There is general agreement that the one person instrumental in developing the concept of the employee stock ownership plan (ESOP) is Mr. Louis O. Kelso. Mr. Kelso was an attorney and economist who studied what he perceived to be a fundamental problem with capitalism. The problem, as he defined it, is capitalism's propensity to concentrate both capital and the benefits of capital ownership into the hands of a small minority.
According to a 1986 report by the Government Accountability Office, except for the corporate stock held in pension plans, 90 percent of equities are owned by just 10 percent of households. What is more alarming for our consumer-based economy is the fact that almost 60 percent of all stock is owned by just 1 percent of households. The majority of households do not own any equities.
Mr. Kelso notes that although the United States is a capitalistic country, we are, first, a consumer-based economy. The concentration of wealth into the hands of a few does very little to support a consumer-driven economy. The great challenge, from his perspective, is to fashion a practical approach to broaden the ownership of capital in this country without taking property from others.
One great barrier to broad equity ownership in our economy is that it most frequently takes existing capital resources to earn more capital. ...