Forum Post: On the Origins of the Crisis

"There was also a sharp change in the US economy in the 1970s, towards financialisation and export of production. A variety of factors converged to create a vicious cycle of radical concentration of wealth, primarily in the top fraction of 1 per cent of the population - mostly CEOs, hedge-fund managers, and the like. That leads to the concentration of political power, hence state policies to increase economic concentration: fiscal policies, rules of corporate governance, deregulation, and much more. Meanwhile the costs of electoral campaigns skyrocketed, driving the parties into the pockets of concentrated capital, increasingly financial: the Republicans reflexively, the Democrats - by now what used to be moderate Republicans - not far behind.

"Elections have become a charade, run by the public relations industry. After his 2008 victory, Obama won an award from the industry for the best marketing campaign of the year. Executives were euphoric. In the business press they explained that they had been marketing candidates like other commodities since Ronald Reagan, but 2008 was their greatest achievement and would change the style in corporate boardrooms. The 2012 election is expected to cost $2bn, mostly in corporate funding. Small wonder that Obama is selecting business leaders for top positions. The public is angry and frustrated, but as long as the Muasher principle prevails, that doesn't matter.

"While wealth and power have narrowly concentrated, for most of the population real incomes have stagnated and people have been getting by with increased work hours, debt, and asset inflation, regularly destroyed by the financial crises that began as the regulatory apparatus was dismantled starting in the 1980s.

"None of this is problematic for the very wealthy, who benefit from a government insurance policy called "too big to fail." The banks and investment firms can make risky transactions, with rich rewards, and when the system inevitably crashes, they can run to the nanny state for a taxpayer bailout, clutching their copies of Friedrich Hayek and Milton Friedman.

"That has been the regular process since the Reagan years, each crisis more extreme than the last - for the public population, that is. Right now, real unemployment is at Depression levels for much of the population, while Goldman Sachs, one of the main architects of the current crisis, is richer than ever. It has just quietly announced $17.5bn in compensation for last year, with CEO Lloyd Blankfein receiving a $12.6m bonus while his base salary more than triples.

"It wouldn't do to focus attention on such facts as these. Accordingly, propaganda must seek to blame others, in the past few months, public sector workers, their fat salaries, exorbitant pensions, and so on: all fantasy, on the model of Reaganite imagery of black mothers being driven in their limousines to pick up welfare checks - and other models that need not be mentioned. We all must tighten our belts; almost all, that is.

Teachers are a particularly good target, as part of the deliberate effort to destroy the public education system from kindergarten through the universities by privatisation - again, good for the wealthy, but a disaster for the population, as well as the long-term health of the economy, but that is one of the externalities that is put to the side insofar as market principles prevail."

• Noam Chomsky, from "Is the World Too Big to Fail?"

http://english.aljazeera.net/indepth/opinion/2011/09/201192514364490977.html