The Indentured Future

Two weekends ago, President Obama provided a thoughtful interview to The New York Times about the frayed state of the country’s social and economic fabric. The president highlighted points about America’s widening income inequality, unemployment and our ephemeral belief in the American Dream. True, economic mobility is fostered with more employment and rising income levels, but to ascend the economic ladder, the colloquy should center on establishing paths of wealth creation. Decades ago, the late Dr. Louis Kelso posited the theory of binary economics, simply stating that there were two types of “earners”: “wage earners”, those who work for a paycheck which alone provided the extent of their economic consumption, and “capital earners” who garner economic value from the “capital assets” they accumulate, such as savings accounts, stocks and bonds, real estate and other holdings. Capital assets gain in value independent of labor and over time capital earners accelerated their consumptive power far beyond that of wage earners. A social economist, Kelso’s basic tenet premised that broader capital ownership would enhance democracy. To wit, he developed mechanisms for “wage earners” to become “capital earners”, such as the Employee Stock Ownership Plan, wherein companies contributed to a benefit plan to enable wage-earning employees […]

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