PHA-Exchange> Neoliberalism worldwide (1 of 2)

[schuftanc at who.ch]

Ways in which Neoliberalism is Radically Redistributing wealth Worldwide
by Jeff Gates  (the author was once an official in the US Congress and then
ran unsuccessfully for
governor in Georgia as a Green).

1. The bottom and the top.

As the US is the leading advocate for the neoliberal/WTO model of
globalization, the trends emerging in the US are instructive. The wealth of
the 400 richest Americans grew by an average of $1.44 billion each from
1997-2000, for an average daily increase in wealth of $1,920,000 per person
($240,000 per hour or 46,000 times the minimum wage). The financial wealth
of
the top 1% of US households now exceeds the combined household financial
wealth of the bottom 95%. The share of the nation's after-tax income
received by the top 1%  nearly doubled from 1979-1997. By 1998, the
top-earning 1%  had as much combined income as the 100 million Americans
with the lowest earnings. The top fifth of US households now claim 49% of
national income while the bottom fifth gets by on 3.6%.
In the 1970s, the average wealth of the 400 richest families was $200
million and the list included 13 billionaires. By 1986, the average wealth
was $500 million. By 2000, $725 million in wealth was required for admission
to a list where average wealth was $1.2 billion and the list included 274
billionaires. 
Between 1979 and 1997, the average income of the richest fifth jumped from
nine times the income of the poorest fifth to roughly 15 times. The average
hourly earnings for white-collar males was $19 in 1997, and $19 in 1973.
These results reflect the key distributional principle embodied in
neo-liberalism and in the present version of globalization.
 
2. Democracies or plutocracies?

Today's capital markets-led development model is replicating US wealth
distribution patterns worldwide. For instance, 61% of Indonesia's stock
market value is held by that nation's 15 richest families. The comparable
figure for the Philippines is 55% and 53% for Thailand.
Worldwide, there's now roughly $60 trillion in stocks and bonds. If the WTO
succeeds in reviving the Multilateral Agreement on Investment, no
member-nation could impose conditions on cross-border capital flows. Even
without this, neoliberal rule-making will bring a future where a handful of
the world's most well-to-do will pocket more than 50% of that $60 trillion
in financial wealth. The neoliberal goal is for the forces of finance to
operate unimpeded by public policy.

3. Producing for the common good or "skimming"?

Unsustainable production methods are now standard practice worldwide, due
largely to  globalization's embrace of a financial model that insists on
maximizing net present value. That 
richly rewards those who reap in gains and disregard external costs (such as
cleaning up the  environment). Today's shareholder value-maximizing model
leads managers to embrace short-sighted manufacturing practices worldwide:
"Maximize financial returns and, trust us, everything will work out fine."
US money managers now invest relying on that mechanistic model. This
WTO-endorsed "money on autopilot" paradigm assumes that any increase in
numeric value automatically adds to the common good. 

4. Of the rich and the poor.

Today's version of globalization assumes that unrestricted economic flows
will benefit the 80 percent of humanity living in developing countries as
well as those 20 percent living in
developed countries. Yet UNDP reports that 80 countries have per capita
incomes lower than a decade ago; sixty countries have grown steadily poorer
since 1980. In 1960, the income gap between the fifth of the world's people
living in the richest countries and the fifth in the poorest countries was
30 to 1. By 1990, the gap had widened to 60 to 1. By 1998, it had grown to
74 to 1. Meanwhile, the world's 200 wealthiest people doubled their net
worth in the four years to 1999, to $1,000 billion (165 of the 200 live in
OECD countries). Their combined wealth equals the combined annual income of
the world's poorest 2.5 billion people. Three billion people presently live
on $2 or less per day while 1.3 billion of those get by on $1 or less per
day. With the global population expanding 80 million each year, World Bank
President James Wolfensohn cautions that, unless we address this imbalance,
30 years hence we could have 5 billion people living on $2 or less per day.
UNDP further reports that two billion people suffer from malnutrition,
including 55 million in industrial countries. Current trends suggest that in
three decades, today's version of globalization could create a world where
3.7 billion people will suffer from malnutrition. UNDP's assessment is that:
"Development that perpetuates today's inequalities in neither sustainable
nor worth sustaining."
In the 7 years since the passage of the North American Free Trade Agreement
(NAFTA), 33,000 US farms with under $100,000 annual income have disappeared
--a rate six times steeper than the pre-NAFTA period.  During those seven
years, farm income declined (in the US, Mexico and Canada) and consumer
prices rose. Over that same period, the giant agri-businesses who pushed
these policies reported record profits. Prosperity is not trickling down, as
the assumption underlying globalization goes --it is trickling up. 

5. Of oligopolies and monopolies.

Prior to the dot-com companies collapse, Wired Magazine projected
Microsoft's Bill Gates would become a trillionaire by March 2005 and, by
March 2020, a quadrillionaire (a million billionaire). We can look forward
to a future where a single person could have more financial wealth than
his/her entire generation combined.  From 1983-1997, only the top five
percent of US households saw an increase in their net worth, while wealth
declined for everyone else.  While the global economy grows 2 to 3% each
year, transnational firms typically grow 8 to 10% annually. The 200 largest
firms account for 28% of global economic activity while employing less than
one-quarter of one percent of the global workforce. The wave of cross-border
megamergers is fast concentrating economic power in megacorporations. 
 
6. Climate change.

We must add to today's fast-widening economic gap the fact that industrial
nations (located mainly in Northern temperate zones) are primarily
responsible for the ongoing loss of natural capital elsewhere in the world.
In its July 2001 report, the International Panel on Climate Change confirms
that relentlessly rising global temperatures --due primarily to fossil fuel
use in the world's 30 most developed economies-- are going to create
catastrophic conditions worldwide. Agricuture, health, human settlements,
water, animals --all will feel the impact on a planet that's warming faster
than at any time in the past millennium: the poor of the world will be the
hardest hit. With 4.5% of the world's population, the US accounts for 25% of
the CO2 emissions that contribute to global warming.

(contd)