Skip to content

A state of economic emergency

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.”