If Dr. Ravi Batra's Theories Hold Water, Man the Lifeboats for the Great Depression of 1990
updated 10/12/1987 AT 01:00 AM EDT
•originally published 10/12/1987 AT 01:00 AM EDT
Back in 1978, Batra, a little-known economics professor at Southern Methodist University in Dallas, gave a lecture at the University of Oklahoma that included these predictions:
1. The Shah of Iran would be ousted in 1979 and the clergy would take over. (Both happened.)
2. Iran and Iraq would start a war in 1980-81 that would last at least seven years. (They did, and it has.)
3. Europe would experience a serious recession in 1986-87. (It hasn't, but its economy has slowed considerably.)
Then, in 1984, Batra made a number of forecasts about U.S. inflation, unemployment, interest rates and prices that also proved correct. And, in January 1986, he said the Dow-Jones industrial average would reach a record 2,000 by the end of the year. He was off by eight days.
But Batra, 44, might still be unknown were it not for another call he made back on that day in 1978, and a book he wrote and published himself to back up his prediction: namely, that the U.S. will suffer a deep recession in 1989-90, leading to a cataclysmic global depression lasting at least through 1996.
If The Great Depression of 1990 should achieve the status of prophecy, Batra, for one, will be cushioned by the fruits of his vision. Now being published by Simon & Schuster at $17.95, the book has risen from obscurity to No. 4 on the New York Times bestseller list.
Batra is not alone in warning that the market is headed for a fall. Like many economists, including John Kenneth Galbraith, he draws parallels between the Roaring '20s and the sky's-the-limit '80s. But his avowed indebtedness to the teachings of an Indian cult leader named Prabhat Ranjan Sarkar, who was once jailed for murder, does set him apart and has led headline writers to ask whether he is an economist or some kind of mystic.
"I don't even know what they mean by 'mystic,' " the Indian-born professor retorts. "That is a very strange comment, because I figure your predictions are based on your theories, and if your predictions are right, your theories must also be right."
Batra has theories galore, but, he writes, "I am no astrologer, no psychic." He says his predictions are based on an "all but obsessive" study of history by his mentor, Sarkar, head of the Indian sect Ananda Marga, or Path of Bliss. Reading Sarkar's Human Society in 1976, Batra decided that "here finally was a philosophy of history that in one stroke could unravel the mystery of every social phenomenon." The stroke was Sarkar's "law of social cycles," holding that societies are successively characterized by four groups—laborers, warriors, intellectuals and acquisitors. The poor laborers never get to run things, but the other three dominate in turn until the acquisitors rule the roost to the detriment of everybody else. That, Batra says, describes the present, a time when acquisitors are greedily tunneling their wealth not into society, where it might benefit others, but into speculation and corporate raiding. "Look at Ivan Boesky," he says, referring to the arbitrageur in legal hot water for insider-trading offenses. "The guy is a multimillionaire to begin with. So why should he want to do these [illegal] things? The reason is that it is human nature that the richer you are, the greedier you become."
To back up his warning of depression, Batra relies on two main sets of statistics. When one percent of the population owns 30 percent of the wealth, he says, society is in trouble because there is no broad economic base to shore up the system during a recession. In America today, he claims—though critics say the figure is erroneous—one percent of the people own about 35 percent of the wealth. He also maintains that depressions have generally struck every 30 or 60 years since the 1780s; 1990, of course, is 60 years since the first full year of the last great depression.
Batra's theories, plus his link to the controversial Sarkar, have cost Batra some of his credibility among more orthodox thinkers. "As a conventional economist, he is perfectly competent," says New York Times columnist Leonard Silk. "He has brought in ideas not usually brought into economics. I am quite skeptical of such theories as a long-term forecasting tool. But I don't think it's fair to treat him as a wacko."
The son of a middle-class professor of Sanskrit, Batra graduated in 1965 from the Delhi School of Economics, where a fellow student introduced him to Sarkar. "My friend was in awe of his philosophy and magnetism," Batra recalls. "I, too, was very impressed." Still, he put Sarkar on hold while he earned his Ph. from Southern Illinois in 1969, joined the SMU faculty in 1972 and, after a number of articles in prestigious journals, was awarded tenure a year later, at 30.
This conventional career changed after the respected journal Economic Inquiry ranked Batra third on a list of "economic superstars" in 1978. "I finally felt," he says, "that I had established myself among economists and could now switch to areas that had been totally neglected." When he did switch, it was to the little-known "law of social cycles" of Sarkar, who in 1976 had been convicted of murdering six defectors from his Path of Bliss. The verdict had been overturned in 1978, and, says Batra angrily, "Sarkar is a philosopher and historian, and the rich people in India have tried to scandalize him any way they can. They use the media to discredit anyone whose ideas differ from their own." Still, Batra's writings about Sarkar began going unpublished. He assembled his articles into a book and sent it to 55 publishers. Rejection was unanimous, so in 1985 he spent $15,000 of his own money to print 3,000 copies. A dozen Dallas bookstores reluctantly accepted his books on consignment, but no one bought them until he went on a local radio talk show. "After the radio show," Batra says, "all my books sold out." At least one of them wound up in New York, where it was praised in Morgan Stanley & Co.'s Investment Research. Calls from curious Wall Streeters led Batra to hire an agent, who got the author a $125,000 advance from Simon & Schuster.
Batra (whose first marriage failed in 1981) says daily meditation gave him the strength to persevere through his time as a maverick. With his elderly parents and his second wife, Sunita, a 23-year-old journalism student he married in 1986, he now lives frugally in a rented town house outside Dallas; property values, he believes, will plummet in a crash, and he has no desire to own his own home. His royalties are expected to reach $500,000, but, having promised Sarkar that "I would not misuse my knowledge for my own personal gain," he says he is sinking most of the take into a grass-roots movement he calls S.A.D.—for Stop Another Depression. Its aim is to press for reforms that might yet avert the catastrophe—stricter bank regulations and a two percent "wealth tax" on individuals with a net worth of $2 million or more. Batra estimates that would raise $225 billion a year. "Doesn't that solve all your problems right there?" he asks. "It would eliminate the budget deficit, and those taxed would never even miss it." Acquisitors, you have been warned.