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Freedom Charter
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Freedom Charter memorial in Kliptown
The Freedom Charter was the statement of core principles of the South African Congress Alliance, which consisted of the African National Congress (ANC) and its allies - the South African Indian Congress, the South African Congress of Democrats and the Coloured People's Congress. It is characterized by its opening demand; "The People Shall Govern!"[1]
Contents
1 History
2 Freedom Charter
2.1 The People Shall Govern!
2.2 All National Groups Shall Have Equal Rights!
2.3 The People Shall Share In The Country's Wealth!
2.4 The Land Shall Be Shared Among Those Who Work It!
2.5 All Shall Be Equal Before The Law!
2.6 All Shall Enjoy Equal Human Rights!
2.7 There Shall Be Work And Security!
2.8 The Doors Of Learning And Of Culture Shall Be Opened!
2.9 There Shall Be Houses, Security And Comfort!
2.10 There Shall Be Peace And Friendship!
3 References
4 External links
History[edit]
In 1955, the ANC sent out 50,000 volunteers into townships and the countryside to collect "freedom demands" from the people of South Africa. This system was designed to give all South Africans equal rights. Demands such as "Land to be given to all landless people", "Living wages and shorter hours of work", "Free and compulsory education, irrespective of colour, race or nationality" were synthesized into the final document by ANC leaders including Z.K. Mathews, Lionel "Rusty" Bernstein, Ethel Drus, Ruth First and Alan Lipman (whose wife, Beata Lipman, hand-wrote the original Charter). The Charter was officially adopted on 26 June 1955 at a Congress of the People in Kliptown.[2][3] The meeting was attended by roughly 3,000 delegates but was broken up by police on the second day, although by then the charter had been read in full. The crowd had shouted its approval of each section with cries of "Afrika!" and "Mayibuye!"[4] Nelson Mandela escaped the police by disguising himself as a milkman, as his movements and interactions were restricted by banning orders at the time.[5]
The document is notable for its demand for and commitment to a non-racial South Africa, and this has remained the platform of the ANC. As a result, ANC members who held pro-African views left the ANC after it adopted the charter, forming the Pan Africanist Congress. The charter also calls for democracy and human rights, land reform, labour rights, and nationalization. After the congress was denounced as treason, the South African government banned the ANC and arrested 156 activists, including Mandela who was imprisoned in 1962. However, the charter continued to circulate in the revolutionary underground and inspired a new generation of young militants in the 1980s.[4]
On 11 February 1990, Mandela was finally freed, and in May 1994 the ANC came to power. The new Constitution of South Africa included many of the demands of the Freedom Charter. It addressed directly nearly all demands for equality of race and language, but made no reference to nationalization of industry or redistribution of land which were outlined in the charter.
Freedom Charter[edit]
We, the People of South Africa, declare for all our country and the world to know: that South Africa belongs to all who live in it, black and white, and that no government can justly claim authority unless it is based on the will of all the people; that our people have been robbed of their birthright to land, liberty and peace by a form of government founded on injustice and inequality; that our country will never be prosperous or free until all our people live in brotherhood, enjoying equal rights and opportunities; that only a democratic state, based on the will of all the people, can secure to all their birthright without distinction of colour, race, sex or belief; And therefore, we, the people of South Africa, black and white together - equals, countrymen and brothers - adopt this Freedom Charter. And we pledge ourselves to strive together, sparing neither strength nor courage, until the democratic changes here set out have been won.
The People Shall Govern![edit]
Every man and woman shall have the right to vote for and to stand as a candidate for all bodies which make laws;
All people shall be entitled to take part in the administration of the country;
The rights of the people shall be the same, regardless of race, colour or sex;
All bodies of minority rule, advisory boards, councils and authorities shall be replaced by democratic organs of self-government.
All National Groups Shall Have Equal Rights![edit]
There shall be equal status in the bodies of state, in the courts and in the schools for all national groups and races;
All people shall have equal right to use their own languages, and to develop their own folk culture and customs;
All national groups shall be protected by law against insults to their race and national pride;
The preaching and practice of national, race or colour discrimination and contempt shall be a punishable crime;
All apartheid laws and practices shall be set aside.
The People Shall Share In The Country's Wealth![edit]
The national wealth of our country, the heritage of all South Africans, shall be restored to the people;
The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole;
All other industry and trade shall be controlled to assist the well-being of the people;
All people shall have equal rights to trade where they choose, to manufacture and to enter all trades, crafts and professions.
The Land Shall Be Shared Among Those Who Work It![edit]
Restrictions of land ownership on a racial basis shall be ended, and all the land redivided amongst those who work it, to banish famine and land hunger;
The state shall help the peasants with implements, seed, tractors and dams to save the soil and assist the tillers;
Freedom of movement shall be guaranteed to all who work on the land;
All shall have the right to occupy land wherever they choose;
People shall not be robbed of their cattle, and forced labour and farm prisons shall be abolished.
All Shall Be Equal Before The Law![edit]
No one shall be imprisoned, deported or restricted without a fair trial;
No one shall be condemned by the order of any Government official;
The courts shall be representative of all the people;
Imprisonment shall be only for serious crimes against the people, and shall aim at re-education, not vengeance;
The police force and army shall be open to all on an equal basis and shall be the helpers and protectors of the people;
All laws which discriminate on grounds of race, colour or belief shall be repealed.
All Shall Enjoy Equal Human Rights![edit]
The law shall guarantee to all their right to speak, to organise, to meet together, to publish, to preach, to worship and to educate their children;
The privacy of the house from police raids shall be protected by law;
All shall be free to travel without restriction from countryside to town, from province to province, and from South Africa abroad;
Pass Laws, permits and all other laws restricting these freedoms shall be abolished.
There Shall Be Work And Security![edit]
All who work shall be free to form trade unions, to elect their officers and to make wage agreements with their employers;
The state shall recognise the right and duty of all to work, and to draw full unemployment benefits;
Men and women of all races shall receive equal pay for equal work;
There shall be a forty-hour working week, a national minimum wage, paid annual leave, and sick leave for all workers, and maternity leave on full pay for all working mothers;
Miners, domestic workers, farm workers and civil servants shall have the same rights as all others who work;
Child labour, compound labour, the tot system and contract labour shall be abolished.
The Doors Of Learning And Of Culture Shall Be Opened![edit]
The government shall discover, develop and encourage national talent for the enhancement of our cultural life;
All the cultural treasures of mankind shall be open to all, by free exchange of books, ideas and contact with other lands;
The aim of education shall be to teach the youth to love their people and their culture, to honour human brotherhood, liberty and peace;
Education shall be free, compulsory, universal and equal for all children;
Higher education and technical training shall be opened to all by means of state allowances and scholarships awarded on the basis of merit;
Adult illiteracy shall be ended by a mass state education plan;
Teachers shall have all the rights of other citizens;
The colour bar in cultural life, in sport and in education shall be abolished.
There Shall Be Houses, Security And Comfort![edit]
All people shall have the right to live where they choose, to be decently housed, and to bring up their families in comfort and security;
Unused housing space to be made available to the people;
Rent and prices shall be lowered, food plentiful and no one shall go hungry;
A preventive health scheme shall be run by the state;
Free medical care and hospitalisation shall be provided for all, with special care for mothers and young children;
Slums shall be demolished, and new suburbs built where all have transport, roads, lighting, playing fields, creches and social centres;
The aged, the orphans, the disabled and the sick shall be cared for by the state;
Rest, leisure and recreation shall be the right of all;
Fenced locations and ghettoes shall be abolished, and laws which break up families shall be repealed.
There Shall Be Peace And Friendship![edit]
South Africa shall be a fully independent state, which respects the rights and sovereignty of all nations;
South Africa shall strive to maintain world peace and the settlement of all international disputes by negotiation-not war;
Peace and friendship amongst all our people shall be secured by upholding the equal rights, opportunities and status of all;
The people of the protectorates-Basutoland, Bechuanaland and Swaziland-shall be free to decide for themselves their own future;
The right of all the peoples of Africa to independence and self-government shall be recognized and shall be the basis of close co-operation.
Let all who love their people and their country now say, as we say here:
'THESE FREEDOMS WE WILL FIGHT FOR, SIDE BY SIDE, THROUGHOUT OUR LIVES, UNTIL WE HAVE WON OUR LIBERTY.'
Adopted at the Congress of the People, Kliptown, South Africa, on 26 June 1955.[6]
References[edit]
Wikimedia Commons has media related to Freedom Charter.
Jump up ^ www.anc.org.za (1955), Freedom Charter, ANC
Jump up ^ "Father of Freedom Charter dies", Johannesburg Star, 28-01-13
Jump up ^ Pillay, Gerald J. (1993). Voices of Liberation: Albert Lutuli. HSRC Press. pp. 82–91. ISBN 0-7969-1356-0.
^ Jump up to: a b Naomi Klein (2007), The Shock Doctrine, London: Penguin Group
Jump up ^ Nelson Mandela (1994), Long Walk to Freedom, New York: Little, Brown and Company
Jump up ^ Bernstein, Hilda (April 1987). "The Freedom Charter (With a Note by Hilda Bernstein)". Third World Quarterly. 9 (2): 672–677. doi:10.1080/01436598708419993. JSTOR 3991903. – via JSTOR (subscription required)
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Official Languages Act (Canada)
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The Official Languages Act (French: Loi sur les langues officielles) is a Canadian law that came into force on September 9, 1969,[1] which gives French and English equal status in the government of Canada.[2] This makes them "official" languages, having preferred status in law over all other languages. Although the Official Languages Act is not the only piece of federal language law, it is the legislative keystone of Canada's official bilingualism. It was substantially amended in 1988. Both languages are equal in Canada's government and in all the services it controls, such as the courts.
Contents
[hide]
1 Summary of main features
2 Political context
3 Failure to implement all provisions of the Official Languages Act
4 Reactions
4.1 Provincial legislatures
4.2 Poll data on public reactions
5 Notes
6 See also
7 External links
8 Related link
Summary of main features[edit]
The Act[3] provides, among other things,
that Canadians have the right to receive services from federal departments and from Crown corporations in both official languages;
that Canadians will be able to be heard before federal courts in the official language of their choice;
that Parliament will adopt laws and to publish regulations in both official languages, and that both versions will be of equal legal weight;
that English and French will have equal status of languages of work within the federal public service within geographically defined parts of the country that are designated bilingual (most notably in National Capital Region, Montreal and New Brunswick), as well as in certain overseas government offices and in parts of the country where there is sufficient demand for services in both official languages. In remaining geographical areas, the language of work for federal public servants is French (in Quebec) and English (elsewhere);
The Federal government has set in place regulations establishing linguistic categories (anglophone, francophone, bilingual) for some job functions within the public service. Departments and agencies of the federal government are required to fill these positions with individuals who are capable of serving the public in English, in French, or in both languages. Unilingual public servants are given incentives to learn the other official language, and the government provides language training and offers a "bilingualism bonus".
Part VI of the Act mandates that English-speaking Canadians and French-speaking Canadians not be discriminated against based on ethnic origin or first language learned when it comes to employment opportunities and advancement.[4]
As well, the law created the Commissioner of Official Languages, an officer of Parliament charged with receiving complaints from the public, undertaking inquiries, and making recommendations regarding the status of the two official languages.
Section 32 of the Official Languages Act authorizes the Governor in Council (i.e., the federal cabinet) to issue regulations defining the geographic regions in which services will be offered by the federal government in the relevant minority language (English in Quebec and French elsewhere).[5] This provides a legal definition for the otherwise vague requirement that services be provided in the minority official languages wherever there is "significant demand." The definition used in the regulations is complex, but basically an area of the country is served in both languages if at least 5,000 persons in that area, or 5% of the local population (whichever is smaller), belongs to that province's English or French linguistic minority population.[6] The regulations were first promulgated in 1991.[7]
Political context[edit]
The Official Languages Act was one of the cornerstones of the government of Pierre Trudeau. The law was an attempt to implement some of the policy objectives outlined by the federally commissioned Royal Commission on Bilingualism and Biculturalism, which had been established in 1963 and since that time had been issuing periodic reports on the inequitable manner in which Canada’s English-speaking and French-speaking populations were treated by the federal administration. At that time, only 9% of jobs within the federal public service were occupied by Francophones,[8] even though French-speakers formed a quarter of the Canadian population. The proportion of jobs designated bilingual grew to 14% in 1978, and to 25% in 2004.[9]
One of the most important features of the 1969 act was to ensure that federal government services would be provided in both official languages, wherever population size warranted it.
Its principles were later incorporated into the Constitution of Canada, in Section 16 of the Canadian Charter of Rights and Freedoms.
A new Official Languages Act was enacted in 1988 in order to achieve two objectives.
First, it was necessary to update the 1969 law to take into account the new language-related obligations that the federal government had undertaken under Sections 16-23 of the Charter of Rights and Freedoms, which had been enacted in 1982. For example, Section 20 of the Charter of Rights and Freedoms guarantees the right of the Canadian public to communicate in English and French with any central government office or with regional offices where there is "a significant demand for communication with and services from that office." Significant demand is not defined in the Charter of Rights and Freedoms. One of the purposes of the Official Languages Act of 1988 was to remedy this omission.
Second, the new law included provisions for the promotion by the government of Canada of Quebec’s English-speaking minority and of the French-speaking minorities in the rest of the country. The programs that fall under the "promotion" umbrella are often designed to encourage each provincial government to offer services to its official-language minority community, and contain a mechanism for transferring funds to the provincial governments in order to finance a part of these programs. Under Canada’s federal constitution, many important services, such as education and health, fall under provincial jurisdiction and are therefore off-limits to any direct federal spending. The transfer of federal funds, conditional upon the fulfilment by each provincial government of detailed conditions laid out in a funding agreement, is a constitutionally permitted method of dodging this jurisdictional constraint.
This would suggest that the Official Languages Act and Quebec's Charter of the French Language (also known as "Bill 101") are fundamentally at cross-purposes with each other. However, that perspective is not universally accepted. For example, former Liberal leader Michael Ignatieff has stated that "Bill 101 and the Official Languages Act are not in opposition, they are complementary."[10]
Failure to implement all provisions of the Official Languages Act[edit]
From time to time, the Official Languages Commissioner draws attention to the fact that federal agencies subject to the law are failing to live up to their legal obligations regarding official languages. In a report published in 2004 on the 35th anniversary of the Official Languages Act, Commissioner Dyane Adam noted that only 86% of posts designated "bilingual" in the federal public service were occupied by persons who had effectively mastered the two official languages. This nevertheless was an increase over the comparable figure of 1978, when only 70% of the incumbents in posts that had been designated "bilingual" were capable of speaking both languages at accepted levels.[11]
In January 2017, the Office of the Commissioner of Official Languages had received 14 complaints related to Prime Minister Justin Trudeau's use of English and French during public town hall meetings.[12] Eleven of the reports came following a session in Sherbrooke, Quebec, where Trudeau, whose father had enacted the Official Languages Act fifty years prior, answered in French when was asked in English to address a lack of government-provided mental health services for English-speaking persons.[13] The remaining three were attributed to Trudeau answering in English to a question asked in French while in Peterborough, Ontario.
Reactions[edit]
Provincial legislatures[edit]
This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (January 2015) (Learn how and when to remove this template message)
In 1969, the law was adopted with all-party support in the House of Commons. Despite this, there was not universal support for the law. The premiers of the three Prairie provinces requested, early in 1969, that the Official Languages Bill be referred to the Supreme Court of Canada to determine its constitutionality. They maintained, along with JT Thorson, the former president of the Exchequer Court of Canada, that the bill was outside the powers of the Parliament of Canada.[14] The reference to the court was never made, but the legal question was resolved in 1974, when the Supreme Court ruled, in Jones v. Attorney General of New Brunswick, that the subject matter of the bill was within federal jurisdiction.
In subsequent decades the response from provincial governments to the example set by the federal government has been mixed:
New Brunswick, which is home to Canada’s second largest French-speaking minority population, adopted the federal government policy and adopted its own Official Languages Act shortly thereafter. The bilingual status of New Brunswick was strengthened in 1993 by the addition of section 16.1 to the Canadian Charter of Rights and Freedoms.
Ontario, which is the home to Canada’s largest French-speaking minority, opted instead to enact a law (the French Language Services Act) which provides for services of the provincial government to be made available in certain geographically designated regions, but which does not give the French language either a symbolic or an authoritative status as an equal "official" language of Ontario.
Manitoba, which is home to Canada’s third-largest French-speaking minority, refused to overturn its ban on the use of French in both the provincial legislature and its courts (which had been in effect since 1890), until it was forced to do so in 1985 by a ruling by the Supreme Court of Canada (Reference re Manitoba Language Rights) that the province was under a constitutional obligation to enact laws in French as well as in English.
Quebec, which is home to an English-speaking minority of over half a million, had traditionally been the only province which was generous in its treatment of its minority-language population, and for this reason had been cited by the Royal Commission on Bilingualism and Biculturalism as the model to be emulated by other provinces. But in the 1970s the provincial legislature adopted two laws, the Official Language Act (also known as "Bill 22") and the Charter of the French Language (also known as "Bill 101"), reducing the access of Quebecers to English-language services, preventing immigrants and Francophones from enrolling their children in English schools, requiring that French be made the language of the workplace, and restricting the use of English on commercial signs.
Poll data on public reactions[edit]
Public support for bilingual services had dramatically increased between the mid-1960s and the end of the 1970s. There is no direct polling on the popularity of the Official Languages Act itself, but poll data on related questions gives an indication of a significant shift in the attitudes of English-speaking Canadians. A 1965 poll showed that 17% of Canadians living outside Quebec favoured the use of public funds to finance French-language schools. This proportion had risen to 77% by 1977 (albeit in response to a slightly different question about support for provincial governments offering services in French "where possible").[15]
Within Quebec, changes to the treatment of French-speakers within the federal public service were met with approval mixed with a media scepticism that this actually helped the unilingual French-speaking majority of Quebecers, who continued to be excluded from some federal jobs designated "bilingual", since by definition a "bilingual" job requires the use of English, and is therefore closed to a unilingual Francophone. That obviously unilingual anglophones are excluded as well is rarely mentioned, or that because of the vastly higher rate of bilingualism among Francophones than Anglophones, the result had been a disproportionally higher representation of Francophones in the federal sector. Anglo and Allophones, conversely, became drastically under-represented in the province of Quebec.
At any rate, the adoption of official bilingualism at the federal level did nothing to slow the rise of the separatist movement. The separatist Parti Québécois made its first significant electoral breakthrough less than a year after the Official Languages Act was adopted, winning 23% of the vote in Quebec’s 1970 provincial election and replacing the Union Nationale as the main electoral vehicle for Quebec nationalism. Six years later, the separatists came to power in the 1976 provincial election.
Even today, support for official bilingualism has not achieved consensus levels in English-speaking Canada. According to a poll conducted in 2002, 98% of Quebecers consider official bilingualism to be "very important" or "somewhat important". This proportion drops to 76% in the Atlantic provinces, 72% in Ontario, 67% in the Prairie Provinces, and 63% in British Columbia.[16] Another poll, conducted in 2000, shows that more than half of Canadians outside Quebec believe that too much effort has gone into promoting bilingualism. By contrast, only 26% of Quebecers shared this view.[17]
Notes[edit]
Jump up ^ "40 Years of the Official Languages Act". Department of Justice Canada. Retrieved 24 March 2013.
Jump up ^ Template:Cilgjohte web
Jump up ^ Canada. Official Languages Act (1985, c. 31 (4th Supp.)). Ottawa. Page consulted July 4, 2006.
Jump up ^ "Official Languages Act - Part VI - Participation of English-speaking and French-speaking Canadians". Department of Justice Canada. 2007-04-04.
Jump up ^ "Definition of English or French Linguistic Minority". Department of Justice Canada. 2007-04-17.
Jump up ^ "Calculation of Population Numbers". Department of Justice Canada. 2007-04-17.
Jump up ^ "Official Languages Regulations". Office of the Commissioner of Official Languages. 2003-09-01.
Jump up ^ Canada. Rapport de la Commission royale d’enquête sur le bilinguisme et le biculturalisme. Livre III : le monde du travail. Ottawa, Imprimeur de la Reine, 1969, p. 374
Jump up ^ Canada, Commissioner of Official Languages. Annual Report, Special Edition 1969-2004. Volume I. Ottawa, 2006. ISBN 0-662-74073-4. Page 43263 consulted July 4, 2006
Jump up ^ Ignatieff made the comment at the Liberal Party of Canada's Quebec convention in early October, 2009. He is quoted in Don Macpherson, "NDP would add rights for French Quebecers", in the Montreal Gazette, October 8, 2009.
Jump up ^ Canada, Commissariat aux langues officielles. Rapport annuel édition spéciale 1969-2004. Volume I. Ottawa, 2005. ISBN 0-662-74073-4. Page consulted July 4, 2006
Jump up ^ "Trudeau's French Answers To English Questions Yield Language Complaints". HuffPost Canada. 2017-01-19. Retrieved 2017-10-19.
Jump up ^ https://youtube.com/8cpc6JtENOE
Jump up ^ Thorson's arguments are discussed, and rejected, by Eugene Forsey in "The Constitutionality of the Official Languages Act", Globe and Mail, February 8, 1969.
Jump up ^ Andrew Parkin and André Turcotte. Le bilinguisme : Appartient-il au passé ou à l’avenir ?, Centre de recherche et d'information sur le Canada, mars 2004, p. 9. Page consulted July 4, 2006.
Jump up ^ Andrew Parkin and André Turcotte. Le bilinguisme : Appartient-il au passé ou à l’avenir ?, Centre de recherche et d'information sur le Canada, mars 2004, p. 6. Page consulted July 4, 2006.
Jump up ^ Andrew Parkin and André Turcotte. Le bilinguisme : Appartient-il au passé ou à l’avenir ?, Centre de recherche et d'information sur le Canada, mars 2004, p. 11. Page consulted July 4, 2006.
See also[edit]
Language portal
Law portal
Canada portal
Official bilingualism in Canada
Official Bilingualism in the Public Service of Canada
Official Language Act (Quebec)
Charter of the French Language
Royal Commission on Bilingualism and Biculturalism
Languages of Canada
External links[edit]
Canadian Department of Justice - Official Languages Act text
Analysis of section 41 of the act
Related link[edit]
List of Acts of Parliament of Canada
Retrieved from "https://en.wikipedia.org/w/index.php?title=Official_Languages_Act_(Canada)&oldid=806011735"
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Incentive
From Wikipedia, the free encyclopedia
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For other uses, see Incentive (disambiguation).
This article possibly contains original research. Please improve it by verifying the claims made and adding inline citations. Statements consisting only of original research should be removed. (July 2013) (Learn how and when to remove this template message)
An incentive is something that motivates an individual to perform an action. The study of incentive structures is central to the study of all economic activities (both in terms of individual decision-making and in terms of co-operation and competition within a larger institutional structure). Therefore, economic analysis of the differences between societies (and between organizations within a society) amounts to characterizing the differences in incentive structures faced by individuals involved in these collective efforts. Incentives aim to provide value for money and contribute to organizational success.[1] As such the design of incentive systems is a key management activity.[2][3]
Contents
1 Categorizing incentives
2 Other forms
3 Social pressure
4 Economics
5 Regulation in the utilities sector
6 Problems
7 Recessions
8 See also
9 References
Categorizing incentives[edit]
Incentives can be classified according to the different ways in which they motivate agents to take a particular course of action. One common and useful taxonomy divides incentives into four broad classes:[4]
Class
Definition
Remunerative incentives are said to exist where an agent can expect some form of material reward – especially money – in exchange for acting in a particular way.[4]
Financial incentives
Moral incentives are said to exist where a particular choice is widely regarded as the right thing to do, or as particularly admirable, or where the failure to act in a certain way is condemned as indecent. A person acting on a moral incentive can expect a sense of self-esteem, and approval or even admiration from his community; a person acting against a moral incentive can expect a sense of guilt, and condemnation or even ostracism from the community.[4]
Coercive incentives are said to exist where a person can expect that the failure to act in a particular way will result in physical force being used against them (or their loved ones) by others in the community – for example, by inflicting pain in punishment, or by imprisonment, or by confiscating or destroying their possessions.[4]
Natural incentives such as curiosity, mental or physical exercise, admiration, fear, anger, pain, joy, or the pursuit of truth, or the control over things in the world or people or oneself.[5]
Intrinsic Motivation
There is another common usage in which incentive is contrasted with coercion, as when economic moralists contrast incentive-driven work – such as entrepreneurship, employment, or volunteering motivated by remunerative, moral, or personal incentives – with coerced work – such as slavery or serfdom, where work is motivated by the threat or use of violence, pain and/or deprivation. In this usage, the category of "coercive incentives" is excluded. For the purposes of this article, however, "incentive" is used in the broader sense defined above.
Other forms[edit]
The categories mentioned above do not exhaust every possible form of incentive that an individual person may have. In particular, they do not encompass the many other forms of incentive – which may be roughly grouped together under the heading of personal incentives – which motivate an individual person through their tastes, desires, sense of duty, pride, personal drives to artistic creation or to achieve remarkable feats, and so on. The reason for setting these sorts of incentives to one side is not that they are less important to understanding human action – after all, social incentive structures can only exist in virtue of the effect that social arrangements have on the motives and actions of individual people. Rather, personal incentives are set apart from these other forms of incentive because the distinction above was made for the purpose of understanding and contrasting the social incentive structures established by different forms of social interaction. Personal incentives are essential to understanding why a specific person acts the way they do, but social analysis has to take into account the situation faced by any individual in a given position within a given society – which means mainly examining the practices, rules, and norms established at a social, rather than a personal, level.
Social pressure[edit]
One and the same situation may, in its different aspects, carry incentives that come under multiple categories. In modern American society, for example, economic prosperity and social esteem are often closely intertwined; and when the people in a culture tend to admire those who are economically successful, or to view those who are not with a certain amount of contempt (see also: classism, Protestant work ethic), the prospect of (for example) getting or losing a job carries not only the obvious remunerative incentives (in terms of the effect on the pocketbook) but also substantial moral incentives (such as honor and respect from others for those who hold down steady work, and disapproval or even humiliation for those who don't or can't).[citation needed]
Economics[edit]
The study of economics in modern societies is mostly concerned with remunerative incentives[citation needed] rather than moral or coercive incentives – not because the latter two are unimportant, but rather because remunerative incentives are the main form of incentives employed in the world of business, whereas moral and coercive incentives are more characteristic of the sorts of decisions studied by political science and sociology.[citation needed] A classic example of the economic analysis of incentive structures is the famous Walrasian chart of supply and demand curves: economic theory predicts that the market will tend to move towards the equilibrium price because everyone in the market has a remunerative incentive to do so: by lowering a price formerly set above the equilibrium a firm can attract more customers and make more money; by raising a price formerly set below the equilibrium a customer is more able to obtain the good or service that she wants in the quantity she desires.[citation needed]
In cases with asymmetric information where one user knows some relevant fact about another, principal-agent theory is the guiding framework in optimizing incentive of choice. The classic example for a situation for asymmetric information can be that of a manager and worker, where manager may want a certain level of output from the worker. The manager does not know the capabilities of the worker, and to achieve the best outcome, an optimal scheme of incentive may be chosen to motivate the worker to give their best performance.[6]
An optimal incentive is one that accomplishes the stated goal.[7] If the goal is to maximize profits, then an optimal incentive will be one that encourages workers to balance the risk imposed by the employee for poor performance and the marginal disutility of effort. A weak incentive is any incentive below this level.[8]
Regulation in the utilities sector[edit]
See also: Performance-based regulation
Incentive-based regulation can be defined as the conscious use of rewards and penalties to encourage good performance in the utility sector.
Incentives can be used in several contexts. For example, policymakers in the United States used a quid pro quo incentive when some of the U.S. incumbent local telephone companies were allowed to enter long distance markets only if they first cooperated in opening their local markets to competition.
Incentive regulation is often used to regulate the overall price level of utilities. There are four primary approaches to regulating the overall price level: rate of return (or cost of service) regulation, price cap regulation, revenue cap regulation, and benchmarking (or yardstick) regulation.
With benchmarking, for example, the operator's performance is compared to other operators' performance and penalties or awards are assessed based on the operator's relative performance. For instance, the regulator might identify a number of comparable operators and compare their cost efficiency. The most efficient operators would be rewarded with extra profits and the least efficient operators would be penalized. Because the operators are actually in different markets, it is important to make sure that the operators' situations are similar so that the comparison is valid, and to use statistical techniques to adjust for any quantifiable differences the operators have no control over.
Generally regulators use a combination of these basic forms of regulation. Combining forms of regulation is called hybrid regulation. For example, U.K. regulators (e.g. Ofgem) combine elements of rate of return regulation and price cap regulation to create their form of RPI - X regulation.[9]
Incentive rates are also prevalent in the utility sector, under any of the utility regulatory frameworks noted. Incentive rates are a vehicle for the utility to induce large commercial or industrial customers to locate or maintain a facility in the utility service territory. The incentive is provided in the form of a discount from the utility's standard tariff rates, terms or conditions. In the U.S., incentive rates (also known as Economic Development Rates and/or Load Retention Rates)[10] are a common component of the utility strategy for supporting the economic development efforts of a particular geographic region or political entity.
Problems[edit]
Incentive structures, however, are notoriously more tricky than they might appear to people who set them up. Incentives do not only increase motivation, they also contribute to the self-selection of individuals, as different people are attracted by different incentive schemes depending on their attitudes towards risk, uncertainty, competitiveness.[11] Human beings are both finite and creative; that means that the people offering incentives are often unable to predict all of the ways that people will respond to them. Thus, imperfect knowledge and unintended consequences can often make incentives much more complex than the people offering them originally expected, and can lead either to unexpected windfalls or to disasters produced by unintentionally perverse incentives.
For example, decision-makers in for-profit firms often must decide what incentives they will offer to employees and managers to encourage them to act in ways beneficial to the firm. But many corporate policies – especially of the "extreme incentive" variant popular during the 1990s – that aimed to encourage productivity have, in some cases, led to failures as a result of unintended consequences. For example, stock options were intended to boost CEO productivity by offering a remunerative incentive (profits from rising stock prices) for CEOs to improve company performance. But CEOs could get profits from rising stock prices either (1) by making sound decisions and reaping the rewards of a long-term price increase, or (2) by fudging or fabricating accounting information to give the illusion of economic success, and reaping profits from the short-term price increase by selling before the truth came out and prices tanked. The perverse incentives created by the availability of option (2) have been blamed for many of the falsified earnings reports and public statements in the late 1990s and early 2000s.
Also there is the tradeoff of short term gains at the expense of long term gains or even long term company survival. It is easy to plunder the assets of a previously successful company and show spectacular short term gains only to have the enterprise collapse after those responsible have gotten their incentives and left the organization or industry. Although long term incentives could be part of the incentive system, they have been abandoned in the past 20 years. An example of an organization that used long term incentive programs was Hughes Aircraft and was highly successful until the government forced its divestiture from the Howard Hughes Medical Institute. Recently there has been movement on adopting the benefit corporation or B-Corporation as a way to change the trend away from short term financial incentives to long term financial and non financial incentives.[12]
Not all for profit companies used short term financial incentives at levels below the president or very top executive levels. The trend to move financial incentives down the organization hierarchy started in the 1980s as a way to boost what was considered low productivity. Prior to that time the incentives were associated more with customer satisfaction and producing high quality products. Moving financial incentives down the corporate chain had the unintended consequences of subverting internal processes to save short term costs, forcing obsolescence at the lower levels as investment was deferred or abandoned, and lowering quality. Some of these issues are explored in the British documentary The Trap. This idea of financial incentives and pushing them to the lowest level common denominator has led to a new company structure or organizational ecology where essentially everything is a standalone profit center with the only incentive being short term financial incentives.
Recessions[edit]
A possible solution against the criticism of overpaying executives in boom times and underpaying them in recession times is by linking bonus targets to an operating index.[citation needed] By doing so external effects (economic cycles) can be excluded from performance measurement. This makes incentive pay more fair or likely not certain as bonuses are based on performance relative to other companies in the peer universe.
While the notion of a fair system seems to be an equal deal, those who are outperforming by a large margin will feel slighted by this approach. Thus, a system based on individual company performance has been the standard.
See also[edit]
Bounty (reward)
Incentive program
Incentive salience
Loyalty marketing
Loyalty program
Motivations of open source programmers
Motivations for online participation
Performance-related pay
Profit motive
Reward system
Travel incentive
References[edit]
Jump up ^ Armstrong, Michael (2015) [2005]. Armstrong's handbook of reward management practice: improving performance through reward (5th ed.). London; Philadelphia: Kogan Page. ISBN 9780749473891. OCLC 910859327.
Jump up ^ Design of Incentive Systems – Experimental Approach | Dennis D. Fehrenbacher | Springer.
Jump up ^ Fehrenbacher, Dennis D. (2013-01-01). Design of Incentive Systems – Chapter 2: An Integrative Framework of Influences on Behavior (PDF). Contributions to Management Science. Springer Berlin Heidelberg. pp. 13–29. doi:10.1007/978-3-642-33599-0_2. ISBN 9783642335983.
^ Jump up to: a b c d Dalkir, Kimiz (2013). Knowledge management in theory and practice. Routledge.
Jump up ^ McClelland, David C. (1987). Human Motivation. CUP Archive.
Jump up ^ "Lecture 7 Asymmetric Information: The Principal-Agent Problem" (PDF).
Jump up ^ EconTerms website, accessed February 7, 2008 Archived January 16, 2009, at the Wayback Machine.
Jump up ^ EconTerms website, accessed February 7, 2008 Archived January 16, 2009, at the Wayback Machine.
Jump up ^ Body of Knowledge on Infrastructure Regulation
Jump up ^ "Archived copy". Archived from the original on 2012-01-31. Retrieved 2011-12-05.
Jump up ^ Chiappori; Salanié (2003). "Testing contract theory: a survey of some recent work. In M. Dewatripont, L. Hansen, & S. Turnovsky (Eds.)". Advances in economics and econometrics. 1 – via Cambridge: Cambridge University Press.
Jump up ^ Businesses seek state's new 'benefit corporation' status, LA Times website, accessed January, 2012
Look up incentive in Wiktionary, the free dictionary.
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