Noam Chomsky (2014) "How to Ruin an Economy; Some Simple Ways"

let's suppose that for some perverse reason that we're interested in ruining an economy and a society so to make the problem interesting we should select a difficult case so say not the Central African Republic where could be done very easily so let's pick a rich and powerful society and best of all let's select the richest and most powerful Society in history one with incomparable advantages one that's fortunately close at hand namely are wrong so a good way to start is to ask what would be signs of a successful economy well to begin with it should have the people who are eager to work plenty of badly needed work that should be done and ample resources to combine idle hands with needed work and that picture helps us sketch what a failed economy would look like the opposite in all respects and we don't have to look very far right here there are tens of millions of people eager to work but with no jobs many of them have simply dropped out of the workforce and despair there are ample resources to provide employment but they're hidden away where they cannot be accessed in the overflowing pockets of the super-rich and the corporate sector particularly the big banks which have been generously rewarded for having created a crisis serious enough to have almost brought down the domestic and even the global economy and their vast amounts of work to be done the infrastructure is collapsing schools badly need teachers the transportation energy systems have to be radically reconstructed and is a great deal more ranging from construction work to scientific research but the system is so dysfunctional that it cannot put eager hands to needed work using the resources that would be readily available if the economy were designed to serve human needs rather than wealth beyond the dreams of avarice for a privileged few it's actually hard to think of a more serious indictment of a socio-economic system well as you all know the dysfunctional economy has been accompanied by very highly concentrated wealth and with it of course political power follows at once from concentrated wealth that in turn yields legislation that drives the cycle forward inequality has reached historic heights in the past decade 95 percent of growth has gone to 1% of the population actually - a small proportion of those meanwhile the general population has faced stagnation or decline median real income in the United States is below its level in 1989 for male for males median real income is below it was in 1968 the labor share of output has fallen to its lowest level since World War two and poorer sectors have suffered severely the United States has the highest poverty rate in the OECD aside from Turkey and that's perhaps not too surprising because the u.s. also ranks near the bottom in measures of social justice in the OECD for african-americans household wealth has virtually disappeared during the latest crisis we should recognize that the grim legacy of slavery which is one of the original sins of American society along with the virtual elimination of the indigenous population that legacy has never been overcome there's some immiseration but not much well these things didn't just happen like a tornado they are the results of quite deliberate policies over roughly the past generation the period of the neoliberal so-called assault on the population which has had similar effects elsewhere as well and that's hardly surprising either the fundamental doctrine of neoliberalism is was well expressed by Adam Smith what he called the vile maxim of the masters of mankind all for ourselves and nothing for other people and if the Masters are given free rein that we should expect the kinds of social and economic disaster that we now see before our eyes well there are alternatives quoting Nobel laureate Nick on economics Joseph Stiglitz points out there are alternatives but we will not find them in the self-satisfied complacency of the elites whose incomes and stock portfolios are once again soaring only some people it seems must adjust to a permanently lower standard of living unfortunately those people happen to be most people in short the vile Maxim at work these developments should not be confused with idealized workings of capitalism and free markets on the other hand on quite the contrary policies are carefully designed to protect the masters from market discipline that has always been true back to the 18th century and to ensure that they can rely on the beneficence of the powerful nanny that they carefully nurture for their benefit but let's continue the exercise of this figuring out how to ruin an economy I suppose we're intent on making the scandal even worse there are some good ways to proceed so modern economies depend very heavily on R&D research development fundamental work comes primarily from the dynamic state sector on which the advanced economy heavily relies almost most of the IT revolution biology based industries and much else actually that's a pattern that traces far back but it's become much more critical since the second world war as the impact of Science and Technology on the society and the economy have greatly expanded so a very good way to ruin the economy and the society would be to cut back on R&D on federal R&D and we can read about how that's done from the first issue of the triple a a sternal American Association for advancement of science journal science the first issue in 2014 here's what it says the 2014 budget will continue what has been a decade's long slide in the ratio of federal R&D in the budget to the GDP this ratio is often used as a measure of how much a nation values basic research it's fallen 20 25 percent in the last decade alone and that's continuing in the meantime elsewhere internationally investment in science is rising as nations throughout the world connect investment and R&D to the development of their human capital in their future prosperity for example the European Union's flagship research program horizon 2020 is set to receive a nearly 30 percent boost in 2014 the Chinese government's invest Ardi has been increasing by percentages in the double digits for the last several years and is poised to become the world leader you can draw the consequences without any comment what's happening here is a very natural development of the imposition of the business model of seeking short-term profit the future the society there are someone else's business another way to undermine a healthy economy is to encourage the growth of financial institutions giving them free rein buy deregulation and using state power to underprice risk these are actually crucial features of the neoliberal era from the 1970s accelerating since there's been an enormous expansion of the financial sector of the economy by 2007 right before the latest crash that had reached about 40 percent of corporate profits well economic growth has continued during this period though not at the earlier pace but it's a rather artificial it's sustained by repeated bubbles the each decade has had its bubbly savings-and-loan bubble under Reagan the tech bubble in the late Clinton years and of course the housing bubble under Bush when the last of these bursts it created a financial crisis that has had severe consequences for much of the global economy and near depression conditions persist for much of the domestic population the costs of the latest of the housing bubble itself and loss of output are estimated by the Congressional Budget Office to be around twenty four trillion dollars that's largely the fault of the Fed which was mesmerised by quasi religious doctrines about efficient markets and therefore could not pretend what was very obviously happening happening right before their eyes as housing bread presses rate rose far beyond trend lines going back 100 years and the bubble that could have been pricked wasn't well the primary mechanism for rewarding the agents of the crises is the government insurance policy known informally as too big to fail and that guarantee goes far beyond the direct bailouts it extends to cheap credit artificially high credit ratings and many other devices and the scale is huge as a recent IMF study which found that virtually the entire profit of the major banks traces to tacit government insurance reaches the level of 83 billion dollars a year according to analyses in the business press Bloomberg News the insurance policy of course leads to underpricing of risk hence making the next crisis more likely after the most recent crisis several prominent economists cluding Nobel laureates raised the question of the general impact of financial institutions in the casino economy of the neoliberal period and they also pointed out that that had not been much studied by economists they suggested that inquiry would show that these institutions might be harmful to the economy and there are some who go much farther so perhaps the most respected financial correspondent in the english-speaking world is Martin wolf of the London Financial Times he concludes that quote him an out-of-control financial sector is eating out the modern market market economy from inside just as the larvae of a spider wasp eats out the host in which it has been laid well as in other developed societies of the economy of the US economy it's actually a state capitalist economy but it's partially market based and markets have both positive and negative features so that tells us another good way to ruin a economy in a society undermine the positive features and amplify the negative features and in fact huge resources are devoted to these tasks the great benefit of markets is that they're supposed to provide consumer choice it's only partially true even in principle but I'll put that aside this beneficial consequence results from informed consumers making rational choices as you learned in your economics courses that's the core principle of markets and as you all know there's an enormous industry which is devoted that undermining this principle by creating uninformed consumers who will make irrational choices it's known as the advertising industry in a functioning market economy ads would provide information to consumers about the products that are available all you have to do is turn on a TV set to see that the goal is exactly the opposite it's to undermine markets by delusion and manipulation making sure that there are uninformed consumers it will make irrational choices and in part these efforts reflect another tendency that undermines markets that's the rise of oligopolies which has actually advanced considerably in recent years now that offers opportunities to avoid price wars by tacit collusion that shifts the goals of business to product differentiation which is often quite meaningless and it requires massive advertising to delude consumers from anakata point-of-view that's mostly waste and it's enormous and scale well these are among the ways to undermine the positive features of markets there's a negative feature of markets intrinsic to them it's called a market inefficiency and that's ignoring externalities so when a firm makes a risky transaction if it's paying attention it takes covers it takes care to cover its own risk but it does not cover it does not consider systemic risk that is the risk that the loss will affect others maybe bring down the market let's say when AIG insurance collapsed tanking the economy or actually would have tanked the economy if the nanny state hadn't written to the rescue here the government insurance policy plays a crucial role in amplifying a harmful feature of markets actually there is a much more serious case of ignoring externalities namely destruction of the Commons there's a standard notion which you've heard called the tragedy of the Commons which is supposed to mean that if the Commons are held by the general public they'll be destroyed so therefore they have to be privatized actually if you take a look at the facts the opposite is usually true its privatizing that destroys the Commons and for good reasons and we're certainly should be aware of it today the most significant case of destroying the Commons is environmental catastrophe informed and rational people can hardly ignore the fact that the drive for short-term profits is leading directly to severe economic threats and imminent ones within the next generation or two but that's another externality that's benefits ignored and in this case there's no one around who can bail out the perpetrators can't run and hand of the nanny state that say bail me out or the future generations whose chances of decent survival they're placing at great risk will the future historian and there may not be one in fact but if there is one such a historian will look back on the current scene with some amazement there are some who are trying to impede the threat of environmental catastrophe there there are others who are devoted to accelerating it who are they well in the forefront of the struggle to overcome the threat are those who we call primitive the First Nations in Canada indigenous people in Latin America aboriginals and Australia tribal communities in India and their counterparts all over the world and leading the race to disaster are the richest and most powerful countries in the world the ones that have unique advantages primarily the United States and Canada Canada in particular has become the scourge of the world with its activities ranging from tar sands to mining activities that are destroying much of the world these are countries with unique advantages and they're in the lead to the race to destruction the suicidal Drive is conducted with considerable euphoria about what's called a century of energy independence in which North America becomes the Saudi Arabia of the 21st century the excitement is scarcely tainted by reflection on what the world will look like as fossil fuels are consumed with unrestrained exuberance there's even gloating over the fact that Europe is reducing its efforts to move towards sustainable energy reason it can't compete with US production based on the cheaper energy that's drawing this is the world in society the corporate sector has announced quite openly that it's carrying out major propaganda campaigns to convince the public that climate change if it's happening at all does not result from human activity these efforts are aimed at overcoming the excessive rationality of the public which continues to be concerned about the threats that scientists overwhelmingly regard as near certain and quite ominous all of that makes sense under prevailing ideology and prevailing institutional structure which is directed towards pursuing the vile maxim of the masters of mankind and in this case it goes well beyond ruining an economy from ski thank you for your remarkable insights I remain curious however as to what your thoughts are if any regarding cryptocurrency and bitcoins general more specifically their effect on the global economy I've not been in about it I suspect it said I suspect it's a fad that'll lead to some crisis and collapse but professor Chomsky and in cases like in the southeast of Mexico in Chiapas we have several communities you know whom does the when gobierno and otherwise that has tried to fight the corrupt aspects of capitalism in their own ways and although they suffer still attacks from it they have managed in one way or another some sort of autonomy but this people first of all they live in a rural environment and that identity is deeply rooted in you know to the land and indigenous practices that become tradition and mysticism how do we bring this aspect of attacks on capitalism to the urban environment into cities for example like Detroit or Flint or Camden or Baltimore that have seen the worst attacks of neoliberal policies and have extinguished all identity as proletarian unity through the attacks of vulture capitalism well actually it's a Detroit is an interesting case I mean Detroit is overwhelmingly black and I'm I can't find a document but I'm convinced that that's the reason why it's being sent down the tube if it was a white community there would be plenty of mechanisms available to bail it out just as there mechanisms available to bail out AIG other criminals but the and it's kind of interesting how it's done so for example this there's an attack on pensions the pensions the in violation of the state constitution pensions are being cut back because of the crisis this is not always done so it takes a after their largely fraudulent the least incompetent probably criminal actions had practically destroyed the economy and they were bailed out massively by the taxpayer but but the executives got huge bonuses and there was some protest about that but it was pointed out by eminent economists Lawrence Summers for one that we have to recognize sanctity of contract in that case and not in the case of workers in Detroit who had already paid River pension means a cutback in wages you're cutting back your wages you'd already paid you done the work but in that case sanctity of contract doesn't matter these are all parts of the neoliberal ideology and it's had a very negative effect every just about everywhere in the world now there are places where where there has been resistant in fact there was an interesting study that just came out of the Economic Commission of Latin America UN Commission on poverty in Latin America and a very interesting results actually the results strongly supported a principle that the Cuban nationalist leader Jose Marti had enunciated over a century ago the farther you are from the United States the better off you are that's exactly what it showed there were countries where in Latin America where poverty had been very sharply reduced namely in the Southern Cone where they had abandoned the neoliberal doctrines and had moved towards substantial not total but substantial social reform but Brazil and Venezuela were the outliers the most reduction there were also countries where poverty had not been reduced like Guatemala and Honduras those have been under US domination forever the worst one and this gets back to Chiapas was Mexico the Mexico is held in the litter in the general literature is a great triumph I chose an economic disaster Mexico is the only country in which poverty it sharply reduced less increased last year and so it's pulling down the average well okay that's these are all you know these are not small facts they're significant facts and the answer to your question is it's Nan's of people like you just like trying to save the world from the environmental catastrophe that's coming is in your hands nobody else is going to do it again sir thank you all three or four times um these are blood directly into my question I was going to ask obviously quite broad but what can we do what do we focus on do we focus on working through the system and try and work through the government do we work with social movements do we work with the indigenous cultures within these smaller localized communities abroad that are the ones that are directly impacted by the externalization like where do we go from here now all of those are good things to do and there's no one right answer for everybody each person has their own interests proclivities talents and so on and every one of the things you mentioned offers plenty of opportunities to do important things and what's going to be significant the question is can this there are two trajectories in process one of them is towards destruction and it's not that far off and it's inherent in the institutions of the society I mean it's almost an institutional requirement of neoliberal capitalism that it destroy the the destroy society in the economy for the reasons I've kind of hinted at but then we're mentioned before but that's just built in another trajectory is trying to overcome it well we can't leave that to the indigenous people in the world they happen to be in the lead but they don't have the resources we have the resources so therefore the question is can we amplify that trajectory but that's in the hands of people like you and the opportunities are there and they have to be taken and without much delay thank you all right okay thank you for your words professor Chomsky what I would ask is that when you mentioned the elites who as you say sort of have been acquiring the wealth of avarice in the past several of decades given your background as a cognitive scientist I was wondering if you think there's any way that these elites can eventually be convinced perhaps that their lifestyle and their sort of greed for wealth is unsustainable for society as a whole this is possible but in fact you know it's I mean I wouldn't count on it you know it's got to be it's in fact it's not if you go back say 50 years 60 years there was a kind of a different culture in management there was a sense in which management had concern for the future of the corporation so for example when Charles Wilson said you know what's good for General Motors is good for the economy wasn't totally wrong they were concerned with keeping the corporation alive keep it making sure that the workforce had some kind of income Henry Ford was famous for that and that's gone the neoliberal doctrine is the opposite you have to have concern for the violin accent and now that means concern for short - very short term profit high profit for the next quarter so you can then get your bonus and maybe run away and the corporation collapse who cares in the society with it that's a significant change in kind of corporate culture and it conceivably could go back but my own feeling is much more significant changes are needed than that one last question in the back all right well the issues of corporate talks are always discussed but how was our people average people + - um how are their word posed - go ahead of the big-money donors and the corporate lobbyists in Washington when they have all the finances to fund these political campaigns if they do it's very it's very significant I mean take almost anything that's happening say the TPP the trans-pacific partnership this is a you know about this it's a a massive treaty it's called a free trade treaty as nothing was nothing to with trade and certainly nothing to with free trade it's a treaty probably don't really know much about it because it's being carried out in secret the way these things are done the populations not supposed to know about them not total secret for the reasons you mentioned it's not a secret to the hundreds of corporate lawyers and corporate lobbyists who are writing the legislation they surely know about it but it's kept in secret from the rest of us although parts have leaked out at one part that leaked out a couple of weeks ago is the part on what's called intellectual property that's a fancy term for robbery it's a highly protectionist mechanism to try to ensure that pharmaceutical corporations and media corporations make exorbitant profits which they have absolutely no economic justification for you can I think easily show this but that's what you'd expect when a treaty is being designed by corporate lobbyists and corporate lawyers what else would they be doing so well and the courts have have helped on this by reducing the there were some limits before on the extent to which corporate wealth could purchase elections this goes back to in nineteen seven but they were they've been pretty much dismantled and now it's a free-for-all it's to be elected the president you have to be able to spend billions of dollars it also holds for Congress was very careful is very good political economist humph Thomas Ferguson over at UMass who's been studying this for years he's done the and work on it and he just came out with his analysis of the house of the Congressional the House elections in 2012 as you probably know the the house election had a Democratic majority for the vote but through various devices as a Republican majority in the house it turns out there's almost a straight line of the correlation between campaign spending and victory is virtually a straight line things have now reached the point where to get a the chair the chair that become chair of a powerful committee significant committee in Congress it used to be based on seniority and service now it based based on putting money into the party coffers you have to buy it so the whole system is being turned into something bought that has very limited resemblance to democracy it's plutocracy and the only way to deal with this is by mass public organization to counter it and in fact that requires associations the major association that's always been in the lead on this is unions so naturally during the live neoliberal period in fact before there's been a massive attack on unions to try to undermine and destroy them that makes sense they're the one major organization that allows working people for people that to come together to work out their programs formulate the demands that defend their rights to press for progressive developments elsewhere in society so sure they have to be wiped out by now private-sector unions are less than 7% of the workforce so there has to be an attack on public unions because they've managed to survive and you see that before you arise it's happening all over but unless you know what sociologists call secondary associations groups of people can manage to get together and organize then there's not going to be any way to counter this vicious cycle that concentrates wealth concentrates political power leads to legislation and Court decisions and so on which ant which accelerate the process and it does have a destructive suicidal tendency so the question is can that be reconstructed well again your hands thank you process Chomsky

Channel: LeighaCohen

Views: 581,239

Rating: 4.8453979 out of 5

Keywords: Noam Chomsky 2_1_14, Social Contract, Super Rich, Corporations, Destruction of Social Contract, Northeastern University (College/University), Policies that inhibit growth, 99%, Global Warming, University (Ontology Class), Q&A, How to Ruin a Society, Soical Action, How to prevent a ruined economy, Big Banks, Wall Street, Unemployement, Cuttting Research, Cutting Federal Funding, Income Inequality

Id: 6mhj-j0z-fk

Length: 34min 59sec (2099 seconds)

Published: Wed Feb 12 2014

Reddit Comments

[u/[deleted]]

http://destructables.org/destructable/freedom-fighters-manual-cia-pamphlet-dropped-over-nicaragua-1983

[u/[deleted]]

L'économie est blessée, qu'elle crève!