Noam Chomsky breaks down the reasons for the US economic decline over the past four decades:
American decline entered a new phase: conscious self-inflicted decline. From the 1970s, there has been a significant change in the US economy, as planners, private and state, shifted it toward financialization and the offshoring of production, driven in part by the declining rate of profit in domestic manufacturing. These decisions initiated a vicious cycle in which wealth became highly concentrated (dramatically so in the top 0.1% of the population), yielding concentration of political power, hence legislation to carry the cycle further: taxation and other fiscal policies, deregulation, changes in the rules of corporate governance allowing huge gains for executives, and so on.Meanwhile, for the majority, real wages largely stagnated, and people were able to get by only by sharply increased workloads (far beyond Europe), unsustainable debt, and repeated bubbles since the Reagan years, creating paper wealth that inevitably disappeared when they burst (and the perpetrators were bailed out by the taxpayer).
I never truly understood economics until I read Chomsky, and I highly recommend reading his work if you want to understand the reality of modern capitalism. His analysis of the global financial system is astonishing to read as it elegantly lays out the structure of a fraudulent system built on inequality, debt and massive instability. Chomsky has a scientists mind, not an economists, so he avoids inside jargon and focuses on explaining core concepts in simple terms. You can go through an archive of his articles here, and I would suggest reading ‘Understanding Power’, a brilliant collection of interviews and lectures Chomsky has given over the past 20 years or so.
I’ve moved slightly away from Chomsky’s views on foreign policy in recent times as I think his depiction of Western governments as cruel imperialists bent on destroying the third world is overly simplistic (not entirely wrong by any means though), but his writing on economics is unparalleled in my opinion.
Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.