In part two of their interview, Paul Jay asks Prof. Noam Chomsky to weigh-in on the dominant subject of the day, the economic crisis. While Prof. Chomsky agrees that the current crisis is a very serious one that will have broad implications for the broader society, he points out that the foreseeable Medicare-induced economic crisis will "dwarf" the current one in magnitude. Furthermore, Prof. Chomsky develops his contention that democracy is hindered by unrestrained free markets. While on the other hand, state-restricted markets are democratic by design in that they allow people take control--through their government--of financial institutions to force them to include externalities and risks to the broader population in their decision-making. These factors are such that profit-seeking enterprises will not accommodate them when left to their own volition, given that free markets do not put a price on these externalities. BioNoam Chomsky has written and lectured widely on linguistics, philosophy, intellectual history, contemporary issues, international affairs and U.S. foreign policy. His works include: Aspects of the Theory of Syntax; Cartesian Linguistics; Sound Pattern of English (with Morris Halle); Language and Mind; American Power and the New Mandarins; At War with Asia; For Reasons of State; Peace in the Middle East?; Reflections on Language; The Political Economy of Human Rights, Vol. I and II (with E.S. Herman); Rules and Representations; Lectures on Government and Binding; Towards a New Cold War; Radical Priorities; Fateful Triangle; Knowledge of Language; Turning the Tide; Pirates and Emperors; On Power and Ideology; Language and Problems of Knowledge; The Culture of Terrorism; Manufacturing Consent (with E.S. Herman); Necessary Illusions; Deterring Democracy; Year 501; Rethinking Camelot: JFK, the Vietnam War and US Political Culture; Letters from Lexington; World Orders, Old and New; The Minimalist Program; Powers and Prospects; The Common Good; Profit Over People; The New Military Humanism; New Horizons in the Study of Language and Mind; Rogue States; A New Generation Draws the Line; 9-11; and Understanding Power.
Comments from Registered Members | (Register or log in to make your comment.) | Peter11216 2008-11-03
From what I understood, there was a claim that government is, in the U.S., controlled by elites, and that it was consciously designed (by some of the "founding fathers", among others) to be that way. But there is no claim that this is inevitable. Then, there is the point that if there was a functioning democracy, the plans for the bailout would take into account the wishes and plans of popular organizations. There's no defense of government intervention, in and of itself. Just a claim that the intervention would look very different if there was a functioning democracy. | PhilipWinter 2008-10-22
Another outstandingly intelligent and, in my view, even handed analysis from Professor Chomsky. Thought provoking certainly - although some of the thoughts provoked [see below] seem to be very much less even handed and, unfortunately, politically dogmatic.
Thank you for this TRN. | Expat 2008-10-22
Interesting, as always. However, Chomsky seems to contradict his comments from the first part in the second part. In the former, he affirmed that our government is inevitably in the hands of one or the other elite; in the latter, he seems to presume, in defence of government intervention, that the government is, after all, for, by and of the people à la July 4th, and so intervention would be democratic. Huh? | timbrewolf1 2008-10-21
Why are these men whispering? May I suggest a compressor to create an even sound level and to raise the volume as well. | john 2008-10-21
Markmason, I agree. I have watched as The Real News Network has grown towards talking about world events as they exist as opposed to reporting within the mainstream media frame for the news.
Good work TRN.
Such (sometimes) laudable journalists as Gwynne Dyer cannot escape the frame and end up making such ludicrous statements as "despite Monday’s agreement by Washington to take Kim’s neo-Stalinist regime off its list of terrorism sponsors... we still don’t know where its nuclear weapons (if they exist) might be hidden." Implying NK has an inescapable obligation to tell “us” where their nuclear weapons are. We are led down a brightly lit path of u.s. exceptionalism and it's position as entirely reasonable no matter how absurd. In contrast any stated position such as that of Iran, North Korea or Syria is suspect no matter how reasonable. Lest we don't get it we are treated to sarcastic overtones regarding the enemy, “Kim, the “Dear Leader” and absolute ruler of North Korea | kaijansen78 2008-10-21
(continued from below)..The Amero is part and parcel of the N.A.U.- does anyone think that this administration or the followng one, whoever they may be, have given up on this dream... and our nightmare!?
Look across the water. You can see the result of the aims and ambitions of the E.U., as it slowly becomes the tyranny it was designed to be: an elitist's paradise! | kaijansen78 2008-10-21
Contrary to the first section, in which Prof.Chomsky advocated a vote for the lesser of two evils, always a wrong thing to do in my opinion, his assessment of the tyranny of the private banking sector was spot on. It all began to go wrong with the illegal creation of the FED. Why did he not talk about taking that institution apart? It is a totally self-serving institution and cannot solve the financial crisis by simply pouring money down the gaping mouth that is the private financial sector.
You cannot just print money out of thin air, and not expect major repercussions; but then I do believe there is an agenda that has yet to be addressed by the media: the plan to self-detruct the dollar in favour of the coming AMERO.
Of course this has to be done in full view and very gradually so as not to rock the boat too much for fear of the public upheaval caused.
The Amero is part and parcel of the N.A.U.- does anyone think that this administration or the followng one, whoever they may be, | TJColatrella 2008-10-21
The purpose of government is to Serve the People, this is key and should be the battle cry of the 21st Century for every American. Adherence to this principle will lead the way to our restoration if not adhered to as the primary principle then we are doomed to go the way of many past great empires..!
We must nationalize certain aspects of our infrastructure including Health Care as well as Energy and our failing Airlines as well..
This will create an economic boom that will effect every American and promote and stimulate commerce..
Remember JS Mill said in his later years he was a Socialist a democratic socialist..! We must borrow what is best from both systems as in everything balance is the key..! | otrovagomas 2008-10-21
georgeb.martin, as a last rebuttal I wanted to clarify one last point. Prof. Chomsky indicates that the USofA is by far the wealthiest and most powerful nation in the world. That assessment is true regarding both the Gross Domestic Product of the country, as well as the sheer size of the military force, and its respective budget. But when it comes to the welfare/wellbeing of the citizens of the USofA, this formidable advantage diminishes somewhat. According to the United Nations, the Human Development Index ranks the USofA in 12th position, behind countries such as Australia(3), Canada(4), Japan(8) or France(10). The world may not have caught up in net wealth with the USofA, but many countries have put the lesser wealth to increase the welfare of their citizens, providing more and better access to health, education and social services. USofA is not all No.1, especially when considering Quality of Life Standards. | otrovagomas 2008-10-21
georgeb.martin, I do not begin to imagine where you got the idea that government capitalism is Marxism. It just boggles the mind. As for the mantra that "the market regulates itself/the market decides/the market makes the best choice" flies in the face of real world evidence, time after time. Were it not for active government support of promoting industrial development or trade---be it through direct financing, commercial treaties, duty barriers, subsidies or direct or indirect support for specific industries (comes in mind the agroindustrial sector, aeronautical or automobile to name a few)--- many of these would not foster, develop, grow or invest. Many of these "market choices" are actually political ones translated into market actions. Do you really believe that the agricultural sector in the USofA or Europe can actually compete in fair terms with countries were labour force cost is so much lower? | otrovagomas 2008-10-21
georgeb.martin, I will not extend myself into a useless cherry-picking fight. Nonetheless I would like to point out some flat-out inaccurate statements of yours: 1/ the USofA is ranked 46 place for life expectancy (CIA World Factbook, 2008), well behind most of the "socialist" (what an absurd adjective) nations you mentioned---namely France (9th), Germany(31st), Italy(18th), the UK(36th), Canada(8th), Australia(7th) or Japan(3rd). All the afore mentioned have Universal Public Healthcare.
An important reason why many physicians are attracted to the USofA to practice is because the system allows for great personal gain, with no competition from state-subsidized practitioners. It basically boils down to being able to charge whatever price, without government oversight or pressure to make these fees accessible to citizens with fewer resources. | georgeb.martin 2008-10-21
We’re indebted to them for billions and billions. Saudi Arabia and India are not too far behind. We produce very few things here, so true wealth is just so much mist. And, we have been designated the globocops. Endless war for endless peace.
As the efficient markets work the externalities would cause others to develop products and services that answer the threat of pollution and consumption of non renewable resources. The market decides not the government. Paul Jay saw a need for this “network”. I know that the government did not tell me to watch these videos and with the fund raising going on, I suspect that neither the US nor Canadian governments are funding the operation….at least to the degree they need.
| georgeb.martin 2008-10-21
Because the government controls movement of capital corruption increases as vendors and contractors, etc. want a piece of the action. Buying elected officials is one way to get a contract.
Introducing welfare state programs (socialism) only causes people to be more and more dependent on government for their lives and welfare. They need government which then can enslave the people.
Attacking the currency is easiest when it is a fiat currency (money whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another currency, but instead from a government's order (fiat) that it must be accepted as a means of payment). Of course, this is all part of the control put into place by Roosevelt and finally by Nixon.
The US is the richest and most powerful country because the rest of the world has not caught up yet. China is loaning us money. We’re indebted to them for billions and billions. Saudi Arabia and India are not too far behind. We produ | georgeb.martin 2008-10-21
This interview is more frightening than the last. The growth in medical costs can be traced to greater involvement by the government. It is strange that if this system is inefficient why folks from around the world want to be treated here? Why has there been a brain drain in countries around the world? Doctors want to work here not Germany, England, Russia, and other socialist systems. Why has the medical care in the US improved year after year? The life expectancy in the US is one of the highest in the world.
The “constraints of 1945 to 1970” were instituted because of the Marxist, totalitarian, globalist, thinking that continued from the Roosevelt years and continue to this day. Governments controlling capital movement is a Marxist idea. Those projects that the corrupt government officials deem worthy are undertaken, whether the population wants them or not. Because the government controls movement of capital corruption increases as vendors and contractors, etc. want a piece of the | geoff29 2008-10-21
The interview ended too soon! Where's parts 3, 4, 5, and 6? Good luck trying to debunk Professor Chomsky, you will have to be highly intelligent, and end up sounding like a character on the embarrassing end of a discussion with Socrates. | panpiper 2008-10-21
"It's well known among economists that markets are inefficient." !!!??? What economists is he talking about? Neo-communist economists only no doubt, of which I know of merely a handful. | panpiper 2008-10-21
I have great respect for Noam Chomsky but he is frankly, a conspiracy theorist. Here, when he says (and I paraphrase), "growth in medical costs is a deliberate technique to 'try' to destroy social security" he has clearly gone into a nonsensical stratosphere. There is a deliberate desire on the part of some insanely evil men to destroy social security and they are doing this by managing to inflate medical costs? Good grief. | markmason 2008-10-21
This dialogue is mesmerizing. Cogent, intense, telling in what is told here and conspicuously absent elsewhere. Chomsky and Jay, in this engaging exchange, deconstruct the "reality distortion machine" of modern media and politics. |
TranscriptWhy I support the Real News
(A short message from a member)
MICHAEL GOODMAN, REAL NEWS MEMBER: We support The Real News Network because we want to have independent journalism, and in a democracy there's nothing more important than the free flow of information. Please join with us and help support The Real News Network.
Chomsky on the economy
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to the second part of our interview with Professor Noam Chomsky. Professor Chomsky, ordinary people are trying to understand the current crisis, financial crisis, the people who've been already suffering from what they call a crisis in the real economy and maybe have not yet quite felt the effects of what the financial crisis is going to mean to day-to-day life. So, quickly, are we moving into something that resembles a serious depression as some people are suggesting? And if we are, do you think we might see some similar radicalization of the working class that we saw during the 1930s? But start from helping us understand what are we moving into here.
NOAM CHOMSKY, PROFESSOR OF LINGUISTICS, MIT: Well, the immediate crisis that's on the front pages is the financial crisis. The credit system has frozen, so banks don't lend to each other, they don't trust each other. The housing market has collapsed. These are things that, of course, influence people's lives directly. So it's not happening kind of in the stratosphere. But the visible crisis, the one that's discussed, has to do with finance. However, there is a growing crisis in the rest of the economy too, and it's a serious one. That's why the automakers are disappearing, for example. There's a major crisis coming along which is going to dwarf this one, and that's the growth in medical costs. If you look at the trajectory and extrapolate, extend it, the highly inefficient medical system is going to swamp the federal budget. This is usually described as a benefits system—you know, medicine, Medicare, and social security—but that's just a technique to try to destroy social security. In fact, social security's in pretty good shape; it's the health system that's the problem. But the immediate problem is the financial system. The roots go back to the early 1970s, when finance was liberalized; it was freed from the constraints of the post-war period. Now, the constraints of the post-war period, roughly 1945 to 1970, they were instituted by the United States and Britain for a reason, one, because it was assumed correctly that allowing governments to control capital movements and currencies would provide a basis for rapidly expanding growth and trade and so on, which indeed happened. That's called the golden age of modern capitalism. Whereas freeing these constraints would retard growth and development, as indeed it has done. But there was a second reason, which isn't being discussed much: allowing governments to control capital movements provides them with a certain space for introducing what we call welfare state programs. If capital movements are free, attacks on currencies are free, there's what economists call a "virtual parliament" of investors and lenders who actually vote, every minute in fact. If they don't like what a government is doing, they attack the currency, there's capital flow—.
JAY: And how likely is world capital to vote no faith any longer in US Treasury bonds? Is that really—?
CHOMSKY: No. In fact, they're fleeing to US Treasury bonds.
JAY: Now, but they're in this push-pull—either they have to defend it or abandon it, and right now they're defending it. Is there any choice to abandon it? Or they really don't have one?
CHOMSKY: No, because the United States, despite all the crises, is far and away the richest and most powerful country in the world. And if the United States tanks, the world economy will tank. So it's a safe bet, if you want security, yes, get Treasury bonds. But the system has unacceptable risk built into it. It's well known among economists that markets are inefficient from the narrowest perspective. So let's make it simple. Suppose you sell me a car, okay? We may make a good deal for ourselves, but we're not taking into account the effect on him. It's what's called an externality. And there's an effect. If you sell me a car, it increases gas prices, it increases pollution, it increases congestion. And that extends very broadly; these so-called externalities can be very large. Now, in financial institutions it's far worse. They are in the business of taking risks. If they're well managed, say, Goldman Sachs, they calculate the potential cost to themselves if there's a loss. But the important words are "to themselves." They don't calculate in what's called systemic risk, the effect on the whole system if I go bust, you know, and it has a huge effect. The result is that risk-taking is under-priced, meaning there's a lot more of it than there would be in a reasonable system. And so, therefore, it was predicted right off that when financial liberalization took place, there would be more regular financial crises and deeper ones. And this particular one is accelerated by the fact that there was a subprime housing bubble and many other factors, so it became far more severe than anyone expected. But it's built into the system. Now, this was kind of combined with a kind of religious market fundamentalism based on doctrines of, you know, self-regulating markets and so on, which are pure fantasy. So the regulatory apparatus was dismantled. Well, that accelerates the pace of potential financial crisis. And along with that came the creation of highly exotic financial instruments. Well, all of this combined, it was pretty clear the early part of this decade that a major crisis was brewing. Alan Greenspan, head of the Federal Reserve, refused to prick the bubble as could have been done in simple ways, on the basis of religious belief in self-regulating markets. And finally it came to this catastrophe where there's a credit freeze, the system's freezing up. Something has to be done, and it's interesting what the choices are. It goes back to our earlier discussion. So this morning on the radio, George Bush announced that the government is intervening in the banks, but we want to make sure that we go back to the profit motive, not policy motives, not political motives. What are political motives? Well, that means participation of the population in making decisions. So we hate democracy; we don't want the public to be involved in decisions about things; we want to go back to the profit motive, meaning that a private tyranny, which is what a corporation is, should look out for itself, not for the public interest.
JAY: Which is what got us here. It's interesting. For the first times, one is hearing the discourse open up. And maybe they don't like the words "socialism" and "capitalism," even as words, are actually entering the public discourse.
CHOMSKY: I don't think it has anything to do with socialism. That's a scare word. It has to do with democracy. So what is being called "government intervention" in a democracy would mean intervention of the population. I mean, if you believe the 4 July speeches, you know, of government of, by, and for the people, then the government is not some alien force stealing for you; government intervention means giving the public a role in making decisions about things that matter to them like working conditions and wages and so on and so forth. In a democracy, political motives would mean the interests of the population in determining what's going to happen next. If you decode the rhetoric, the question is: Do we want private concentrations of power to make decisions for their own benefit? Or do we want the public to be concerned, to make decisions for the public welfare? That's what's really behind it.
JAY: For ordinary people, as this crisis deepens, what do you think they can do? What should they do?
CHOMSKY: It's very striking. When the $700 billion bailout was announced, the public was outraged. There was furious objection, so much so that the House of Representatives had to vote it down. Now, on the surface, that looks like an exercise of democracy, but it isn't. Even in a dictatorship, if the dictator does something outrageous, the public can riot and he'll have to back down. Now, in a democracy, functioning democracy, what happens is different: not just shouting "no," which is what happened, but active popular organizations like unions or political clubs or whatever would be coming forth with specific proposals and demanding that their representatives implement them. And there are proposals; there's quite a lot of proposals on the table. Joseph Stiglitz, who's [inaudible] from outer space, made a very simple point. He said if we put money into the banks, pour liquidity into the banks, we can pour it in, and they'll pour it out—mergers and acquisition, anything—for their own benefit, 'cause that's what they're in business for, for their benefit, not for our benefit. So he said we have to have veto power. Well, veto power means voting rights, and if it's a real democracy, voting rights means popular participation and initiative. Well, the initiative should be coming from the population, like with health care, where the population has definite views. But the country is so depoliticized that popular views are considered politically impossible, lacking political support. Well, that's what's called a democratic deficit: formal democratic institutions, but not functioning. And we have to overcome that. That underlies lots of issues.
JAY: Thank you very much, Professor Chomsky. And thank you very much for joining us.
DISCLAIMER:
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy. | |
You must log in as a registered user to save articles, or to view articles you have saved. Not a registered user yet? Register Here  
|
