Chomsky on Giethner
Noam Chomsky: Geithner plan is recycled Bush - Paulson
Noam Chomsky speaks to Paul Jay on the Obama - Geithner plan. Chomsky says that "they're simply recycling, the Bush-Paulson measures and changing them a little, but essentially the same idea: keep the institutional structure the same, try to kind of pass things up, bribe the banks and investors to help out, but avoid the measures that might get to the heart of the problem."
Bio
Noam Chomsky has written and lectured widely on linguistics, philosophy, intellectual history, contemporary issues, international affairs and U.S. foreign policy. His works include: Aspects of the Theory of Syntax; Cartesian Linguistics; Sound Pattern of English (with Morris Halle); Language and Mind; American Power and the New Mandarins; At War with Asia; For Reasons of State; Peace in the Middle East?; Reflections on Language; The Political Economy of Human Rights, Vol. I and II (with E.S. Herman); Rules and Representations; Lectures on Government and Binding; Towards a New Cold War; Radical Priorities; Fateful Triangle; Knowledge of Language; Turning the Tide; Pirates and Emperors; On Power and Ideology; Language and Problems of Knowledge; The Culture of Terrorism; Manufacturing Consent (with E.S. Herman); Necessary Illusions; Deterring Democracy; Year 501; Rethinking Camelot: JFK, the Vietnam War and US Political Culture; Letters from Lexington; World Orders, Old and New; The Minimalist Program; Powers and Prospects; The Common Good; Profit Over People; The New Military Humanism; New Horizons in the Study of Language and Mind; Rogue States; A New Generation Draws the Line; 9-11; and Understanding Power.
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Transcript
NOTE: THIS TRANSCRIPT IS UNEDITED. CHANGES MAY ENSUE. THE REAL NEWS NETWORK IS NOT RESPONSIBLE FOR MISTAKES FOUND HEREIN.
PAUL JAY: Welcome to The Real News Network. We're in Cambridge at MIT with Professor Noam Chomsky, who I think needs no introduction. Thanks for joining us.
CHOMSKY: Glad to be with you.
JAY: So a few days ago, the Obama administration and Geithner, they announced their plan for the banks. What do you make of it?
CHOMSKY: Well, there are several plans, actually. One is capitalization. The other, the more recent one, is picking up the toxic assets with a private-public coalition. And that sent the stock market zooming right away. And you can see why: it's extremely good for bankers and investors. It means that an investor can, if they want, purchase these valueless assets. And if they happen to go up, well, it makes money; if they go down, the government insures it. So there might be a slight loss, but there could be a big gain. And that's—one financial manager put it in The Financial Times this morning, "It's a win-win situation."
JAY: A win-win situation if you're the investor.
CHOMSKY: If you're the investor, yeah.
JAY: If you're the investor.
CHOMSKY: For the public it's a lose-lose situation. But they're simply recycling, pretty much, the Bush-Paulson measures and changing them a little, but essentially the same idea: keep the institutional structure the same, try to kind of pass things up, bribe the banks and investors to help out, but avoid the measures that might get to the heart of the problem—however, at the cost, if you consider it a cost, of changing the institutional structure.
JAY: What's the plan you would support?
CHOMSKY: Well, I mean, say, for example, take the bonuses, the AIG bonuses that are, you know, causing such anger, rightfully. Dean Baker pointed out that there's an easy way to deal with it. Since the government pretty much owns AIG anyway (it just doesn't use its power to make decisions), split off the section of AIG—the financial investment section—that caused all the problems, split it off, and let it go bankrupt. And then the executives can seek to get their bonuses from a bankrupt firm if they like. So that would pretty much take care of the bankruptcy problem, and the government would still maintain its large-scale effective control, if it wants to exert it, of what's viable in AIG. And with the banks, the big banks, like Bank of America, one of the big problems is nobody knows what's going on inside. You know, there are very opaque devices and manipulations which technically the government—. They're not going to tell you themselves. You know, why should they? It's not their business. In fact, when Associated Press sent journalists to interview bank managers and investment-firm managers and ask them what they've done with the TARP [Troubled Assets Relief Program] money, they just laughed. They said, "It's none of your business. We're private enterprises. Your task, the public, is to fund us, but not to know what we're doing." But the government could find out—namely, essentially, take over the banks.
JAY: Is all of this sort of machinations of policy because they want to avoid nationalization?
CHOMSKY: You don't have to use the word "nationalization" if it bothers people, but some form of, you know, receivership which would at least allow independent investigators, government investigators, to get into the books, find out what they're doing, who owes what to whom, which is the basis for any form of modification. I mean, it could go on to something much beyond, but it's not contemplated. It's not a law of nature that corporations have to be dedicated solely to profit for their shareholders. It's not even legislation. It's mostly court decisions and management rules and so on. And it's perfectly conceivable for corporations, if they exist, to be responsible to stakeholders, to the community, to the workforce.
JAY: Well, especially when it's all public money at this point that's running the system.
CHOMSKY: Look, fact of the matter is it's almost always public money. So take, say, the richest man in the world, Bill Gates. How did he become the richest man in the world? Well, a lot of it was public money. In fact, places like where we're sitting right now,—
JAY: MIT.
CHOMSKY: —that's where computers were developed, the Internet was developed, fancy software was developed, either here or in similar places, and almost entirely on public funding. And then, of course, I mean, the way the system works, fundamentally—it's kind of an overstatement, but fundamentally, is that the public pays the costs and takes the risks, and the profit is privatized.
JAY: Which is what we're seeing now with the whole [inaudible] bailout.
CHOMSKY: Well, there's a lot of talk about it now because it's the financial institutions and it's very visible, but this happens all the time. I mean, as I say, computers and the Internet, the basis for the IT revolution in the late '90s.
JAY: So when you say "challenging the institutional structure," what would you like to see happen?
CHOMSKY: For a start, corporations, banks, and so on should be, I think, responsible to stakeholders. That's not a huge change. In fact, it's even been brought to the courts. It was an important case, highly relevant now. About 30 years ago, when the major steel companies wanted to destroy the Youngstown steel plants—major part of the steel industry, you know, the core of the community had been built up around it, and so on—and they wanted to move it or get rid of it. And the workers and the community wanted to keep it and felt they could run it privately. And in fact they brought a case up through the courts, arguing that the management rules ought to be changed so that stakeholders, rather than just shareholders, would have control over the corporation. Well, it lost in the courts, naturally, but it's a perfectly feasible idea. It could be a way to keep communities alive and the industry here.
JAY: So if you're looking at the financial system now and you take this principle, the representing the interests of all stakeholders, not just shareholders, what would that look like in terms of policy?
CHOMSKY: First of all, to begin with, it would mean that the government would not just bail out the banks, pour capital into them, but would exercise control. And control begins with inspection. So we find out what they're doing. And then you keep the viable parts. And if they're viable, they might just vote it into public control. I mean, the government could probably have, you know, bought AIG or Citigroup for far less than what they're paying them now. I mean, in a democratic society, the government would meet the public, and then there should be direct public engagement in what these institutions ought to do and how they ought to distribute their money, what the terms ought to be, and so on. I mean, they could be democratically run by the workforce, by the community.
JAY: But doesn't it—whether you use the word or not, requires a kind of nationalization. I mean, does the bank then become a publicly owned institution?
CHOMSKY: They become publicly owned institutions which serve the public and where decisions are made by the public. That's a long way off. You have to approach that in steps. When you think of nationalization, you know, the doctrinal system, with historical reasons, associates nationalization with, you know, some Big Brother taking it over, and the public follows orders. But that's not necessarily the way it's done. There are many nationalized institutions that are run quite efficiently. In fact, take, say, Chile, which is supposed to be the poster child for, you know, Thatcherite/Reaganite free-market economics. A large part of the economy's based on a nationalized, very efficient copper producer, Codelco, which was nationalized by Allende, but was so effective that during the Pinochet years it was never dismantled. Actually, it's being sort of chipped away at now, but it still provides the—I think it's still the biggest copper producer in the world, provides most of the government income. And elsewhere too there are highly successful nationalized firms. But nationalization is only one step towards democratization. The question is who manages them, who makes the decisions, who controls them. Now, in the case of nationalized institutions, it's still top-down, but it doesn't have to be. I mean, again, it's not a law of nature that institutions can't be democratically run.
JAY: What would it look like?
CHOMSKY: What would they look like?
JAY: Mm.
CHOMSKY: The participation by workers councils, by community organizations at meetings, discussions in which policies are made—that's how democracy's supposed to work. I mean, we're very far from that, I mean, even in the political system. Just take, say, primaries. Okay, the way our system works, candidates running for office, his campaign managers go to some town in New Hampshire and they set up a meeting, and the candidate comes in and says, "Here's what a nice guy I am. Vote for me." You know. And people either believe him or not and go home. Suppose we had a democratic system that worked the other way around. The people in the town of New Hampshire would get together at conferences, meetings, public organizations, and so on, and they would work out the policies that they would like to see. And then, if somebody's running for office, he can come; if they want, they could invite him, and he would listen to them. They would say, look, here's the policies we want you to implement; if you can do this, we'll allow you to represent us, but we'll recall you if you're not doing it.
JAY: Well, as you say, this is far off in terms of today's politics.
CHOMSKY: It's not that far off. It happens.
JAY: But at the national level, it's—.
CHOMSKY: At the national level it's far off. But let's take what's probably the most democratic country in the Western Hemisphere, although people don't like to think of it that way, Bolivia. It's the poorest country in the hemisphere. It's the poorest in South America. It's had elections in the last couple of years in which the large majority of the population, who happen to be the most repressed people in the hemisphere, the indigenous population, have for the first time in 500 years entered the political arena, determined the policies they want, and elected a leader from their own ranks, a poor peasant. And the issues are very serious—their control over resources, economic justice, cultural rights, the complexities of a very diverse multi-ethnic society. The policies are pretty much coming out of the public themselves, and the president is supposed to implement them. Now, you know, nothing works that perfectly, all sorts of problems, but that's kind of the basic theme. Okay. That's functioning democracy. It's almost the opposite of the way our system works.
JAY: Well, in the next segment of our interview, let's talk about the future of democracy, or what we might call it, in the United States. Please join us for the next segment of our interview with Professor Noam Chomsky.
(University of California Press), which examines the crisis of organized labor in the USA. Click 
By Dave Lindorff
As the country contemplates a major reform and restructuring of the way we run our national health care system (if it can even be called that), it needs to be pointed out that the mammoth health insurance industry is nothing but a parasite on that system.
Health insurance companies add zero value to the delivery of health care. Indeed, they are a significant cost factor that sucks up, according to some estimates such as one by the organization Physicians for a National Health Program, as much as 31 percent of every dollar spent on medical services (a percentage that has been rising steadily year after year).
Insurance companies are damaging in more ways than simply cost, though.
They also actively interfere in the delivery of quality medical care, as anyone who has had to battle with some “nurse” on the phone at an insurance company to get required pre-authorization for needed procedure can attest. Just recently, the editor of a local weekly alternative paper in Philadelphia, Brian Hinkey, the victim of a near fatal hit-and-run accident last year who spent several days in a coma, and has been working hard to regain the use of all his limbs and faculties, reported in an opinion piece in the Philadelphia Inquirer on how his insurer after a few successful weeks of in-hospital rehab, denied him coverage for six critical weeks for out-patient rehab services, though every specialist on head injuries knows that early, consistent therapy is crucial to recovery of lost brain function.
This kind of human abuse is standard operating procedure for companies whose bottom lines are fattened the more services they can deny to insured clients. My own father, once doomed by a metastasized cancer following prostate surgery, was saved by a procedure offered by a physician in Atlanta that his Blue Cross plan in Connecticut refused to pay for. He had to finance the expensive treatment himself.
Now these medical system parasites are suddenly running scared, because it is clear that if everyone in America is to be guaranteed health insurance coverage—a promised goal of the new administration of President Barack Obama, and, according to polls, the desire of a large majority of the American people—they are going to stand exposed as a costly impediment to achieving that goal.
Insurance companies have managed to stay profitable and at least somewhat affordable to the private employers and workers who, together, have to pay for them, by denying care not just to policy holders, who are denied certain tests and treatments but especially to those who have known ailments, who are simply denied coverage altogether.
For decades, people with “pre-existing conditions” have been either barred from coverage, or have had to sign waivers that excluded them from getting coverage for treatment of those pre-existing conditions. In the worst case, which is all too common, people have ended up dying because they couldn’t get treatment for common and easily treated ailments like high blood pressure or diabetes.
Now we hear that two big insurance trade groups, the Blue Cross and Blue Shield Association and America’s Health Insurance Plans, have offered to "phase out the practice of varying premiums based on health status in the individual market" in the event that all Americans are required to obtain health insurance.
Well sure they’re doing that. If they didn’t, the government would force them to! The insurance industry, in saying that it would not price sick people out of coverage in a nationally-mandated health insurance scheme, is merely recognizing the political firestorm that would arise if it were not to do that, and were to force the sick and inform onto some government insurance plan, subsidized by taxpayers, while they just cherry-picked the healthy population, as they’ve been doing now for decades.
The whole point is that if everyone is included in the insurance pool, instead of only the healthy population, then the overall cost of being chronically or critically ill to the individual is spread over the whole of society. Premiums get adjusted accordingly.
Medicare is the model. Here we already have a government plan that covers every single elderly and disabled person.
If we were to simply extend Medicare to cover everyone in America, we would essentially have the Canadian model of health care (which, it should be pointed out, costs half what we pay in America for health care when private insurance and government programs are added together). As with current Medicare, the government would pay for treatment, with private doctors and hospitals providing the care, and with the government negotiating the permissible charges. That, in a nutshell, is what “single-payer” means—the government is the single payer for all health care. It doesn’t mean, as the right-wing critics claim in their scaremongering propaganda, that people would be forced to use certain doctors and certain hospitals. Far from it. That’s what private HMOs do.
Medicare is efficient (only 3.6% of Medicare’s budget goes to administrative costs, compared to 31% for health care delivered through private insurance plans), its clients like it, and doctors and hospitals accept it.
We should not be tricked by this seeming sudden appearance of decency on the part of these corporate parasites. There is simply no valid reason for preserving the private insurance industry’s role in any health care reform plan that is aimed at giving everyone access to health care in America. The Obama administration needs to jettison its “free market” fetish when it comes to health care. The financing of health care for all Americans can all be handled much better by the government. Medicare has proven this. Other countries—Britain, Australia, France, Canada, Taiwan and most other modern nations have proven this.
Leave the insurance industry to handle our car insurance and our life insurance. It has no more place in the delivery of health care than do tapeworms in the digestive process of our bowels.
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DAVE LINDORFF is a Philadelphia-based journalist. He is author of “Marketplace Medicine: The Rise of the For-Profit Hospital Chains” (Bantam Books, 1992) and most recently of “The Case for Impeachment” (St. Martin’s Press, 2006). His work is available at www.thiscantbehappening.net