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Noam Chomsky: "Corporate Welfare in the U.S."

Talk given at Workmen's Circle Hall in Brookline, Massachusetts (4/22/96).
sponsored by Americans for Democratic Action.

Reviewed by
Arthur Stamoulis
April 27, 1998

To appear in SEED: challenging hegemony, Volume III, Issue 4, May 1998:

"The Subsidy Called Security": A Review of Radio Free Maine's video tape of Noam Chomsky's 4/22/96 lecture "Corporate Welfare in the U.S." at Workmen's Circle Hall in Brookline, Massachusetts sponsored by Americans for Democratic Action

With Newt Gingrich and the Republican Revolutionaries' 1994 "Contract on America" and Democrat Bill Clinton's 1997 support of various "reform" policies, there has been a lot of talk in the mainstream news media in recent years about the many so-called "costs of welfare," material, moral and otherwise. As poor families in this nation who receive public assistance in times of need are consistently scapegoated by classist, racist and sexist pundits and politicians for the economic problems that other Americans face, many activists on the left have tried to draw attention to the many costs associated with the issue commonly known as "corporate welfare." For example, the September 1997 issue of SEED pointed out that:

In 1994, AFDC and food stamps combined cost $38.2 billion. The same year direct subsidies to corporations cost $50.9 billion. Tax breaks worth an additional $53.3 billion were also given to corporations. In other words, the total cost of corporate welfare was $104.3 billion.

While these figures are certainly revealing, focusing exclusively on direct subsidies and tax breaks, the traditional terrain of "corporate welfare," does not even come close to exposing the actual depth of what Noam Chomsky calls "the transfer of public funds to deep pockets." In a video of his April 22, 1996 lecture called "Corporate Welfare in the US" available from Radio Free Maine, Chomsky discusses the major component of the transfer of tax dollars to private industry -- the Pentagon System.

The Cold War is supposedly over, but military spending remains at approximately Cold War levels. A huge proportion of our tax dollars are spent preparing for a high-tech World War III. While questions of drug lords, deterrence, "rogue states" and so forth can be debated, there are other aspects to military spending that aren't so debatable. In his talk on "the subsidy called security," Chomsky argues that the Pentagon, along with NASA, parts of the Department of Energy, and several other government institutions, were developed and are maintained at least in part to support large transnational corporations. He points to the enormous profits that corporations have made from "dual use technology," technologies that are developed with public funds under the military and space exploration system, and then handed over to corporations to be patented and sold back to the public that financed their development in the first place. Chomsky states that over fifty percent of all research and development conducted in the electronics, computer, aeronautics, metallurgy, laser and telecommunications industries has been done with the public's money. He points towards the satellites used by AT&T; and the airplanes sold by Boeing as obvious examples of pieces of technology that were largely developed with taxpayers' money and are now used for private profit.

Aside from the trillions of dollars spent on war-time technology that is handed over to corporate power, this particular type of welfare has another cost. The Pentagon System goes beyond a simple question of cash into a question of democracy. Chomsky reasonably contends that high-tech industry cannot survive on its own in "the free market." This being the case, and assuming that high-tech products such as computers, airplanes and microwave ovens are desirable, a question arises as to how to go about funding their production. High-tech research and development with public funds could be done in a variety of ways. Improving the Star Wars program is one way. Increasing social spending on things like technological improvements of public hospitals, schools, infrastructure and so on is another. In his lecture, Chomsky cites instances in the 1940s when arguments as to which of these types of paths to follow were actually had by certain powerful figures. Chomsky argues that the military system of subsidies for business was chosen over the social spending system, even though the social spending system could potentially create a greater number of jobs and be crafted in a more cost effective way, because the military system channels profits into the hands of a relatively few rich investors, while the social spending system would more widely distribute the cash. The military system was also deemed more acceptable because while few people tend to have strong opinions on what sort of tank to build, many do have opinions on how local schools and hospitals should be built and improved; in other words, social spending could have a democratizing effect that those with the power to make the decision viewed as negative. Open funding of high-tech industry on the local level would be difficult because people's opinions would get in the way of private profit; the high-tech products would get made, but making sure that a limited number of people highly profited from them would be somewhat difficult. A much more efficient way of transferring public money to corporate investors is through a federal military system, because the only convincing that needs to be done is that people are being threatened by the Russians, the Cubans, the Iraqis, the Iranians, whoever.

"Corporate Welfare in the US" is an extremely mind-opening and very watchable video. It addresses the largest portion of corporate welfare, which just so happens to be the part that is most often overlooked in the mainstream media, but in alternative media as well. What is commonly referred to as corporate welfare -- direct subsidies and tax breaks -- are only peanuts compared to the Pentagon System of transferring public funds into private hands. This lecture is particularly important because it examines the phenomena in terms of the historical lack of democratic practice in the United States. This video should be seen by all people trying to determine how to best go about fighting for responsible social spending, peace and/or democracy. Anarchist Chomsky draws the unavoidable connections between these issues brilliantly. This video is available for $19.00 from Radio Free Maine: "../RFM.html" or tel/fax (207) 622-6629.

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