The transcript of Dialogos Radio’s interview with the universally renowned scholar Noam Chomsky, on the latest political, economic, and social developments in Greece and in Europe, follows below. This interview aired on October 11-12, 2012. Find the podcast of this interview here.
MN: Professor Chomsky, thank you for joining us on Dialogos Radio. You have written and spoken extensively about the ongoing crisis in Greece and Europe, and about similar crises in the past. To begin, you’ve said in the past that the “troika”—the IMF, the European Union, and the European Central Bank—want to destroy Greece. Why do you believe Greece is the target, or the scapegoat if you will, when it represents such a small percentage of the world’s economy?
NC: Well, I’m sure I didn’t say “wants to destroy Greece,” I say that its policies are destroying Greece. What I presume they’re trying to do—actually, what was stated by the president of the ECB Mario Draghi—he didn’t state this as an intention, but as a description of what’s happening. He says the current policies will destroy the European social contract, the welfare state. That was in an interview in the Wall Street Journal. He wasn’t advocating it, he was describing it. And I think that’s probably pretty accurate. I don’t think they are picking on Greece specifically, it’s that Greece is the weakest link in the chain, so it will therefore suffer the most from these policies.
MN: In your view, why has there been such a tremendous and continued insistence on austerity measures when these measures have, so far at least, not worked out in Greece?
NC: Well it depends what you mean by working out. They certainly haven’t been working out in terms of reviving the economy or even in paying off the debt. That’s actually increasing. And it’s not that these policies aren’t working now. Such policies virtually never work. In fact, the IMF not long ago did a study of, I think, a few hundred cases of austerity under recession, and found that the record is typically very poor. It’s understandable why—what you need in a period of recession is growth, and that requires stimulation. That’s why even the business press, like Business Week in the United States, or correspondents for the Financial Times in London, are urging as they put it, “now is the time to press the accelerator, the break will come later.” It’s actually the same advice that Christiana Roemer (?), the former head of Obama’s council of economic advisers gave, when she recommended a strong stimulus. With a small stimulus—it should have been larger—but even the small stimulus had a positive effect. And I think that’s correct, I think the business press is correct in saying that what you have to do is stimulate the economy, and as the economy grows, you have the capacity to pay off debt, but if you impose austerity, it probably will just increase the debt, meanwhile causing enormous pain. Many human lives are being lost, and forever. For young people particularly, if they are driven off the job market, the chances of recovering are not high. That means their lives. Also, from a strictly economic point of view, the narrow economic point of view, forgetting any human consequences, that means huge resources are wasted. The human resources, human capital, economists like to call it, which can be producing what people need. In fact what we’re seeing—it’s not that the European Union is short of resources. It has plenty of resources that it could use. Same in the United States. So what we’re seeing is a real indictment of the socioeconomic system in which we live. There are a huge number of people who want to work—in the United States its probably close to 25 million that are either unemployed or underemployed or have given up—maybe 23 million, comparably, in Europe, huge number of people that want to work, plenty of resources to put them to work, a lot of work that needs to be done to satisfy basically people’s needs and legitimate wants, but the system can’t get them together. There couldn’t be a harsher indictment of the socioeconomic system. And I don’t think it’s that the methods are all that obscure. The simple proposal of most of the business press is to the point, many economists have pointed out the same thing, Nobel laureates and others. There are resources there, they’re ample, they can be used to stimulate the economy. Right now it would have to be done through the federal government, because demand is low, and therefore corporations, which happen to be sitting on huge profits, are not investing them because there’s no demand. So the demand’s not going to come from that, therefore it’ll come from the government.
MN: Why aren’t these resources being taken advantage of, then, whether we’re talking about the Eurozone or the United States. Why aren’t these resources being put to use?
NC: Well there are official reasons, I don’t think they’re very credible but you can judge them for yourself. First of all we should recognize that there’s a difference between the U.S. and the European central banks. The U.S. central bank, the Federal Reserve, has an official commitment to two different policies. One is to prevent inflation from getting too high. The second is to maintain high employment. Those are its two legal requirements. The European central bank has only the first. It has no commitment to keep employment up. And that’s the result of its domination by the Bundesbank, the German bank, who are inflation hawks. I think, and plenty of economists think, again including Nobel laureates, that they had 2% inflation goal, and actually their inflation is not even close to a problem, but the banks don’t like the possibility of maybe inflation, far in the future. High inflation isn’t good for financial institutions, it’s a pretty remote contingency right now. But that’s their commitment, to keep potential inflation though, even though to stimulate the economy, they are going to have to accept a higher rate of inflation. There’s quite good, substantial economic literature showing that a higher rate of inflation, if it’s more or less stable, is perfectly consistent with long-term growth. But even that’s not done. In the United States it’s kind of similar, except that the Fed does have a commitment to employment. And in fact, in comparison with the European central bank, the U.S. fed has been mildly progressive. It’s taken at least some moves towards stimulating the economy. They could do a lot more, there’s no fear of inflation here. It’s kind of interesting that all these people are supposed to be worshipping markets, but the markets are telling them, loud and clear, that they see no concern about inflation. That’s why money is pouring in to U.S. treasury instruments, even though the interest rate is so low that people are apparently losing money just to keep it in a safe place. They wouldn’t be doing that if they felt there was going to be inflation and that the value of their deposits would decline. So the markets are saying we don’t see any problem with inflation. There’s no evidence of any such problem. But the financial institutions have been so powerful in determining policy that their concern for eventual inflation, which is not in sight, is in fact increasing the severity of the problem. That’s the benign interpretation. There’s a less benign interpretation, and that is that it’s been suggested that it really comes down to class war, it’s an effort to destroy the social contract, the European welfare state, the much weaker U.S. welfare state. In fact, that’s been almost stated. For example, Mario Draghi, the president of the ECB, in a Wall Street Journal interview a couple of months ago, did point out that the social contract of Europe is obsolete. He wasn’t saying that’s the goal of policy, but it’s hard to doubt that there are those who see it as a goal of policy, and that’s the effect that it’s having, at least in Southern Europe, and to a much more limited extent in the north. And this is not new, incidentally. This goes back to Reagan and Thatcher. The Reagan-Thatcher neoliberal assault, I think it’s a fair word, all throughout the world, on domestic societies too, has had just this effect, this predictable effect.
MN: Parliamentary elections were held in Greece in May and again in June. How would you characterize the elections and the overall political climate that has developed in Greece, including the rise of parties like Syriza on the left and the Golden Dawn on the right?
NC: Well, I’m afraid that these are signs of desperation. The Greek population is being squeezed beyond the capacity to endure. I mean, it’s not becoming southern Africa, it’s still a relatively well-off country by international standards, but it’s being driven down to living standards of the 1960s and maybe earlier. And that’s pretty hard to tolerate. It does have to be added, there are plenty of internal problems in Greece. You can’t attribute everything to the troika, though I think their policies have been bad enough. I mean Greece has, in a way, been a partially dysfunctional society. For example, the wealthy barely pay taxes. I mean, to an extent that is true elsewhere, including the United States, but it’s been pretty extreme in Greece. And there’s also been a proliferation of unnecessary and in fact harmful bureaucracy that has ought to be taken care of no matter what the policies are, even if Greece is flourishing. It’s been claimed in the northern countries that Greeks don’t work hard enough, but that’s just not true, they have higher working hours than Northern Europe. But there are a lot of internal problems in Greece which are being exacerbated by the policies of troika.
MN: In the past, you’ve developed a list of media manipulation strategies that the media around the world uses in order to establish control and to manipulate in many ways the audience. Do you believe that the people of Greece are victims of any of these strategies, or do you believe that the global community has fallen victim to these strategies, as a result of the very negative reporting about Greece in the global media?
NC: Well I should add a cautionary note here. You may be referring to something that circulates on the internet called, I think, 10 strategies of manipulation by the media, which is attributed to me, but I didn’t write it. There have been many efforts to correct it, to get it off, but once something’s on the internet, it’s hopeless. So if that’s what you mean, it’s not mine. I wouldn’t say the media have a particular strategy, I mean, the media are different in different countries. But, take, say, the United States, which has been the most intensively studied, I think, other Western European countries are pretty similar but there’s not as much study of them. In the United States there are very definite pressures, institutional pressures primarily, which tend to drive media coverage and choice of issues and so on, in particular directions, which are not surprisingly, tend to be supportive of major power structures—the state and the private sector and concentrated private power, which are very closely linked. I and others have written about these pressures—I wouldn’t call it a media strategy—it’s a reflection of the pressures within which they function. And I think…there’s a huge amount of documentation which, in my view, shows quite persuasively that these pressures have a big impact—not 100%, there’s a range of variation—but very substantial impact on what the media choose to focus on, and what they report about it, and how they present it. You see that all the time. I mean, you can hardly open a copy of the newspaper without seeing it. So take, say, this morning’s New York Times. There’s a front page story, if you look at the headline, the story is about an evil man, he’s called, who’s in charge of creating chaos in Iraq. I mean, you can think of somebody else who created chaos in Iraq: namely, the United States, which, first of all, imposed 10 years of murderous sanctions, practically devastated the society, then invaded the country, killed hundreds of thousands of people, displaced a couple of million out of the country, half destroyed the society, engendered a bitter ethnic conflict which didn’t exist before, and it’s had horrible effects. Well that’s creating chaos, but since we did it, it’s not creating chaos. And if Iran is trying to—if you read the report, is trying to extend their influence into Iraq, their neighboring country, as we do and everyone else does—that’s causing chaos. Well okay, that’s a perception that reflects the interests of state and private power here, and we could regard as laughable if we saw it somewhere else. And that’s typical and you find it constantly. I don’t think it’s conscious, it’s just deeply embedded in the mentality of not only the media but the educated classes pretty generally. So I doubt if many readers find this very surprising.
MN: In your view, what are Greece’s options at this stage in order to overcome this crisis and the ongoing cycle of austerity. For instance, do you believe that a return to a national currency would be a good thing for Greece?
NC: Well that has been suggested. There’s some quite good economist who have suggested it. It means basically pulling out of the European Union. That has definite costs for the European Union and for Greece. It would permit Greece to use classical means to try to extricate itself from the crisis. For example, it could deflate its currency and improve its capacity to export, at a cost of lowering the standard of living. That’s a kind of natural way to get out of a crisis like this. Can’t do it as long as it’s in the Eurozone. It would have that option. But they would have to think pretty carefully about the array of costs and benefits, and frankly, I don’t feel like I have enough of a grasp on it to make a judgment. It’s a hard judgment. I don’t know if anyone has the capacity, but it’s a hard judgment that has to be thought through.
MN: Are there other alternatives that you feel could bring Greece towards prosperity again, other than a return to its own currency?
NC: Yeah. A stimulative policy in the Eurozone. The Eurozone has resources. There’s plenty of resources. They could be used to stimulate growth in the countries facing difficulties—they’re all facing slight difficulties, but they are severe in the south, Greece, Spain, Portugal, Italy, and Ireland, which is sort of metaphorically south, the peripheral parts. I should say that in a certain sense, Europe is now suffering from its relative humanity—stress the word relative. So for example, if you compare the European Union to its North American counterpart, NAFTA—not an exact counterpart but similar—they were developed at about the same time but in quite different ways. In the case of the European Union, before the poorer countries were permitted into the Union, the richer countries in the north used a variety of devices to improve, to raise the standard of living and the standards of production in the poorer countries, so that when they did enter, they wouldn’t undermine the living standards of northern workers. And that was pretty successful, compensatory spending, subsidies of various kinds and so on. It wasn’t perfect, but it made some move in that direction, it was moderately successful. It was a failure in that an economic union didn’t have as a counterpart a political union, which is now causing severe problems. But to a limited extent, that was successful. Compare that with the United States. When the US, under Clinton, took the initiative in creating NAFTA, which is kind of an economic union—Canada, the United States, and Mexico—that’s two rich countries and one poor country. It did not take those steps towards Mexico. It’s not that it wasn’t suggested—the Office of Technology Assessment, Congress’ research bureau, since disbanded, made exactly that proposal, spelled it out in considerable detail, and urged that that would lead to a high wage, high growth economy for all three countries. The U.S. labor movement took exactly the same position. There’s a labor advisory council which according to U.S. trade law is supposed to be consulted on such things, but wasn’t until the very last minute. But they made very similar proposals, again using the European Union model as a suggestion. Not only was that rejected, it wasn’t even discussed, and the press wouldn’t report it. So nobody knows about it, unless they read kind of arcane literature. But now Europe is paying the cost. In North America, the cost has been quite severe. For Mexico it’s been very harmful. There’s a lot of propaganda, including media propaganda, about Mexico’s great economic success since NAFTA, but if you just look at the data, it’s a complete fabrication, it’s been pointed out over and over. And for the United States and Canada too, it’s meant lost employment, a means to destroy unions. So for example, in the United States, one effect of NAFTA was that enterprises, companies here could destroy organizing efforts by threatening to transfer the plants of the enterprise to Mexico if workers continued to try to organize. In fact, under a NAFTA study, run by a Cornell university labor historian, it was discovered that those efforts increased very sharply, I think 50% after NAFTA. Now that happens to be illegal, but corporations can quite freely carry out illegal actions when there’s a criminal state that’s not going to enforce it. And that played a notable role in undermining unions, hence undermining the workforce and the standard of living of working people. Plus, just the ability to shift jobs to Mexico under what’s ludicrously called trade—it’s not trade, it’s operations internal to a command-and-control economy. That’s economic chicanery. Anyway, this happened in North America, it didn’t happen in Europe, and now, in a certain way, Europe is paying a price for its relative humanity. That doesn’t exonerate the actions of the troika in any respect.
Please excuse any typos or errors which may exist within this transcript.