If you work for a company that has an Employee Stock Ownership Plan (ESOP), you have the opportunity to purchase shares of that company while repaying the loan of its capital assets using future earnings (from dividends instead of your account account). savings or second mortgage your home) and with pre-tax dollars (which dramatically speeds up amortization). In investment circles, this strategy is known as leverage 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 salary or salary, and a second from the dividends generated by your new property. This increases the salary you take home or allows you to accumulate funds for retirement, college for children or have a fund for rainy days in case the corona virus strikes again. In a well-run and employee-owned business, the average worker often retires with a lot of money in the bank.
Even more advantages …
So what does employee ownership do for the company? For starters, since everyone is an owner, the worker vs. management conflicts that often undermine the efficiency of conventionally organized companies. It has been effectively coalesced on the property side of the ledger so that traditional conflicts between workers, managers and owners become absurd. The lack of conflict tends to strengthen and stabilize the company for the future.
It also democratizes the workplace. It systematically counteracts and prevents the concentration of wealth. That is, since the workers are also owners, they have the right to have an opinion on the operation of the company by voting on their shares for representation on the company’s Board of Directors. In well-run employee-owned companies, you won’t find CEOs who are paid 300, 400, or 500 times what lower-paid warehouse workers are paid.
There is still a need for executives in management. However, there is much more participation in planning, problem solving and decision making by front-line workers than in conventionally managed companies. All of this translates into higher levels of mutual respect and greater business benefits.
Everyone is worth working together!
And since everyone is an owner, financial incentives literally pay everyone to join, 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 bottom. As a result, the efficiency and resilience of the business is maximized (especially in tough economic times), while turnover is predictably lowered.
Although there are approximately 8,000 employee-owned businesses with 11 million employee-owners in the US Today, the problem is that they remain the rare exception, not the rule. Therefore, employees of conventionally owned companies (even those with stock options) lack the opportunity to use future earnings to pay off loans by purchasing equity shares in the company. Even if they were allowed to buy your business, they would need access to the discretionary funds necessary to do so. And today most workers lack that access.
In addition, public sector employees, such as teachers, the police and members of the fire department, and the military, are left outside the circle of ownership. So are women who work hard to raise their children or supervise their elderly parents. That is, most Americans lack a systematic opportunity to participate in the property (generally predictable and profitable) side of the economy because many live paycheck to paycheck, need to feed children, and pay rent / mortgage. This eliminates any opportunity for 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 dollar idea whose time has come
In that sense, let’s recognize that, on average, the US economy is growing at a rate of $ 4 trillion annually. That translates to about $ 12,000 a year for every man, woman, and child in America. But in general, who benefits from this annual growth? Obviously they are those who can afford to buy stocks, real estate bonds, technology, etc. who benefit the most.
The question I want to ask here is, how can we give the average American citizen systematic access to the ownership side of the economy? How can the average citizen gain access to that predictable $ 4 trillion growth to generate a second stream of investment income, while eliminating the fear and instability that so many Americans experience in today’s incredibly unbalanced economy? ?
Paying Americans to Join …
Consider this. What if the Federal Reserve, through local banks, issued $ 12,000 of SECURED CAPITAL CREDIT to each U.S. citizen annually, along with a stipulation that these funds could only be used to purchase shares of new and transferred capital assets that Are they forecast to generate sufficient future earnings to pay for these assets? It would cost US taxpayers NOTHING. It does not generate public or consumer debt! And, instead of creating a currency backed by public debt, our money would be backed by real and productive assets of the private sector.
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 voting shares, with newly issued full dividend payments, of companies that need new capital assets to grow. However, what this would do is give all American citizens equal access to the ownership side of the American economy. It will help democratize the free market. At this time of political division and strife, it is literally in the interests of Americans to unite, at the same time, in the same direction, towards the same goals!
Systematically counteract concentrated wealth!
Over time, every American citizen will accumulate more and more equity (rather than debt) and benefit from the income from their investments in a way that only the wealthy can do today. As a result, the need for federally supported social safety net programs (ie, social security, Medicare, Medicaid, food stamps) will gradually disappear. More people will be able to pay taxes, which in turn lessens the burden on those of us who still pay taxes. Systematically counteract / prevent the concentration of wealth and democratize the US 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 to make America great again.
Capital Homesteading in detail
I confess that this comment has been a generalized portrait that urgently needs more details. So for a complete and detailed explanation of how this strategy could be designed, go to CESJ.ORG and review the concept that Dr. Norman Kurland calls Capital Homesteading. It’s an ingenious idea whose date is long overdue. And it’s a very good thing that could come to fruition as a result of this horrible COVID 19 crisis.