The Handmaid's Tale is set in Cambridge, Massachussetts, and most of the buildings and landmarks mentioned throughout the novel are parts of Harvard University. Why might Atwood have chosen a major university as the headquarters of this new regime? Consider the relationship between knowledge and control.
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I believe this was done for effect. Although if the reader is unaware that Harvard was America's first school of higher learning (university) and one of the top universities in the world, its meaning or innuendo goes unnoticed. Atwood's choice of setting a prison in the midst of a place known for its history of enlightenment is about as polar opposite a description as can be conveyed.
The Handmaid's Tale