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A state of economic emergency

MIT professor and social activist Noam Chomsky at the third annual Boston Symposium on Economics
February 13th, 2014

For some simple tips on how to ruin an economy, one has to look no fur­ther than the United States, according to MIT pro­fessor and social activist Noam Chomsky.

“There are tens of mil­lions of people eager to work, but with no jobs many of them have dropped out of the work­force in despair,” Chomsky explained on Monday evening in the Raytheon Amphithe­ater at North­eastern University’s third annual Boston Sym­po­sium on Eco­nomics. “There are ample resources to pro­vide employ­ment but they are hidden away, where they cannot be accessed, in the over­flowing pockets of the super rich in the cor­po­rate sector.”

Chomsky, who is known as the “father of modern lin­guis­tics,” has par­tic­i­pated in all three sym­posia, which are designed to encourage cre­ative dis­cus­sions on issues con­cerning the well being of the world’s cit­i­zens. The annual event is spon­sored by the North­eastern Uni­ver­sity Eco­nomics Society, an under­grad­uate club based in the Col­lege of Social Sci­ences and Human­i­ties.

The title of this year’s sym­po­sium was “The Dynamic Role of Cen­tral Banks in the Economy,” and the event also fea­tured pre­sen­ta­tions by George Black­ford, director of the web­site Real World Eco­nomics, and Ted Truman, senior fellow at the Peterson Insti­tute for Inter­na­tional Eco­nomics, a non­profit research institution.

Chomsky, for his part, described the rea­sons behind the strug­gling U.S. economy. He argued that cer­tain fac­tors — among them cut­ting fed­eral funding for research and devel­op­ment and the growing gap between the richest 1 per­cent and every­body else — have led to the country’s cur­rent eco­nomic climate.

“The system is so dys­func­tional that it cannot put eager hands to needed work using the resources that would be avail­able if the economy were designed for human needs,” Chomsky said. “These things didn’t just happen like a tor­nado — they are the results of delib­erate poli­cies over roughly the past generation.”

Truman’s talk focused on the world’s reliance on cen­tral banks during the most recent global finan­cial crisis.

“Cen­tral banks are where the money is,” he said, noting that they oversee a country’s cur­rency, money supply, and interest rates. After the start of Great Reces­sion in 2007, he said, the bal­ance sheets of cen­tral banks in major coun­tries were mobi­lized to not only repair pri­vate bal­ance sheets, but also to restore eco­nomic sta­bility. Because of the assis­tance they pro­vided, the bal­ance sheets at the cen­tral banks in the U.S., Japan, Europe, and Eng­land have increased more than three­fold since 2007.

“The actions of cen­tral banks during the global eco­nomic crisis raised their status to that of Olympian alchemists,” Truman said. “Going for­ward, cen­tral banks will have to deal with that reality.”

- By Joe O’Connell


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