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Our outstanding lunches have been an Austin must for eleven ‘ears. Our international grocery features food and wine from around the world. Come see us at our new home. Oommon MIMIKET 1610 San Antonio Austin, Tex. 78701 472-1900 Hours: 7am 7pm Mon. to Fri. and 8am 6pm on Sat billionaires in the United States “nearly doubled in 1986 from 14 to 26 in just one year.” The richest one percent of Americans, according to Batra, now possess greater wealth than the bottom 90 percent. Fiscal policy, he insists, exacerbates this concentration of wealth. Tax cuts in 1921, 1924, 1926, and 1928, all very favorable to big business and high-income groups, encouraged a growing concentration of wealth at a time when one-third of the nation’s wealth was already in the hands of one percent of the nation’s families. And the Reagan tax reforms can hardly be described as mitigating gross accumulation of wealth by the few. Batra’s argument is not against cutting taxes and reducing the size of government, but rather against “easing the tax burden of multimillionaires.” “Nothing,” he claims, “but increasing wealth disparity and hence eventual calamity can come from it.” Among the effects of this accumulation of wealth are an increase in the number of persons with few or no assets and a concomitant increase in demand for credit by borrowers who are less credit worthy. In such an environment, Batra argues, bankers, who must pay interest’ on their deposits, are compelled to make risky loans. Thus, the increased concentration of wealth eventually leads to more bank failures. Meanwhile, the very rich, that one percent they are different from the rest of us. Not only do they have more money but they more are inclined toward speculation with that money. According to Batra, the rich establish highly speculative investment trends that serve no productive ends. Others who see the rich profiting so quickly from speculative purchasing follow them and together they create market “bubbles” or “mania.” It was precisely one such bubble that burst on October 19, Batra said in an interview. Other fluctuations in the stock market will follow, all preludes to the big topic and title of the book. THE DEPRESSION OF 1990, according to Batra “is, given the perverse fiscal policy of the Reagan presidency, inevitable.” His is something of a seismic theory of depression. Great depressions occur at intervals of three or six decades. Decennial recessions, or 30year depressions, lessen the tensions of this economic plate tectonics. But tension has been building with only mitigating recessions –since the 1930s. All of this is made worse by the fact that we are “in the descending phase of the age of acquisitors.” So in 1989, or the first half of 1990, “the stock market will crash and will be followed by an abysmal decline in business activity and a sharply higher rate of unemployment. The low point of a the great depression will come in ‘1994. The crisis will last seven years, from 1990 through 1996.” The rest of the industrial world will, of course, be dragged into a great depression. A small consolation for American protectionists is Batra’s preclibtion that the market crash might begin on the wildly speculative Tokyo exchange and that the Japanese, too, will suffer. And Batra also suggests that since the economies of the Third World are far more dependent on international commerce today than they were in 1930, their suffering will be far greater: “The misery I foresee in the cities of India, Mexico, Brazil, Pakistan, Egypt, and the rest of the Third World is beyond my powers of description.” There are measures that one might take to survive the depression of 1990. As the subtitle suggests, this is also a how-to book and saving is the cornerstone of the Batra prescription. A family of four, he calculates, will require about $11,000 per year to make it through the depression. Assuming that a person is likely to remain unemployed for four years, $44,000 is approximately what will be needed to survive the worst of the crisis unless one lives in New York, San Francisco, Los Angeles, Boston, or Chicago, where $80,000 will be required. Social security or private pension plans could represent a risk, according to Batra; social security depends on a solvent government and private pension funds require a relatively sound economy. As much money as possible should soon be withdrawn from private pension plans, which might not survive the crash. Money should be divided, after 1990: one-third kept in a bank account, one-third in a safe deposit box, and onethird at home. Real property, including homes, should be sold before mid-1989 as their value will fall precipitously. Stocks should also be sold before the middle of 1989 and other instruments, like IRAs, should be liquidated as the market crashes. All of this, Batra claims, will place one in a “maximum survival position” for the depression of 1990, a time personel assets should consist of cash and precious metals. The depression could be avoided, Batra writes. But he has little confidance that it will. For to avoid it, the federal government would have to address the budget deficit and the rising concentration of wealth. A restoration of the tax system that existed before the Reagan tax cuts would reverse both trends. And a wealth tax, that is, a federal property tax on that one percent of the population that owns over one-third of the wealth, would serve the dual purposes of eliminating the deficit and redistributing that a properly devised wealth tax could ultimately be used to retire the national debt. Much of the budget deficit, he has argued, is a direct result of high defense spending. The purpose of a strong defense is to protect a person’s life, liberty, and property from foreign enemies. Life and liberty are; he holds, equally dear to everyone. Where people differ is in relative wealth and the owners of great wealth should bear at least one-third of the expense of defending it. Batra also argues for limits on leveraged mergers, increased margin requirements to cool speculation, and rigorous government oversight of the stock and commodities market. Banks also must be restrained from lending for purely speculatie purposes. None of this, he seems to accept, will come to pass. The rich, the author must recognize, are different from the rest of us. Not only do they have more money, they have more political power. So the rest of us are encouraged to work toward Batra’s “maximum survival position,” which seems the economic equivalent of the backyard bomb shelter of the early ’60s. There is much of interest in Batra’s work. Though at times, his prescriptions are antiKeynesian, he is essentially a progressive, making the case for an agenda that includes “a minimum wage that satisfies a family’s basic needs of food, shelter, clothing, education, and medical care,” jobs rewarding enough that they would provide full incentive for everyone to work, and government intervention to control inflation and unemployment. His wealth tax appears reasonable; such a proposal has been discussed by liberal/progressive policy leaders like Jesse Jackson and Jim Hightower. All and all, his arguments are made on behalf of thousandaires rather than millionaires. And in an age when as Russell Jacoby laments most intellectuals are cloistered in the University, how good it is to be able to catch this fellow on KLBJ, KLRD, or the Donahue Show. But his work here, it seems, is flawed. He has mixed too much his physics with his metaphysics. One can’t accept Batra without accepting his mentor, P. R. Sarkar, whose theories seem, well, squirrely. Batra also makes odd predictions that he can’t seem to substantiate, such as a predicted major reworking of the U.S. Constitution. And his prophecies of doom and gloom are so shrill and oft-repeated that he has cast himself in the role of Cassandra. So you read Batra, just skip the first 60 pages. I’ll read Galbraith’s Great Crash of 1929. I’ve always preferred bad news cast in the preterite and told by a voice as witty and erudite as that of Lord Keynes himself. 18 FEBRUARY 12, 1988 4