Great Depression II?
With the bad economy, we’ve heard a lot of talk about a second Great Depression coming. Then with all the biting of nails, we see a story of a Wal-Mart employee being trampled to death by eager shoppers.
These shoppers were not starving and searching for food out of desperation. They were not seeking to satisfy their basic needs. No, they were up early seeking to buy gifts for friends and loved ones.
This not only tells me that we have a LONG WAY TO GO before we get to another Great Depression, but that many of us either lack knowledge of history or perspective. That we can remotely compare our situation with the Great Depression tells me that we do not know REAL hard times.
For perspective, let’s compare:
- People waiting in line to get bread - yes, just bread - during the Great Depression
Shoppers waiting for a Target to open on "Black Friday"
During the Great Depression meant people not knowing what they were going to eat on a daily basis. “Hard times” today seems to be defined as having to cut back on a cable package or buying $850 worth of gifts for the kids rather than $1,000 worth.
This is not to belittle those individually having a hard time right now, but to even compare today’s times (collectively) with the widespread grief and misery of the Great Depression is insane.
Yes. That was the US. They called those shanty towns, "Hoovervilles"
Not homeless. Just waiting to get into a Best Buy
Perhaps it is that we think that we (as individuals) are doing ok, but it is our neighbors that are suffering.
Make shift home
First in line for mall opening
The must spend mentality of some people amazes me. Get a paycheck on Friday and broke by the following Thursday. Money in. Money out.
- Getting food at a soup line
Getting LCD Televisions
My point here is to keep things in perspective. We pray that we never return to such times as the Great Depression.
Filed under: Reflections
I was thinking about this the other day and wondering if easy credit is the difference. With the “credit crisis” I have become aware that they expect us consumers not to spend based on having a comfortable living wage, but by taking out loans from credit cards in order to spend that $850 or $1000 on gifts or, for that matter, on food. I’m assuming this was not the case in the Great Depression, I’m assuming that when you ran out of money, you ran out and there were no credit cards to “help” you.
I don’t think it’s fair to describe today’s economy with the Great Depression. So your kid can’t get a new IPOD for Christmas and you’ve removed Macadamia nuts from your grocery list…
We should all be happy for the blessings that we do have.
Of course there is absolutely nothing in morality or Islam that says that you should only care about people who live in the same political state that you do.
Around the world today as we read this there are well over 1 billion people living in extreme poverty who cannot meet their basic needs on a daily basis and are forced to live on less than one dollar a day.
We care about all these people, but as Muslims specifically we should note that more than half of these people are Muslims whom we call our brothers and sisters but whom we do nothing to assist.
I know there are limits to what we can do but we all need to think and work harder to address such issues. The fact that some Muslims will argue that we have done too much or cared too much about our brothers and sisters overseas is a bizarre and perverse abomination.
Allaah knows best.
Alhamdulilah!
I recall my great grandmother always telling me that there was a time when her and her husband ate chicken broth for 3 months just to survive during the great depression.
I personally think the majority of the “econ crisis” is hype played up by the democrats to get elected: remember ‘its the economy stupid’. There are serious debt crisis problems. It will just teach americans that they need to save hard cash - like the old timers. Save and the dollar becomes stronger! The dollar becomes stronger and prices go down! Simple econ!
I agree with you Tariq. All this doom and gloom talk is a little over the top. During the great depression emplyment was at 20% today’s unemplyment rate is at of 6%. So we have a long way to go before our economic hardships can compare to the GD.
Indeed many will lose their jobs (I might one of them) and some especially those in the midwest will have to relocate to find new steady employment. However, with new President & administration and new outlook I think for the most part the US will bounce back. Many are saying it may take five to ten years and some it will take only two years for the economy to rebound. i’m optimistic I belive it will take only two years for us to make a recovery, not a complete recovery mind you, but enough to quiet those doomsayers.
This is an excellent point. I certainly did not mean to demean or belittle those currently living in extreme poverty around the world. I just wanted to point out that here in the US, we need a little perspective when talking about a “new Great Depression”. This is also a great point that you are making as well
I invite anyone who wants to contribute to the campaign to end extreme poverty in the world to donate to the Millenium Promise Campaign here.
http://www.millenniumpromise.org/site/PageServer?pagename=home
It’s sad that the young man at Wal-Mart paid for his life because of inconsiderate people like them. If he has his own family, I feel terrible for them. Nobody’s life should be worth losing over something as awful as this. Even after that young man was ran over, some of those people were still heartless. They still insisted in coming in the store. It would be bad that some of those people will be going to jail for this. It just make no sense whatsoever.
I wonder what my late grandmother would think of these comparisons? They are quite interesting. She lived during the days of the Great Depression. Although I couldn’t fathom myself eating horse meat, that what she had to do as a kid when her folks barely had anything to eat. She would get pissed at me and my sibs for throwing away food that we didn’t like. Not only did she find our gestures to be offensive, but she always liked to remark that one of these days we were going to know what it’s like to really starve. I admit, it makes me almost want to vomit thinking about it( eating horsemeat), but when I when I think about this economic crisis that we’re in, it may not be as bad as the Great Depression, but it’s near it.
I personally know if a woman who has no lights in her house, yet she rushes to a car dealer ship and is going to surprise her husband with a SUV( can’t afford those car notes as well) for his X-mas gift. Now that is stupid if I ever heard of such. When I look of those pictures I think about her.
It rather embarrassing to see this. During the Great Depression people stood in line for important things. Here it is in 2008 and the economy is screwed, but we’re waiting for the stores to open for unimportant needs. It just in congruent. I just hate that that young man lost life because of this. What a crying shame.
@ TheLadyoftheHouse: “…I’m assuming that when you ran out of money, you ran out and there were no credit cards to “help” you.”
This is correct; credit cards didn’t really start to be used by many middle class Americans until the mid 70s. When I was in the fourth grade (’70-’71), I needed my first pair of glasses. I remember my mom driving to the bank to ask for a $40 loan so that she could buy them. Can you imagine going to the bank for a loan of $40 today? Credit cards got rid of that problem (of short-term consumer credit needs), but not until 35 years or so after the end of the Great Depression. Until the 70s, it was very much save your money for a rainy day or go broke.
@ Abul Layth: “I recall my great grandmother always telling me that there was a time when her and her husband ate chicken broth for 3 months just to survive during the great depression.”
My dad, to this day, still hates chicken because of how much he had to eat of it during the Great Depression and WW2.
“I personally think the majority of the “econ crisis” is hype played up by the democrats to get elected…”
No, the econ crisis is very real, and isn’t going away anytime soon. Even a simple visual examination of unemployment rates will show that we’re going into a recession.
@ Peaches: “When I look of those pictures I think about her.”
I could tell a similar story about a former co-worker from long ago. Some people are just totally enamored of material things; money just slips through their fingers, and they have very little understanding as to how or why they should save their money.
A real econ crisis is when you hit 20% unemployment. The unemployment rate is currently at 6.5%! Yes, it is certainly a recession but it is not a “crisis”.
What I think the real crisis is is that the US government just spent 800 billion more dollars on buying up more debt! Where did the money come from? PRINT MORE MONEY!
2 weeks ago the cry was “deflation”! Now we really have to worry about inflation!
Sorry to post again but I just wanted to compare a few things. In 1992 the unemployment rate was at 7.8%. Ask yourselves how America was doing then!
The last time the unemployment rate was at 6.5 was in 94 under Clinton. Were things so miserable then too? I personally think that people are hyping this up a bit much, and because they are doing so the situation may become worse.
I am a taxi driver and I am constantly discussing economics with affluent businessmen. Nearly 90% of them believe this is a temporary slump. They see the sales figures holding, and yes, they all admit to cutbacks, but such happens when the economy slows. Belt tightening is obligatory if you want to remain afloat!
Fuel prices are low, the consumer has more money to spend because of it, that extra savings of $20-40 a week in gas prices will go to buy commodities. Since fuel prices have lowered, I have personally been picking more people up. They have the spare cash that they didn’t have. I would argue that high fuel prices is what offset the economy to begin with.
I think the black friday projections of a +3% in sales proves that this is only a temporary slump and predictions of this recession ending within the next two years are justifiable.
But of course Allah knows best!
Like many of you, I am Muslim, but when I think of the terrible fate which befell the man at Wall-Mart last week, I am reminded of something I heard a Buddhist
roshi say- “There is suffering with, and suffering without.”
I fear that many of us are addicted to shopping. We are not sure why we think we need these things-but, well, we do… It saddens me a great deal. As my late father once said-”there are some things a latte just won’t fix.
wow…
love the juxtaposittion of imagery to prove your point.
scary stuff.
Alright, let’s not over simplify this whole thing.
Those that say this is the Great Depression part Deaux are foolish and ignorant of history. It’s nothing like that.
At the same time, this recession is only a year old, and it took about 3 years for the Great Depression to really settle in. Many of the factors that lead to the GD are mitigated these days by new laws and regulations that weren’t in place back then.
Yet, there are also new challenges that America wasn’t facing in 1929 either. For one thing, intense foreign competition. TWO massively expensive wars. A HUMONGOUS national debt problem. And a near-dead manufacturing sector.
I work for an airline and have seen my pay take a serious cut as the company tightened on expenses. Four months of looking for a new job has led to nothing and I am forced to move to another state. Things have been difficult for me and many other Americans, but it’s nothing like the GD at this time.
But to pooh-pooh the current conditions and maintain a perpetually bright outlook is a little naive.
And there is one other thing that seriously concerns me about the future and makes me very nervous about the state of this economy.
Every Muslim (and non-Muslims) should take heed and keep the following lines in mind and heart:
“O you who believe! Be afraid of Allâh and give up what remains from Riba, if you are believers.
And if you do not do it, then take a notice of war from Allâh and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).
‘Nuff said.
This is all I was saying. Let’s put this into perspective. Some people have been going around screaming that this is a depression. I wanted to show some of what that was really like
Y’all trippin’ with all of that things aren’t so bad rap!!!
More than half a million people lost their jobs in one month, the highest total in thirty-four years. The deep thing about job-seekers’ in this current climate is that there just aren’t that many jobs out there–not to mention all the companies with hiring freezes that job-seekers don’t even know about. My employer has had a hiring freeze in place for nearly a year.
I saw a story on the internet where an investment banker was walking around with a placard saying MIT grad for hire, and he had 20 years experience. I read another article that Harvard stopped recruiting tenured professors–that is unprecedented.
The 700 BILLION bailout for financial institutions is nearly one third of the U.S. Budget. There is something really serious going on.
Let’s see if y’all still have this cavalier attitude in a year or so.
@ Daud
Again, no one is saying that things are not bad. My point is that the conditions today are NOT even close to what was seen during the Great Depression. Everything is not totally black and white in life my friend
@ Abul Layth: A real econ crisis is when you hit 20% unemployment. The unemployment rate is currently at 6.5%!
I discussed the US unemployment rates two weeks ago in a post at my blog. What I wanted to point out here is that the 6.5% unemployment rate you’re quoting is what’s known as “U-3.” This is the “official” unemployment rate the US gov’t quotes; however, it’s not the largest measure of unemployment. That distinction goes to “U-6,” and that number in October was 11.8%. What I discuss in my post is that unemployment in October is already almost as high as the peak in June 1992, and that it’s moving toward the November/December 1982 unemployment rate peak, which was the worst recession (in terms of unemployment) since 1948, when the current series of data started. I estimated that U-6 was probably around 16% in ‘82; in that regard, you only need unemployment to worsen by 4.2% or so for the current economic problems to equal that time period (which I remember oh so well).
So, yes, technically, it may not be a “crisis” yet, but it’s moving that way, and I have no idea when the worst of it will be over.
STRATEGIES FOR
SURVIVAL AND GROWTHIN THE AGE OF
THE GREAT DEPRESSION II
DR. RAJU M. MATHEW
Al Ain University of Science & Technology,
Abu Dhabi, UAE
This is the Great Depression II
The crisis that we are now facing can rightly be called as the Great Depression II of 2009 and it is several times severe than the Great Depression I of 1929. It is not mere a financial melting down; not mere a credit crisis. It is not a recession to disappear within two years. The dimensions and intensities of the Great Depression II are quite different from the early one. Who had brought out the present crisis and where had gone all the money or credits that were available before a few months back, are the two questions that the general public is asking.
Who has brought it?
Almost all banks had been lending five to ten times more than what they had, by the principle of 80/20 or even 10/90 in the age of electronic cash and e-banking or e-commerce, without bothering the repayment capacities of the borrowers that ultimately resulted in the credit crisis and crushing of the stock markets. Further, the heavy expenditure on armaments incurred by almost all nations and terrorist organizations had aggravated the crisis. By siphoning off billions from the accounts of the big corporations and millions of individuals, especially the elderly, the terrorist organizations made money for their operations. Governments borrowed heavily for defense expenditures. Unfair business practices and high level frauds had made every thing very complex.
The Basic Reason
After high and fast growth and booms now it is the turn of gloom, recession and depression. There is a limit for speed and growth. Development based on aggressive marketing, consumerism and globalization, ignoring the vast majority, cannot go on very long. Recessions and depressions are self correcting mechanism for the maladies of a society that strives for unlimited growth at a high speed. No human being or economy can run fast for very long. Now, Information Technology and the Modern Management Techniques do not have any answer for the present crisis. So also are the cases with IMF, WTO and the World Bank that are on the verge of collapse. These are the basic lessons that the Great Depression II teaches us.
Fast to Slow
Everybody has been running fast. Fast life style has become the rule, As a result, nobody has any time even to dream, imagine, think and learn. Knowledge and scholarship have been pushed back for data and information; learning has been reduced into an exercise for scoring of higher grades or marks; reading has been neglected for the sake of scanning and extracting from the internet. Critical thinking and creative ideas or works have been denigrated; superfluous analysis and mimicries have been dominated in the place of sound theories and strategies.
In the fast life, even young men and women could not find time for romance and love making other than fast sex, that too without the botheration of child birth. The greatest causality is the family life, the cordial relationships between wife and husband and between parents and children. Even in religion, faith in God and love of human beings are pushed back by the harsh and rigorous practices and rigid interpretations, without any element of mercy and forgiveness. After a period of fast life, everybody has to go back to slow life.
The Missing Link
The value and importance of rural life, especially agriculture are withered away for the over projection of the glory of urban life and the service sector. But cities could not survive without farming and rural sector. Urban sector is depending too much on the rural sector rather than the villages relaying on cities, because most of the villages could be easily made self sufficient with regard to the basic necessities of life. Service sector of an economy could not flourish when its agricultural or industrial sectors are weak. Information Technology and Modern Management Techniques could not survive in the age of crisis; they are only catalysts for boom when the economy is sound and healthy. They are also the catalysts of doom or bust when the economy of weak and sick.
How Long it will be?
The Great Depression II, now in its first phase, would continue for a minimum period of five years, sometimes ten years, in a more rigorous way. It brings about a crisis of faith in technology, money power, managerial talents and the entire banking and insurance sector, besides the money and stock and share markets and the credit system. The highly acclaimed economic and business wisdoms and formulas are crushed and shattered. A sense of helplessness and even meaninglessness are to dominate in the thinking and behavior of not only of the common people but even the professionals and top executives .Everybody, including the top billionaires and technocrats and the most trusted business houses, has become vulnerable. A good many of them, especially the youth, are in the verge of a suicide or mental brake down.
Gone are the Ages
We have to accept, though painful, that the age of consumerism and the dominance of the service sector over the agriculture and industrial sectors are over. So also is the case with cities over the villages. The ages of malls and supermarkets and multi-billion dollar advertisements and promotional activities are over. The unreasonably over-salaried CEOs and other executives have to become an extinct species mainly for their illegitimate high bonuses coupled with their inefficiency and lack of social commitments. The age of pomp and extravagancy is finished. The inter-sector imbalances with regard to growth and wage or salary structures and the striking disparities with regard to the standard of living of the people of the various sectors are the basic reason for the present global crisis. The undue growth of the defense industries is possible only by jeopardizing all the other industries and sectors.
Who Could Save Us?
Men of ideas, vision, scholarship, theories and strategies and multi-disciplinary backgrounds could alone solve the present crisis. The only agency to deal with The Great Depression II with long term strategies and policies is the Governments that must be strong enough and duly functioning. No single country or government could tackle it; instead, global efforts and strategies are required. The UN must be made strong enough to act globally for dealing with the Great Depression II, chalking out the area of international cooperation. It must act on a war footing; other wise, over 80 per cent of the jobs would be wiped out; thousands of youth would commit suicide or become mentally sick and billions would die out of hunger, epidemics and civil wars.
Urgent Measures
The UN must set up The Great Depress II Relief Fund to help millions of people who lost their job and income consequent on the Great Depression II. UN must make all major religions and other organizations to get involved in these tasks. The Fund shall be operated in such a way that its benefits must reach to all the needy at the right time. The UN and all its Agencies must be ready to take some drastic steps including cutting the salary and other benefits to the extent of 30 to 40 per cent of all its employees, including the top executives and also limiting other expenses. On the basis of the UN guidelines, all government must come forward to put an upper limit for the salary and other perks of all those who are employed, including in the private or corporate sectors. Actors, singers, players, models and people in the show business must be ready to cut their remuneration by taking into account the global crisis. Cost of production as well as cost of living must be reduced at a considerable level so as to ensure the survival of the millions in the age of The Great Depression II.
Ineffectiveness of the Keynesian Strategies
The Great Depression II could not be dealt with a set of conventional monetary and fiscal policies as have been suggested by the Keynesians or the Neo-Keynesians that have become totally ineffective for their over-doze or over-saturation. There is a limit for technology and management techniques, including marketing in this regard. Now what are required are a massive behavioral change and a new way of life, freeing from consumerism and fast life style on the part of the society as a whole. Greater cooperation and mutual support between nations, even at global level, are the only means for survival and growth. All nations must cut their defense expenditure to the extent of seventy to eighty per cent and a joint global strategy against terrorism must be launched as no nation can be made free from it.
Re-creation and Re-learning
The Great Depression II brings life slow. It is the time for re-creation and re-learning and acquiring new knowledge and skills. It is the right time for creative works and above all reinventing the basic human, family and religious values coupled with humanism, spirituality and cooperation. It is the time for baby booms. It is the time for the re-birth of rural and farming sector. People find new meaning in agriculture and country life. Now, it is unproductive to make heavy investments in cities and high technologies and the service sector. Religions have to play a very important positive role by developing mutual respect and cooperation rather than rivalry and aggressive fundamentalism that bring Terrorism as a by-product.
Long Term Strategies
The best long term strategy to deal with The Great Depression II is to invest heavily on the rural and the farming sector and develop their infrastructures along with making heavy investment in education, especially basic science and engineering, social sciences and humanities. Learning must be encouraged by developing libraries and encouraging the overall reading habits of the people. Cost effective Open Learning– Open Schools and Open Universities or Virtual Universities, even in Science and Technology must be set up or developed to make education reach in the hands of millions all over the world.
These strategies are equally applicable to both the East and West, developing and developed nations, including GCC countries. Nobody, including the young and dynamic American President, Barrack Obama, has a magic stick to deal with The Great Depression II, other than following the above noted term strategies and policies. It is high time to realize that no affluent nation can survive by keeping a large number of nations or people poor and depressed and selling arms and defense equipments and following consumerism. It is high time to realize that terrorism and religious fundamentalism add miseries and sufferings of the humanity and bring hell on earth for they are the weapons in the hands of Satan who wants to bury down the peace and happiness of the humanity.
From Dooms to Booms
When implementing the above policies and strategies, people will come out with savings, innovative ideas, plans and strategies and to put them in agriculture, industry and service sectors within three years. All these will push up economic activities, including global trade and business. International cooperation between developed and developing or underdeveloped societies and nations would emerge so as to ensure a minimum development and standard of living for all. The people will dictate their terms of peace and co-existence over the Governments and the Terrorist Organizations, including aggressive and fundamentalist religions. There is no doubt, the humanity would withstand the crisis and enter in the New Age of Peace and Development for the bold and honest efforts of the youth.
About the Author
Dr. Raju M. Mathew is a strategist and theoretician with strong background in Economics, Cybernetics, Education and Information Science & Technology with long years of experience in teaching and research, including directing a major research project and supervising ten doctoral works. With the publication of his book, ‘Library Resource Allocation’ from England in 1981 he was been recognized as a theoretician and strategic thinker, that made the Netherlands based FID to nominate him as one of the twelve inte3rnational members for its Committee on Research on Theoretical Basis of Information Science in 1983. He formulated two basic theories of knowledge consumption and knowledge production that got published jointly by the FID and the USSR Academy of Sciences in 1985 in their work, ‘Theoretical Problems of Informatics’. Now these theories are known in his name and have become the field for doctoral research.
In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge and also set up the International Forum for Knowmatics & Knowledge Technology (IFKT); http://www.ifkt.net. Dr. Mathew on 25th Oct. 2008 in his letter addressed to The National, forecasted the fall of oil price to the extent of $ 40 per barrel by the end of Dec. 2008 ,when its price was $78. In his web site: http://www.mathewrm.com , in Sept 2000, when IT was in boom, he successfully predicted the Great Crisis of IT within a period of five months and in April 2001, his was the only site on IT crisis.
I think you’re absolutely right about there being a second great depression. I think that people are so stupid to not see it. And because we’re trying to not notice it, people keep going and buying stuff that in the long term they wont really need. A tv’s not going to save your life. A new rolex wont pay the bills. You can’t eat a new fancy car. Seriously people, prepare for the worst and hope for the best. That’s the best thing to do really in these bad times. My parents have started using less money and we have a huge food storage in case of anything like a depression happened or my dad went without a job. I can’t even find a job in our little town. My dad always jokes that if he looses his job, it’ll be me and my older brother taking care of my parents. But I’m starting to think he wasn’t only joking. Everyone needs to prepare for what might happen if the economy collapses. Seriously. Get on it.
Of course, the pictures of the great depression are probably years into it, but the pictures of today were before we were officially in a recession. Let’s see pictures in 2013.
DEATH OF ECONOMICS AND GREAT DSEPRESSION II:
ROLE OF BUSINESS SCHOOLS IN AGGRAVTING
THE GLOBAL CRISIS*
DR. RAJU M. MATHEW
The Present Global Crisis
The world is under a great financial and economic crisis. To almost all finance and management experts it is just a financial meltdown or a credit crisis or at the maximum a recession. But for the economists with strong backgrounds in Economic Theory, Policy and History, who are very limited in numbers, it is the Great Depression II, far more severe than the Great Depression of 1929.
CEOs and MDs
Economics has been denigrated into oblivion in the onslaught of the glittering courses of the Modern Business Schools and their high salaried and bonus earning graduates as CEOs and MDs or top managers, during the time of the just receded Boom, However, the present crisis brings back Economics into the forefront for drafting strategies and policies for making a speedy recovery. In the height of the crisis, as almost all the products of the Business Schools, including Harvard turned like ostrich dipping their heads in the sands. Now they are accused the prime culprits of the present crisis. Now they are treated as dirty as pick-pockets and street pimps for their greed and immorality.
Breach of Trust and Mismanagement
Almost all products of the B- Schools who are elevated to CEOs or MDs of big corporations in the banking, insurance and financial sectors are charged with breach of trust and mismanagement besides eating away the big bonuses and committing money laundry, presenting false and fabricated statements, for their greed and fraud .In their passion for glamour and glitter, they violated the basic principles of management due to their ignorance of the fundamentals of Political Economy, as their knowledge, more correctly information, is in capsule form without any deep understanding of theory, history and strategies.
Political Economy
Political Economy or Economics is as old as the origin of the human societies and also of the nations. Kaudialya, the Indian strategic thinker, in his ‘Arthasatra’ and Machiavelli, the Italian strategist, in his ‘The Prince’ had dealt with Political Economy . The Pharaohs of Egypt had applied basic economic principles in constructing dams and pyramids while employing the Israelites as slaves, besides successfully managing the economy for a very long time. Learning from the Pharaoh, Moses too had applied basic economic principles in levying taxes, waging wars and sharing the loots, including women.
However, Economics as a branch of Science emerged with the publication of Adam Smith’s ‘Wealth of Nations’ that paved the way for the emergence of Capitalism, especially the industrialized western economies. It was J. M. Keynes, a well known British economist, with his General Theory, saved Capitalism from eternal peril during the Great Depression of 1939. F.A. Hayek became the first Nobel laureate in Economics.
The Great Depression
Almost all industrialized economies have been undergone with the phenomena of ‘business cycles’, characterized by high growth, stagnation and recession. Innovative entrepreneurs could make new strides in the growth of Capitalism. However, the Great Depression of 1929 had challenged the very foundation of Capitalism as supply had not created its own demand. It was J. K. Keynes who prescribed the medicine of public spending and deficit financing besides championing the cause of establishing the IMF and the World Bank, gave new foundation for Capitalism.. However, the over dosage of the Keynesian remedies, especially deficit financing and public borrowing, designed for emergencies, have become a regular practice for almost all governments. As a result, they have getting ineffective, just like the regular and over-dosed use of anti-biotic.
New Corporate Culture
After the Second World War, especially during the Cold War period, most of the military technologies, including internet, had been put into civilian applications that gave new impetus to industrialization, networking, globalization and trade-in-services. The Multinational Corporations (MNCs) have emerged with grater influence over almost all governments and their budgets exceeded far ahead of the governments of smaller countries. Information Technology, has become the most powerful tool in the hands of the MNCs to control and manage their operations, spreading across several countries.
They have entered in all major services like, banking, finance, insurance, networking and communications, management and consultancy, marketing, retail trade and real estate to have a virtual control over the entire economy and to make quick profit in terms of billions and trillions. A new type of corporate culture has emerged with the motto of making quick profit, high salary and bonuses at any cost. It has created greedy and jealousy CEOs and other corporate heads and managers who thrive with fraud and corruptions besides false and manipulated accounts and statements to deceive the government and the general public.
The Service Sector has started to dictate or dominate all the other sectors, side tracking both Agriculture and Industrial Sectors and thereby upsetting the very basis and balance of an economy. Information Technology has penetrated in all the domains of the service sector, reducing everything into bits and bytes. In the over-emphasis of Information, the worth of Knowledge and Wisdom has withered away.
Death of Economics
Almost all B-Schools rivaled each other for creating and supplying greedy, jealous, manipulating and unscrupulous, high salaried managers and business executives in the age of corporate culture. They challenged the very foundation and wisdoms of Political Economy. In the new age of Information Technology, a new breed of economists with mathematical and statistical tools and computing techniques have dominated the scene and they have denigrated Economics with a set of formulas and equations., that have reduced economics, a minor branch of Mathematics ort Statistics. Economics has been reduced into mere data and information without the backing of any wisdom and knowledge. Thus Economics has lost its purpose and foundation besides its human face and social commitments towards the weak and the poor. As a result, Economics, basically concerned with ‘wealth of nations’, ‘social well being’ ,‘income and employment’ and ‘constitution of liberty’, resource allocation efficiency and optimality’ has become unfashionable in the age of highly fashionable ‘Business Management or Administration’.
Do We Need Business Schools?
The actual contribution of the Business Schools and their graduates in the healthy development of the national as well as the global economy and in the promotion of global trade is a disputed or questionable one. Of course, they have squeezed the entire economy for their own greed and added the misery of the millions, especially of the poor for promoting consumerism, aggressive marketing and credit based purchase of consumer items. They ruined the financial stability of the millions of families, turning them into debtors and wiped out thrift and saving mentality from the society. With their lavish funding, they have even corrupted all the major religions that have become more and more materialistic by promoting consumerism at the cost of spirituality and compassion. It must be highlighted that almost all major business and industrial establishments are built by the real entrepreneurs without qualifications from any of the B-Schools. Now the basic question is do we need the immoral, unethical and greed and fraud- promoting Business Schools and their short and long courses and academic programs.
Re-Inventing Economics
It is high time to make Economics free from the narrow boundaries of a set of mathematical formulas and equations besides the computer generated data and information. It is a crime to reduce economics within the narrow framework of data and information, ignoring Knowledge and Wisdom. Wisdom and Knowledge are our real wealth and they alone save us at the time of crisis and perils. The world needs the visions, wisdom and knowledge of the Political Economists for a fair and ethical global order and society.
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Universities must come forward to give re-emphasis to the study of Political Economy by attracting the best students and professors so as to develop a holistic view of the working of an economy, inter-dependence of its various sectors and units besides the diverse economies of the world and finally of the global economy.
It is time to critically examine the social value and worth of the mushrooming Business Schools with their long and short term academic programs, including M.B.A and several other gilt-edged diploma courses without any strong basis in Economics. The present global crisis made the world realized that management is not mere making profit and earning high salary and bonus, by exploiting both the workers and customers and cheating the share holders and the governments.
Managers must be made socially committed for the creation of wealth, income and employment and thereby attaining social well being both at national and global levels. They have to plan, organize and getting things done for attaining the set objectives of their firms and also the broader social goals of making a sound and healthy economy. They must be made to follow a set of well defined business ethics and fair practices. Other wise, they become criminals to brake the very foundations of families, enterprises, nations and the entire global economy.
(* This is the sixth series of work by the author on The Great Depression II – the Present Global Crisis. All his other works can be found if a search is made in the internet under ‘Dr. Raju M. Mathew’. )
About the Author
Dr. Raju M. Mathew is an economist, a strategist and theoretician with strong background in Cybernetics, Education and Information Technology with long years of experience in teaching and research, including directing a major research project and supervising ten doctoral works. Dr. Mathew formulated two basic theories of knowledge consumption and knowledge production that got published in 1985 and appeared in several languages. Now these theories are known in his name and have become an area for doctoral research.
In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge so as to develop knowledge industries. He is the founder president of the International Forum for Knowmatics & Knowledge Technology (IFKT). Some of his works are available in the site: http://www.ifkt.net. Now he is working with the Al Ain University of Science & Technology, Abu Dhabi, UAE.
Dr. Mathew is on a mission of making the world aware of the impacts and intensities of the present crisis, the Great Depression II of 2009 and persuading the governments and international agencies to formulate correct strategies and policies and implement them urgently to deal with it and make an early recovery from it, so as to save the lives of millions, especially the young and the poor. Dr. Raju M. Mathew can be contacted by e-mail: rajoocyber@yahoo.com.
OIL, CARS AND CONSUMERISM
AND THE GLOBAL ECONOMIC CRISIS:
DISCUSSION ON THE GREAT DEPRESSION II
DR. RAJU M. MATHEW
Global Economic Crisis
The world is under a great economic crisis. For the conventional economists it is only a Recession and not a Depression at all, for their partial analytical techniques, over-simplified models with unrealistic assumptions and over emphasis on data. It may take at least five years for them to realize that it would be a Great Depression and by that time it may be over. When Cybernetics is employed for the study of the working of the global economy as a whole with multi-sector approaches on the basis of the deeper understanding of Political Economy, we are forced to admit that this is not a simple Recession, but a Great Depression that requires not only economic stimulus but Ethical or Spiritual and Political Stimulus also to recover.
Dreadful Consumerism
Not only the capitalist or developed countries but also the Socialist or Islamist or Less Developed Countries too are brought under the Great Depression II. It is not only Islam or Christianity but also Communism could not save the world from Consumerism and the unethical or immoral business practices that are hundred times deadlier than Materialism or even Atheism. Consumerism has emerged as the greatest threat to the very existence of Capitalism for it drained away saving and investment, that constitute Capital without which there is no Capitalism.
The corporate culture has corrupted almost all religions and communist movements and made them the victims of Consumerism. The corporate culture made everything expensive and unaffordable for the majority for it aims only ‘the chosen few’. It has speeded up the process of the demise of spirituality and moral values. Eroding of the basic spiritual values has paved the way for greed, fraud and corruptions at all level. The present crisis is the result of the total ethical and moral failures besides the economic and technical failures.
Spirituality and Human Values
In the demise of spirituality and basic human values, religions turn towards rigorous and harsh customs, practices, devotions, prolonged prayers and fasting without any element of love, mercy and forgiveness. All these factors acted as catalysts for religious fundamentalism. A big vacuum in spirituality of religions paved the way for terrorism. The youth, especially the poor, are indoctrinated and getting believed that the greatest virtue is become martyrs and to die and kill for their religions for they are rewarded with all the luxuries and pleasures of a ‘seven star hotel’ besides the service of seven virgins in the Paradise after their martyrdom. Sex, drugs and money are administered to them as the immediate rewards.
Islam and Christianity
Islam and Christianity, the two major world religions have miserably failed, in practice, to imbibe the basic moral, spiritual and ethical values to the humanity. After embracing the corporate culture, they have been rivaling each other in spreading across nations and adhering to the rigorous religious practices. Their champions or leaders have become as materialistic as the ancient Epicureans.
Because of their warring or quarreling factions and their quench for pomp and acquiring more and more material wealth, almost all religions miserably failed to lead the world in the realm of spirituality and to inculcate minimum ethical and human values to the society. Most of the sects or cults in Hinduism and Buddhism also assumed the role of big multinational corporations with assets in terms of trillions.
Oil and Cars
Industrialization started with steam powered locomotives and nurtured by the automobile industry that speeded up the processes of urbanization and fast life style besides giving predominance to oil industry. Oil producers and automobile industry started to dictate the entire economies of the world, especially of the western industrialized economies. OPEC has squeezed oil importing nations by charging exorbitant price for oil and amassed the wealth of nations.
The corporate world has effectively employed Information Technology to have a virtual control over the entire globe by e-money, e-banking and e-commerce and spread the corporate culture of greed, fraud and consumerism. Oil, cars and consumerism, originally acted as the catalyst of boom have turned the catalysis of Doom or the Great Depression II. They have drained away the saving and investment habits of the middle class and made everybody debtors and upset not only the balance of economies but also of the Nature.
New Awareness
People are getting aware that for the wrong logistics of their places of stay, work, shopping and entertainment, they have to travel a lot and burn out a lot of oil unnecessarily. . They could have avoided over 60 per cent of their journeys, especially in the age of advanced communication technologies. By a proper development of public transportation system and its effective use, many could have avoided owning cars or traveling in cars. A good majority of business trips are unnecessary or unproductive. All these make a very dark future for the oil, automobile and hospitality sectors. Consuming lesser and lesser oil for the recovery of the economy and for the health of the environment would emerge as a major slogan in almost all countries.
Natural Death
It is time for the Multinational Corporations to have a natural death for their crimes committed against the humanity, especially against the poor nations and peoples. Championing the cause of consumerism, they have even turned a malignant cancer of Capitalism and Globalization besides corrupting Islam and Christianity and other religions. They destroyed the economic foundations of millions of families and virtually wiped out the middle class not only in the west but also in emerging economies with their aggressive marketing strategies. Selling dreams and fantasies, they pushed everyone into illusions. They have hidden or invisible link with almost all terrorist organizations. They are involved in money laundry, corruptions and fabrication of wrong accounts or documents and cheating the shareholders and the general public.
The Stimulus Packages
It is fact that, none of the stimulus packages, though in terms of several trillions, could save the world from the impending peril and miseries of the millions unless the world saves itself from the dirty hands of consumerism and controls the growth of automobile industry besides reducing oil consumption to the extent of 30 to 40 per cent. This is the time for fair business practices and code of ethics for all economic activities besides regulating marketing and advertisements for which a global summit must be held soon. Ensuring sustainable income along with reasonable saving and investment is the only means for recovery on a long time basis. Otherwise, all the stimulus packages and recovery efforts would vanish within three to six months after making some symptoms of recovery and then aggravate and prolong the crisis to the extent of ten years.
Survival Strategy
The present global crisis taught the basic lesson that humanity and its various socio-economic systems or organizations could not survive without the basic moral and ethical values and some element of spirituality and upsetting the balance of the Nature. It is high time in burying down Consumerism and Corporate Culture besides adopting slow and simple life styles and turning towards spirituality and setting right the imbalances between urban and rural sectors and also between agriculture, industry and service sectors and the different regions of the world for the very survival of humanity. Humanity could not afford to pay so much high salary and bonus in terms of several millions to the CEOs and Managers and to allow the traders and business people to make such a huge profit within a short span of time.
It is a great crime against Humanity and the Nature to burn out so much oil and generating so much heat and sound from the speeding millions of cars and driving away the millions from farms and rural life to the cities. It is high time to redefine the very meaning of development and urbanization especially when the entire humanity is under threat and peril.
The people of OPEC or OECD Countries must shed away the deadly and inhuman ideology as they are the chosen people of God, an ideology originated at the time of Abraham and aggressively implemented during the time of Moses to dominate or exterminate other tribes or races. For the Just and Loving God, all men are chosen and everybody has an equal right for a decent life just like the people of the OPEC or OECD countries and everybody must observe spiritual and ethical values. Nobody has any right to dominate or dictate over other people. If Islam and Christianity fail to bridge the gap between the rich and poor, among their followers, and upheld basic spiritual and human values, their very worth and relevance will be questioned in the age of crisis and globalization of religious faiths.
About the Author
Dr. Raju M. Mathew is an economist, a strategist and theoretician with strong background in Cybernetics, Education and Information Technology with long years of experience in teaching and research. He has so far supervised ten doctoral works, including the basic approaches of Hinduism, Buddhism, Christianity and Islam towards knowledge, economy and spirituality.
Dr. Mathew formulated two basic theories of knowledge consumption and knowledge production that got published in 1985 and appeared in several languages. Now these theories are known in his name and have become an area for doctoral research. In 2005, Prof. Mathew proposed Knowmatics and Knowledge Technology as the two Post-Information Technology disciplines for processing and handling knowledge so as to develop knowledge industries.
He is the founder president of the International Forum for Knowmatics & Knowledge Technology (IFKT). Some of his works are available in the site: http://www.ifkt.net. Now he is working with the Al Ain University of Science & Technology, Abu Dhabi, UAE.
Dr. Mathew is on a mission of making the world aware of the impacts and intensities of the present crisis, the Great Depression II of 2009 and persuading the governments and international agencies to formulate correct strategies and policies and implement them urgently to deal with it and make an early recovery from it, so as to save the lives of millions, especially the young and the poor. Dr. Raju M. Mathew can be contacted by e-mail: rajoocyber@yahoo.com.
To paraphrase Mr. Nelson:To compare those times with today is a fallacy.
We have hoovervilles. We just call them bushvilles and tent cities. The shelters are hurting for food. With that said, the Walmart incident mob was just a bunch of shopping extremists. “Those people”-and you know what I mean by this-was not hurtin’ for jack!THEM JOKERS GOT SOME ISSUES! But as for the working poor/homeless it is another story. These two groups have always suffered but their appears to be more of it than it has been in a while. In enough places for alot of people it is “that bad”, and it is bound to get worse if it is has not already. I think that the folks that have money are doing better than ever, or if they are middle class, staying still(not moving up or down), but the folks hit are not doing well.
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