In the text it says that stakeholders control " may result in less efficient distribution of taxes" Can anybody explain what that means?
short version - money which would have gone to government officials in a shareholder society in the form of taxes now goes to a firm in a stakeholder society for them to redistribute. Under the assumption that government is more efficient at tax distribution, this would be less efficient since stakeholders are doing the distributing.
How is the government involved here in the first place ?
Any company has to pay taxes on its profits. These taxes are used by government for laying roads, making public utilities hospitals, schools, gardens etc.etc. These are for the benefit of society. which means government is re-distributing wealth (collected in the form of taxes - which otherwise would have gone to shareholders, in case of no taxes). Under the stakeholder assumption, stakeholders are society.So they say instead of paying taxes, being society want to use that money for their benefit/soceity’s benefit. Meaning they would decide to construct schools or hospitals etc, without there being a government/taxes. Now you decide -> pay taxes to govt and they do the job of redistributing wealth or stakeholders (creditors, vendors, users of products, employees etc etc) decide to do what they think is benefit to the society.