In 1978,  to the laughter of many and the derision of a few, I wrote a book called, The Downfall of Capitalism and Communism, which predicted that Soviet communism would vanish around the end of the century, whereas crony or monopoly capitalism would create the worst-ever concentration of wealth in its history, so much so that a social revolution would start its demise around 2010.  My forecasts derived from the law of social cycles, which was pioneered by my late teacher and mentor, P. R. Sarkar. Lo and behold, Soviet communism disappeared right before your eyes during the 1990s, and now, just a year after 2010, middle-class America, spearheaded by a movement increasingly known as “Occupy Wall Street (OWS),” is beginning to revolt against Wall Street greed and crony capitalism. Will the revolt succeed? It surely will, because the pre-conditions for its success are all there.
The first question is this: Why does rising wealth disparity create poverty? My answer is that it causes overproduction and hence unemployment and destitution. It is all a matter of supply and demand. Inequality goes up when official economic policy does not allow wages to catch up with the ever-growing labor productivity, so that profits soar and rising productivity increasingly raises the incomes and bonuses of business executives. I have detailed this process in an earlier article. Then money sits idly in the vaults of bankers and big-business CEOs and restrains consumer demand, leading to overproduction and hence layoffs. The toxic combination of mounting layoffs and absent job creation raises poverty, which, according to official figures, is now the highest in 50 years.

The next question is: how has the government either restrained wages relative to productivity or made the rich richer and the poor poorer? It is easy to see that almost all official economic measures adopted since 1981 and contained in the following list have devastated the middle class. The list includes:

1. The Reagan income tax cut of 1981 that benefited the rich, but made it necessary to sharply raise all other federal taxes, paid mostly by the poor and the middle class, to finance that tax cut.
2. Unenforced antitrust laws, leading to mergers among large and profitable firms, but killing high-paying jobs in numerous industries.
3. Permitting the oil industry mergers in the 1990s that are now preventing oil prices from falling in the middle of the worst slump since the 1930s.
4. Permitting relentless mergers among pharmaceuticals and health insurance companies, so that America, far more than any other nation, now spends almost 15 percent of its gross domestic product (GDP) on health care that is mediocre by European and Japanese standards.
5. Unchecked use of outsourcing that kills high-paying jobs in manufacturing and services.
6. Ignoring the growth of the trade deficit that has destroyed our manufacturing base.
7. The 1999 repeal of the Glass-Steagall Act under President Clinton that led to reckless lending by banks and an unprecedented housing bubble, which collapsed in 2007 to trigger the ongoing slump.
8. The Bush tax cuts and bailouts that further benefited the rich while nearly doubling the government debt.
9. And finally, the decimation of the real minimum wage by President Reagan and other Republicans. (In 1981 the hourly minimum wage bought $8 worth of goods compared to $6 by the end of Reagan’ presidency in 1988, and to mere $5.15 in 2006 under Bush.)
10. Looking at this nine-point list, is there any government program that a big business CEO would hate? Stated another way, is there any measure that has helped the middle class? I can’t think of any. Thus, over the past three decades whatever the government did, ostensibly to help the people, actually ended up hurting them. Mergers, outsourcing and free trade raise productivity, but also lower wages, whereas the other provisions of the above list directly enrich the wealthy. The nine-point list is really a list of exploitation.

Let us now look at President Obama’s record since January 2009 when he took office. The president’s first act was to engineer another bailout, à la George W. Bush. The idea was that the $800 billion package of assisting banks and faltering industries would save or create some four million jobs. Did the measure succeed in its avowed purpose?

According to the latest estimate from the Congressional Budget office, the bailout created nearly 1.5 million jobs. Even if we accept the administration’s claim of four million, the bailout was extremely wasteful and enormously enriched the rich. Dividing 800 billion by four million yields 200,000. In other words, the government spent $200,000 to create one job. When the average wage is less than $50,000 per year, where did the other $150,000 go? This suggests that companies that hired those four million people received $150,000 for each job they created. Thus, three-fourths of the bailout, or $600 billion, went to businesses, and a mere one-fourth benefited the unemployed. This is the best case for the Obama measure. It is clear that the bailouts, Bush’s and Obama’s, were extremely wasteful and hugely enriched the opulent.

The fact is that government deficits are not working and have always benefited the wealthy. Not surprisingly, the fastest and the sharpest rise in income and wealth inequality has occurred since 1981, when the culture of mega-deficits first began. Lasting prosperity occurs only when wages rise in proportion to productivity, as was the case through much of American history, especially from 1940 to 1980. Whenever wages trail productivity, debt and profits soar, only to be followed by overproduction and soaring poverty and misery for the middle class. Such was the case in the 1920s and the 1930s and such again has been the case since 1981.
If President Obama really wants to create millions of jobs, then all the economic measures adopted since Reagan’s presidency must be abandoned. Of course, the Republicans would oppose him tooth and nail in this resolve; they would scream about the president hurting job creators, who in fact are job destroyers. Big business has decimated American jobs through mega-mergers, outsourcing, oil speculation and by shifting factories to Mexico and China. The nation can only prosper if the destructive ability of job destroyers is restrained through increased taxes or the creation of free markets.
When the government bails out mega banks and Wall Street firms, it amounts to shooting the economy in the foot. Our president seeks to bring about change, which was his campaign slogan. But once elected, he got sidetracked by thinking that change is possible through compromise. This has never happened before. Never in history have the exploited prospered by cooperating with the exploiter.
Compromise is what produced the government’s nine-point list of measures described above. The Republicans were able to impose these measures whenever some Democrats compromised with them. When Reagan raised the gasoline tax and excise taxes in 1982, it was through the cooperation of the Democrats, who cooperated again in 1983 when Social Security and self-employment taxes went up sharply to pay for the massive income tax cut of 1981. The repeal of the Glass-Stiegel Act, the Bush tax cuts and bailout were all the handiwork of Republican lawmakers and right-wing Democrats.
America does not need another dose of increased government spending, but a rational economic policy that generates free-market capitalism to take the place of the current monopoly capitalism. In 1776, the nation declared independence; coincidentally, the same year Adam Smith, the father of modern economics, demonstrated how small businesses generate lasting prosperity for all, not just a privileged few. That is what we need again. It is well known that small firms have created the bulk of American jobs in recent years. This is then the best argument for breaking up business conglomerates not only to create jobs, but also to lower the oil price and the cost of health care.
The government should also adopt strong, not toothless, measures to eliminate the trade deficit, which is now running at $500 billion per year. This alone will create five million manufacturing jobs. Eliminating the trade deficit will raise US GDP by the same amount, and to produce that much output, new workers will be needed. Suppose it costs a business $100,000 to hire a worker, including salary, benefits and profit. Dividing 500 billion by 100,000 yields five million. In other words, eliminating the trade shortfall will generate five million new jobs, paying the average wage and benefits. The trade deficit can be eliminated by setting up a low export-exchange rate, the way China and other Asian nations have done. But first, the government must see the value of balancing our trade and then proper economic policy can be devised to reach the goal.

Outsourcing is now the biggest job destroyer. The government should impose a hefty tax on this practice. This way, if a company has to outsource some work, it will compensate the nation for creating joblessness in the economy. Finally, we need to eliminate the federal budget deficit. This can be done by repealing the Bush tax cuts for the wealthy and by enacting a small tax on financial transactions, while preserving crucial programs for the retirees. There is no reason to cut Social Security and Medicare, because President Reagan raised taxes sharply to guarantee the benefits to retiring baby boomers. In short, President Obama should do away with the nine-point list of exploitation mentioned above. He will then be able to bring about the change that he promised during the election campaign in 2008.

Einstein once defined insanity as doing the same thing over and over again and expecting different results. By now, we should know that excessive government spending is one such insanity. It creates very few jobs and primarily benefits the rich. In fact, I have shown mathematically to some audiences that, under reasonable assumptions, increased government debt goes completely into the pockets of the opulent. As the latest piece of evidence, from September 2010 to September 2011, the deficit rose $600 billion, but only 400,000 jobs were added. I call upon the OWS movement to demand that the above nine-point list of exploitation be repealed, so that a free-market capitalism of small firms is reborn. This will strengthen the president’s hand and enable him to face Republican lies and tactics that are only meant to further weaken the economy and force the president out of power. We need to make sure that Mr. Obama is re-elected, provided he accepts the repeal agenda, because the Republicans always do the same thing over and over, namely make the rich richer and the poor poorer. Additionally, we should also work to defeat Republican incumbents and rightist Democrats who will compromise to maintain the status quo and possibly cut Medicare.

Our efforts are bound to succeed. I am an economist and historian and made many forecasts in the past about the economy and social change. While 5 percent of my economic forecasts have been wrong, to my knowledge I have never made an error about forecasting a revolution. My latest estimate is that monopoly capitalism will go the way of Soviet communism by 2016.  O’ brave protesters of the OWS movement, your effort will not only shape the 2012 elections, they will also end, once and for all, the brutality of the rich and powerful, who are responsible for the sorry state you are in. The change that you are about to bring will be glorified as what Abraham Lincoln did for black Americans. I hope that, with your support, Mr. Obama will be the harbinger of that change.

It is all a matter of demand and supply. A healthy economy requires a balance between these two forces, i.e., for an economy to create jobs and avoid recession, it is essential that

Supply = Demand

Please don’t be alarmed by this equation, because I am sure you have heard of these concepts and they need not be explained in detail. They offer great insight into what has happened over the past three decades. The main source of supply or production of goods is productivity, whereas the main source of demand are wages. Layoffs occur only when supply exceeds demand so that some goods remain unsold, profits fall, and businesses have to fire workers. Thus wages have to be proportionate to productivity if the supply-demand equation is to remain in balance, which in turn avoids unemployment.
Because of new technology and investment, productivity generally rises every year, which means production or supply increases every year. Then wages must also rise in the same proportion so demand keeps up with supply. Otherwise, supply exceeds demand and layoffs inevitably follow. This is the simple logic that governs the creation or dismissal of jobs.

Ever since 1981, when Reagan became president, government policies have changed so much that productivity has been outpacing wages. The policies of restraint over the minimum wage, free trade, outsourcing, among others, created an ever growing gap between wages and productivity. As supply grew faster than demand, the government began to print money and bring down interest rates to lure people into debt. Led by Fed Chairman Alan Greenspan, money growth jumped again and again and consumer debt grew sharply. This way the economic balance was maintained and joblessness avoided because now

Supply = Demand + Consumer Borrowing

However, the wage-productivity gap kept rising and even the ever growing consumer debt was insufficient to maintain economic equilibrium. So the government also had to raise its own spending year after year. In this case, layoffs were avoided because then

Supply = Demand + Consumer Borrowing + Government Budget Deficit

Now you can see why, and how, America became a nation of debtors at every level. In today’s world, the equation is no longer that supply equals demand, but that supply equals spending out of wages and new debt.
However, the debt creating measures cannot succeed forever. A time comes when consumers run out of good collateral such as home equity, and then banks stop lending. Such a time arrived in 2007, and a year later, since the economy had been running on debt for so long, supply massively exceeded demand, and large scale layoffs followed. With consumer borrowing screeching to a halt, government deficit had to sky-rocket to maintain the equation’s balance, and to keep the recession from turning into a depression. From a few hundred billion dollars a year, the deficit jumped into trillions, which in turn made the rating downgrade inevitable. With Standard & Poor’s downgrading many nations in Europe because of their high debt, it had to take similar action for the United States as well.

Let me give you examples of how the supply-demand logic has helped me make a variety of forecasts since 1999, when I wrote a book called, The Crash of the Millennium, predicting a stock market crash in 2000. In 1999 there was a rare budget surplus which caused supply to exceed demand, so profits fell and shares began to crash from January 2000. In fact, Greenspan, who knew no economics, had supported the creation of that surplus, thereby generating the supply-demand gap and the inevitable crash. A budget surplus is toxic in an environment of ever rising wage-productivity gap, but Greenspan was unaware of this logic. As I had expected, following the crash he printed oodles of money and sharply lowered interest rates that in turn spawned a housing bubble.
By this time I was fed up with his manipulation of money growth, and in 2005 published a book with a blunt title, Greenspan’s Fraud, where I argued that his policies were fooling experts all over the world but they would soon bring about a serious recession. Economists laughed at my gall and the title of my book and many actually endorsed Greenspan’s actions. I countered by writing another book in 2006 and called it The New Golden Age: The Coming Revolution against Political Corruption and Economic Chaos. In this I predicted that a major slump would start in mid-2007 with a housing crisis and then convulse the world through stock market crashes, soaring unemployment, mega bankruptcies and exploding budget deficits. However, eventually there would be a golden age of unprecedented prosperity, because a fed up public would throw out corrupt politicians and elect ethical candidates who in turn would introduce genuine economic reforms to fix the problems.
The first part of these forecasts, to my great sorrow, has already come true. The second half will likely materialize in the next four years. Let us take another look at the economic-balance equation:

Supply = Demand + Consumer Borrowing + Budget Deficit

Since even now productivity continues to rise, supply will keep rising for a while, but, with both wages and consumer borrowing flat, the budget deficit must rise further to maintain balance in the equation and hence the economy. As the deficit is going to fall, another round of imbalance and hence layoffs is inevitable. 2012 will look really bad.
The Federal Reserve could again pump up the money supply, and that could slow the coming slump temporarily, but things will only get worse after six months. The reason is that the Fed has been doing this for three years now, and all it has done is to boost share prices as well as oil. The oil price had dropped to about $32 per barrel by the end of 2008. Then came the Bush-bailout and a sharp jump in money supply, both of which stuffed the pockets of multimillionaires and billionaires, who in turn used the government money to stab us all in the back: they resumed speculating in oil. So by now, oil is hovering around $90 per barrel.
In the past, even in a minor recession or growth slowdown, oil would sink to around $10. This happened in 1986, 1989 and 1999. But not anymore. The biggest slump since the 1930s has produced a $90 oil. Such is the by-product of official corruption that has ignored anti-trust laws and permitted mergers among giant oil companies since the days of Bill Clinton. Exxon-Mobil among other behemoths, along with an army of hedge funds, is now busy speculating in oil, and in the process killing the global economy.
Ever since the early 1980s, American economy has been so mismanaged that it cannot live without the federal deficit. Add to this the phenomenon of oil speculation, and you have a perfect recipe for a prolonged recession. Major deficit cuts are scheduled in 2013, and if they really come to pass, then the recession could turn into a depression. At that point, even oil will collapse to $10. Gold perhaps will rise further especially if the Fed injects more money. Otherwise, gold could also collapse.
I am sorry for ruining your day, but hopes offered by experts and politicians cannot trump the supply-demand logic. The Soviet Union tried to violate the laws of supply and demand, and in the process it vanished. The saddest thing of it all is that the American economy can be easily fixed and brought back to full employment in less than 18 months by gradually decreasing the wage-productivity gap. I have discussed these reforms in detail in my books, but space does not permit me to explore them here. All I can say is that all the economic policies that the administrations have followed in the past 30 years must be scrapped or modified so that wages catch up with productivity. That indeed will be a revolution.

*Ravi Batra is a professor of economics at Southern Methodist University, Dallas, Texas. His website is ravibatra.com.

A WME is a short-term financial palliative that makes the rich richer but postpones economic troubles, while seeming to cure the problems of unemployment and dwindling family incomes. It tends to create debt in the economy, but most economists call it fiscal policy or monetary policy. Once the term “policy” is used, everybody shuts up and accepts the claims of WMEs’ beneficence, believing that a genius must have devised it. However, all it does is to generate more debt in the economy, and let the problems pile up, only to return with greater force in the future. Most nations have deployed it in the past 30 years, but various American administrations have been exceptionally adept in its use.

Let us see how a WME only postpones economic ills and also enriches the rich. I am sure you’ve all heard of supply and demand, even if you never took a course in economics. Supply and demand are like the two wings of an airplane; both have to be equally strong and weighty, or else the plane will crash.

What is the main source of supply? Productivity. What is the main source of demand? Wages. If you become more productive – through education or the use of better technology – you produce or supply more goods. If your wages rise, then you consume or demand more goods. For the economy to stay healthy, supply must be equal to demand, or:

Supply = Demand

Please don’t be alarmed by the use of a simple equation, because it will highlight the role of debt in a visual way and make it easily understandable. If supply is not equal to demand, then, like the airplane with unequal wings, the economy will crash some day. Here, supply refers to the value of goods produced in the entire economy, and demand means total spending or the value of goods consumed in the nation.

It so happens that, because of investment and new technology, productivity and, hence, supply rise year after year. This means that wages and, hence, demand must also rise year after, and in the same proportion. Otherwise, there is an imbalance, and unexpected problems arise. If wages trail productivity growth, supply exceeds demand, leading to overproduction. Businesses are unable to sell all that they produce and layoffs follow. Hence, the only cause of unemployment in an advanced economy is the rise in the gap between what you produce and what your employer pays you.

However, joblessness creates problems not only for the unemployed but also for elected officials, because the unemployed have the right to vote. Politicians seek to face a happy electorate and be re-elected. They don’t like unemployment anymore than you or I, which means they have to create ways to raise national spending to the level of supply. They face two choices: either to follow policies to raise your salary proportionately to the level of your productivity – which is only fair and ethical – or to adopt measures to lure you into larger debt, so that you spend more not out of a pay raise, but from increased borrowing.

Luring the public into debt in order to get re-elected, I believe, is crass corruption. It is also corruption because the politician, ever in need of campaign donations, wouldn’t dream of offending business interests that are all for low wages. With wages trailing productivity since 1981, elected officials have been following what is known as monetary policy, which tempts people into larger debts. This eliminates unemployment as spending rises to the level of supply, because now,

Supply = Demand + New Consumer Debt

With monetary policy, the Federal Reserve prints more money to bring down the rate of interest, and lower interest rates induce people to increase their borrowing or their debt. However, the wage-productivity gap has been rising so fast that the government also had to raise its own spending and debt constantly, so that total spending matched rising supply. In this case:

Supply = Demand + New Consumer Debt + New Government Debt

Raising government debt to postpone the problem of unemployment is called “fiscal policy.” Now you see why our nation is awash in debt at both the consumer and the government level. Elected officials have frequently used debt-creation policies to get re-elected, while creating the impression that they are doing American workers a favor by preserving their jobs. Are they doing you a favor? Absolutely not. Instead, they are simply enriching the rich. Let us see how.

First, job creation occurs through the cooperative action of both producers and consumers. Producers only create supply and, indeed, hire workers, but if their goods remain unsold, they lose money and workers are laid off. Second, joblessness occurs only if your boss doesn’t pay you enough to match your productivity. If you work hard and still get fired, then it is the employer’s fault, not yours. You are doing your job of being productive on the one hand and creating demand out of your salary on the other. If your demand falls or does not rise enough, then it is because your boss has not given you a raise or has cut your wages. At the macro level, insufficient national demand only means that workers have produced so much for their companies that supply exceeds demand, so that some people have to be laid off. Where then is your fault in this entire process? It is your employer’s greed that generates joblessness, not you.

Once the government has generated enough new debt to increase spending to the level of supply, the unemployed are called back to work, usually at lower wages. But the debt increase is large enough to eliminate overproduction even at puny wages. As overproduction vanishes, profits jump. You can see this clearly from the above equation. If your wages and, hence, your demand are constant, then the entire increase in debt goes into the pockets of suppliers. Without this debt growth, employers would have suffered losses due to overproduction; but with the creation of new debt, all their goods are sold, and profits soar, while your salary is either constant or grows very little; it may even fall, if you were laid off and had to find a new job. Thus, if the budget deficit is $1trillion, then corporate profits plus executive bonuses jump by $1 trillion. If the deficit is $2 trillion, then businessmen’s incomes rocket by the same amount.

This is exactly what has occurred during the Great Recession that started at the end of 2007. Millions of people were fired because the likes of General Motors, IBM, Microsoft and Goldman Sachs could not sell all they had produced. Then President Bush sharply raised the budget deficit, and the Federal Reserve printed tons of new money to bail out failing businesses. As a result, the economy stabilized in 2009 and began to grow in 2010. However, real wages fell, while profits sky-rocketed. Why? Because, the entire increase in government debt went into the coffers of producers. This is how Goldman Sachs alone could give bonuses of over $20 billion to its executives in 2009, while millions were still being laid off. Consumer debt actually fell, but the government debt rose so much that executives received hefty extra compensation.

Eliminating the Budget Deficit

It should be clear by now that our so-called monetary and fiscal policies are enriching the rich while not doing much for the jobless. What should we do? For the solution, let us take a look at the American economy in the 1950s and the 1960s, the golden decades of high growth and growing prosperity for all. GDP growth averaged over 4 percent as compared to less than 3 percent since 1981, while real wages went up to match rising productivity. The top bracket income tax rate at the time averaged above 80 percent, and corporations paid 25 percent of the total tax revenue or about 5 percent of GDP. The middle class paid low taxes, and there was practically no budget deficit.

Why was GDP growth so high back then? The answer lies in high taxation of wealthy individuals and corporations. Thus, for the 1950s and the 1960s:

Supply = Demand + Near Zero New Debt

Since real wages grew as fast as productivity, new debt was practically zero. People met their needs mostly out of their rising salaries. Demand rose in a natural way to match increasing supply. It may be noted that supply comes primarily from the rich, but demand comes primarily from the poor and the middle class. Since taxes were low on low-income groups, consumer demand grew as fast as salaries; but from 1981 on, thanks to President Reagan and his advisers such as Alan Greenspan, the tax burden was transferred from the rich to everyone else. Income tax rates sank for wealthy individuals and corporations, while most, if not all, other federal taxes jumped. The self-employed small business person, for instance, saw a rise of 66 percent in their tax rate. Taxes also rose on gasoline and tires. The crippling tax burden on lower incomes naturally reduced the growth in demand, so GDP growth (growth in supply or output) fell sharply below that in the 1950s and the 1960s. Even the oil-shocked 1970s produced higher growth of 3.3 percent.

All this suggests that we should move toward the tax structure of the 1950s and 1960s. Today, the top-bracket income tax rate is 35 percent. Suppose we were to raise this rate to 45 percent for annual incomes above $250,000, and to 70 percent for incomes above one million, then the income tax yield would rise from $1 trillion to $1.5 trillion, or by $500 billion. Thus, any dollar earned above $250,000 will be taxed at the rate of 45 percent; similarly, any earned above a million will face a rate of 70 percent, so that average tax rates will be well below the top rates, which will still be below those in the 1960s. For corporations, we could go back to the old rate of 45 percent tax on corporate profits, while eliminating loopholes. We would then collect about 5 percent of GDP or some $750 billion, which would bring in extra revenue of $600 billion. Thus, higher taxes on affluent families and businesses will raise our revenue annually by $1.1 trillion. Slashing defense spending and oil and agricultural subsidies would reduce government spending. This way we can almost eliminate our budget deficit, which is currently running at an annual rate of $1.2 trillion.

Eliminating the Trade Deficit

Eliminating the budget deficit would quickly revive our comatose economy. The first benefit would be felt in the fall of our trade deficit, especially that with China, which has become our foremost lender. America would no longer have to borrow money from anyone, and China would not be able to use its surplus dollars to buy more US government bonds. Such a move would cause a major appreciation in the value of the Chinese yuan, which, in turn, would reduce, possibly eliminate, our trade shortfall with China. Our manufacturing would revive and thousands of new jobs would be created, raising the tax revenue further.

The next step would be to reduce the tax burden on lower incomes by cutting the self-employment tax to 12 percent from the current 15 percent; we could also eliminate the Social Security tax on the minimum wage. Our increased tax revenue would pay for these cuts, which would further raise consumer demand and, hence, GDP growth. Note that the trade deficit is also a WME, because it tends to lower wages, while stuffing the wallets of the CEOs of multinational corporations. Just look at the fat pay checks of such CEOs in the aftermath of our trade with China.

Another WME that our government has systematically used to reduce our living standard is outsourcing; we can impose a stiff tax on this practice and raise even more revenue. This would also enable us to trim the tax burden of low-income groups.

In short, the American economy can be easily fixed if our government would stop using its vast arsenal of WMEs against us. I believe that, in just 12 to 18 months, we can bring the nation back to an unemployment rate of 6 percent, which is close to full employment.

Apekshit Mulay was also live on airwaves of 104.9 FM Funasia radio on May 15th 2011 morning from 6 am to 7 am CST to inform the listeners about the economic system of PROUT. In this interview Apekshit described PROUT as mass capitalism that gives power to the masses. He talked about how monopoly capitalism has let just 1% of Americans control more than 95% of America’s wealth. He also stated that if the “monopoly Capitalism” is left unchecked it could be destructive. Apekshit also used this interview to enable a lot more listeners to tune in to Dr. Ravi Batra’s interview on May 20th 2011.

On 20th May 2011, Dr. Ravi Batra was live on airwaves of 104.9 FM Funasia radio from 6 am to 7 am CST. In this interview Dr. Ravi Batra raised awareness of the America’s Debt crisis and make suggestions to fix problems in economy. He also answered questions from listeners in Dallas to help ordinary Americans beware of the coming fall in stock market because of drastic spending cuts proposed by Republican Party.

According to Paul Krugman, the economy is in the early stages of a third depression and it will probably look more like the Long Depression of the 19^th Century that followed the Panic of 1873 than the much more severe 1930’s Great Depression. According to him, the cost – to the world economy and, above all, to the millions of lives blighted by the absence of jobs – will nonetheless be immense.

What we are witnessing is not the early stages of third depression. Instead it is the initial stages of economic collapse like 1990s Russian economy as predicted in my book Modernization of Islam (Booksurge, Jan. 2008). It took me 4+ years to write this book and I wrote the chapter “The Collapse of the American Economy” in this book in the early 2007. It is worth noting that Russian GDP decreasing by 45 percent during 1990s.

Federal Reserve is running out of bullets, i.e. it has slashed the rates to almost zero. Due to the two irresponsible Republican governments, Reagan and Bush Jr., which maxed out the credit worthiness of the federal government, the US administration does not have any more option to spend money on stimulus. Consumer spending accounts for two-thirds of U.S. economy. Due to heavy job losses during eight years of Bush administration and then Great Recession, consumer purchasing power has drastically diminished. The US budget deficit is going to be in trillions of dollars for at least a decade. Its trade deficit is also going to be above at least $400 billion for next several years as consumer goods manufactured domestically will not be profitable at all for retailers like Walmart and Home Depot. Therefore at one point, the US dollar has to give in.

Any substantial depreciation of the dollar will result in a corresponding increase in consumer goods prices and cause inflation. Now the US produces only 75 percent of the merchandise they consume – down from 90 percent a decade ago.

As I have written in my other articles, one of the main reasons of the present economic downturn is Wall Street. Under the pressure of Wall Street pundits, every CEO has to show profits each quarter otherwise he will lose his job. First this led to the consolidation of firms, i.e. mergers; then lean and thin firms (i.e. lay-offs inside the firms) and finally shifting of job overseas. But in this process, they have forgotten about the purchasing power of the consumer. The jobs, shifted overseas, were the source of the purchasing power of the consumers. Therefore ideally one needs to put emphasis on the purchasing power of consumer and not the profit only. Also the Wall Street will never allow and also not allow the creation of these jobs to return to the U.S.

In the coming years, some portion of the country may have to face an economic situation similar to the 1990s Russia after the collapse of the U.S.S.R. But unlike Russia it has the latest technology and top scientific talent with a hard working population. These conditions will allow it to emerge much more powerfully than the 2000 Russia; but its living standards will not be the same as before the 2008 recession began.

There is a major difference between the 1930s Great Depression and the coming Great Depression. During the 1930s Great Depression, the Keynesian stimulus, i.e. generating employment by government spending, worked. The 1930s Great Depression ended only after the country entered the Second World War, i.e. when the country started churning out arms and armaments on massive scale. In fact a few years after the end of the 1930s Great Depression, the living standard in the country started to improve in comparison to the pre-depression period. But right now the Keynesian stimulus alone is not going to solve the problem because the country is completely dependent on the import of the consumer items.

In the end there will be no option but to restart the manufacturing and service sector units within the country because the country cannot sustain huge amounts of negative Balance of Payments (BOP) for long although inflation will go through the roof and the living standard will go down drastically. The sooner this step is taken the better.

Of the main causes that lead to obesity in those living in poverty, a poor diet is the most instrumental. In Loretta Shwartz-Nobel’s article “America’s Wandering Families”, Schwartz Nobel interviews two homeless mothers about their current impoverished situation and their eating habits. One homeless mother of one is quoted saying, “I bought a lot of rice and beans and Bisquick mix…bags of cereal…and powdered milk because it is cheaper and it lasts longer” (Schwartz-Nobel 257) while the other single parent describes how her meals consist of “potatoes and some macaroni and cheese, the cheep things to go with dinner” (260). These desperate mothers only eat such unhealthy and unbalanced meals because, due to their impoverished state, it is all they can afford. Diets such as these, which include high calories and fat, are the main causes of childhood obesity that, in most cases, is carried into adulthood.

Nobel is not alone in her discovery of poor quality in diet among those living in poverty. In Kristen Wiig Dammann and Chery Smith’s article on the research of obesity in low-income women, “Factors Affecting Low-Income Women’s Food Choices and the Perceived Impact of Dietary Intake and Socioeconomic Status on their Health and Weight”, Dammann and Smith state, “Research has suggested that because diets high in refined grains, added sugars, and added fats generally cost less than healthful diets composed of lean meats and fresh fruits,… the poorer segment of the population has greater exposure to an unhealthful diet” (Dammann and Smith 242). The authors believe that due to the poorer population’s lack of income, they are exposed to more unhealthy foods because much healthier foods, such as fruit and lean meats, are more expensive and unappealing to a consumer with a small budget. This is not to say that the impoverished have a blurred view of healthy and non-healthy foods. Dammann and Smith quote a subject of their research who says, “I can’t set myself aside and get all the right, proper, $3 tomatoes and broccoli and cauliflower…I don’t have the money for it, and yes I do know what I’m supposed to eat” (248). These struggling parents have a great understanding of the healthy foods that they and their families need, but a problem that one family after another runs into is that they cannot afford the healthy foods required for a balanced diet. This leads to the parents as well as the children to become overweight or even obese.

One could easily assume that these low-income or homeless overweight families are not trying hard enough to handle their problems, that it is not the food that is the problem but the lifestyle of which these Americans live. In the article “The Wages of Sin” by Francine Prose, Prose describes how studies of the overweight often misconstrue their lifestyles, causing false information to be spread. Prose goes on to say, “Such prejudice has been found to derive from the widely accepted notion that fat people are at fault, responsible for their weight and appearance, that they are…lacking in the equalities of self-denial and impulse control that our society values” (Prose 198). The majority of people believe that the overweight are at fault for their own unhealthy lifestyle and that all the blame should be placed on them. People that accuse with these beliefs are ignorant to the many different factors and issues that the poor and overweight must cope with on a daily basis.

Physical activity can be considered the best way to lose weight and stay healthy. When applied to the overweight living in poverty, living a physical active lifestyle is hard to accomplish. In their article, “Diet, nutrition and the prevention of excess weight gain and obesity”, authors Swinburn, Caterson, Seidell, and James believe, “Poorer neighborhoods tend to have fewer recreation amenities, be less safe, and have a higher concentration of fast food outlets” (Swinburn, Caterson, Seidell, and James 133). Those living in such poverty-stricken neighborhoods not only have nowhere to be physically active, but are also surrounded by nutrition lacking restaurants that only increase their obesity. In Russel Lopez and Patricia Hynes’s article “Obesity, Physical Activity, and the Urban Environment: Public Health Research Needs”, Lopez and Hynes believe the root of this problem is due to lack of awareness. When describing a research hypothesis on physical activity in suburban and urban settings, the authors explain, “the resultant findings were largely suburban in focus, [and]…research on overweight, physical activity and the urban built environment…of inner cities has yet to be done” (Lopez and Hynes 170). What is happening is that a lack of attention is being paid towards low income neighborhoods who are suffering due to their inability to be physically active. With the focus being centered on populations with a lacking obesity problem, the overweight living in low income, urban areas are suffering. In her article “Deprivation Amplification Revisited”, Sally Macintyre provides a different reason for a lack of recreational amenities. Macintyre states, “Differences between areas are solely due to differences in the personal characteristics of the residents” (Macintyre 33). Macintyre is implying that suburban residents and urban residents live their lifestyles because of who they are. She believes suburban residents are hard workers rewarded with a wealthy community while urban residents are lazy and ignorant, thus their economic status is just another symptom of their personality. What is not taken into consideration is to the countless families that are born into their current situation of wealth or poverty and how many have no choice but to live unhealthy lifestyles. This leads to the unfortunate impoverished to have no access to nice fitness facilities or grocery stores stocked with the healthiest foods. Instead they are left with fast food restaurants and corner stores that only sell chips and soda.

By Shambhu Sharan

The recent economic downturn hurt many university students. The students, who graduated or are graduating soon, face difficulties paying their different bills.  Most students have jobs. However, the international students have many more problems. The University of Texas at Arlington’s international students makes up 10 percent of the student body. The university offers scholarships, research grants, teaching assistantship, research funding to pay tuition and bills for qualified international students.

The graduate international students have to keep their GPAs high. Physics graduate Kunal Tiwari said he lost the university’s tuition assistance last semester because his GPA dropped below 3.00. UTA’s education quality is much better than Indian universities. The only thing is education is more expensive here compared to India. International students pay 40-50 percent more tuition compare to in-state tuition.

International students cannot get students loans and are legally not permitted to work off campus jobs. They cannot get a social security numbers unless they have an on-campus job. The SSN is the basic requirement to get cell phone connections and other essential things. The students cannot work more than 20 hours each week, and the average on-campus job pays $7 an hour.

Undergraduate and master’s international students who have no scholarships and grants work and study hard to keep their GPA up to stay in the university.

Business Administration graduate student Prashant Dwivedi said the medical care here is expensive compared to the Southeast Asia. He spends $18,000 per year for all his expenses. He took a loan from a bank in India. He received scholarship for a semester that was the great help for him.

“It is very hard to get medical treatment when I become sick,” Dwivedi said. “Most cases, I can’t get an appointment same day at the University’s Health Service Center. The health insurance doesn’t cover the alternative medicine.”

Job market is looking for experts to employ them. Considering the job market, those who graduated are having hard time to find a job. H-1 visa has made stricter to get jobs for the international students.

Besides financial problems, most international students use public transportation to buy groceries and go off the campus. The University provides shuttle service on Saturday and Sunday from the campus to Wal-Mart.

Most Indian students like to eat cooked food at home. Due to busy schedules, they don’t find time every day to cook.

There is a scarcity of on-campus apartments because the university is demolishing the Legacy Height apartments. The landlords have increased the apartment rent.

After getting a university degree if students do not get hired in their field, they are compelled to work in low paying jobs like restaurants, gas stations and supermarkets.

I think university’s international students have many difficulties and challenges. The university administration and the government should try to solve some of the problems.

Though I have a bachelor’s degree in Economics, working on my Masters in Business Administration, it was difficult for me to digest the PROUT philosophy in the beginning. I have tried to remain open and keep my patience through my initial studies of PROUT, which contradicted many of the ideas I’ve been learning in the University. After a few months I began to open my mind and imagine how a PROUT world would be. However, the compassion of the PROUT philosophy did not seem practical in today’s world. There are so many realities to overcome, no matter what economic system we follow. And I still am not confident to say that I completely comprehend PROUT. 

It so happened that Ravi Batra was speaking at a seminar held for PROUT’s 50th anniversary in 2009. This came at the time that the world was facing a deep economic crisis during the past year. The goal of this seminar was to review the course of the crisis: past, present and especially the near future. Do we have solutions to deal with it? Do we have a chance to put PROUT ideas into these solutions?

The participants divided into three main groups: Expert professors in each field, NGO’s, and the public. The course of the seminar was divided into two main sections. The first section was a conversation with economist Dr. Ravi Batra involving subjects relevant to the current economic crisis. In the second section the three groups discussed all kinds of current local economic issues and phenomenon, relating PROUT ideas to the situation. Predictably a big clash was generated while explaining and further discussing the meaning of PROUT. We argued about the definition and individual interpretations every time PROUT was mentioned. However, the seminar ended in a good flow and most participants agreed with the main points of PROUT. We made friends who were new to the ideas of PROUT, but wanted to work to promote the PROUT ideas to the public. Some of them were still disheartened about the tremendous, ugly beasts created by capitalism and have little confidence in winning against them. Still they believe it is their duty to fight for what isright, even though it seems an impossible task. My belief is that we anticipate and create the world we envision and we enjoy and suffer at the same time.

It has now been three months from the time I attended the seminar. However, I still remember the flow of that day. I wonder whether this economic crisis has given people a chance to review the way we make money and the insecure, out of control money markets we have created. From what I observe, probably not so much. People still use the same ways to grasp all the money and security they can. No persuasive economic solution has arisen to convince people that our economy will improve. Even so, I still believe the most important goal of the seminar is to grow PROUT seeds in each and every participant and hope that those seeds will sprout sooner or later. I believe we’ll see more and more people working for the ideals of PROUT in this world.  After all, we do rely on the collective social flow to realize PROUT. In time it will raise the human spirit to an even higher standard.

Large businesses import goods from the other countries in large quantities at a lower price, but the small businesses buy their products locally, which are more expensive. That has impacted small businesses.

The current economic downturn has hurt small businesses in the U.S. and also across the Metroplex.

Southern Methodist University economics professor and author Ravi Batra said that small businesses have been hurt by the higher taxes.

“A small business owner pays 10-15 percent income tax, 8 percent sales tax and 15.6 percent self-employment tax, which represent a large part of small businesses overall income,” Batra said.

Larger businesses import goods in large quantities at lower prices from developing countries than small business can.

“Large businesses import goods from China, India and Africa, where labor costs are lower than in the United States,” Batra said. “They import in a large quantity and try to stock their shelves with almost every conceivable item. That’s because people would like to buy all their consumer goods at one place to save money and time,”

Batra said if the government reduced the self-employment tax on small business owners, it would help them grow. Then, they could invest their savings in their businesses.

“During the recession, many people lost their savings and investments,” Batra said.

“They have less buying power.”

Plano’s Precious Beginning Montessori Academy teacher Uma Srinivasan said the smaller grocery stores are expensive and located far from her home.

“I used to shop in smaller stores, but now I shop in the supermarkets such as Wal-Mart, Sam’s Club and Kroger,” Shrinivasan said. “I get almost all the items at the Sprouts cheaper except wheat flour and few kinds of lentils.”

Srinivasan maintains the habit of consuming healthy foods. Many stores like Sprouts, Albertsons, Kroger and Whole Foods have a superior quality of organic products for better prices. These stores also accept consumer coupons, which are a cost effective for the buyers in this recession period.

“Indian and Asian grocery stores are forced to raise their price because of the high export costs, but they do not provide better quality,” Srinivasan said. “The larger stores are competitive with quality and cost.”

Baldev Singh, President of Subji Mandi, an Indian store, started his store in November 2003 in Garland. His store suffered lower sells since last year due to competitive supermarkets.

“When gas prices went up, the prices of imported rice, wheat flours and spices went up,” Singh said. “When value of the dollar goes down his prices go up.”

Singh said the prices of lentils and masoori rice are high because India stopped exporting these goods. He imports these items from Kenya, Australia and Mexico by paying higher prices.

An Indian shopper Gursharan Singh Bagli buys in the Indian store because he finds most of his desired goods in the store.

Ike Theo, a Chinese shopper from Richardson, said he prefers to buy in Fiesta because it is cheaper and he finds most of his groceries in the store.

“Indian stores have no tofu and very less fresh vegetables and fruits available,” Theo said. “I find more varieties of fruits and vegetables in the Fiesta.”

Marc Friedland was the founder and owner of Talley’s Green Grocery, a natural foods store in Charlotte, N.C., from 1991 to 2008. Friedland said he closed his business because big supermarkets opened near his store and he couldn’t compete against them.

Friedland said the failure of small businesses can cause more long-term harm to the economy than the high profile failures in the financial sector.

“In 2007 small businesses accounted for 78.9 percent of all new jobs,” Friedman said.  “But when the recession hit, the government bailed out the banks and large corporations – not small businesses.”

Moreover, with all the federal money being thrown out to businesses “too big to fail,” small businesses have received almost nothing, he said.

“When the small business fails, it is one of the neighbors that get hurt.  Additionally, the employees of that business are out of work,” Friedman said.