Do you think the Dow will hit 1,000,000 by the year 2100? It 
will, if it gets a meager 5% per year this century..

But forget the Dow's level...let's think
about inflation adusted value of investments
and ask if it's even mathemtaically (let
alone ecologically) possible for the present
system to go on indefinitely. The answer is a 
resounding No. Here's the piece:

Wall Street's Days Are Numbered: Just Do The Math

Many of us are well aware that the corporate mantra of "Profits and
Growth Uber Ales" is not environmentally sustainable -- let alone
compatible with justice or democracy. However, little has been written
about the fact that over the long term Wall Street is a Dead End as an
investment for retirement. This is not hard to prove, and you don't
need any fancy mathematics, just a calculator that can perform "power"
calculations similar to those used for mortgages and personal finance.

Regardless of the talk about "When will the next Bull market be?", the
fact is quite simply that Wall Street -- which at the moment is
unfortunately the only game in town for much of our retirement
security -- cannot continue indefinitely on its current path.  Let's
look at a few numbers.

Wall Street's long-term growth has been around 11% per year. Let's
simplify things, so we don't have to worry about "adjusting for
inflation" when we compare a dollar invested in one year, with its
return decades later. Inflation-adjusted long-term Wall Street returns
have ranged roughly between 6.5% and 7.5% [1], so to be conservative,
let's assume a 6.5% after-inflation return for the market over the
Long Term.

When thinking about investing and retirement, most of us look at
time-frames measured in decades, not centuries or longer. However
if we are to examine the market myth that Wall Street is sustainable,
we need to look at what happens to the dollars invested in it over the
really long term -- as each generation comes and goes.

For example: What would $1,000 be worth, if it grew for 100 years
at 6.5% annual growth (after inflation)? To answer this, we just punch
in 1.065 raised to the 100th power on our calculator, and multiply by
$1000. The answer is about $543,000. That's a lot, but where's the
problem? What about that same $1,000 growing at 6.5% per year
(after-inflation), after 200 years? The answer now is $295 Million! [2]

Hold on to your hat: what happens after 300 years? Our money would be
$1000 times (1.065)^300 or, $160 BILLION. Just for kicks, let's look
500 years ahead: the original $1000 would grow to a sum which (even
after inflation is factored out!) would be...  over $47 QUINTILLION
(over $47,293 TRILLION). This is more than all the money in the world,
literally! Obviously one person couldn't possibly own that much.

We don't have to wait that long to get to absurdity: Take something as
mild and tame as one million Americans, each investing $1,000 today.
After just 350 years, the inflation-adjusted account balances would be
nearly $4 trillion each. A million such account would again be far
more than all the money in the world. After a mere 250 years, each
account would be worth -- inflation adjusted -- almost $7 billion, so
just these one million accounts together would be "worth" $7
quadrillion, never mind the "money" in the accounts of everyone

Again this is an absurd amount..unattainable!  As you may have figured
out by now, this article is *not* about how to make your
great-great... great grandchildren fabulously wealthy...but rather,
about the fact that growing at even a most modest 6.5% "indefinite"
growth is simply *not possible* -- there isn't enough wealth on this
earth!  Clearly, such investment account "balances," if they existed
at all on that future date, would simply not be worth the amount they
supposedly are valued at.

"But wait," you say, "what about improved worker productivity, won't that
allow us to keep making more 'stuff' so each person on earth can
own more and more each year?" Let's put aside for the moment, the fact
that the wealth under our current system would not distribute the
wealth at all equally.

But worker productivity has over the long haul grown by only a few
percent per year [3] -- far below our 6.5% and far below the rate Wall
Street has always grown at.

Let's put aside the fact that Wall Street would never make peace with
such low returns -- let's fantasize for a minute and imagine that the
market could become "sustainable", and thus give these more modest
returns Sit down alone or with a financial advisor and imagine a world
in which Wall Street returns of 2% or even 3% per year -- punch in the
numbers, including how much you think you can save per month, and try
to reach your goal for retirement -- your new sums will be a mere
fraction of what you would be used to having at retirement with
today's annual rates of growth [4] -- so much for a reliable
retirement based on Wall St.

There are even larger problems looming over our "sustainable Wall St."
fantasy, however.

Even imagining wonderful productivity growth "forever", and allowing
fantasies about a "responsive, responsible" Wall St. would limit
itself to lower growth strictly in line with productivity growth,
ecological considerations become obvious.  Could planet Earth really
sustain many millions of people or investment accounts, *each*
commanding many trillions of dollars worth of resources?  Because such
figures would still be reached, even as a few percent annual growth --
it would just take a little longer.  It does stretch credulity to
imagine Earth sustaining millions of accounts each worth many many
trillions of dollars...

* * * 

In a sense the above is not radical: we all know that "you can't grow
exponentially forever" as it applies, for example, to human

But then again, if we are aware of this ecological wisdom, then
why bother with all the fancy numbers about the unsustainability of
Wall Street's growth? Why not make the much more pressing and
compelling case for the unsustainability of corporate capitalism's
"keep growing forever" fever as global climate change already
endangers our society, and, according to recent
scientific finding, perhaps even  threatening its very survival[5].

Certainly such issues deserve our pressing attention, and should be at
the center of the arguments we present to the public about the
pressing need to create alternatives to the Corporate Economy.

Still, so long as people have the idea that Wall Street
"can work," it's very tempting for them to put "depressing"
thoughts of ecological disasters aside. But what if we make
a clear case that ecological *and* economic realities necessitate an
alternative system for retirement? Sometimes even critics
of corporate capitalism wonder quietly to themselves whether
it's crazy to try to create such alternatives. Yet once we understand
the above realities, it is clear that it would be crazy *not* to seek
alternatives to the Wall Street Retirement System.

Once it's clear that not only ecological survival but logic itself
shows that our present system cannot be here forever, this can free us
up to imagine innovative alternatives. While shorter-term
environmental crisis fill us with an urgency to act, creative thinking
about alternatives may be the perfect complement; indeed, such
positive alternatives are not only necessary to win other over, they
may also be sufficient on their own to help move society away from the
corporate dead end.

Ithaca is lucky to have one such innovative program already in the
works [link to WISE]. Others have come up with similar, complementary
visions of a democratic, grassroots-based, and equally safe -- nay,
more safe -- retirement systems [link to online version of my piece].

Harel B


[1] "The consistency of returns in the stock market over long periods
is an important lesson. In his book Stocks for the Long Run (1998),
Jeremy J. Siegel, a professor of finance at the Wharton School of the
University of Pennsylvania, divided U.S. market history into three
periods: 1802-1870, when stocks returned 7.0 percent in real
(inflation-adjusted) terms; 1871-1925, when they returned 6.6 percent;
and 1926-1997, when they returned 7.2 percent."

[2] It's not hard to see why. We saw earlier that over 100 years our
money grew about 540-fold in size. Over 200 years, our initial sum
becomes about 540 times bigger over the first 100 years, and then THAT
sum becomes a bit more than 540 times bigger over the second 100
years. Thus the growth is by roughly 540 *squared*.

[3] "The rate of increase in output per hour in the private nonfarm
business sector edged up to a compounded annual average rate of 1.1
percent for the years 1990-1996 Over the period 1979-90, the rate of
increase was 1 percent per year." From:

Around 3% (ranges between 2-4%) given in

[4] In fact, even a mainstream economist in Kiplinger's opined that
the returns of much of the 20th century were only as high as they were
because of what we should consider "a one-time windfall" -- the
increase in Price per Earnings ratio -- fancy speak for the fact that
the price of a single share, when measured against the company's total
annual profits, has ballooned somewhat). Interestingly, the July 2003
issue of Kiplinger's (p. 33) published a note supporting this thesis,
noting that the Dow would reach 1,000,000 before the year 2100 if it
increased by a mere 5% per year only!

[5] The worst-case scenario was bad enough: 6C increase
by 2100, or more than 10 degrees F increase...

Now the worst case scenario might be 10C:

Thanks to a Monbiot piece

for helping locate this New Scientist article (which, please note,
quoted research published in the more prestigious _Science_ journal)

and if that wasn't enough, well, this
previous piece by Monbiot:

explains other recent scientific research suggests why by even a 6
degree Celcius rise in temperature might mean a threat to life itself
on Earth.

"Labor is prior to, and independent of, capital. Capital is only the
fruit of labor, and could never have existed if Labor had not first
existed. Labor is superior to capital, and deserves much the higher

"Capital should be at the service of labor, and not labor at the
service of capital" POPE JOHN PAUL II, On Human Work, p. 31

"Fascism should more appropriately be called Corporatism because it is
a merger of state and corporate power" -BENITO MUSSOLINI.

"Rats and roaches live by competition under the laws of supply and
demand; it is the privilege of human beings to live under the laws of
justice and mercy"  -- WENDELL BERRY