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Corporate players live life in a bubble

The current flutter of hearts along the Terrace is probably not due to coronary disease but another 20th century life threatening condition: bubble-itis.

Recognisable by the aura of euphoria in its victims, bubble-itis afflicts mostly corporate males in the 30 to 60 year old bracket who believe that the Dow Jones industrial average indicates the true economic health of the world.

The bubble is rapidly expanding as the Dow Jones industrial average crashes through the 11,000 barrier on its way to feverish heights.

The Wall Street press is beside itself; major corporate news services are positively glowing at the new wealth of this market boom.

What Wall Street does not admit to seeing is the reality outside the bubble. Some corporate players however, must have greater immunity to greed and can see the bigger economic picture.

Russell Mokhiber, editor of the Washington DC Corporate Crime Reporter and Robert Weisman, editor of the Washington DC Multi-national Monitor are two resisters of bubble-itis.

They recently discussed a report from the Boston based group, United for a Fair Economy, that features the findings of economist Edward Wolff of New York University, a leading authority on wealth distribution. (http://lists.essential.org/corp-focus)

Although the stats refer to America, our situation is sufficiently linked that we need to pay attention.

The UFA Shifting Fortunes: The Perils of the Growing Wealth Gap in America report found:

• From 1983 to 1998, the Standard & Poors 500 grew a cumulative 1,336 percent – the wealthiest households gained the most

• The top 1 percent of US households, having doubled their share of national wealth since the mid 1970s, now control 40 percent of the wealth – more than the entire bottom 95 percent

• Microsoft’s Bill Gates, with $US60 billion, has greater wealth than the bottom 45 percent of US households combined; his wealth is more than the combined GNPs of Central America plus Jamaica and Bolivia.

But:

• In 1983, when the Dow Jones was still at 1,000, most households had greater net worth, adjusting for inflation, than they do now

• The inflation-adjusted net worth of the median household fell from $US54,600 in 1989 to $US49,900 in 1997; nearly 20 percent of households have zero or negative net worth (more debts than assets)

• Millions of Americans are worse off – the average weekly wage has fallen 12 percent since 1973; productivity grew nearly 33 percent in the same period

• Household debt as a percentage of personal income has risen from 58 percent in 1973 to an estimated 85 percent in 1997

• The average person can get credit for more than eight times what they already owe.

Chuck Collins, codirector of UFA and coauthor of the report, says: “the wealth gap reinforces, and is reinforced by, widening disparities in education, economic opportunity and quality of life”.

If so, affluent bubble-itis victims please note – the bubble must burst.



• Ann Macbeth is a futurist and principal of Annimac Consultants.

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