AMY GOODMAN: As members of Congress led by Newt Gingrich are currently fighting for an increase in military spending, we turn to a recent speech of MIT professor Noam Chomsky. He talks about how the U.S. budget is looking increasingly like the structural adjustment programs the U.S. imposes on developing countries.

NOAM CHOMSKY: The Washington Consensus, which is basically designed for the Third World, to make it that way and keep it that way, it’s now being applied not just to the Third World countries, but to other rich industrial societies, with the United States and Britain in the lead. However, it’s with a twist. Since it’s being applied at home, this is really existing free market theory that’s being applied at home, meaning nuanced, you know, so, powerful government to protect the rich, and market discipline and tough love for everyone else. And you see that very clearly. Go through the various elements of the Washington Consensus that I mentioned.

The first one is about reducing government. Well, that’s false. We’re not reducing government. We’re switching it, shifting it around. So, social spending is indeed way down since the 1970s, when this stuff started — accelerated after 1980, but it was starting in the mid-'70s. Kind of a benchmark example is AFDC, the main support system. That was cut virtually in half from about 1970 to 1990, with obvious effects on poor families and children and so on. It was part of a general war against women and children that was conducted by the conservatives under the name of family values. It's interesting that they were able to get away with that. That tells you something about the intellectual culture. Well, one part was the reduction of AFDC by roughly half from about 1970 to about 1990. It’s now essentially gone. Purpose of that, as you know, is so that 7 million, a couple of million — I think 5 or 6 million kids, average 7 years old, can learn responsibility. That’s part of tough love.

Meanwhile, another part of the government has been very stable and, in fact, is going up — namely, the Pentagon system, which remains at approximately Cold War levels. In fact, it’s higher now than it was under Nixon, although, you know, the big enemy has disappeared, which tells you exactly how much — tells a rational person, at least, exactly how much they were worried about the Russian threat. Not only does it remain at Cold War levels, but it’s going up under the initiative of the fiscal conservatives. The Heritage Foundation, which, you know, is sort of the right-wing foundation that designs the budget for the Gingrich army, are calling for an increase in the Pentagon system, as is Gingrich, as indeed was Clinton. So, that goes up.

And I should say the cutting of social spending — social spending is being cut very sharply, very much over public opposition. At the time of the 1994 congressional election, you know, the big landslide, over 60% of the public wanted social spending to increase. OK, went very sharply down. What about Pentagon spending going up? Well, that’s the public is six-to-one opposed to that, which gives you some — one aspect of a big picture about what’s happening to American democracy. I mean, somewhat of a change, not a huge change.

So, one part of the system is going up: Pentagon spending. Another part’s going down: social spending. And the same is true in other domains, like, for example, legal aid for the poor is being slashed and virtually destroyed. On the other hand, the security system, states — the government security system, state and federal, that’s going up. So, prisons are going way up, the prison population. Crime hasn’t really — hasn’t changed for about 20 years. And incidentally, U.S. crime rates are not off the spectrum, contrary to what a lot of people believe. Crime rates are sort of toward the high end of the industrial world, but not off the spectrum — with one exception, namely, murder with guns. But that’s a special feature of American society, which doesn’t have to do with crime rates. Apart from that, crime rates are kind of toward the high end, not going up. The prison population tripled during the Reagan years, is going up even faster now.

And I think the reason is another aspect of the Third World model — namely, the superfluous population. There is a big superfluous population. They don’t contribute to wealth protection. Well, we’re civilized folks. We’re not like the people we fund in Colombia who go out and murder them, so we throw them into jail. And that’s going way up, and even more. And there’s also a kind of like a side benefit to this. The putting more and more people in jail, and in fact under harsher and harsher conditions, has a — is a technique of social control for everybody else. I mean, when you’re — if you’re — you know, some day down the road, you decide to run a dictatorship, and you want to really harm people — it’s kind of like Hitler Germany or something — you know that you’re going to carry out policies that are going to cause people a lot of harm, you got to control them somehow. And there aren’t many ways to do it. Everyone hits on the same ways. What you do is engender fear and hatred and make them hate the guy who looks a little different, or whatever it may be, and then you punish those bad guys because they’re really awful, and you punish them really hard and so on, and that makes people even more frightened. You can just see that happening right around you, and building up the perception of crime. Crime has, like, you know, what they call in literary theory, a subtext. You’re supposed to understand, “criminal” has the word — little word “Black” in front of it, just like “welfare mother,” you know, “Black” — “rich Black welfare mother.” And criminal means, you know, that Black guy is coming after you. So, what you want to do is — this has the dual effect of getting rid of a superfluous population, basically unskilled workers — you know, it’s a close race-class correlation — and also demonizing them, so everybody else is scared and frightened, and they’ll be willing to accept what’s happening to them, too, and not look at where the source is.

So, that part of — the drug war is basically for this, has almost nothing to do with drugs, but has plenty to do with criminalizing an unwanted population and scaring everybody else. And so does the harshening of prison conditions, which is really — the United States off the map on this, in violation of international conventions, constantly condemned in human rights forums, and getting much worse. The reinstitution of chain gangs was, of course, bitterly condemned. But, you know, that’s that bad South, Alabama. Well, it’s now in Illinois. The state Senate of Illinois, last week or two ago, legislated chain gangs — not for violent criminals, incidentally, for people who are found with drugs or, you know, rob the store or something like that. The Chicago press pointed out that this carries — this is kind of reminiscent of slavery. But the legislator, the senator, state senator who put it through said that this is just another aspect of what he called tough love. And then he explained that some people work better under humiliation, so it’s really good to restore elements of slavery. And again, the subtext is everybody else gets scared. You know, if those guys have to walk around like slaves in chains, we must be in real danger, so therefore we’ll accept what’s happening to us. That’s the logic.

So, prisons are going up, and it’s — and that has a lot of side benefits. Apart from just getting rid of the superfluous population, it is a source of cheap labor. So, prison labor is going way up. Cheap labor, you don’t have to worry about unions, no benefits. They don’t get out of line. And that also, naturally, undercuts wages elsewhere, so just like forcing welfare mothers to work. You know, raising children isn’t work, as anybody knows who’s had children. So you have to drive them to work, kind of like people who go to Fidelity Investment to figure out scams about how to deal with the security market. Really want these people to work, but since there’s no jobs for them, they’re going to work at low-paid or publicly subsidized wages, which will undercut other wages. And the same with prison labor.

In fact, the scale of prison construction, which is a kind of Keynesian stimulus to the economy anyway, but its scale has become so enormous that even high-tech industry — you know, the guys who are usually just ripping off the Pentagon system — they’re beginning to look at it, figuring out, recognizing that high-tech surveillance devices and so on may be another way to sort of get the transfer of public funds to make sure that the high-tech industry keeps moving. It’s reached — it’s not the scale of the Pentagon, but it’s going up. Well, that’s one aspect of what’s called reducing government — modifying government, to be more precise.

Another aspect of it is what’s called devolution, reducing — moving governmental power from federal to the state level. And that has a kind of a rationale which you hear all over the place. For example, there was an op-ed a couple of weeks ago in The New York Times by John Cogan of Hoover Institute at Stanford, who’s pointed out what he called a “philosophical issue” that divides the Democrats and the Republicans. The philosophical issue is that the Democrats believe in big government and entitlement, and the Republicans believe in getting power down closer to the people, to the states, because they’re kind of populist types.

Well, it takes about maybe three seconds’ thought to recognize, to realize that moving power down to the states, in funding and so on, is just moving it away from the people, for a perfectly elementary reason. There’s a hidden part of the system, of the power system, that you’re not supposed to know about or think about, and that’s private power. Now, it takes a big corporation, like, say, General Electric or Microsoft, to sort of pressure the federal government. But even middle-sized guys have no problems with state governments. They can control them quite easily.

And in case anyone was too dull to figure this out by themselves, the same day as Cogan’s op-ed in The New York Times, which is a typical one, there was a story in The Wall Street Journal about Massachusetts, which had a headline that read, “What Fidelity Investment Wants, It Usually Gets.” OK. And then the story went on to say that Fidelity Investment, the biggest investment firm in Massachusetts, wanted even more subsidy and support from the state government than it already gets, and it was threatening, if it didn’t, it would move over the border to Rhode Island, where it just owns the place. So, therefore, the passionately libertarian governor quickly rearranged tax subsidies and one thing or another so that Fidelity got what it wanted. Well, Fidelity couldn’t have done that with the federal government, couldn’t have said, you know, “You give us even more, or we’re going to move to Switzerland,” or something. I mean, other guys can do it maybe, but not Fidelity.

Raytheon, which is the biggest manufacturing producer, did the same thing. Raytheon — incidentally, Fidelity, it’s not that Fidelity is poor. They just announced record profits a couple days ago. Same with Raytheon, just announced record profits, but, you know, having big problems. So they wanted even a bigger tax subsidy and direct subsidy and tax write-offs, which just means transfer of taxes to — from the state of Massachusetts. And they threatened, if they didn’t get them, they were going to go to Tennessee. So, of course, they got them. The Legislature passed a special law giving what they call defense industry special extra subsidies. Notice that Raytheon is publicly subsidized in the first place. That’s where its money comes from. But now it has to be additionally subsidized so that its profits will be even higher than the record profits it just made. Same with Fidelity. And that’s the kind of game anybody can — you know, even way down, the much smaller businesses can play with states.

So, moving devolution — the consequences of devolution are quite straightforward. It means that any funding that goes to — say, block grants, that go to the states, you can be reasonably confident that they’ll end up in the deep pockets of rich people, not, you know, in the hands of hungry children or poor mothers or anything like that. That’s how you get power down to the people. OK, that’s devolution.

And in fact, quite generally, when you look at it, what’s called government cutting is more or less cost transfer. It’s almost never reduction. Sometimes it’s increasing. So, let’s take what’s called — take health reform. “Reform” is a word you always ought to watch out for. You know, like when Mao started the Cultural Revolution, it wasn’t called a reform. You know, reform is a change that you’re supposed to like, OK? And so, as soon as you hear the word “reform,” you kind of reach for your wallet and see who’s lifting it.

Anyhow, there are things called health reforms. And the health reforms are supposed to cut government costs. Well, they do cut one kind of cost, but, of course, they raise another kind of cost. And furthermore, it’s no big secret. So, like, The Wall Street Journal had a headline which pointed out that when the reforms were moving through Congress, it said, “Rich Gain, Poor Lose, Trade-Offs for the Middle Class.” OK? Which is right. That’s exactly what the reforms are intended to do. You have to remember, by “middle class,” they mean the people right below the very rich, so they don’t mean the median. You know, they’re not talking about people with $30,000-a-year income. They mean every — you know, so what it really means is great for the rich, super rich; trade-offs for those, the near-rich; tough business, tough love for everybody else, which is most everyone. When you close public hospitals and that sort of thing, you know exactly who’s going to suffer.

Well, let’s go to what are — take, say, New York, which has a conservative governor and a conservative mayor. And they’re carrying out very extensive conservative tax cuts, because they’re fiscal conservatives. The tax cuts, The New York Times pointed out in a small item, all benefit business. So, by accident, all the tax cuts benefit business. Well, there are also tax increases, which are compensating for the tax cuts. But they don’t call them tax increases. What they call them is — the phrase is “reduction of subsidies” for public transportation and for tuition in public universities. Well, “subsidy” itself is another interesting word, kind of like “reform.” It’s a subsidy if public funds are used for public purposes. That’s called a subsidy. It’s not called a subsidy when they go to private wealth. That’s reform or something. So, they’re cutting down subsidies for public transportation. Well, that’s just a tax. If you pay 20% more for getting on the subway, that’s tax. The same if you pay higher tuition at City College. And that’s a highly regressive tax. So, who rides the subways? And who goes to City College? So, what they’re doing is shifting — is cutting taxes for business, for the rich, and increasing taxes for the poor, which are going to compensate for that. And that’s called fiscal conservatism.

AMY GOODMAN: MIT professor Noam Chomsky, America’s leading progressive intellectual, speaking recently at an all-day forum at Harvard University sponsored by Jobs for Justice. The speech was recorded by Chuck Rosina of WMBR in Cambridge, Massachusetts. And if you know of an interesting speech coming up, why don’t you record it or let us know about it? We’ll give the number at the end of the show. I’m Amy Goodman. You’re listening to Democracy Now!