If you work for a company that has an Employee Stock Ownership Plan (ESOP), you have the opportunity to purchase shares in that company while repaying the loan on its capital assets using future earnings (from dividends instead of your savings account). or second account). mortgaging your home) and with pre-tax dollars (dramatically speeding up your payment). In investment circles, this strategy is known as leveraging a buy (an LBO for short).
As a result, once the loan is paid off, you will have two streams of income, one from your wages or salary and the second from the dividends produced by your new property. This increases your take-home pay or allows you to build up funds for retirement, college for the kids, or an emergency fund in case the coronavirus strikes again. In a well-run employee-owned business, average workers often retire with a lot of money in the bank.
So what does employee ownership do for the company? For starters, since everyone is an owner, eliminate the worker vs. management conflicts that often undermine the efficiency of conventionally organized companies. It has effectively coalesced on the ownership side of the ledger so that traditional conflicts between workers, managers, and owners no longer make sense. The lack of conflict tends to strengthen and stabilize the company for the future.
It also democratizes the workplace. It systematically counteracts and impedes concentrated wealth. In other words, since the workers are also owners, they have the right to give an opinion on the operation of the company by voting for their shares for representation on the company’s Board of Directors. In well-run employee-owned companies, you won’t find CEOs getting paid 300, 400, or 500 times what the lowest-paid workers in the warehouse are paid.
There is still a need for executives in management. However, there is much more involvement in planning, problem-solving, and decision-making by frontline workers than in conventionally run companies. All this translates into higher levels of mutual respect and greater business benefits.
It pays for everyone to work together!
And since everyone is an owner, financial incentives literally pay everyone to work together, in the same direction, at the same time, toward the same goals. When the company wins, everyone wins, not just a few at the top. And when the company loses, everyone loses, not just the underdogs. As a result, business efficiency and resiliency are maximized (especially in tough economic times), while turnover is predictably reduced.
Although there are currently approximately 8,000 employee-owned businesses with 11 million employee-owners in the US, the problem is that they remain the rare exception, not the rule. Therefore, employees of conventionally owned companies (even those with stock options) do not have the opportunity to use future earnings to repay loans when they purchase equity shares in the company. Even if they were allowed to buy your company, they would need access to the necessary discretionary funds to do so. And today most workers lack that access.
In addition, public sector employees, such as teachers, members of the police and fire departments, and the armed forces, are kept out of the property loop. So are women who work hard raising children or supervising elderly parents. That is, most Americans lack a systematic opportunity to participate in the (usually predictable and profitable) property side of the economy because many live paycheck to paycheck, need to feed the kids, and pay rent/mortgage. . This removes any opportunity for so many to benefit from property in our economy. In turn, it also widens the wealth gap that threatens to kill what little remains of American democracy.
A $4 trillion idea whose time has come
In light of that, let’s recognize that, on average, the US economy grows at a rate of $4 trillion dollars a year. That translates to about $12,000 a year for every man, woman, and child in the United States. But generally speaking, who benefits from this annual growth? Obviously, they are those who can afford to buy stocks, bonds, real estate, technology, etc. those who benefit the most.
The question I want to ask here is, how can we give the average American citizen systematic access to the property side of the economy? How can the average Joe get access to that predictable $4 trillion dollar growth to generate a second stream of investment income, while eliminating the fear and instability that so many Americans endure in today’s incredibly lopsided economy?
Pay Americans to join…
Consider this. What if the Federal Reserve, through local banks, issued $12,000 of INSURED CAPITAL CREDIT annually to each US citizen, along with the provision that these funds could only be used to purchase shares of new and transferred capital assets that were they expected to generate enough future earnings to pay for these assets? It would cost American taxpayers NOTHING. Does not create government or consumer debt! And instead of creating a currency backed by government debt, our money would be backed by real, productive private sector assets.
And it will not be inflationary. All money created would be backed by the full value of private sector assets that citizens would receive secured loans to purchase. Citizens would actually be buying newly issued, fully dividend-paying, voting shares of companies that need new capital assets to grow. What this would do, however, is give all US citizens equal access to the property side of the US economy. It will help democratize the free market. In this time of political division and conflict, it is literally in the best interest of Americans to unite, at the same time, in the same direction, toward the same goals!
Systematically counter concentrated wealth!
Over time, each American citizen will accumulate more and more equity (instead of debt) and benefit from their investment income in a way that only the rich can today. As a result, the need for federally supported social safety net programs (ie Social Security, Medicare, Medicaid, Food Stamps) will gradually fade away. More people will be able to pay taxes, which in turn reduces the burden on those of us who actually still pay taxes. Systematically counter/prevent concentrated wealth and democratize the American economy!
Today’s crisis would not be a crisis
If the Obama administration had implemented Capital Homesteading in the wake of the 2008 crash, the current COVID 19/unemployment crisis would not be a crisis. People could afford to stay home and still have enough income to weather a much less severe storm. Trump has the same opportunity today. Let’s see if he really wants America to be great again.
Capital Homesteading in Detail
I confess, this comment has been a general portrait that badly needs more details. So, for a full and detailed explanation of how this strategy could be designed, visit CESJ.ORG and check out the concept Dr. Norman Kurland calls Capital Homesteading. It’s an ingenious idea whose time is long overdue. And it’s a very good thing that could actually come to fruition as a result of this horrible COVID 19 crisis.