01 batra fm 11/13/06 4:53 PM Page i PRAISE FOR RAVI BATRA’S GREENSPAN’S FRAUD “The most thoroughgoing assault on the Maestro’s legacy so far.” —Fort Worth Star-Telegram “In this chilling exposé of one of the most powerful men of our time, Ravi Batra reveals Greenspan for who he secretly is: An ideologue who has waged war on the American Dream and imperiled the world economy. Greenspan’s Fraud is a terrifying book.” —David Callahan, author of The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead “As always, his economic arguments are expressed elegantly.” —Publishers Weekly 01 batra fm 11/13/06 4:53 PM Page ii ALSO BY RAVI BATRA Greenspan’s Fraud The Crash of the Millennium The Great American Deception The Myth of Free Trade Japan: The Return to Prosperity Surviving the Great Depression of 1990 The Great Depression of 1990 Muslim Civilization and the Crisis in Iran The Downfall of Capitalism and Communism The Pure Theory of International Trade The Theory of International Trade under Uncertainty 01 batra fm 11/13/06 4:53 PM Page iii THE NEW GOLDEN AGE The Coming Revolution against Political Corruption and Economic Chaos RAVI BATRA 01 batra fm 11/13/06 4:53 PM Page iv THE NEW GOLDEN AGE Copyright © Ravi Batra, 2007. All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews. First published in 2007 by PALGRAVE MACMILLAN™ 175 Fifth Avenue, New York, N.Y. 10010 and Houndmills, Basingstoke, Hampshire, England RG21 6XS. Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN-13: 978-1-4039-7579-9 ISBN-10: 1-4039-7579-5 Library of Congress Cataloging-in-Publication Data Batra, Raveendra N. The new golden age : the coming revolution against political corruption and economic chaos / Ravi Batra. p. cm. Includes bibliographical references and index. ISBN 1-4039-7579-5 1. Political corruption—Economic aspects. 2. Corruption—Economic aspects. 3. United States—Economic policy—2001– 4. Poverty. 5. Business cycles. 6. Civilization, Islamic. I. Title. JF1081.B38 2007 330.'0511—dc22 2006050324 A catalogue record of the book is available from the British Library. Design by Letra Libre, Inc. First edition: February 2007 10987654321 Printed in the United States of America. 01 batra fm 1/3/07 9:49 AM Page v To Airié Stuart This page intentionally left blank 01 batra fm 11/13/06 4:53 PM Page vii CONTENTS Acknowledgments ix 1. Global Poverty and Economic Chaos 1 2. The Twin Bubbles: Housing and Oil 15 3. The Cycles of Inflation and Money 39 4. The Law of Social Cycle 53 5. Western Society 73 6. The U.S. Business Empire 85 7. Lies, Damned Lies, and Economists 103 8. The Muslim Civilization 123 9. Roots of the Current Conflict between Islam and the West 141 10. Our Common Future 159 11. Eradicating Global Poverty: A Call for a Voter’s Revolution 189 Notes 227 Index 235 This page intentionally left blank 01 batra fm 1/3/07 9:50 AM Page ix ACKNOWLEDGEMENTS his book arose from my conversations with Airié Stuart, my edi- tor at Palgrave Macmillan. I happened to call her in late 2005, at Ta time when rising American poverty was capturing headlines. Every year since the start of the new millennium, a million Americans had been joining the ranks of the poor with no end in sight even in an improving economy. Our conversation started on a light note as we ex- changed pleasantries, but quickly turned serious. Airié expressed her profound concern for the growing social tumor of poverty afflicting not just the United States but also the entire globe and asked if I would be willing to write about the problem. Having edited my latest work, Greenspan’s Fraud, she felt I was the right candidate to offer simple and practical solutions to ease the misery of the world’s destitute. My initial reaction was somewhat lukewarm, because I had been writing on world poverty for many, many years, and the cures I had of- fered conflicted with conventional wisdom coming from the economic establishment, which was and is busy appeasing the interests of the rich and powerful. “What’s the point in me writing another book on the causes and cures of poverty,” I asked, “when the real problem is world- wide corruption that creates and nurtures deprivation all over the globe?” “Then write on that,” Airié exclaimed. “Prove to the people that it is corruption that creates poverty here and abroad.” As I pondered the assignment, I sought to expand the scope of the book proposal by incorporating the forecasting tools I had explored in the past, because they offer a mixed but bright message about the fu- ture. They indicate that the poor are about to multiply all over the globe, so much so that the oppressed masses will revolt and overthrow the ruling elite, culminating in a planetary golden age in which poverty will become a thing of the past. Like many abuses discarded in the dust- 01 batra fm 1/3/07 9:50 AM Page x x THE NEW GOLDEN AGE bin of human history, hunger and deprivation would simply vanish. Airié accepted my augmented proposal, and the fruit of our conversations and cooperation is The New Golden Age. The final version of the manuscript has visibly improved because of her repeated but gentle prodding. To ex- press my thanks and gratitude to her, I have decided to dedicate this work to a very fine lady, Airié Stuart, who feels for the suffering human- ity and wants to do something practical about its agony. Others who have been helpful in producing this book are my dear wife Sunita and research assistants, Amit Aggarwal, Jayant Sarkar and Huijun Wang. Some of the ideas developed here were first tested in a panel discussion organized by the McGuire Center for Ethics at South- ern Methodist University in March 2006, and I am grateful to the center for selecting me as its teaching fellow for 2006 and for its moral support. Thanks are also due to Dick Alexander, Michael Blomquist, and Alan Bradshaw for discussions that came in handy while writing some chap- ters. Finally, I am thankful to my son Rishee for adding clarity to some graphs. 02 batra ch1 11/13/06 4:54 PM Page 1 CHAPTER 1 GLOBAL POVERTY AND ECONOMIC CHAOS n spite of impressive economic strides made by some countries in re- cent years, a great mass of humanity around the world lives in Ipoverty, even destitution. A World Bank report estimates that nearly 3 billion people, about half the global population, were poor or lived on less than $2 a day at the dawn of the new millennium. Another billion people were destitute, subsisting daily on less than a dollar.1 What is worse, the situation changed little between 1980 and 2000,2 while the ranks of the $2-a-day poor actually swelled.3 Even in Asia, where the economies of China and India have been growing at the exceptional rates of 8–10 percent per year for over a decade, nearly 2 billion people are poor and 700 million are destitute.4 Thus, the impressive growth rates of some Asian economies have done little to alleviate overall poverty in the East. Nor has penury eased in Africa and Latin America. Most experts blame the problem on our planet’s population explo- sion. However, poverty is not just a Third World cancer; it also afflicts a large swath of people in the First World, including the advanced economies of North America, Europe, Australia and Japan. In fact, the richest country, the United States, now resembles a banana republic, with its poverty ranks swelling by a million every year. This book argues 02 batra ch1 11/13/06 4:54 PM Page 2 2 THE NEW GOLDEN AGE that the main cause of poverty, anywhere and everywhere, is official cor- ruption, which breeds economic policies that enrich the ruling elite and exacerbate income and wealth disparities. The poverty tumor is not the result of paltry growth in output, but of the growing monopoly power of big business, which in turn reflects government malfeasance. Global out- put has grown twice as fast as the global population since 1980, yet poverty stalks the world with increasing vehemence.5 Where is poverty headed? This is another question raised and tack- led by this book, which goes on to explore the globe’s future. My answer is that this future is very bright, although a few grim years are around the corner. By using some of the cycles that I have analyzed in the past, I come to the conclusion that, after a short interlude of intense economic chaos, the world will move into an era of unprecedented prosperity in which poverty will be mostly eradicated. No longer will there be hunger and deprivation. Although this book focuses on the United States, which is at the cen- ter of the global economy, it offers lessons with universal applications. This is because in a U.S.-centric world, what transpires in America echoes around the planet.