How USA, the engine of economic growth for the
world, got mired in a major financial crisis?

Roots of Recession

The globe is reeling under an unprecedented disruptive recession. Recession basically means falling demand for goods and services, leading to piling up of unsold inventory with manufacturers and traders. The falling demand is caused by diminishing purchasing power with the consuming public. Employers either retrench manpower to stay afloat or close shop altogether, if they see no hope of profits. Loss of jobs further sap consumer confidence and purchasing power compounding the misery around. In a market economy, recessions do occur in nations periodically in a cyclical fashion and are followed by a recovery of prices, jobs and demand in time. But this time, the recession which started in USA after spreading its tentacles over the whole world, thanks to liberalization and globalization which broke down country barriers to trade, is unlikely to end for a long time to come.

This is because, USA which had become the engine of economic growth for the world is mired in a major financial crisis created by the reckless profligacy indulged in by her population over the past two decades, strongly encouraged by the capitalist government.  Owing to heavy imports of luxury and other articles of consumption for its people, without matching exports, US owes huge amounts to the rest of the world.

In turn, the US public who gave up the saving habit for about a decade has also been given access to sizeable loans by the banks to buy houses and indulge in conspicuous consumption without considering their ability to repay and without a thought for tomorrow.

The rest of the world accustomed to trusting the strength of American economy played along so far. This unsustainable spending spree has finally run out of steam and the economy has practically halted. Other Countries, especially India, China, Japan etc., who have tuned their economy and manufacturing sectors to feed the endless appetite of American public, are caught in a bind. As demand from USA fell precipitously, they are facing slowing down production, business losses, joblessness and unrest of the poor.

Governments are rushing to spend huge amounts of money (by printing currency notes) to support industrial activity and to create employment and support consumption, but the magnitude of the problem is too large and cutting across the world to be tackled by these measures. The uncontrolled market forces, fed by shameless greed of speculators  has also led to  spiraling increases in the prices of essential commodities like  food, causing untold miseries to the middle and poor classes.

Unorganisations predict that the end to problem is not in sight and in fact in the next two years miseries will increase tremendously. Unemployment will rise manifold, poor people and undeveloped countries will face extreme deprivation and starvation. Even developed countries are bracing themselves for widespread and perhaps violent  and spontaneous civil unrests.

The measures so far adopted by all the countries are more or less similar, which is to support loss making private industries with huge amounts of money, ostensibly to protect jobs, but governments have no clue on how to help the poor and to prevent starvation on a large scale.

Solution in Spirituality

If we look at the developments in a Krishna conscious way, the following points become apparent.

1. The capitalist ideology is driven basically by man’s greed and desire to enjoy sense pleasures. It presumes that the forces of demand and supply, which are the visible form of this nature, should be allowed free play in the economy and it will result in the best good for the people in long run. Governments should not do anything to interfere, even if it is seen to distort distribution of wealth to concentrate in few hands to the detriment of others. As the rich will demand more services and goods, industries will be set up to meet it and generate employment for others. The labor must constantly up-skill themselves to remain employable or face loss of jobs.

2. There is an assumption that one’s happiness depends on material prosperity and success in life is measured by wealth and power accumulated by a person.

3. There is lack of faith in karma and reincarnation, leading people to think only about enjoying this life to the hilt through senses.

4. There is strong encouragement given to competition, as opposed to cooperation which is the hallmark of spiritual societies and success is measured by profits. This destroys all human values and obnoxious practices proliferate in personal and business life.

5. Bodily consciousness leads to selfish desires and exploitation of others, even within the family resulting in failed marriages, depression and other ills. The same philosophy is also causing so many undesirable and dangerous goods and services being produced and marketed.

Interestingly, a lot of articles on prudent living, saving for future, avoiding wasteful and luxurious living, even simple living and high thinking have started appearing in the media and receiving notice! They are also beginning to explore the virtues of family life and spending quality time together.  But sadly, it is only a story of bolting the stable behind the horse.

No wonder the entire hedonistic population stands frustrated and bewildered. In such a confused milieu, the voice of the timeless scriptures rings loudly, beckoning the afflicted to come for shelter, only if they can tune in their ears.

S.K. Subramanian is a General Manager with the State Bank of India.