Noam Chomsky: “Europe’s policies make sense only on one assumption: that the goal is to try and undermine and unravel the welfare state.” | EUROPP

30 Replies to “Noam Chomsky: “Europe’s policies make sense only on one assumption: that the goal is to try and undermine and unravel the welfare state.” | EUROPP”

1. Noam Chomsky’s observation are correct and it is clear there are some who think it is about time the worlds economy got rid of all the hangers on. For those who believe that , I just have one question. Who do you think is going to buy all those “efficiently” created goods and services. The wealthy already have every thing they need and the rest of us will only save for the day the economy no longer requires our services.If entitlements are removed from the western economy, the economic contraction of the so called “fiscal cliff” will be like a childes slide in comparison.

   1. As you pointed out, the 1% need the 99% to buy the goods and services they produce. And the 99% need the 1% to create jobs. This is a symbiotic relationship. It is in the interest of both sides to ensure that the other thrives. We often seem to lose sight of this.

2. Sorry, Colin, I have to disagree with you here. In many cases the sequence was a huge increase of debt in the private sector, which then go offloaded onto governments, so that now they have to carry not only their own debt, but also the debt of their profligate banks and finance companies as well. Many of them would have fared well enough if they didn’t have to carry this double burden.

   1. Disagreement is welcome. How else can we get a balanced view?

      Ireland and Spain — yes, problems were caused by private sector debt.
      Greece, Portugal and Italy — the primary cause was fiscal profligacy.

      Austerity has certainly weakened the social contract in countries with fiscal problems, but the social contract in other Eurozone states emerged largely unscathed.

      1. Britain is another example where the biggest economic shock came from the imminent collapse of banks, which then had to be nationalised and their liabilities transferred to the taxpayers.Iceland, too.

         I heartily agree with you about the futility and inequity of the war on drugs, by the way (and as a non-drug user).

      2. Part of the problem is that no politician wants to be seen as soft on drugs.

3. If I had a choice between Noam Chonsky, an intellectual of decades standing and Joe Hockey a politician in a reactionary opposition, then Joe wouldn’t have a look in.

   1. Chomsky is at times brilliant, at other times on another planet. Much as I respect his intellect there is no way I would ever vote for him.

4. Unhappily, in many western countries, we have a group of politicians who as a matter of deliberate policy, to avoid being voted out of office, pursue a policy of making sure that a large proportion of the population have their hands in the public purse in the form of welfare handouts. This practice breeds an entitlement mentality, and a large section of the population comes to believe that everything in life should be provided for them either by the state, or by the efforts of others. This is independent of which side of politics you happen to inhabit, and I believe is the fundamental reason we are in this economic ditch. It really has nothing to do with economic theory, but just human greed.

   1. Good post. Especially your recognition that both sides play the same game. Look where populism landed Greece. You would think others would learn from their mistakes.

5. One of the biggest problems is the so called free trade theory of US capitalism. All over the western world industries have closed down (off shored) – taking with them jobs and a tax base. They are all buggered … same for the USofA. I saw it recently while in Europe – most countries in West and Eastern Europe were busy importing products and building debt while Turkey produced all it could use and then some. Guess which country has a future to build on? For more along these lines take a look an the bitter but impressive Paul C Roberts @ http://www.paulcraigroberts.org/2012/12/01/our-collapsing-economy-and-currency/

6. hooray at last common sense is being acknowledged. Hockey was ridiculed in April for stating the obvious at last others are being open and honest enough to come out and state what is apparent to anyone with an economic brain.
   Pity Wayne and Julia can.t see it. Sure we need a safety net but we also need policy that encourages innovation and productive employment. If I hear of another survey to confirm the last survey that stated the bloody obvious I’ll be more bald than I am already.

7. I really recommend you don’t read Chomsky, Colin. He will only annoy you by saying things you disagree with!

   1. Strangely enough, I support many of his views:

      • His view of corporate control — as opposed to direct ownership — of US media through advertising dollars.
      • His condemnation of 2010 US Supreme Court Citizens United ruling revoking the limits on campaign finance which he calls a “corporate takeover of democracy.”
      • His opposition to the “war on drugs”.

      The “war on drugs” is costly; ineffective because it enriches and empowers the traffickers; and selective because it targets certain drugs while ignoring others such as caffeine and alcohol. Rather wage economic war on drug traffickers, impoverishing them by providing limited free drugs to registered addicts (successfully trialed elsewhere) and driving up their supply costs by paying top-dollar to poppy growers or coca farmers to grow alternative crops. It would save $billions in law enforcement, while reducing social costs and usage — if managed correctly.

8. I always find it interesting that people who talk about “a sense of entitlement” invariably talk about other people’s sense of entitlement not their own. It is my experience that people who come from a priviliged background almost invariably think of themselves as entitled to the priviliges handed to them by accident of birth. It has never been a level playing field and I believe it never will. I have just finished reading some extracts from “The price of Civilisation: Economics and Ethics after the fall” by Jeffrey Sachs of Columbia University (one of the biggest-name economists in the world). I haven’t yet read the book, but I will, however he apparently says that America’s greatest problem is moral not economic and that at the root of America’s economic crisis lies a moral crisis.
   As I said I’m about to buy the book however I believe that is an accurate statement that applies world wide not just to Ameriica. No economic system will “fix the problems of the world” without an accompanying sense of moral obligation by those who are priviliged and I believe we ALL need to acknowledge that we are priviliged.

   1. Good post. We need to acknowledge we are privileged — and extend those privileges to others. Offering a first-world education to others would be a start.

      1. I agree Colin that a 1st world education should be the birthright of all Australians. I wonder if it would help to acheive that goal, if we valued (and paid) the teachers of our children as much as we value and pay the so called Captains of Industry and Commerce, who so frequently consider themselves overtaxed. I probably need to add that I am not a teacher, merely a retired accountant, who may perhaps have been also comparatively over paid at the time.

      2. I had in mind extending the opportunity for a 1st world education beyond our shores.

         If there was a shortage of teachers, I would say they are underpaid. I think you would find that most people prefer the role of teacher to that of a captain of industry — one reason why the latter are paid more. The other reason is because politicians and public company directors set their own pay.

      3. A 1st world education beyond our shores would indeed be a worthy aim. I was not completely serious in advocating that teachers should be paid the same as Captains of Industry, I recognise that the market has a place in setting pay rates. However I don’t agree that the market is quite as infallible in setting rates as you suggest. There is a case to be made that a 1st world education is not just a worthy aim, but essential infrastructure for the future. Perhaps we need to recognise that attracting the best talent to the teaching profession is essential to that aim and also recognise that that the past may not be the best model to use to attract the best talent. Of course money is not the only atttraction in choosing a new career, however it is a very powerful one. It is no accident that high pay rates have attracted high brain power to the banking and legal professions and it could be argued that we may have been much better off if that talent had been attracted to the teaching profession.
         All the professions (but particularly the medical profession) have shown beyond doubt that the market can be manipulated by restricting supply, there is no evidence to suggest that the medical talent pool has been detrimentally affected by this. Usually this has been achieved by setting higher levels of entry into the profession.
         I’m a supporter of the market economy in general, however the market is continually manipulated to achieve (usually selfish) ends. I would prefer to think of the market as the best available model we have, but far from perfect.
         If we want better education standards on a world wide scale, then we should be prepared to pay for it. That will probably mean more investment in technology to enable the best teachers to reach a wider student population, however attracting the best brains and talent to the teaching profession may be too important to leave to the market alone.

      4. Les
         You made a good point before ,However your clarification makes it clear there are some things about the worlds economy you don’t fully understand.The idea that all we have to do is give all young people a good education and all will be well. I suggest you look at the unemployment lines in the west , or talking to some of those who have one of those go nowhere Mc jobs and ask them about their situation. You also believe the market economy although flawed is the best way to provide the goods and services that are required to meet the needs of a society. Sadly if we continue this particular version of a market economy things will only get worse, In the not to distant future a very small group of families will finish up owning every thing you can stick a meter on, and a very enslaved existence for the rest of us. There are way’s we can alter thing’s, to make sure the needs of the many are met before the glutany of the few. Teaching people that their obsession with wealth accumulation is unhealthy for us all would be a good start..

      5. Chris, Your point about underemployed and unemployed graduates is valid. But that is a short-term issue related to the GFC. In the long-term, raising education standards is one of the best ways of promoting both stable government and prosperity. If we look at the world’s conflict zones, there is a strong correlation with low education standards.

         We have to teach people, not that self-interest is wrong, but enlighten them that up-lifting society is in their own self-interest.

      6. The price of any service set by the market is derivative from the value that we place on it. The market is not some kind of ‘objective’ mechanism that automatically reflects the intrinsic value of something. Education is valued more in the emerging nations in our region than it is in Australia, so they are prepared to pay more for it than we are. In the long run this might count against us, particularly in times when the terms of trade go against us again and we can no longer count on digging things out of the ground to make us rich.

      7. That is because the rewards are a lot higher. The pay difference between menial jobs and professional jobs is a lot higher in developing countries. So the incentive for education is higher.

      8. “There is a case to be made that a 1st world education is not just a worthy aim, but essential infrastructure for the future.”
         I couldn’t agree more. But I believe that we already have high quality people in the teaching profession. What we need to do is empower them by reducing red tape and improving technology so that they can achieve better outcomes.

         Market manipulation tends to benefit the few at the expense of many. It may raise incomes of some members of the medical profession but lowers the standard of medical care provided to the broader population. This is the same problem highlighted by Mancur Olson.

         This is not a criticism of the market mechanism but an argument in support of it — manipulation should be prevented so that the market can function.

      9. Thanks for your response Chris
         If I have given the impression that my beliefs are so simplistic as to think that the only thing necessary was to give all young people a good education and all will be well, I have not expressed myself very well. After Colin’s response “Offering a first-world education to others would be a start”, I went off at a tangent following that thread.
         I started work in the 1950’s, when it really was true to say that anybody who wanted to get a job could find one. That has not been the case now for many years and is unlikely to to be so in the future, for many reasons including the export of jobs to places where labour costs are much cheaper and technology which has made many jobs redundent or only able to be done by people with a relatively high IQ. Please do not misunderstand me, I do not think that the level of IQ measures the worth of people, however I happen to believe that at this stage of human society we have not found the right balance between what I might call “mind work” and “physical work”, or perhaps re-defined the whole concept of “work”.
         The Technology Revolutuon, which has taken hold since the 1950’s has had as much impact on human lives as did the Industrial Revolution, perhaps relieved somewhat by imperfect “safety nets”, but destroying the feelings of self worth of many people. There is much more that I could say about this, but perhaps that is enough.
         I must say that the Global Financial Crisis did not come as a surprise to me and I suspect that at some time in the future it may be recognised as the time when the “old paradigm” had to fail in order for the “next paradigm” to happen. I do not profess to know what that paradigm will be. I do believe that a change in morality will be far more important than a change of economic systems.
         Do I believe in “the market economy”? With reservations – yes. But only to the extent that mankind has found it necessary to exchange products and goods for as long as we can go back in history and it has filled that function reasonably well. Do I believe in Capitalism?, again a qualified yes. It has had some success in amassing the funds necessary and the spirit of enterprise necessay for investment to take place. Again I do have some reservations. I happen to agree with Adam Smith in thinking the creation of the Joint Stock Company was at least a mixed blessing, in that it seperated the Investor/entrpreneur from the management of the enterprise.
         Do I believe that there is also an important role for Government? Yes I do!, however again with reservations. I think it is now abundently evident that there is an important supervisory and regulatory role that can only be fulfilled by government. I think it is also abundently evident that there are functions of society that have never been satisfactorily performed by private enterprise and in my opinion arfe unlikely to be so in the future.
         I believe it is melting pot time. I don’t pretend to know the shape of the future. At this stage I foresee a scary scenario and a more optimistic scenario. The scary scenario would be a re-run of the 1930’s and 1940’s and there are many similarities and portends which could make that happen only perhaps worse next time. The more optimistic scenario would be that human beings are grown up enough to recognise the danger and find new ways of living together in relative harmony.
         Above all I think we need to re-discover morality, before we try to cobble together an improved economic system, however may be the configuration of that.
         There are many issues which I’m unable to follow up in a response such as this such as the environment, global warming, recognising the human dignity of all the world’s inhabitants, suffice it to say these and other issues cannot be divorced from economic questions.

      10. Les
          Thank you for your clarification of your clarification. I agree with much that you say however I would add a few points. I started gainful employment in the early sixties and have like you watched in amazement at the speed and complexity of societal change. Apart from longevity I am wildly travelled and now reside in a third world subsistence economy that has taught me much about where too from here in economics.
          If you are interested to continue a conversation that is outside this format I am at chrisperkins30@hotmail. I think it is important to exchange thoughts especially if they differ.

      11. I believe in the market mechanism. What we have experienced in recent years is a result of government interference with the market mechanism. Easy money policies, for instance, distorted price signals leading to a housing bubble. This does not mean lifting regulation. We should not confuse free markets with efficient markets. Efficient markets need strong regulation to prevent manipulation. We also need to eliminate interference with the market mechanism which can lead to imbalances. Increase market regulation while reducing market intervention.

9. The preferred model of how an economy should work, without supervision; espoused by right wing individuals; failed us all in 2008. Another model is needed.
   Having rating agencies destroying economies on the basis of failed right wing views of economic “principles” is sickening, disgusting, immoral, etc.
   The model used by the Chinese may not be perfect but it is working while USA and Europe are failing.
   Even Australia has a better ecoomy than USA and Europe which cling to an outmoded set of “principles”.
   A side issue is that too high a proportion of the economy is tied up in the financial sector and progress will not occur until this is rectified.

   1. I disagree for the following reasons:

      • The underlying cause of the GFC was interference with the market mechanism by the Fed and PBOC. Fed easy money policies distorted the supply of money in the economy, fueling the debt/housing bubble. Massive Treasury purchases by the Chinese supported the dollar at artificially high levels while driving long-term rates even lower.
      • History shows that centrally planned economies do no work. China’s success only came when they allowed the market mechanism to operate — when government got out of the way. Unfortunately they have not gone far enough and pressures are building in their economy that could cause a sharp setback as in Japan (1990) and most of the rest of Asia (1998).
      • Australia has all its eggs in one basket: selling commodities to China.

      But I do agree that an inflated financial sector is a risk to the economy.

10. Bankers & Lords beware as squatters are heading for your houses.

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