GLOBAL POVERTY AND ECONOMIC CHAOS

In spite of impressive economic strides made by some countries in recent years, a great mass of humanity around the world lives in poverty, 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 explosion. 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 that the main cause of poverty, anywhere and everywhere, is official corruption, 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 output 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 tackled 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 center 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. There is a well-known cliché that if the U.S. economy sneezes, the world catches pneumonia. Likewise, if the U.S. economy expands, the world booms. American economic thought and policies now sway the globe. This economic thought is reckless, unethical and faulty, and stands in the way of eradicating poverty. In one form or another, U.S. economists espouse the well-known trickle-down economics, or what may be called tricklism, whereby prosperity is supposed to seep, drop by drop, from the top down to the bottom. Such thinking nurtures policies that worsen disparities in income and wealth. Since tricklism now dominates global thought, the gap between the rich and the poor is rocketing all over the world. Here are some statistics about disparities in global income and wealth: • 20 percent of the population in advanced economies consumes more than 80 percent of the world’s output. • Less than a thousand millionaires have as much wealth as the poorest 2.5 billion people of the planet. • In 1999, the world’s richest 200 people had a net worth of $1 trillion, while 582 million people earned an income of $146 billion.6 According to the Asian Development Bank, 93 percent of Asia’s destitute live in India (357 million), China (203 million) and other South Asian nations (77 million).7 Thus India, notwithstanding its superb economic performance since 2000, continues to be the ringleader in terms of hunger and deprivation. Yet a Bloomberg News report found that India’s millionaires club swelled to 83,000 in 2005. Although this is still a small group, it grew by 19 percent, the fastest rate in the world. Similarly, China, with a population close to India’s, had 320,000 millionaires. Not surprisingly, the United States topped the list with 2.7 million, followed by 448,000 in the United Kingdom.8 This book argues that trickle-down economics seeds poverty not only in America but also around the world. What used to be primarily a U.S. virus now infects the planet. Thus global poverty spews from the pandemic of tricklism. Furthermore, the virus also spawns yawning imbalances in terms of financial bubbles and growing budget and trade deficits, which in turn are a recipe for worldwide economic chaos. Very briefly, my argument is this: In developed economies, tricklism keeps wages as low as possible while maximizing CEO incomes. This causes consumer demand to fall short of product supply, so that the demand-supply balance is maintained by the creation of more consumer and government debt. In developing economies, tricklism also means low—in fact, dirt-poor—wages, along with high CEO salaries, so that demand again trails supply. There the demand-supply balance is maintained by increased government debt and the creation of a trade surplus with the United States and Europe. Thus, in both cases, it is tricklism that maximizes CEO incomes and minimizes worker salaries. Clearly, there is only one cause of penury around the world. In order to eliminate global poverty, the U.S. economic thinking that espouses tricklism must change. Hence the primary focus of this book is on the American economy and intellectuals. Once tricklism expires, the economic chaos, accelerating by the day, will vanish and give way to speedy and equitable prosperity. Poverty will then fade all over the world.

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Khd Business

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