Noam Chomsky on the State-Corporate Complex

I'm going to talk mostly about the United States in part because I know it better but also in part because of its unique significance in the global system that's been true dramatically since the Second World War the character an extent of this uniqueness often isn't understood and would be easily worth the talking itself but I won't go into that however we constantly see that even in relatively small ways so for example when a housing bubble in the United States burst a couple of years ago that initiated a global economic crisis which most of the world is still mired in the worst outcomes were just averted by quite desperate measures furthermore although the United States u.s. Society and its political economy are unusual in some respects it's not that different from elsewhere the and in fact the developments within the United States over the years have often foreshadowed what is going to happen pretty soon in other industrial societies of the state capitalist world well the world in fact the whole world is of course always changing but there are significant continuities and they're worth bearing in mind one continuity is that those who control the economic life of the country also tend to have overwhelming influence over state policy and that should be a truism taught in elementary school that was formed succinctly by Adam Smith and words that I've quoted before but are important enough to repeat he speaking of Britain of course he wrote that the principal architects of policy are the owners of the society in his day the merchants of manufacturers the masters of mankind as he called them and they ensure that state policy serves their interest however Grievous the effect on others including the domestic population but primarily the victims of what he called their savage injustice abroad and India was his prime example there was an early in the days of the destruction of India well today the Masters of mankind are multinational corporations and financial institutions but the lesson still applies and it helps explain why the state corporate complex is indeed a threat to freedom and in fact even survival well by now there are important elaborations of Smith's truism applied to the modern world the most significant and sophisticated version that I know is by political economist Thomas Ferguson what he calls his investment theory of politics which in brief and simplified essentially views us elections as occasions in which coalition's of private investors coalesce to invest to control the state it turns out to be a thesis is quite high predictive success over more than a century as he shows what it means in effect is that elections are pretty much bought and that the buyers expect to be rewarded and that happens all the time was illustrated very clearly in the last US presidential election 2008 President Obama's victory traces largely to huge influx of capital from the financial institutions especially toward the end of the campaign they prefer preferred him through his opponent McCain and they expected to be rewarded and of course they were the country at that time was mired in a deep recession so Obama's first act was to select an economic team it was drawn almost entirely from those who had caused the severe economic crisis that he inherited he systematically avoided critics of their practices including quite prestigious ones Nobel laureates actually the business press wrote rather ironically about this Bloomberg News did a review of Obama's economic team went through each one of them looked at their records and said concluded that these people shouldn't be on the economic team to fix up the economy they should be getting subpoenas which was pretty correct they didn't of course well not surprisingly the team chose measures which rewarded the major culprits who are now richer and more powerful than before and poised to lead the way to the next and probably more severe financial crisis now there was recently an interesting article about this by the special inspector of the bailout programs Neil Barofsky he wrote a bitter condemnation of the way it was executed he points out that the legislative act that authorized the bailout was a bargain the financial institutions that were responsible for the crisis would be saved by the taxpayer and the victims of their misdeeds in fact real crimes the victims would be somewhat compensated by measures to protect home values and preserve home ownership is mostly a housing crisis well only the first part of the bargain was kept the financial institutions were rewarded lavishly for causing the crisis and they were forgiven for outright crimes but the rest of the program flounder as RAAF's key points out I'm quoting him foreclosures continue to mount with 8 to 13 million filings forecast over the program's lifetime while the biggest banks are 20% larger than they were before the crisis and control the larger part of the economy than ever they reasonably assumed that the government will rescue them again if necessary in the credit rating agencies incorporate future government market bailouts into their assessments of the largest bank that means exaggerating market distortions that provide them with an unfair advantage over smaller institutions which continue to struggle so in short as he puts it Obama's programs were a giveaway to Wall Street executives and a blow in the solar plexus to their defenseless victims in other words the government listened to those who have a voice in the political system and acted accordingly all completely in accord with smith's truism well there should be no surprises here there are careful studies of Senate votes over a long period and they show that the Senate is indeed responsive to a sector of the population the top third and income actually a closer analysis which oh that it's a very small fraction of that top third in contrast there's no correlation at all between Senate votes and opinions of the middle third for the bottom third now there is a correlation it's negative Senate votes are countered the preferences for the bottom third and on major issues of foreign and domestic policy there's quite a sharp disconnect between public opinion and public policy over a long period well one might argue that these results don't really depart very far from the intentions of the founders of the society so James Madison who was the main framer of the constitutional order he explained to the Constitutional Convention that power should remain in the hands of the Senate the Senate was not chosen directly by voters until about a century ago as Mott Madison explained to the Constitutional Convention the Senate represents the wealth of the nation the more capable set of men men who have respect for property owners and their rights and understand that government must protect the minority of the opulent against the majority we should bear in mind however in kind of in Madison's defense that his mentality was pre-capitalist so he assumed that a senator would be as he put it an enlightened statesman and benevolent philosopher the Senate would be a chosen body of citizens whose wisdom may best discern the true interests of their country and whose patriotism and love of Justice will be least likely to sacrifice it to temporary or partial considerations they would just they would therefore refine and enlarge the public views regarding the public against the mischiefs of democratic majorities so rather like the noble Roman gentleman of fantasies of the day actually Adam Smith before him had a sharper eye well it didn't take long for Madison to shift his thinking about this as he viewed the early results of the Democratic experiment he had second thoughts in fact by 1792 just a couple years later by then he deplored what he called the daring depravity of The Times as the stock jobbers become the Praetorian band of the government at once it's tool and it's tyrant bribed by its largesses and over eyeing it by clamors and combinations which isn't a bad description of today's political system and its social and economic correlates well today in the richest country in human history that 20% of the population qualify for food stamps the real unemployment today is at the level of the Great Depression for much of the population manufacturing workers for example and in fact their actual circumstances are much worse than in the Great Depression in which old enough to remember most of my family were unemployed working-class and the country was of course far poorer than it is today but it was a hopeful period in many ways there was a sense that people were doing something about it and that times would get better and indeed they did thanks to act very active organizing CIO other things and then an immense government stimulus first during the war then continuing through the post-war decades well that's not true today the jobs that are being lost are unlikely to return at least under the current programs of the masters of mankind not graven in stone but that's their programs well while the population suffers the goldman sachs which is one of the main architects of the current crisis they're now richer than ever and they have just quietly announced seventeen point five billion dollars in extra compensation for last year with the CEO Lloyd Blankfein they're getting twelve point six million that well has base salary more than triples and exactly as barofsky said they're poised to play the same game again why not they can rely on the government insurance policy that enables them to safely engaged in risky transactions make huge profits and they don't take into account what in the jargon of economics are called externalities the effect of a transaction on others crucially in their case what's called systemic risk that is the likelihood that the whole system of collapse as a result result of their risky and hence profitable transactions and when it does collapse as is anticipated and it's not a big problem they can run to the powerful the nanny state that they nurture clutching in their hands their copies of Hayek and Milton Friedman and 9r and and so on and they can demand the bail out to which they're entitled because they are too big to fail as it's put and as one commentator added Riley also too big to jail for quite serious crimes it's a pretty impressive scam of course it's in radical violation of capitalist principles but the masters of men and believed in those principles only for others not for themselves and that stance has a long pedigree that's another matter that's important to understand if we want to grasp the nature of the world in which we live actually lies in the background a very revealing interaction that's taking place right now between two countries that are quite different in terms of independence and Economic Development the United States and Egypt the democracy uprisings in the Arab world particularly in Egypt these are events of a truly historic importance and they're very frightening to Western power for very simple reasons the West is certainly going to do whatever it can to prevent authentic democracy in the Arab world to see why it's enough to take a look at the studies of Arab public opinion which has certainly known the planners even though not to the Western public at least to those who keep through the media what they show is that for example in Egypt the about 90% of the population think that the United States is the main threat that they face maybe ten percent think Iran that is a threat actually about 80 percent think the reason be more secure if Iran had nuclear weapons and those figures have to be high in Egypt but they're pretty much true across the Arab world so it's obvious that the West is not going to do whatever it can to prevent those opinions from entering into policy which means to prevent any form of authentic democracy well the these are extremely important events and important to take a look at how they're developing so for example the Egyptian movement you probably saw was led by a group of young tech-savvy people who called themselves the April 6th movement the why April 6th well that's a reference to major labor action that was prepared planned on April 6th 2008 at one of the major industrial installations in Egypt mahalo textile installation they were supposed to be big strike a lot of support activities and I was crushed by the military dictatorship that we were supporting forgotten here who cares but not forgotten there and the same is true in the other countries the things that have been that have suddenly burst forth are not coming from nowhere well whatever is going to happen it's not clear that's all of this is still work in progress but despite the internal barriers and external constraints these popular movements have achieved substantial success and they have pretty exciting prospects one of the most dramatic recent moments was last February February 20th when Kemal Abbas sent a message from Tahrir Square in Cairo through Wisconsin workers they saying we stand with you as you stood with Abbas is a leader of the years of struggle of Egyptian workers for elementary rights that lie in the background of today's Arab Spring as I said brutally crushed by the western-backed dictator he's also a leading figure in the current uprising and our bosses measure a message of solidarity to Wisconsin workers evoked the traditional aspirations of the labor movement solidarity among working people of the world and populations generally well right now the trajectories in Cairo and Madison are intersecting but they're headed in opposite directions in Cairo towards gaining elementary rights denied by the dictatorships in Madison towards defending rights that have been won and long and hard struggles and are now under severe attack and each of these is a kind of a microcosm of tendencies that are underway in global society and following varied courses and they're sure to be far-reaching consequences of what's taking place in the decaying industrial heartland of the richest and most powerful country in human history and in what President Eisenhower called the most strategically important area of in the world namely the Middle East a stupendous source of strategic power and probably the richest economic prize in the world in the field of foreign investment those are the words of the State Department in the 1940s I was apprised that the u.s. intended to keep for itself and its allies in the unfolding new world order of the day that they were organizing and implementing and in fact still do well it's normal for the victors to consign history to the trashcan and it's normal for the victims to take it seriously and if we want to understand the world we should follow their example today is in fact not the first occasion when Egypt and the United States are facing similar problems and moving in opposite directions that was also true in the early part of the 19th century in ways which are quite crucial for both societies and generalize across the world and are crucial for understanding of the creation of the divide between the the rich first world and the poor third world much less sharp back in those days well at that time early 19th century Egypt in the United States were both well placed to undertake rapid economic development both of them had rich agriculture now that included cotton which is sort of the fuel of the early Industrial Revolution although unlike Egypt the United States had to develop cotton production and a workforce by conquest extermination and slavery with consequences that reverberate to the present there was one fundamental difference between Egypt and the United States namely the United States had gained independence and it was therefore free to ignore the prescriptions of economic theory which were delivered the same ones as today at the time they were delivered by the greatest economists of the day Adam Smith in terms similar to those preached to what are called developing societies today so Smith urged the American colonies to keep through what was later called their comparative advantage that is to produce primary products for export and to import superior British manufacturers and certainly not to try to monopolize crucial goods that meant particularly cotton in those days kind of like oil today any other path he warned I'll quote him would [ __ ] instead of accelerating the further increase in the value of their annual products produce and would obstruct instead of promoting the progress of their country toward real wealth and greatness approximately what you study in economic courses today and the advice given to the world by the IMF and the World Bank well having gained their independence the colonies US colonies were free to ignore the laws of sound economics they were free to follow England's own course of independent state guided development there was high tariffs to protect industry from superior British exports in the first textiles later steel and others and a wide variety of other modes of state intervention in order to accelerate economic development and the independent Republic also tried and came pretty close to tried to get a monopoly of cotton for a good reason the purpose was to place all other nations at our feet as the Jacksonian presidents put it at the time when they were the necks in Texas and fo Mexico they were particularly concerned with England England was the big enemy in those days it was a deterrent and they figured if they monopolized cotton they could bring England through its feet that's pretty important for example it's one of the reasons why Canada wasn't conquered British the third is ever times maybe it's being conquered in other ways but that's another matter but it wasn't militarily conquered they also couldn't conquer Cuba much as they wanted to because the British fleet was in the way they did finally conquer it later in the century 1898 under the pretext of liberating it but actually conquering it but the idea was if they could monopolize control of cotton they could overcome this a deterrent that was in the way of expansion actually it's kind of interesting that that's that's essentially the policy that was attributed to Saddam Hussein in 1990 ridiculous at that time but if you look back at the propaganda at the time of the invasion the pretext was well he's trying to monopolize oil and you know to bring us all to his feet I mean it's totally outlandish but the what was charged the crime attributed to Saddam Hussein is in fact one of the main ones that led to u.s. economic development it happened and had a big effect one of the reasons it's out of history except that it's in history well that was the United States what about Egypt Egypt couldn't follow a comparable course because it was barred by British power it wasn't independent so British Lord Palmerston declared on his words that no ideas of fairness toward Egypt ought to stand in the way of such great and paramount interests of Britain as preserving its economic and political hegemony and he expressed what he called his hate for the ignorant barbarian Muhammad Ali and the developmentalists leader who was trying to direct Egypt on an independent course and Britain's fleet and financial resources that were deployed to terminate Egypt's quest for independence and economic development after World War two the United States displaced Britain as global hegemon and it adopted the same position the u.s. made it clear that Washington would provide no aid to Egypt and the whole world badly needed aid at the time the US would provide no aid to Egypt unless it adhered to the standard rules for the weak ones I cited which of course the u.s. continued to violate itself imposing high tariffs at the bar Egyptian cotton and causing a debilitating d'être dollar shortage actually that's the usual interpretation of market principles it's fine for you fine for disciplining the weak and controlling them but not me please I want the nanny state to make sure I'm okay that applies at home to the way Goldman Sachs and its colleagues and their representatives and government understand very well these are really leading themes of modern history they're the basis for the sense of the basis for the first third-world distinction this generalizes all over and for what's happening internal to the rich societies as well well as these kind of quite simple principles predict elections are increasingly just becoming a charade run by the public relations industry which tries to mobilize populations to vote while making sure that issues are marginalized for the reason I mentioned public has different opinions about issues than the Masters of mankind so you want to keep them aside I should say that well I'm talking about the United States it's not true everywhere so if you go say to the poorest country in South America Bolivia they actually have democratic actions pretty unremarkable ones especially in the last 10 years so in the last 10 years the most repressed bitterly repressed the segment of the population the indigenous population have actually entered the political arena press their demands took part in elections won the elections elected someone from their own ranks a poor peasant you know not somebody from the skullenbones at Yale and and won the election on real issues serious issues like control over resources cultural rights how to handle the problems of justice in a complex multi-ethnic society and then in a another election a couple years later they did even better well that's democracy you have to look pretty hard to find anything like that in the industrial world what's happening in our societies is something quite different so for example after his 2008 victory as perhaps you know Obama immediately won an award from the advertising industry for the best marketing campaign of 2008 he beat out Apple computers and if you look at the business press where people talk more openly executives were euphoric they said they'd been marketing candidates like toothpaste ever since Reagan but 2008 was the greatest achievement they said it was so great it's going to change the style and corporate boardrooms the 2012 election is now expected to cost two billion dollars it's gonna have to be mostly corporate funding so it's not at all surprising that Obama's selecting business leaders for top positions the public is quite angry and frustrated but unless the Western populations and say rise to the level of Egyptians and they're gonna remain victims in the United States the Republicans are long ago ceased any pretense of being a traditional political party there are so deep in the pockets of corporate America if and the super-rich do you need a telescope to find them Democrats who incidentally by now are mostly what used to be called moderate Republicans so the Democrats there is not too far behind Obama's choice of an economic team which I mentioned is an example actually I didn't put it quite accurately there was one exception in his economic team namely Paul Volcker he was the Secretary of Treasury under Ronald Reagan but the spectrum has shifted so far to the right that Fokker was the last liberal calling for some kind of regulation it was incidentally not is and he was kicked out and replaced by Jeffrey Immelt he's the CEO of General Electric that's the nation's largest corporation and his special responsibilities if you look back at the rhetoric was to create jobs she had more accurate comment again by Tom Ferguson is that what we actually have here is the disappearance from the scene of the best known and most visible critic of the excesses of the financial sector and his replacement by the sitting CEO of a company that is heavily dependent on government aid of all sorts including diplomatic assistance to invest more in China and to shift jobs there this is not about jobs it's about political money the White House knows it will need to raise about a billion dollars for its reelection campaign that's the context in which this and Obama's other recent appointments need to be judged and the business world not surprisingly was quite pleased the London Financial Times reported that mystery melts appointment was applauded by the US Chamber of Commerce major business lobby in which they said has been among the president's harshest critics and funded many Republicans who ran against Democrats and last November's election but maybe that will be over and the last barrier to business rule could be out of the way well if you look at GE General Electric more than half of its workforce is abroad and more than half of its revenue comes from overseas operations although most of its revenues come not from production though it's regarded as a manufacturing enterprise but from financial operations for which incidentally had received the hefty bailout when Wall Street tanked while the appointment was proclaimed to be for job growth it actually has little to do with that and more accurately it's what's called follow the money more than a century ago the great political financier Mark Hanna said that two things are important in politics and money and I forgotten the second ones that's far more true today especially with the radical changes of the past 30 years and they're important to understand these developments roughly the last 30 odd years they followed one of the major changes in world order in the modern period namely the dismantling of the post Second World War economic system so-called Bretton Woods system which had been designed by the victors of the Second World War the United States and Britain basic designers were john maynard keynes for britain and the new deal economist Harry Dexter white for the United States one central component of this system was regulation of currencies in fact I was part of the basis for the huge economic growth of the next couple of decades highest in history well that was dismantled about 40 years ago that was one factor that led to the huge explosion of financial speculation and the vast growth of financial institutions at that time they were small components of the economy and they were mostly doing what the banks are supposed to do in state capitalist systems namely to direct unused funds like say your bank account to some kind of productive investment that was then by 2007 just before the great crash they gained about 40 percent of corporate profits in the u.s. their profits come mostly from complex financial manipulations actions that have little or if any social or economic utility and are harmful to the economy and also to people in many ways these practices would be sharply curtailed if capital principle capitalists principles were to prevail they'd be curtailed by crashes and you know losing your money but thankfully there's no fear of that at least for the rich another factor in the financialization of the economy was that the rate of profit in production was declining so it was easier to make money by financial manipulations of course always with the protection of the nanny state closely related development was the offshoring of production that's within a global trade system that is very carefully designed to set working people in competition with one another worldwide along with a very high level of protection effort for wealth and unprecedented rights for investors and that's the usual interpretation of market discipline again you know fine for you but not for me please these developments are set in motion a vicious cycle of concentration of wealth and with it concentration of political power again in accordance with Smith's maxim for the past 30 years state corporate policy has been very precisely designed to accelerate this cycle so inequality as you probably know has soared to the highest levels in US history but less known is that this is actually misleading the radical inequality results primarily from the extraordinary wealth of the top 1% of the population actually more accurately the top one-tenth of 1% it's a group so small that it's missed by the u.s. census which vastly underestimates inequality for this reason it's been studied by economists meanwhile for the majority of the population real incomes have pretty much stagnated people are getting by with heavier workloads much more say than in Europe or even Japan debt and asset inflation like the last housing bubble the minuscule category of victors is extremely small that's primarily CEOs hedge fund managers and the like and they use their political power to enhance the process so tax cuts for example are carefully crafted to benefit the super-rich if you look back until around 1980 until Reagan taxes were in the United States were somewhat redistributed it's according to the analysis the Internal Revenue Service as in most countries that's what they're supposed to be since then with a couple of blips that effect is declined and if other factors are introduced like say tax havens and other evasion options they redistribute upwards that's carefully designed so it takes a the Bush tax cuts ten years ago and which are a huge burden on the economy they were designed very carefully the they started in the first year with a tax rebate to people small rebates so you get a couple hundred dollars in the in the mail and you think this is great tax rebate but they were designed so that over the years the benefits would shift towards the rich and by the tenth year when they were due to expire more than half of the tax benefits went to the top one percent people who count but then it's kind of invisible if it happens that way there's a name for it it's called the sunset technique you make sure that by the time the Sun sets things are happening the right way you kind of dilute people at the beginning and only those who were inside the game can see what's planning down the road that was the Bush tax cuts but the same things happening right at this moment like the you know the lame-duck session of Congress that mean you know the session after the November election before the next Congress takes office Obama was greatly praised for his achievements during the lame-duck session you know statesmen like display of bipartisanship and so on and praised by his own supporters in fact well there were some achievements the main achievement was a tax break for the super-rich and I mean super-rich like I'm pretty well off but I'm below the cutoff for that one it was super rich tax cut of course that increased the deficit and which was supposed to be the big thing we're worried about carrying that off required some pretty impressive footwork but it was done also at the same time there was a tax increase for federal workers but it wasn't called that because you're not supposed to talk about tax increases it was called a freeze and you think for five minutes a freeze for maybe five seconds a freeze for public sector workers is identical to a tax increase for them so this is a tax increase for public sector workers disguised as a freeze there was also a payroll tax decrease for Social Security and Social Security's paid by working people doesn't provide anything to the deficit the contrary the way to read workers pay for it and there was a decrease in that payment which kind of sounds good people need the money but again it was a Trojan horse take a look at the way it was designed it was the sunset technique again the freeze was carefully designed so that it ends right before the presidential election no political figures understand perfectly well that with an election coming up and nobody's going to say let's raise the payroll tax so that essentially makes it permanent which is a way to defund Social Security Social Security is actually in pretty good shape despite what everybody screams about but if you if you can to fund it it won't be in good shape and there is a standard Niq of privatization namely defund what you want to privatize like when Thatcher wanted to privatize the railroads first thing to do is defund them then they don't work and people get angry and they want to change you say ok privatize them and then they get worse you know and in that case the government had to step in and rescue it but that's the standard technique of privatization defund make sure things don't work people get angry I hand it over to private capital well that's the Social Security scam if they can succeed in defunding it been trying for decades it's too popular to do much about and very efficient incidentally minuscule administrative costs you know nothing like the outlandish privatized health care system so it's kind of hard to get rid of but if you can defund that it might work out that's the point of this decision in the lame-duck session and that's kind of important first of all if it can be privatized it's a huge bonanza for investors there's a ton of money in the Social Security system it's kept in a trust fund or invested in government bonds and goes back to working people but if that can get into the hands of financial institutions now they can make a ton of money by using those funds to enrich themselves and as usual when the system crashes to going back to the taxpayer to bail them out so it's a great technique also the Social Security has really has defects like it's almost it's of no use whatsoever to wealthy people I mean they may get it but they're not gonna notice it's a you know toothpick on a mountain so who cares but for a large part of the population it's their means of survival there's a kind of a deeper point the Social Security is based on the principle that Kemal Abbas was talking namely solidarity social solidarity Social Security is based on the idea that you're supposed to care what happens to people who are in need so like if there's a disabled widow across town and she doesn't have food to eat you're supposed to care about it that's what Social Security is and that's a bad idea now you're supposed to look after yourself not care about other people the Social Security is dangerous it kind of undermines preferred doctrines and it can even lead to action it couldn't change the way the world works so we don't want that in fact the there's a large-scale attack on public education it's based on the same principles you can privatize and the same techniques are being used defunded so it doesn't work complaining about how it doesn't work privatize it gets worse but then you've undermined social solidarity and it's fine for the wealthy anyway they'll get what they want well all of this is part of a quite oppressive campaign of class war which has many aspects the a lot of them aren't immediately visible that they're there so for example the government sets rules on corporate on how corporations are run what's called corporation corporate governance and the rules that have been set up during this passionate class war period the rules are that CEOs can pick the boards that set their salaries and they can and that you know work out techniques like say stop stock options which conceal short-term gain and you can imagine how that works when you pick your own board now well there have been efforts to try to get this to be more transparent but they were beaten back by Congress same is true of deregulation during the period when New Deal regulations were maintained there were no financial crises system went along smoothly since Reagan there have been regular financial crises each one worse than preceding one but the rich and powerful make out fine for the reasons I mentioned the public pays rich benefit well that's at all of this is a kind of a new stage of state capitalism loyalty to firms is less and less necessary when the goal of management is short-term profits which of course comes mostly from financial manipulations so who cares about the firm if it goes under fine bridge well it's worth noting that this really is new not very long ago the long-term future of the firm was an important consideration for management less and less so under modern forms of state capitalism and rather interestingly these issues were foreseen foreseen by the great founders of modern economy economics Adam Smith for example that he recognized and discussed what would happen to Britain if the Masters adhered to the rules of sound economics what's now called neoliberalism he warned that if British manufacturers merchants and investors turned abroad they might profit but England would suffer however he felt that this it wouldn't happen because these people would be the Masters would be that guided by a home bias so as if by an invisible hand England would be spared the ravages of economic rationality now that passage is pretty hard to miss it's the only occurrence of the famous phrase invisible hand in Wealth of Nations namely in a critique of what we call neoliberalism the other leading founder of modern economics David Ricardo he drew similar conclusions he hoped that home bias would lead I'm quoting him now would lead men of property to be satisfied with the low rate of profits in their own country rather than seek a more advantageous unemployment for their wealth in foreign nations and he said these are feelings that I would be sorry to see weakened well the there are predictions aside the instincts of the classical economists were quite sound well I mentioned before that one well-known market inefficiency effect of the market and efficiency of dismissing externalities that is the effect of a transaction on others in the case of financial institutions the externality that's dismissed is systemic risk the risk that the whole system will crash as a result of some failed transaction you don't take that into account when you make a transaction well in that case the taxpayer can come to the rescue and it makes sure then that way you can make sure that those who profit from risky transactions will be saved but that's not always an option and the consequences can be severe in fact perhaps awesomely severe so nobody's going to come to the rescue if the environment is destroyed and that it must be destroyed is close to an institutional imperative under contemporary state capitalism just think it through business leaders right now are conducting massive propaganda campaigns to convince the population that anthropogenic global warming you know global warming was because of human interference liberal hoax the and they're succeeding like in the United States probably two-thirds of the population believes this by now well the CEOs who are running these campaigns that they understand what all of us understand they understand that the threat is very real very grave that it'll destroy everything they own wreck the lives or their grandchildren they know all of that but they don't as CEOs of a corporation in that institutional role they have no choice they can pull out of course but if they stay there they have to maximize short-term gain and market share actually that's a legal requirement and under anglo-american law if they don't do it they'll be out and somebody also come in who does do it so it's an institutional property not an individual one and it does set off a vicious cycle and one that could be lethal and to see how imminent the danger is and just have a look at the new Congress in the United States the one that was propelled into power by large-scale business funding and propaganda almost everyone there is a climate change denier and they've already been acting on those assumptions they've been cutting the limited expenditures there are for dealing with environmental problems and if the United States doesn't do anything significant the rest of the world isn't either well worse than that some of them are true believers so for example the head of the new head of one of these committees on the environment he explained that global warming can't be a problem because God promised Noah that there wouldn't be another flood takes care of that well you know if that was happening you know like in Andorra small remote country you know maybe we would laugh but it's not laughable when it's happening in the richest and most powerful country in the world and before we laugh that we might bear in mind that the current economic crisis is traceable in no small measure to the fanatic faith in such dogmas as the efficient market hypothesis and in general to what Nobel laureate Joseph Stiglitz 15 years ago called the religion that markets know best the religion made it unnecessary for economists and the Federal Reserve to notice that there was an eight trillion dollar housing bubble that had no basis at all in economic fundamentals it was way off historical trends and that devastated the economy when it burst no need to look at it because we have the religion markets know best so forget it well all of this and that religion is resuscitated despite what happened will all of this and much more can proceed as long as the general population is passive apathetic devoted to consumerism or maybe hatred of the vulnerable as long as that's true the powerful can do as they please and those who survive will be left to contemplate the ruins you

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Length: 55min 24sec (3324 seconds)

Published: Fri Oct 28 2011