Recent Interview of Noam Chomsky Re- the Economy, Etc.

by Amy Goodman:

NOAM CHOMSKY: Like Larry Summers, for example, who is now [Obama's] chief economic adviser. I mean, he was Secretary of Treasury under Bill Clinton. His great achievement was to prevent Congress from regulating derivatives, exotic financial instruments. Well, that’s one of the main factors that led to the crisis.

His kind of senior adviser, one of the first, was Robert Rubin, who was Secretary of Treasury right before Summers. His main achievement—many achievements, like what he did to Indonesia and the third world, but here, his main achievement was to lead the way to revoke the Glass-Steagall legislation from the New Deal, which protected commercial banks from risky investments. It broke down those barriers. Immediately after having done this, he left the government, joined Citigroup as a director, and they began to make huge profits, including him, from picking up insurance companies and so on and making very risky loans, relying on the “too big to fail” doctrine, meaning if we get in trouble, the taxpayer will bail us out, which is just what’s happening, taxpayers now pouring tens of billions of dollars into rescuing Citigroup.

Well, these are the advisers who were supposed to fix up the system. Tim Geithner was right in the middle of this. He was head of the New York Federal Reserve, so, yes, he was supervising these actions. Now, you know, you can argue about whether they’re doing the right thing or the wrong thing, but are these the people who should be fixing up the system?

Actually, the business press just had some interesting things to say about this. Bloomberg News, you know, main business press, had an article in which they reviewed the records of the people who Obama invited to his economic summit. I think it must have been last November or December. They just reviewed the record. I think there were a couple dozen of them. People on the—you know, people like, say, Stiglitz, Krugman, they were never even allowed close to it, let alone anyone from the left or labor and so on, given token representation. So they went through the records, and they concluded that these people should not be invited to fix up the economy. Most of them should be getting subpoenas because of their record of accounting fraud, malpractice and so on, and helping bring about the current crisis.

* * * * *

AMY GOODMAN: Why do you think Obama chose to surround himself [with people like Summers]?

NOAM CHOMSKY: Because those are his beliefs. I mean, his support comes from the—his constituency is basically the financial institutions. Just take a look at the funding for his campaign. I mean, the final figures haven’t come out, but we have preliminary figures, and it seems to be mostly financial institutions. I mean, the financial institutions preferred him to McCain. They are the main funders for both—you know, I mean, core funders for both parties, but considerably more to Obama than McCain.

You can learn a lot from campaign contributions. In fact, one of the best predictors of policy around is Thomas Ferguson’s investment theory of politics, as he calls it—very outstanding political economist—which essentially—I mean, to say it in a sentence, he describes elections as occasions in which groups of investors coalesce and invest to control the state. And he takes a look at the formation of campaign contributors, and it gives you a surprisingly good prediction of what policies are going to be. It goes back a century, New Deal and so on. So, yeah, it can predict pretty well what Obama is going to do. There’s nothing surprising about this. It’s the norm in what’s called political democracy.

Ok, arguably massively violating copyright here; but check out this segment:

NOAM CHOMSKY: Well, healthcare is a dramatic case. I mean, for decades, the healthcare issue has been right at the top of domestic concerns, for very good reasons. The US has the most dysfunctional healthcare system in the industrial world, has about twice the per capita costs and some of the worst outcomes. It’s also the only privatized system. And if you look closely, those two things are related. And the privatized system is highly inefficient: a huge amount of administration, bureaucracy, supervision, you know, all kinds of things. It’s been studied pretty carefully.

Now, the public has had an opinion about this for decades. A considerable majority want a national healthcare system, like other industrial countries have. They usually say a Canadian-style system, not because Canada is the best, but at least you know that Canada exists. Nobody says an Australian-style system, which is much better, because who knows anything about that? But something like what’s sometimes called Medicare Plus, like extend Medicare to the population.

Well, up until—it’s interesting. Up until the year 2004, that idea was described, for example, by the New York Times as politically impossible and lacking political support. So, maybe the public wants it, but that’s not what counts as political support. The financial institutions are opposed, the pharmaceutical institutions are opposed, so it’s not—no political support. Well, in 2008, for the first time, the Democratic candidates—first Edwards, then the others—began to move in the direction of what the public has wanted, not there, but in that direction.

So what happened between 2004 and 2008? Well, public opinion didn’t change. It’s been this way for decades. What changed is that manufacturing industry, a big sector of the economy, has recognized that it’s being severely harmed by the highly inefficient privatized health system. So, General Motors said that it costs them over a thousand dollars more to produce a car in Detroit than across the border in Windsor, Canada. And, you know, when manufacturing industry becomes concerned, then things become politically possible, and they begin to have political support. So, yes, in 2008, there’s some discussion of it.

Now, you know, this is very revealing insight into how American democracy functions and what is meant by the term “political support” and “politically possible.” Again, this should be headlines. Will a proposal come that approaches what the public wants? Well, we’re already getting the backlash, strong backlash. And what private healthcare systems are claiming is that this is unfair. The government is so much more efficient that they’ll be driven—there’s no level playing field if the government gets into it, which is true.

So much more here; please read the whole dam' thing.