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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.”

– By Joe O’Connell

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