Alstott go too far...
...To insist to the contrary and not to place a priority on supporting and retraining the victims of progress represents a loss of opportunity which is costly not only to the individuals but to the society as a whole...
...This, Levy and most economists have taken to mean that technological change has increased the demand for college-educated workers compared to high school graduates...
Vol. 126 • September 1999 • No. 16
