[Dialogue] {Disarmed} Why The Right Loves a Disaster

[Jim Rippey]

This seems to me to be an excellent explanation of how the rich and powerful
use crises to feather their own nests at the expense of everyone else.   And
our Democrats in Congress are letting it happen again!   The historical
examples are telling.  Jim Rippey

 

-------------------------------

 




Why The Right Loves a Disaster

By Naomi Klein, 1/28/08

"HYPERLINK
"http://www.latimes.com/news/opinion/commentary/la-op-naomi27jan27,0,4268246
.story"Los Angeles Times" --- - Moody’s, the credit-rating agency, claims
the key to solving the United States’ economic woes is slashing spending on
Social Security. The National Assn. of Manufacturers says the fix is for the
federal government to adopt the organization’s wish-list of new tax cuts.
For Investor’s Business Daily, it is oil drilling in the Arctic National
Wildlife Refuge, “perhaps the most important stimulus of all.”

But of all the cynical scrambles to package pro-business cash grabs as
“economic stimulus,” the prize has to go to Lawrence B. Lindsey, formerly
President Bush’s assistant for economic policy and his advisor during the
2001 recession. Lindsey’s plan is to solve a crisis set off by bad lending
by extending lots more questionable credit. “One of the easiest things to do
would be to allow manufacturers and retailers” — notably Wal-Mart — “to open
their own financial institutions, through which they could borrow and lend
money,” he wrote recently in the Wall Street Journal.

Never mind that that an increasing number of Americans are defaulting on
their credit card payments, raiding their 401(k) accounts and losing their
homes. If Lindsey had his way, Wal-Mart, rather than lose sales, could just
loan out money to keep its customers shopping, effectively turning the
big-box chain into an old-style company store to which Americans can owe
their souls.

If this kind of crisis opportunism feels familiar, it’s because it is. Over
the last four years, I have been researching a little-explored area of
economic history: the way that crises have paved the way for the march of
the right-wing economic revolution across the globe. A crisis hits, panic
spreads and the ideologues fill the breach, rapidly reengineering societies
in the interests of large corporate players. It’s a maneuver I call
“disaster capitalism.”

Sometimes the enabling national disasters have been physical blows to
countries: wars, terrorist attacks, natural disasters. More often they have
been economic crises: debt spirals, hyperinflation, currency shocks,
recessions.

More than a decade ago, economist Dani Rodrik, then at Columbia University,
studied the circumstances in which governments adopted free-trade policies.
His findings were striking: “No significant case of trade reform in a
developing country in the 1980s took place outside the context of a serious
economic crisis.” The 1990s proved him right in dramatic fashion. In Russia,
an economic meltdown set the stage for fire-sale privatizations. Next, the
Asian crisis in 1997-98 cracked open the “Asian tigers” to a frenzy of
foreign takeovers, a process the New York Times dubbed “the world’s biggest
going-out-of-business sale.”

To be sure, desperate countries will generally do what it takes to get a
bailout. An atmosphere of panic also frees the hands of politicians to
quickly push through radical changes that would otherwise be too unpopular,
such as privatization of essential services, weakening of worker protections
and free-trade deals. In a crisis, debate and democratic process can be
handily dismissed as unaffordable luxuries.

Do the free-market policies packaged as emergency cures actually fix the
crises at hand? For the ideologues involved, that has mattered little. What
matters is that, as a political tactic, disaster capitalism works. It was
the late free-market economist Milton Friedman, writing in the preface to
the 1982 reissue of his manifesto, “Capitalism and Freedom,” who articulated
the strategy most succinctly. “Only a crisis — actual or perceived —
produces real change. When that crisis occurs, the actions that are taken
depend on the ideas that are lying around. That, I believe, is our basic
function: to develop alternatives to existing policies, to keep them alive
and available until the politically impossible becomes politically
inevitable.”

A decade later, John Williamson, a key advisor to the International Monetary
Fund and the World Bank (and who coined the phrase “the Washington
consensus”), went even further. He asked a conference of top-level
policymakers “whether it could conceivably make sense to think of
deliberately provoking a crisis so as to remove the political logjam to
reform.”

Again and again, the Bush administration has seized on crises to break
logjams blocking the more radical pieces of its economic agenda. First, a
recession provided the excuse for sweeping tax cuts. Next, the “war on
terror” ushered in an era of unprecedented military and homeland security
privatization. After Hurricane Katrina, the administration handed out tax
holidays, rolled back labor standards, closed public housing projects and
helped turn New Orleans into a laboratory for charter schools — all in the
name of disaster “reconstruction.”

Given this track record, Washington lobbyists had every reason to believe
that the current recession fears would provoke a new round of corporate
gift-giving. Yet it seems that the public is getting wise to the tactics of
disaster capitalism. Sure, the proposed $150-billion economic stimulus
package is little more than a dressed-up tax cut, including a new batch of
“incentives” to business. But the Democrats nixed the more ambitious GOP
attempt to leverage the crisis to lock in the Bush tax cuts and go after
Social Security. For the time being, it seems that a crisis created by a
dogged refusal to regulate markets will not be “fixed” by giving Wall Street
more public money with which to gamble.

Yet while managing (barely) to hold the line, the House Democrats appear to
have given up on extending unemployment benefits and increasing funding for
food stamps and Medicaid as part of the stimulus package. More important,
they are failing utterly to use the crisis to propose alternative solutions
to a status quo marked by serial crises, whether environmental, social or
economic.

The problem is not a lack of ideas “alive and available” — to borrow
Friedman’s phrase. There are plenty available, from single-payer healthcare
to legislating a living wage. Hundreds of thousands of jobs can be created
by rebuilding the ailing public infrastructure and making it more friendly
to public transit and renewable energy. Need start-up funds? Close the
loophole that lets billionaire hedge fund managers pay 15% capital gains
instead of 35% income tax, and adopt a long-proposed tax on international
currency trading. The bonus? A less volatile, crisis-prone market.

The way we respond to crises is always highly political, a lesson
progressives appear to have forgotten. There’s a historical irony to that:
Crises have ushered in some of America’s great progressive policies. Most
notably, after the dramatic market failure of 1929, the left was ready and
waiting with its ideas — full employment, huge public works, mass union
drives. The Social Security system that Moody’s is so eager to dismantle was
a direct response to the Depression.

Every crisis is an opportunity; someone will exploit it. The question we
face is this: Will the current turmoil become an excuse to transfer yet more
public wealth into private hands, to wipe out the last vestiges of the
welfare state, all in the name of economic growth? Or will this latest
failure of unfettered markets be the catalyst that is needed to revive a
spirit of public interest, to get serious about the pressing crises of our
time, from gaping inequality to global warming to failing infrastructure?

The disaster capitalists have held the reins for three decades. The time has
come, once again, for disaster populism.

Naomi Klein is the author of many books, including her most recent, The
Shock Doctrine: The Rise of Disaster Capitalism, which will be published in
September.Visit Naomi’s website at HYPERLINK
"http://www.naomiklein.org"www.naomiklein.org , or to learn more about her
new book, visit HYPERLINK
"http://www.shockdoctrine.com"www.shockdoctrine.com  .

© 2008 The Los Angeles Times

 

 

 

 


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