<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html>
<head>
<meta http-equiv="content-type" content="text/html; charset=ISO-8859-1">
</head>
<body bgcolor="#ffffff" text="#000000">
QUESTION: ...at the beginning of the financial crisis, International
Monetary Fund proposals for the Third World were to pay back debt to
core countries, raise interest rates, privatize and generally engage
in pro-cyclical policies. For the U.S., the accepted prescriptions
were: stimulate economy, forget about debt, nationalize industry.
But since then, a very powerful current emerged and changed <i>the
policy debate - now it's about deficit reduction and austerity at
home, which the Obama administration is actively fueling with its
deficit commission and talk of the federal government's need to
tighten its belt</i>. Is this shift another indicator of what
Simon Johnson talks about, namely the similarities between the U.S.
and emerging-market oligarchies? Is the U.S. "becoming a banana
republic," as he puts it? Your book mentions Citigroup's buoyant
analysis of <i>plutonomies, in which the economy functions in all
respects in the interests of its richest 10 percent,</i> largely
oblivious of the needs of everyone else. Is this what's taking
place?<br>
<br>
NOAM CHOMSKY: It's a development that's been going on, though even
more so in Europe. The United States in many ways resembles a Third
World country - far more elevated, but it has many of those
structural characteristics:<i> the extreme inequality of wealth, the
deterioration of infrastructure because it only serves poor
people, predatory operations, huge corruption,</i> and so on.
These are all pretty typical of Third World countries, not countries
that are trying to develop a sound future economy. Let's just steal
what we can and go away. Regarding Citigroup's analysis, it's
certainly more so than before. It's never been untrue, but certainly
more so now. Take the period that was moving toward social democracy
of some kind - say the '50s and the '60s -- that's when the
technology that you're using right now was developed. And it was
developed at taxpayer expense, but there was no particular thought
that the taxpayer would benefit from it. People who would benefit
from it were IBM, Microsoft, and so on. The corporate sector wanted
the population of the country to pay the costs, take the risks. And
it was done totally fraudulently, not so that you could have a
computer. People thought they were defending themselves from the
Russians or something. But planners understood ... They were
building the economy of the future, from which they are going to
benefit. And maybe incidentally others will, but that's only
incidental.<br>
<br>
...there was a period of regulation from the New Deal up to the
'70s, and there were no financial crises. Since the '70s, the
regulatory structure has partially been dismantled, partially
captured - you know, regulatory capture - and partially it's been
affected by what's sometimes called cognitive regulatory capture.
That is, the regulators bought the ideology that's being peddled by
economists, and business happily picks it up because it's so good
for them, not because they think there's any merit in it. And as a
result, since the '70s there have been repeated financial crises;
this is not the first one, they've been regular.<br>
<br>
...Reagan left the country with a major financial crisis - Savings
and Loans (after another in 1987) - ten years later you had the tech
bubble; in between, you had Long Term Capital Management; the fact
that the economics profession could survive that is astonishing. You
know the story, a couple years after that comes the housing bubble.
For the population, the economy has been surviving on asset
inflation, increasing debt and increasing work hours, often for both
adults in the family.<br>
<br>
From <a class="moz-txt-link-rfc2396E" href="http://www.chomsky.info/interviews/20101119.htm"><http://www.chomsky.info/interviews/20101119.htm></a>.<br>
</body>
</html>