The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein (2006)
(author of No Logo)
From the inner jacket blurb: “Klein traces back the intellectual origins of disaster capitalism back to the University of Chicago’s economics department under Milton Friedman whose influence is still felt around the world.” And not in a good way. This is the cabal that persuaded Reagan et al that trickle down theory was a sensible plan. Not sure if they did so maliciously or for fun, or just some esoteric playing but with real world consequences.
These events [like 9/11] are examples of what Naomi Klein calls “the shock doctrine”: the use of public disorientation following massive collective shocks — wars, terrorist attacks, natural disasters — to push through highly unpopular economic shock therapy. Sometimes, when the first two shocks don’t succeed in wiping out all resistance, a third is employed: that of the electrode in the prison cell or of the Taser gun. [from jacket blurb again]
It is a long hard read. Descriptions of torture of prisoners is just one example. After the horrific photos were released and having been shocked to learn it was not Americans being tortured but Americans doing the torturing, I was dumbfounded. My dad was a bomber pilot in WWII and while the Geneva Convention wasn’t completely complied with, and he easily could have been killed, I don’t think I ever heard of Nazi’s treating POWs like we treated Iraq POWs. That is to say, brutally, lawlessly, and criminally. Yet Bush and Cheney and Rumsfeld are free to enjoy doing a little painting or whatever enjoying the profit of the 40 million or more that Halliburton made for Cheney off the no-bid contracts for the war supplies. I would love to see an audit of there costs versus what they charged the government. I’ll bet it would show such blatant overpricing that it would even make Republicans cry foul.
She talks about how W’s war made Iraq disappear as a country. The failure to grasp that once they removed the iron hold of Saddam on the people, they would not find people ready, willing and able to implement democracy (the ever changing propaganda of what are we fighting for being a joke of course, but not the funny kind). What we got was “…ancient feuds brought to the surface to merge with fresh vendettas from each new attack…” (p. 372) And as we now know, ISIS and the end of civilization in Iraq and possibly the world. This book was written in 2007 so can only hint at what we now know we brought on ourselves and the world due to the hubris of George W. Bush and his puppet masters Dick Cheney and Donald Rumsfeld, and plenty more I’m sure. I hope to make or find a list someday. Kind of like the list I’m planning on building of all the politicians ended up indicted (Kasich at Lehman Brothers) at some point in the careers as politicians or corporate pay back jobs, and especially the jailed ones who were once much touted as feared and respected (Tom DeLay). The list is long, predominantly Republican, but I am pretty sure I find some democrats in there too. Corruption knows no party lines. But I would venture that it is a standard way of doing business without a second thought or remorse by the fake compassionate conservatives of W’s pretense.
In the seventies, when the corporatist crusade began, it used tactics that courts ruled were overtly genocidal: the deliberate erasure of a segment of the population. In Iraq, something even more monstrous has happened — the erasure not of a segment of the population but of an entire country; Iraq is disappearing, disintegrating. It began, as it often does, with the disappearance of women behind veils and doors, then the children disappeared from the schools — as of 2006, two-thirds of them stayed home. Next came the professionals: doctors, professors, entrepreneurs, scientists, pharmacists, judges, lawyers. An estimated three hundred Iraqi academics have been assassinated by death squads since the U.S. invasion, including several deans of departments; thousands more have fled. Doctors have fared even worse: by February 2007, an estimated two thousand had been killed and twelve [12!] thousand had fled. In November 2006, the UN High Commission for Refugees estimated that three thousand Iraqis were fleeing the country every day. By April 2007, the organization reported that four million people had been forced to leave their homes — roughly one in seven Iraqis. Only a few hundred of those refugees had been welcomed into the United States.
With Iraqi industry all but collapsed, one of the only local businesses booming is kidnapping. Over just three and a half months in early 2006, nearly twenty thousand [20,000!] people were kidnapped in Iraq. The only time the international media pays attention is when a Westerner is taken, but the vast majority of abductions are Iraqi professionals, grabbed as they travel to and from work. Their families either come up with tens of thousands in U.S. dollars for the ransom money or identify their bodies in the morgue. Torture has also emerged as a thriving industry. Human rights groups have documented numerous cases of Iraqi police demanding thousands of dollars from the families of prisoners in exchange for a halt to torture. (page 373)
Iraq became a ghoulish dystopia where going to a simple business meeting could get you lynched, burned alive or beheaded. . . . And by late 2006, the privatized reconstruction efforts that were at the center of the anti-Marshall Plan had almost all been abandoned on the ground — and some rather dramatic policy reversals were in evidence. (pp 374-375)
I was shocked to learn that the President (I guess) had worked to get corporations to “invest” in rebuilding Iraq. Some of the investors that backed out included HSBC (crooks in their own right), Proctor and Gamble, General Motors, and others. One company even boasted “a Wal-Mart could take over the country,” the contempt of this statement is astounding and shows how little grasp our leaders had about Iraq. Klein states that in April 2014, “1,500 contractors pulled out of Iraq that week alone. Many more would follow.” The same company that had envisioned the glorious state of Wal-MarIraq conceeded that “McDonalds is not opening any time soon.” Duh, ya think?
That is what she means by her use of corporatist as a description of the nature of the new vision for the nation of Iraq: “A CEO’s wet dream of Home Depots, Wal-Marts, and McDonalds across the land with profits pouring into their coffers. If it wasn’t so sad I’d be laughing my ass off at the stupidity of their mutual delusions.” She quotes “the top U.S. field commander in Iraq, [who] explained that “we need to put the angry young men to work. . . .A relatively small decrease in unemployment would have a very serious effect on the level of sectarian killing going on.” He couldn’t help adding, “I find it unbelievable after four years that we haven’t come to that realization. . . . To me, it’s huge. It’s as important as just about any other part of the campaign plan,”” The problem is that the people in charge had so little concept of what the consequences of their actions would be that they had not even considered there would be large numbers of unemployed (after all, we have them here and they aren’t getting into too much trouble) men with guns would do.”
By the time U.S. officials came to the realization that they didn’t need to rebuild a shiny new country from scratch [and couldn’t I would say], that it was more important to provide Iraqis with jobs and for their industry to share in the billions raised for reconstruction, the money that would have financed such an undertaking had already been spent.
Meanwhile, in the midst of the wave of neo-Keynesian epiphanies, Iraq Study Group fronted by James Baker [another Bushie] issued its long awaited report. It called for the U.S. to “assist Iraqi leaders to reorganize the national oil industry as a COMMERCIAL ENTERPRISE” and to “encourage investment in Iraq’s oil sector by the international community and by international energy companies.” (emphasis mine)
So basically, big surprise, a national asset should be PRIVATIZED and sold to global conglomerates for their profits. Gosh, I wonder why it was a long awaited report. Seems to me it was likely written before the start of the freaking war and obviously no study was required: they just did what the “energy communities” wanted. Blood for oil and $$$$$ for the rich. Oddly though:
Most of the Iraq Study Group’s recommendations were ignored by the White House [W], but not this one: the Bush administration IMMEDIATELY pushed ahead by helping to draft a radical new oil law for Iraq, which would allow companies like Shell and BP to sign thirty-year [30!] contracts in which they could keep a large share of Iraq’s oil profits, amounting to tens or even hundreds of BILLIONS of dollars — unheard of in countries with as much easily accessible oil as Iraq, and a sentence to perpetual poverty in a country where 95 percent of government revenues come from oil. . . . Explaining why it was justified for such a large percentage of the profits to leave Iraq, the oil companies cited the security risks. In other words, it was the disaster that made the radical proposed law possible. . . . [at this time] sectarian conflict [caused] an average of one thousand [1,000] Iraqis KILLED EVERY WEEK. . . . Simultaneously, Bush was unleashing his “surge” of troops in Iraq, operating with “less restricted” rules of engagement. Iraq in this period was far too volatile for the oil giants to make major investments, so there was no pressing need for a new law — except to use the chaos to bypass a public debate on the most contentious issue facing the country. Many elected Iraqi legislators said they had no idea that a new law was even being drafted, and had certainly not been included in shaping its outcome.”
Theft under the cover of law, in other words. But just to give you the punchline:
The law that was finally adopted by Iraq’s cabinet in February 2007 was even worse than anticipated: it placed NO LIMITS on the amount of profits that FOREIGN COMPANIES can take from the country and made no specific requirements about how much or how little foreign investors would partner with Iraqi companies or hire Iraqis to work in the oil fields. Most brazenly, it excluded Iraq’s elected parliamentarians from having ANY SAY IN THE TERMS FOR FUTURE OIL CONTRACTS. Instead, it created a new body, the Federal Oil and Gas Council, which according to the New York Times, would be advised by ” a panel of oil experts from inside and outside Iraq.” This unelected body, advised by unspecified foreigners, would have ultimate decision-making power on all oil matters, with the full authority to decide which contracts Iraq did and did not sign. In effect, the law called for Iraq’s publicly owned oil reserves, the country’s main source of revenues, to be exempted from democratic control and run instead by a powerful, wealthy oil dictatorship, which would exist alongside Iraq’s broken and ineffective government.
It’s hard to overstate the disgrace of this attempted resource grab. Iraq’s oil profits are the country’s only hope of financing its own reconstruction when some semblance of peace returns. [!] To lay claim to that future wealth in a moment of national disintegration was disaster capitalism at its most shameless. (p. 377)
And let’s not forget that the White House claimed that the war would be paid for by Iraqi oil profits, but really all along it was a theft by global corporations using our soldiers to capture the ownership of the oil belonging to the people of Iraq. Yet here we aware with Iraq even more of a disaster than ever before and our greatest accomplishment seems to be a 43 million dollar gas station providing a type of gasoline that most vehicles cannot even use. But it gets worse thanks to Bush et al.
There was another, little discussed, consequence of the chaos in Iraq: the longer it wore on, the more privatized the foreign presence became, ultimately forging a new paradigm for the way wars are fought and how human catastrophes are responded to.
This is where the ideology of radical privatization at the heart of the anti-Marshall Plan paid off handsomely. The Bush administration’s steadfast refusal to staff the war in Iraq — whether with troops or with civilian administrators under its controls — had some very clear benefits for its other war, the one to outsource the U.S. government. . . .
I had not paid a lot of attention to Rumy’s role in all of the quagmire but this book really opened my eyes.
Because Rumsfeld designed the war as a just-in-time invasion, with soldiers there to provide only core combat functions, and because he eliminated fifty-five thousand [55,000!] jobs in the Department of Defense and the Department of Veterans Affairs in the first year of the Iraq deployment, the private sector was left to fill in the gaps at every level. . . . Since Rumsfeld steadfastly rejected all solutions that required increasing the size of the army, the military had to find ways to get more soldiers in combat roles. Private security [mercenaries] companies flooded into Iraq to perform functions that had previously been done by soldiers — providing security for top officials, guarding bases, escorting other contractors. Once they were there, their roles expanded further in response to the chaos. Blackwater’s original contract in Iraq was to provide private security for Bremer, but a years into the occupation, it was engaging in all-out street combat.
At the start of the occupation, there were an estimated ten thousand [10,000!] private [$$$$] soldiers in Iraq, already far more than during the first Gulf War. Three years later, a report by the U.S. government Accountability Office found that there were forty-eight thousand [48,000!] private soldiers, from around the world, deployed in Iraq. Mercenaries represented the largest contingent of soldiers after the U.S. military — more than all the other members of the “Coalition of the Willing” combined. (p. 378)
And who paid for these mercenaries, the American taxpayer, plus interest in the form of the national deficit to pay for the war to prove to Bush Sr. that his little boy George W. was worthy. And of course then they needed private interrogators and translators as well, so they outsourced torture and failed to administer discipline or oversight: “the government officials in charge of overseeing the interrogators’ performance were not even in Iraq, let alone in Abu Ghraib.”
The corporation that gained most from the chaos was Halliburton. Before the invasion, it had been awarded a contract to put out oil fires set by Saddam’s retreating armies. When those fires did not materialize, Halliburton’s contract was stretched to include a new function: providing fuel for the entire nation, a job so big that “it bought up every available tanker truck in Kuwait, and imported hundreds more.” In the name of freeing up soldiers for the battlefield, Halliburton took on dozens more of the army’s traditional functions, including maintaining army vehicles and radios.
Even recruiting, long since seen as the job of soldiers, rapidly became a for-profit business as the war wore on. . . . Rumsfeld’s reign also fueled a boom in outsourced training. . . . And thanks to Rumsfeld’s privatization obsession. . . when soldiers came home sick or suffering from post traumatic stress, they were treated by private health care companies for who the trauma-heavy war in Iraq generated windfall profits. . . .The move to privatize the running of the medical center [Walter Reed] allegedly contributed to a shocking deterioration in maintenance and care, as more than a hundred skilled federal employees left the facility. (p. 380, gee ya think? allegedly my ass)
The greatly expanded role of private companies was never openly debated as a question of policy….Rumsfeld did not have to engage in pitched battles with federal employees’ unions or high-ranking generals. Instead, it all just happened on the fly in the field, in the field, in what the military describes as mission creep. During the first Gulf War in 1991, there was one contractor for every hundred soldiers. At the start of the 2003 Iraq invasion, the ratio had jumped to one contractor for every ten [10!] soldiers. Three years into the U.S. occupation, the ratio reached one to three [1:3]. Less than a year later, with the occupation approaching its fourth year, there was one contractor for every 1.4 U.S. soldiers. [who were more well paid than the U.S. soldiers too, BTW] But that figure includes only contractors working directly for the U.S. government, not for other coalition partners or the Iraqi government, and it doesn’t account for the contractors based in Kuwait or Jordan who had farmed out their jobs to subcontractors.
The point she is making is that this cost a lot of money and was not approved by Congress (as far as I am aware).
The UN’s budget for peacekeeping in 2006-2007 was $5.25 billion — that’s less than a quarter of the $20 BILLION Halliburton got in Iraq contracts, and the latest estimates are that the mercenary industry alone is worth $4 billion.
So while the reconstruction of Iraq was certainly a failure for Iraqis and for U.S. taxpayers, it has been anything but for the disaster capitalism complex. Made possible by the September 11 attacks, the war in Iraq represented nothing less than the violent birth of a new economy. This was the genius of Rumsfeld’s “transformation” plan: since every possible aspect of both destruction and reconstruction has been outsourced and privatized, there’s an economic boom when the bombs start falling, when they stop and when they start up again — a closed profit-loop of destruction and reconstruction. . . .
I have quoted extensively from the book on this particular disaster because I did not know most of this and expect many other people do not either. However her thesis extends to a variety of disasters and how they have been twisted by corporations so they can profit from them — but more specifically how this privatization of disasters may result in “disaster apartheid” and proposes the example of having to pay for the helicopter ride off your roof in the next Katrina. “During the Israeli attack on Lebanon in 2006, the U.S. government initially tried to charge its citizens for the cost of their evacuations, though it eventually backed down.” (p. 419)
To bring it back to Friedman’s Chicago School economics, which has three core tenants: “privatization, deregulation and cuts to government services” that create unfettered capitalism. The free market rules
were doing exactly what they were designed to do: they were not creating a perfectly harmonious economy but turning the already wealthy into the superrich and the organized working class into the disposable poor. These patterns of stratification have been repeated everywhere that the Chicago School ideology has triumphed. . . . In December 2006, a month after Friedman died, a UN study found that “the richest 2 percent of adults in the world own more than HALF of global household wealth.” The shift has been starkest in the U.S., where CEOs made 43 times what the average worker earned in 1980 when Reagan kicked off the Friedmanite crusade. By 2005, CEOs earned 411 times as much. For those executives, the counterrevolution that began in the basement of the Social Sciences building in the 1950s has indeed been a success, but the cost of that victory has been the widespread loss of faith in the core free-market promise — that increased wealth will be shared. (p. 445)
She also discusses how many of the leaders of this ideology went on to become convicted of fraud, influence-peddling, and conspiracy (like Ken Lay and Grover Norquist (the no taxes pledge guy) with Jack Abramhoff). She cites one of the worst statements ever made by anyone who admires the democracy of our Founding Fathers:
And Grover Norquist, the Friedmanite think-tanker who had made progressives’ hair stand on end by declaring, “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”
For anyone who appreciates that government and taxes bring services for all the people through a shared pool that benefits all citizens, Norquist’s and the Chicago boys’ rejection of any social safety net is terrifying. The rich get richer and the poor die and it’s all their own fault for being poor while all the credit for getting rich is their hard work. Conveniently overlooking the small loans of a million dollars (Trump) got from his father who profited from vice, or Bush dynasty’s collaboration with the Nazis.
The Chicago School of economic ideology, has now been revealed as “a system of gross wealth inequalities, often opened up with the aid of grotesque criminality.” I would add, unashamed criminality having read about Enron and Jack Abramhoff’s dirty tricks elsewhere.
Jumping ahead to p. 457, after an extensive discussion of Chicago School’s impact on Latin America and the subsequent efforts to reject it, that great big boot on the neck of most developing countries, the IMF is shown for the evil that they are, holding hostage by debt the countries it purports to help. (There is a great Warren Zevon song condemning the IMF way back in the day, can’t think of the title at the moment.)
In just three years, the IMF’s worldwide lending portfolio had shrunk from $81 billion to $11.8 billion, with almost all of that going to Turkey. The IMF, a pariah in so many countries where it has treated crisis as profit making opportunities, is starting to whither away. [I must check this out.] The World Bank faces an equally grim future. In April 2007, Ecuador’s president, Rafael Correa, revealed that he had suspended all loans from the bank and declared the institution’s representative in Ecuador persona non grata — an extraordinary step. Two years earlier, Correa explained, the World Bank had used a $100 million loan to defeat economic legislation that would have redistributed oil revenues to the country’s poor. “Ecuador is a sovereign country, and we will not stand for extortion from this international bureaucracy,” he said. At the same time, Evo Morales announced that Boliva would quit the World Bank’s arbitration court, the body that allows MULTINATIONAL COMPANIES TO SUE NATIONAL GOVERNMENTS FOR MEASURES THAT COST THEM PROFITS.
And this is why the TPP is a VERY BAD IDEA. If we have a clean water regulation that costs some multinational a bit of profit, they can sue and win because under these trade agreements, created in secret and authored by corporations, it makes multinational corporations sovereign over the United States and voids our laws. “The multinationals always win,” Morales said.
And just for another tasty tidbit of slime, I just learned that Paul Wolfowitz was once president of the World Bank before being forced to resign. Some of you may recall the protests in Seattle over World Trade Organization talks in 1999. (p. 458 note) It is amazing to me that 60,000 people cared enough about world economic abuses to protest. Not that much changed however because they have all the money and power and aren’t going to give it up without a fight.
Klein also explains that while we may hear about offers of aid to countries on the news, I did not know that they often had strings attached that continued the relentless pursuit of profit for corporations. For example, an offer to Lebanon for reconstruction required as a condition of acceptance that “the country privatize phone and electric service, price increases on fuels, cuts to public service and an increase to an already controversial tax on consumer purchases.”
Apparently the small government non-intrusion preferences of our politician puppets does not extend to letting other governments make their own laws and run their own country if it means people benefit and corporations are denied the opportunity to profit off the backs of the people there too.
Well, the book is overdue so I have to call it quits. I just spotted another reference to as to where Rumsfeld came by his Chicago School. However, I am still not clear on how this economic theory was able to become so fully entrenched and unquestioned as a good thing when it is clearly bad for people.
[note caps and other emphases mine]