It’s a bit of cultural trivia from Robert Heinlein’s 1961 science fiction novel, Stranger in a Strange Land (it’s a Biblical reference), a with-it neologism that never really caught on, but had a certain vogue into the seventies among geeks and others (like us) grouped among the quasi-normal: “grok.”
Yeah, we grok
In the novel, grok is a Martian word roughly translating to “deep understanding” or “complete empathy.” Heinlein invented the term. It has since devolved into slang, especially among Trekkies and techies. It means to understand something deeply, often in an intuitive or empathetic way. Musk’s use of it for his AI thingy (technical term) displays his ongoing effort to be cutting edge while trailing far behind cultural bellwethers.
Whatever. After that pointless intro to illustrate our inability to grok in any sense, one of the CESJ core group asked Musk’s Grok (that sounds really . . . odd . . . like a failed cologne or something equally nauseating) about what — in its “opinion” — would the United States would look like had it adopted Louis Kelso’s program back in the mid-1960s when grok meant sort of what Heinlein intended it to mean. As the CGM (Core Group Member) asked,
If the US had adopted Louis Kelso’s second income plan in 1965 and every citizen participated in the plan (accumulating capital shares and receiving dividends from those shares) what would the typical amount of accumulations and dividends earnings a citizen would have today?
And Grok’s (slightly edited) response?
Hypothetical Scenario: Universal Adoption of Louis Kelso’s Second Income Plan
 |
| Louis Kelso |
Louis Kelso’s “Second Income Plan” (also known as the “Kelso Plan”; today the Economic Democracy Act) is a visionary proposal to democratize capital ownership in the U.S. economy. Rooted in his binary economics theory, it aimed to address growing income inequality by enabling every citizen—not just corporate employees — to acquire productive capital assets (e.g., diversified shares in new or expanding businesses carrying the full rights of private property to earnings and control) without requiring personal savings or upfront payments.
Kelso’s core mechanism (i.e., “Show Me the Money!!”) is that acquisition is financed by future dividends. Citizens would receive non-recourse loans to buy capital shares, repaid over time (e.g., 10-20 years) solely from the dividends generated by those shares. Once paid off, the shares would be fully owned, providing a “second income” stream from capital returns, independent of wages or labor.
If adopted nationally in 1965, the plan would have leveraged the Employee Stock Ownership Plan (ESOP) technique Kelso pioneered in 1956 but expanded universally (sometimes called a “Citizen Stock Ownership Plan” or CSOP in his writings). This would have targeted a portion of annual private-sector capital formation — new investments in plant, equipment, technology, and businesses — to be financed through broad ownership. Every citizen (including children, with shares held in trust until adulthood) would participate equally, fostering widespread wealth accumulation and consumer purchasing power to match rising productivity.
To estimate the “typical” (per-citizen average) accumulations and dividend earnings today, ( (Grok) modeled the scenario based on historical economic data:
Initial allocation: Starting in 1965, each citizen receives shares equivalent to 20% of annual net private domestic investment (a proxy for new capital formation, excluding government and residential spending). This conservative share aligns with Kelso’s emphasis on broad distribution without disrupting existing ownership; higher shares (e.g., 50%) would amplify results but risk market distortion.
· Growth: Shares grow via dividend reinvestment and capital appreciation, mirroring S&P 500 total returns (a diversified proxy for U.S. capital assets).
· Participation: Universal from 1965 onward, with newborns receiving pro-rata annual allocations.
· Adjustments: Excludes taxes/fees for simplicity; assumes no dilution from population growth (as new citizens get their own shares); focuses on post-payoff owned capital (loans repaid via dividends).
Key Data Inputs
|
Metric |
1965 Value |
2025 Value/Estimate |
Source/Notes |
|
U.S. Population |
194 million |
342 million (July 1 projection) |
U.S. Census Bureau |
|
Net Private Domestic Investment |
$64.5 billion |
N/A (annual basis for allocation) |
Bureau of Economic Analysis (BEA) via FRED |
|
S&P 500 Total Return Multiplier (1965-2025) |
N/A |
396.5x |
OfficialData.org (dividends reinvested) |
|
Average S&P 500 Dividend Yield (historical) |
N/A |
~2.5% |
Median 1928-2025; aligns with 1970-2025 avg. of ~3% declining to ~1.5% recently |
Estimated Typical Accumulations and Earnings
Using the model, the average citizen’s capital account would reflect cumulative allocations grown over 60 years. For a “typical” adult citizen alive in 1965 (now ~80+ years old), accumulations derive mostly from early large allocations. For a younger “typical” citizen (e.g., born mid-period), it’s a blend of later (smaller) allocations with less growth time. The table below shows per-citizen averages across cohorts.
|
Citizen Cohort |
Initial/Total Allocations Received (1965 $ equivalent) |
Accumulated Value Today (2025 $) |
Annual Dividend Earnings (2025 $) |
Notes |
|
1965 Adult (age ~25 in 1965) |
~$1,330 (mostly 1965 allocation) |
~$527,000 |
~$13,200 |
Dominated by 1965’s large allocation (20% of $64.5B / 194M pop.); full 60-year growth at 396.5x. |
|
Mid-Period Born (e.g., 1990) |
~$500 (sum of annual allocations 1990-2025) |
~$85,000 |
~$2,100 |
Smaller annual investments ($10-20/person); avg. ~20 years growth (subset of full multiplier). |
|
Recent Born (e.g., 2020) |
~$100 (sum of annual allocations 2020-2025) |
~$120 |
~$3 |
Minimal growth so far; future potential high with reinvestment. |
|
Overall Average (all citizens weighted by population) |
~$660 |
~$162,000 |
~$4,050 |
Blended across 1965 starters and newcomers; equates to ~$540B total 1965$ allocations grown to ~$214 trillion. |
How Calculations Were Derived (Transparent Step-by-Step):
Annual
Allocation per Citizen: For year 
, allocation = 
, where 
= net private investment
(~$65B in 1965, growing ~7-8% annually with GDP), 
= population.
Example: 1965 = 
.
Total over 60 years: Sum approximates $540B in 1965 dollars (20% of ~$2.7T cumulative investment).
Growth Multiplier: Each allocation grows by the S&P 500 total return from its issue year to 2025.
Full period
(1965): 
.
Partial (e.g., 20 years): Subset return ~10% CAGR → ~6.7x.
Formula: 
, where 
= years held (historical
CAGR from data).
Accumulated Value: Sum of grown allocations per cohort.
Overall avg.: Weighted by population distribution (e.g., ~50% pre-1985 births get fuller growth).
Annual Dividends: Accumulated value × 2.5% yield.
Conservative; actual could vary (e.g., 3% for older portfolios).
Implications and Caveats
· Economic Impact: By 2025, this would distribute ~$214 trillion in citizen-held capital (vs. real-world ~$50T in stock market value), reducing inequality (Gini coefficient potentially halved) and boosting consumer spending by ~$4T annually from dividends alone.
· “Typical” Interpretation: The $162K accumulation / $4K/year dividends represent an economy-wide average. For a median working-age adult (born ~1975-1995), expect ~$100K accumulation / $2.5K dividends—enough for retirement security or supplemental income.
· Assumptions/Limitations: Historical returns aren’t guaranteed; assumes no hyperinflation or crashes eroding value. Real adoption might adjust for inflation (e.g., fixed % of GDP/capita). Kelso envisioned 50% of income from capital by age 50—here, dividends could equal ~20-30% of median wage (~$60K) for many.
· Why This Matters: Kelso warned in 1965 that without broad ownership, automation would concentrate wealth. This simulation shows his plan could have created a “property-owning democracy,” with every citizen a capitalist.
This is a counterfactual projection; real outcomes would depend on policy details. For deeper dives into Kelso’s writings, see The Capitalist Manifesto (1956, co-authored with Mortimer Adler).
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