The Shock Doctrine Review

MORE READING:
Winning by Failing -- Disaster & Murder is good for USA business

Reviewing Naomi Klein's "The Shock Doctrine"
by Stephen Lendman

Naomi Klein is an award-winning Canadian journalist, author, documentary
filmmaker and activist. She writes a regular column for The Nation
magazine and London Guardian that's syndicated internationally by the New
York Times Syndicate that gives people worldwide access to her work but
not its own readers at home.

In 2004, she and her husband and co-producer Avi Lewis released their
first feature documentary - "The Take." It covered the explosion of
activism in the wake of Argentina's 2001 economic crisis. People responded
with neighborhood assemblies, barter clubs, mass movements of the
unemployed and workers taking over bankrupt companies and reopening them
under their own management.
Klein is also the author of three books. Her first was "No Logo - Taking
Aim at the Brand Bullies" (2000) that analyzes the destructive forces of
globalization. Next came "Fences and Windows - Dispatches from the Front
Lines of the Globalization Debate" (2002) covering the global revolt
against corporate power.

Her newest book just out is "The Shock Doctrine: The Rise of Disaster
Capitalism" that explodes the myth of "free market" democracy. It shows
how neoliberal Washington Consensus fundamentalism dominates the world
with America its lead exponent exploiting security threats, terror
attacks, economic meltdowns, competing ideologies, tectonic political or
economic shifts, and natural disasters to impose its will everywhere. Wars
are waged, social services cut, and freedom sacrificed when people are too
distracted, cowed or bludgeoned to object. Klein describes a worldwide
process of social and economic engineering she calls "disaster capitalism"
with torture along for the ride to reinforce the message - no "New World
Order" alternatives are tolerated.

"Free market" triumphalism is everywhere - from Canada to Brazil, China to
Bulgaria, Russia to South Africa, Vietnam to Iraq. In all cases, the
results are the same. People are sacrificed for profits and Margaret
Thatcher's dictum applies - "there is no alternative."

"The Shock Doctrine" is a powerful tour de force, four years of
on-the-ground research in the making and well worth the wait. In an age of
corporatism partnered with corrupted political elites, it's must reading
by an author now firmly established as a major intellectual figure on the
left and champion of social justice. Naomi Klein is all that and more.
Even for those familiar with her topics, the book is stunning, revealing,
unforgetable and essential to know. This review will cover a healthy
sample of what's in store for readers in the full equisitely written text.
It's in seven parts with a concluding section. Each will be discussed
below starting with a brief introduction.

Introduction - Blank Is Beautiful: Three Decades of Erasing and Remaking
the World (into Hell)

New Orleans, post-Katrina, is a metaphor for an American-style "New World
Order" with unfettered capitalism unleashed in its most savage form. Klein
quotes Republican congressman Richard Baker telling lobbyists: "We finally
cleaned up public housing in New Orleans. We couldn't do it but God did."
And New Orleans developer Joseph Canizaro added: "I think we have a clean
sheet to start again (and take advantage of) big opportunities." Their
scheme is erasing communities and replacing them with upscale condos and
other high-profit projects on choice city real estate at the expense of
the poor mother nature forced out and government won't allow back.

Enter the "grand guru" of free-wheeling capitalism, then age 93 and in
failing health. This was conservative/libertarian economist Milton
Friedman's moment that he first articulated in his 1962 book "Capitalism
and Freedom." His thesis: "only a crisis - actual or perceived - produces
real change. When a crisis occurs, the actions that are taken depend on
the ideas that are lying around....our basic function (is) to develop
alternatives to existing policies (ones Friedman rejects, and have them
ready to roll out when the) the impossible becomes politically
inevitable." Klein calls crises "democracy-free zones," and Friedman's
thesis "the shock doctrine." For New Orleans it means "permanent reforms"
like destroying public housing and issuing vouchers for privatized schools
in lieu of rebuilding public ones with government reconstruction funds.

For Friedman, government's sole function is "to protect our freedom both
from (outside) enemies....and from our fellow-citizens." It's to "preserve
law and order (as well as) enforce private contracts, (and) foster
competitive markets." In his view, anything else in public hands is
socialism that for "free market" fundamentalists like Friedman is
blasphemy.

Until 1973, Friedman's radical doctrine stayed in his classroom, but all
that changed on an earlier September 11. Following General Augusto
Pinochet's bloody ascent to power, he had a real life laboratory as
advisor to the new Chilean dictator. His prescription came to be known as
the "Chicago School" revolution of rapid-fire economic transformation he
called "shock treatment," now known as "shock therapy." It's an economic
version of "destroy(ing) the village (and country) to save it" from the
Vietnam era and nearly as harsh.

Millions know its lessons, but Friedman's not their hero. It's central
tenets are structurally adjusted mass-privatizations, government
deregulation, unrestricted free market access for foreign corporations,
and deep cuts in social spending with repressive laws, harsh crackdowns
and torture along for the ride to reinforce the core tenet Reaganites call
"trickle down" and Brits call "Thatcherism."

Its recipients call it hell, and Klein explains why - in Chile, Argentina,
Uruguay, Bolivia, Brazil, China, Russia, the Falklands, Poland, South
Africa, Sri Lanka, New Orleans, Israel, and coming to a neocon-occupied
homeland neighborhood near you. It's "disaster capitalism" unleashed, and
business is booming. Klein cites insiders saying opportunities are on a
par with a thriving "emerging market...."the deals are even better than
the dot-com days, and the 'the security bubble' picked up the slack when
those earlier bubbles popped."

Reaganomics adherents are today's neoconservatives with the "full force of
the US military machine (serving their unfettered) corporate agenda" of
greed writ large. Its holy policy trinity is: "elimination of the public
sphere, total liberation for corporations and skeletal social spending (if
any at all)." But instead of lifting all boats as promised, it's mirror
opposite. It creates a powerful ruling corporatist class partnered with
corrupted political elites - "with hazy and ever-shifting lines between
the two groups." Russia got billionaire "oligarchs," China "the
princelings," Chile "the piranhas," and America the Bush-Cheney "Pioneers."

Everywhere, the scheme is the same: huge public wealth transfers to
private hands, exploding public debt most often, "an ever-widening chasm
between the dazzling rich and disposable poor, and an aggressive
nationalism (like George Bush's permanent "war on terrorism" and the
world) that justifies bottomless spending on security." "Inside the
bubble" is paradise. Outside, however, is hell with "aggressive
surveillance, mass incarceration, shrinking civil liberties," a declining
standard of living, and repression and torture reinforcing the message to
non-believers.

Klein calls the harshness "a metaphor of the shock doctrine's underlying
logic." When applied, it induces a state of "deep disorientation," and
shock to force targets "to make concessions against their will." The
"shock doctrine" works the same way on a mass scale, and the 9/11
experience proved it. It exploded the "familiar world" and created a
period of disorientation and regression the Bush administration jumped on
abroad and at home. As Klein put it: "Suddenly we found ourselves living
in a kind of Year Zero (with) everything we knew of the world before (now)
dismissed as 'pre-9/11' thinking." We became a "blank slate, a clean sheet
of paper," and the administration did what was impossible before. It's how
the "shock doctrine" works: "the original disaster (terror attack, war,
hurricane, market meltdown) puts the entire population into a state of
collective shock" enabling policy manipulators to move in for the kill to
remake the world in their image and get it done before the shock wears off.

Part 1 - Two Doctor Shocks - Torture and Chicago School Fundamentalism

Following a crisis shock, another quickly follows. The corporate piranhas
exploit disorientation with economic "shock therapy" along with "police,
soldiers and prison interrogators" with torture their method of choice "to
build a model country (by) erasing people and then trying to remake them
from scratch."

Klein reviews the history of CIA's interest in torture as a way to control
the human mind. It began with the Montreal doctor they funded to perform
"bizarre experiments on his psychiatric patients (by) keeping them asleep
and in isolation for weeks, then administering huge doses of electroshock
(plus) experimental (psychedelic LSD and hallucinogen PCP angel dust) drug
cocktails."

The experiments were performed at McGill University's Allan Memorial
Institute by Dr. Ewen Cameron even though they clearly violated all
standards of medical ethics using human guinea pigs without their
permission with permanent damage their reward. Cameron believed by
blasting the human brain with an array of shocks, he could "unmake and
erase faulty minds, then rebuild (on a blank slate) new personalities"
cleansed of their previous nature. It was voodoo science, and it failed.
His patients were his victims, but CIA gained a wealth of knowledge it now
employs with no pangs of conscience or regard for ethics.

Klein traces CIA's interest in mind manipulation to a 1951 trinational
meeting of intelligence agencies and academics in Montreal when concern
was that Communists could brainwash POWs to control them. That was when
the spy agency engaged Canadian researchers to learn how, and one of them
was Dr. Donald Hebb, director of psychology at McGill, who was working on
the problem. Intelligence agencies were impressed enough with his work to
fund classified sensory-deprivation experiments on volunteer McGill
students.

They proved intensive isolation interferes with clear thinking enough to
make people more receptive to suggestion. They were also "formidable
interrogation techniques" amounting to torture that Hebb knew violated
medical ethics. He later characterized Cameron's work as "criminally
stupid," but CIA got what it wanted - a way to interrogate "resistant
sources" in a "new age of precise, refined torture, not the gory, inexact"
kind from the Spanish Inquisition or what Nazis and other tyrants often
practiced. Cameron's experiments with human guinea pigs built on Hebb's
earlier work laying the foundation for CIA's "two-stage psychological
torture method" of sensory deprivation followed by sensory overload.
University of Wisconsin historian Alfred McCoy in his book, "A Question of
Torture" on CIA interrogation, called it "the first real revolution in the
cruel science of pain in more than three centuries."

Pre-9/11, these techniques were freely used covertly as any form of abuse
or torture violates the Geneva, UN and other statutes prohibiting these
practices as well as the US Army's own Uniform Code of Military Justice
barring "cruelty" and "oppression" of prisoners. No longer, as "On
September 11, 2001, that longtime insistence on plausible deniability went
out the window" as well as any claim this nation respects the law and
rights of free people everywhere. What once was done sub rosa or by proxy
is now condoned and authorized at the highest levels of government on the
fraudulent claim of national security to hide the real aim of social
control.

Klein notes torture is still technically banned in the US, but only when
pain is the "equivalent in intensity to (what accompanies) serious
physical injury, such as organ failure." Simply put, anything goes, but
it's not put that way. In Iraq, it was thought "shock and awe" would be so
stunning, Iraqis "would go into a kind of suspended animation." A second
makeover Chicago School fundamentalism shock could then be imposed on a
blank post-invasion slate, and bingo, mission accomplished. Klein notes
"there was no blank slate, only rubble and shattered, angry people" who
were blasted with more shocks when they resisted. Like Cameron and his
experiments, "Iraq's shock doctors can destroy, but they can't seem to
rebuild," and the same is true wherever these shock doctors show up.

Milton Friedman and the Search for a Laissez-Faire Factory

The epicenter of shock ideology is the University of Chicago Economics
Department. It came out of the 1950s "in the thrall" (of a) man on a
mission to fundamentally revolutionize his profession," and on that score
Milton Friedman succeeded mightily. Friedman, now gone, believed, markets
work efficiently and best unfettered of rules, regulations, onerous taxes,
trade barriers, entrenched interests, and human interference. Whereas
Cameron believed electroshocks could restore natural health, Friedman
favored economic shock as extreme and destructive to nations as Cameron
and CIA's methods are to human minds.

Friedman taught this voodoo science and believed to the end, all contrary
evidence aside, it was perfect and worked. Chicago School fundamentalism
developed at a post-war time in the 1950s when leftist ideas supporting
worker rights were gaining ground. Where they "promised (workers) freedom
from bosses, citizens from dictatorship (and) countries from colonialism,"
Friedman promised "individual freedom" to choose that appealed to owners
of capital who embraced him and his thinking.

It stood in stark contrast to what became known as "developmentalism" or
"Third World nationalism" in the post-war developing world. Economists in
it favored an "inward-oriented industrialization" strategy to break the
cycle of poverty and grow. Like Keynesians and social democrats, they
showed it worked in Latin America's Southern Cone with leaders like Juan
Peron "put(ting) their ideas into practice with a vengeance (by) pouring
public money into infrastructure projects, (providing) local businesses
generous subsidies, and keeping out foreign imports with....high tariffs."
It brought prosperity to the South and "dark days" for Friedman, his
acolytes, and free-wheeling capitalists losing out to social progress.

It sprung corporate America to action by funding a legion of think tank
and Chicago School foot soldiers to change the message and fortunes of
their businesses. Friedman was their ideological leader preaching public
wealth should be in private hands, rules and regulations out the window,
accumulation of profits unrestrained, and social welfare programs
curtailed or abolished. In short - deregulate, privatize and get
government out of the business of everything besides providing security
and enforcing contracts. He also believed taxes were onerous and once said
he was "in favor of cutting (them) under any circumstances and for any
excuse, for any reason, whenever it's possible...."

He also said corporations should be exempt from federal taxes claiming
what they pay ends up in consumer prices that, in fact, is pure nonsense
as every marketing MBA (like this writer) learns straightaway. The
fundamental law of pricing is to charge what the market will bear, no more
or less. In other words, get all you can but no more than buyers will pay.
Soon enough they'd pay plenty in the developing world.

In 1953, the US declared war against "developmentalism" with CIA's first
ever coup against Mohammed Mossadegh in Iran. Another followed the next
year in Guatemala, and in both instances democratically elected leaders
were ousted because corporate interests opposed them. It was only the
beginning, and Friedman and his "Chicago Boys" soon had a real time
laboratory to prove their "capitalist utopia" worked.

Salvador Allende's Popular Unity government electoral victory in 1970 was
the opportunity. Three years later he was out giving Friedman the chance
he wanted. Klein related the results in what she called "the first Chicago
School state" with others to follow. They're all the same with "an
unstoppable hurricane of mutually reinforcing destruction and
reconstruction, erasure and creation" following the crisis. Next is
unfettered economic shock therapy with torture and disappearances awaiting
resisters and anyone guilty of bad thinking. Friedman's brave new world
was beginning to roll. It's devastation is everywhere including at home.

Part 2 - The First Test - The Bloody Birth of the Counterrevolution

Counterrevolution began 34 years ago in Chile on another September 11 that
should have been unimaginable and had to seem surreal. There were tanks in
the streets and fighter jets attacking government buildings in a scene all
too real and deadly. It played out in Santiago and around Chile and was
just the beginning of a long nightmare. It brought General Augusto
Pinochet to power (with plenty of CIA help) who called his action "a war,"
not a coup, and to reinforce his message he made it seem like one. Blood
in the streets, the presidential palace in flames, and President Salvador
Allende dead ended the most vibrant democracy in the Americas. It was a
cakewalk with "the junta's grand battle over by mid-afternoon."

A state of siege was imposed followed by mass arrests, killings and
torture in a climate of fear that enveloped the country. Allende
supporters were targeted in Chile's "Caravan of Death." Chileans paid
dearly, but the Chicago Boys had their moment of triumph, and they were
ready. Rolling off the press was their detailed economic manual for the
new government called "The Brick." It was a 500 page Chicago School shock
therapy wish list. It was "the first Chicago School state," its first
"global counterrevolution" victory, and "a genesis of terror" in a brave
new world for Chileans.

The economic playbook was right from Milton Friedman's "Capitalism and
Freedom" that's long on free market triumphalism and void on its effects
on real people. It was pure Friedman featuring mass privatizations,
deregulation and deep social spending cuts flavored generously with
corporate-friendly tax cuts, trade unionist crackdowns, savage repression
for non-believers, and an end to Chile's social democratic state Friedman
condemned.

Pinochet bought it along with a team of Chicago School alumni called
"technos." They embarked on a free market binge with disastrous results.
In the first year, inflation hit 375%, thousands of Chileans lost jobs,
the country was flooded with cheap imports, local businesses closed and
hunger grew along with public and small business discontent in this free
market "paradise." In desperation, "it was time to call in the big guns"
with Milton Friedman coming to Santiago to reinforce his message that for
things to improve they first had to get worse. It was classic shock
treatment and Chicago School baloney with Friedman preaching patience and
promising an "economic miracle" if his prescription was followed.

Pinochet agreed, and slash and burn followed with visions of paradise at
the end of the rainbow. It was pure untested fantasy, and the results
showed it. After one year of hardened shock therapy, Chile's economy
contracted 15%, unemployment rocketed to 20%, and contrary to Friedman's
rosy scenario it lasted for years with no social safety net help for
desperate Chileans.

Klein notes Chile today is still cited as a model that free market
"Friedmanism" works in spite of the clear evidence it doesn't. Growth did
resume a decade later, but only after conditions worsened. It forced
Pinochet to reinstate Allende policies like renationalizing privatized
companies but not his social democratic agenda. Chileans were left with
the shambles. When the economy stabilized and rapid growth resumed in the
late 80s, poverty was 45%, but the richest 10% saw their incomes rise by
83%. Even today, Klein notes, Chile remains one of the most unequal
societies in the world. It's shock therapy miracle shifted "wealth to the
top and shock(ed) much of the middle class out of existence."

It's the way it works everywhere and a glimpse of the future: "an urban
bubble of frenetic speculation and dubious accounting fueling superprofits
and frantic consumerism, ringed by ghostly factories and rotting
infrastructure of a development past; roughly half the population
(excluded); out-of-control corruption and cronyism; (decimated) nationally
owned small and medium-sized businesses; (mass) transfer of (public)
wealth (and resources) to private hands (accompanied by) a huge (shift) of
private debts into public hands." Inside the Chilean bubble was paradise.
Outside was "The Great Depression." Bubble-benefitters reacted with
"junkie logic: Where is the next fix?"

It was first across the border in other Latin American Southern Cone
countries where the "counterrevolution spread (and) people vanish(ed)."
Argentina, Brazil and Uruguay were targeted with similar results as in
Chile under juntas replacing democrats. Chicago School fundamentalism was
on a roll, and woe to the non-believers. Nations that were
developmentalism models became wastelands with decades of worker gains
lost almost overnight. Factories closed, wages fell, unemployment soared,
poverty grew severe, dissenters disappeared, and ordinary people suffered
to prove what pin-stripped academics knew after Chile went sour. Instead,
it was on to the next target.

In them all, the slate was cleansed and terror unleashed, unrestrained by
national borders. Former Allende economist and diplomat turned activist
Marcos Orlando Letelier became a victim in September, 1976. While living
in Washington, he condemned Chile's "economic freedom" for the privileged
and paid with his life. Pinochet's DINA secret police killed him and his
American colleague, Ronni Moffit, by remote-detonating a bomb planted
under his driver's seat. An FBI investigation learned the assassins
entered the country under false passports with full CIA knowledge and
complicity.

The purging included cleansing wrong ideas and thinkers like legendary
left wing Chilean folk singer, Victor Jara. He was seized and taken to
Chile's notorious National (killing and torture) Stadium to be reeducated.
Soldiers broke his hands so he couldn't play the guitar. Then they shot
him 44 times "to make sure he couldn't inspire from....the grave." One
culture was being erased and replaced by another. As in Nazi Germany,
books were burned, newspapers and magazines shuttered, universities
occupied and strikes and political meetings banned. Trade unionists were
specially targeted as threats to the new economic order. It's leaders were
rounded up, movement members viciously attacked, and "battalions" targeted
workers in factories. They were arrested, imprisoned, tortured, and
disappeared in a sweeping reign of terror designed to crush opposition and
wrong-thinking.

In Argentina, Ford Motor Company's local subsidiary was complicit. It
helped soldiers and secret police rid unionists from its factories and
supplied vehicles as well. Green Ford Falcon sedans became the feared
symbol of terror an Argentine playwright called "death-mobiles." Many
thousands kidnapped and disappeared rode off in these cars, never to
return.

Farmers involved in land reform struggles also were targeted along with
anyone with "a vision of society built on values other than pure profit."
It affected community worker activists, many church-connected, who wanted
social services like health care, public housing and education the state
was erasing through shock therapy and mass repression. Klein noted while
"policies attempted to excise collectivism from the culture,
inside....prisons (the practice was to) excise it from the mind and
spirit." The sickness was democratic socialism, the cure pain and
suffering. Wrong-thinkers were taught the hard way, and many paid with
their lives. Chicago School fundamentalism is harsh medicine. Its grand
guru, Milton Friedman, was unrepentant. He called it "freedom" and took
his mathematical model miracle to the grave amidst a hail of undeserved
eulogies.

In his memoirs before he died, his "blatant revisionism" on Chile was
shameful and disturbing. He falsely claimed Pinochet only asked for help
in 1975 when, in fact, the Chicago Boys worked with the military before
the 1973 coup, and their policies were implemented on Pinochet's first day
in power. Friedman also claimed the junta's repressive years didn't undo
Chilean democracy. In his view, it opened up "more room for individual
initiative and for a private sphere of life (offering a greater) chance of
a return to a democratic society." It was classic convoluted Chicago
School thinking. It made him famous courtesy of corporate triumphalism,
generous funding and an utter disdain for human rights and dignity.

Friedman also used his 1976 Nobel lecture to argue economics was as
scientifically accurate and objective as other sciences. He failed to
mention its dark side - devastating poverty, unemployment, shuttered
factories and mass human misery and deaths in the first nation adopting
his ideology on its victimized people. Now it's everywhere and savagely
enforced in an age of corporate dominance, wars for profit and neglect of
human needs to fund them. That's Friedman's real legacy from the barrel of
a gun and called "freedom."

Part 3 - Surviving Democracy

Chicago School dogma became known as Thatcherism in Britain, but its prime
minister wasn't an early adherent. Margaret Thatcher thought Chilean shock
therapy wasn't possible in a democracy like the UK because voters wouldn't
buy it. Three years into her first term, her approval rating was lower
than George Bush's. She was in danger of not being reelected and didn't
dare risk imposing bitter economic medicine that would sink her chances.
That is, until destiny intervened on April 2, 1982 when Argentina invaded
the British-held Falkland Islands off its coast that was unimportant to
either country except for the political hay to gain from war.

Thatcher jumped at the chance to regain her footing and "went into
Churchillian battle mode," even though Argentina's president, General
Leopoldo Galtieri, wasn't Adolph Hitler. But defending the British empire
was almost as good, and it paid off. Thatcher's political future was at
stake. She revived it, more than doubled her approval rating and
henceforth was known as the "Iron Lady" that for her was high praise, and
she made the most of it.

She launched a "corporatist revolution" based on Chicago School economics
she thought impossible earlier. She parlayed her new popularity to a
victory against striking coal miners in 1984 with tactics like unleashing
8000 "truncheon-wielding" riot police in a single confrontation. Before
the strike ended, thousands of workers were injured, but Thatcher stood
firm with a clear message to other unionists. Take what you're offered or
get the same medicine.

She didn't stop there, and what followed was a radical economic agenda in
a wave of state enterprise privatizations including British Telecom,
British Gas, British Airways, British Steel and others in what Klein
called "the first mass privatization auction in a Western democracy." It
proved Chicago School fundamentalism didn't need repressive dictatorships
to advance as long as "Iron Ladies" like Thatcher were around to match the
best of them, short of all out tanks in the streets shock therapy, that
is. Her eleven and a half years in power proved it, and Britain hasn't
been the same since with Labor as committed now as the Tories.

Bolivia was soon targeted as well, but in 1985 was part a democratic wave
sweeping the world. It was an election year with two familiar figures
facing off for the presidency - former dictator Hugo Banzar and former
elected president, Victor Paz Estenssoro. It was close and Banzar thought
he won so before final returns were in he named 30 year old Harvard
economist Jeffrey Sachs to help develop an anti-inflation economic plan
for the country.

Sachs was part Keynsian but larger part Chicago School adherent that made
for a bad combination. He bought its orthodoxy in softer form by
supporting debt relief and generous aid along with the shock therapy he
advised Banzar to adopt as the only solution to hyperinflation.

As it turned out, Banzar lost and Paz won, and while no socialist, he was
no Chicago School adherent either, or so voters thought. Four days into
his term, he charged his emergency economic team to radically restructure
the economy using shock therapy with a twist. It was much harsher than
Sachs proposed with the entire state-centered structure Paz erected
decades earlier dismantled in the first 100 days before the public could
react. In its place, food subsidies were ended, price controls lifted,
wages frozen, oil prices hiked 300%, deep government spending cuts
imposed, unrestricted imports allowed, and state-owned companies downsized
as a first step to privatizing them. It cost hundreds of thousands of
full-time jobs, pensions and safety net protections. Friedman continued to
roll.

The results were predictable. The minimum wage never regained its value,
and two years later real wages were down 40% and average per capita income
dropped from $845 in 1985 to $789 in 1987. As in other shock therapy
countries, a small elite got richer while the great majority of Bolivians
lost out with campesinos faring worst. In 1987, they earned on average
$140 a year, or less than one-fifth the nation's declining average income.

Bolivian misery gave Sachs star status for the country's "Miracle." It
launched his new career and brought him to Argentina, Peru, Brazil,
Ecuador, Venezuela and Russia later on plus a best-selling book and
three-part PBS "success story" series. The only problem was it wasn't
true. President Paz had no mandate for shock therapy, and many workers
were predictably furious at his betrayal. They went on strike and Paz's
response made Margaret Thatcher's earlier action against striking coal
miners seem tame by comparison. Tanks rolled in the streets, and riot
police raided union halls, a university and factories. Hundreds of arrests
followed, including the top 200 union leaders, and oppositional politics
was banned. The siege lasted three months during the decisive shock
therapy period with more repression and Chicago School medicine later.

It showed shock therapy needs harsh authoritarian rule backing with
Bolivia's pin-stripped politicians, economists and bureaucrats
administering it, not uniformed soldiers as in Chile. Paz's democratic
victory was illusory like others when leaders renege on promises and
sacrifice them on the alter of Chicago School orthodoxy.

Argentina was another "textbook case." In the post-Falklands War period,
it was burdened with billions in odious debt Washington insisted be
serviced and paid. It was far more onerous after the (Paul) "Volker Shock"
when the US Federal Reserve Chairman hiked interest rates up to 21% in the
early-mid 1980s to fight inflation, so he said. It was painful in the US
and disastrous for developing countries turning their debt burdens into
crises. New loans were needed to pay off old ones, and the debt spiral was
born afflicting nations then and still today. That was the whole idea, or
at least one of them.

Argentina, Brazil and other countries had another option they didn't take
- defaulting on debt so great it was unrepayable. As Klein put it:
"Understandably (new democracies were) unwilling to go to war with
Washington (and the international lending agencies it controls so they)
had little choice but to play by Washington's rules (and) in the early
eighties (they) got a great deal stricter....It was the dawn of the era of
'structural adjustment' - otherwise known as the dictatorship of debt."

In the 1980s, Chicago School economists colonized the IMF and World Bank
to advance their corporatist crusade. Economist John Williamson named it
"the Washington Consensus" that stuck ever since. It consisted of core
economic policies both institutions consider essential for economic health
according to their orthodoxy. We know them well: all "state enterprises
....privatized (and) barriers impeding entry of foreign
firms....abolished." There was more that together was classic Friedman
dogma: privatization, deregulation, unrestricted free trade (never called
fair), and deep cuts in government spending except for security.

Indebted developing countries learned shock doctrine 101 the hard way.
Getting aid meant accepting Washington Consensus rules - the whole
package. So to save their countries, they had to "sell (them) off." Klein
calls Argentina the "model student" in the 1990s under leaders like Carlos
Menem. Appointing Domingo Cavallo economy minister signaled he bought the
corporatist package. But as Klein points out: "Argentina was not unique
(and by 1999) Chicago School alumni included more than twenty-five
government ministers and more than a dozen central bank presidents from
Israel to Costa Rica."

Shock therapy was on a role that in Argentina turned into a textbook case
of therapeutically induced disaster. What Time magazine in 1992 called
"Menem's Miracle" became Menem's Mirage when the economy collapsed in
2001, and Argentina did the unthinkable with Menem gone and a new
president in power. It defaulted on an $805 million debt to the World
Bank. It should have ended the neoliberal experiment, but instead it
spread. Economic crises fueled it, and when old ones ebbed "even more
cataclysmic ones appear(ed): tsunamis, hurricanes, wars and terrorist
attacks. Disaster capitalism was taking shape" with shock therapy its tool
of choice.

Part 4 - Lost in Transition: Slamming the Door on History

Before the Berlin Wall fell, Lech Walesa became a labor hero in Poland and
the West by defying the Moscow-controlled government and getting away with
it. Solidarnosc (Solidarity) spread from its Gdansk roots to the country's
mines, shipyards and factories and within a year had 10 million members.
They won the right to bargain but wanted more. They aspired to take over
the state and institute their own alternative economic and political
program. It's radical centerpiece was to transform huge state-run
companies into worker-run cooperatives so Solidarity members could be
empowered in their own "socialized enterprise."

Walesa objected, lost the debate, and he feared what then happened. The
Jaruzelski government declared martial law, sent tanks to the streets and
rounded up thousands of Solidarity members. By the late 80s, the crackdown
subsided, the economy was in free fall, workers again struck and Mikhail
Gorbachev's reformist government was in power in Moscow. Solidarity was
legalized, a Citizens' Committee Solidarity wing was formed, its members
stood in snap elections and won effective control of the government
capturing 260 parliamentary seats.

It should have been the best of times, but with the economy in trouble,
Poland needed aid including debt relief. With Chicago School alumni
running IMF, none was offered except under Washington Consensus rules,
take it or leave it. Enter Jeffrey Sach, the shock doc, with an even
harsher plan than imposed on Bolivia. It included an immediate end to
price controls, slashing subsidies, and privatizing mines, shipyards and
factories. It short, it ran directly counter to Solidarity's aim for
worker-run industry.

Sachs promised Solidarity Poland could become like France or Germany under
his plan. By swallowing shock therapy medicine first, taking the pain, the
patient would end up cured and healthy - if he was right. After debate,
the verdict was in and the treatment bought with predictable results.
Sachs promised "momentary dislocations" but delivered a full-blown
depression. Industrial production plummeted 30% after two years of
"reforms." Unemployment skyrocketed, and in 1993 hit 25% in some areas.
It's still chronic today with recent World Bank figures pegging it at
around 20%, the highest in the European Union. For young people, it's even
worse with 40% of workers under 24 unemployed.

Most alarming is the number of people in poverty. From a 15% level in
1989, it rose to a startling 59% in 2003. Incredibly, the country, like
Chile, is still cited as a free market reform model. It's pure myth, angry
Poles know it, but reports in the West ignore them as they do shocked
victims everywhere.

They didn't ignore "the shock of Tiananmen Square," but didn't report it
accurately either. In the early 1980s, Deng Xiaoping was transforming his
country economically while keeping rigid political control including
iron-fisted repression when needed. Democracy was nowhere in sight nor is
it now. While many of Deng's reforms were successful and popular, others
in the late 80s weren't, and it provoked deep anger in the cities by
people most affected. Price controls were lifted, corruption and nepotism
was rampant, freedom minimal, job security eliminated, unemployment
soared, and deep inequalities grew between "winners and losers in the new
China."

It came to a head with mass protests in 1989 in Tiananmen Square that
Western reports characterized as a clash between old-guard Communist
authoritarians and idealistic students wanting western-style democracy. It
was pure propaganda. The protests were massive and threatened the
government, but democracy wasn't the issue. It was popular discontent from
wrenching economic change raising prices, lowering wages, and causing "a
crisis of layoffs and unemployment." Protesters weren't against economic
reform. They were against the Chicago School version of it, but their
efforts were costly.

Deng declared martial law May 20, tanks rolled in the square,
indiscriminate shooting took place, and when it ended thousands were dead,
many more thousands injured, and still more thousands hunted down,
arrested, jailed, some tortured, and hundreds likely executed. Shock
therapy rolled in China as in Chile - through the barrel of a gun and raw
state terror. Following the crackdown, China opened to foreign investment,
joined the WTO, and turned the country into the world's largest low wage
sweatshop for Wal-Mart's "Always Low Prices."

For foreign investors and party apparatchiks, it was a win-win arrangement
with Klein citing a 2006 study showing 90% of China's billionaires to be
Communist Party officials. About 2900 "party scions" (called "the
princelings") control $260 billion, and Klein notes the "stark similarity
between (China's authoritarian rule) and Chicago School capitalism - a
shared willingness to disappear opponents, blank the slate of all
resistance and begin anew" using shock and fear to transform countries
into free market paradises for the privileged.

The Tragedy of South Africa's "Democracy Born in Chains"

Klein quotes Nelson Mandela in January, 1990 (two weeks before he was
freed) in a note to his supporters from prison saying: "The
nationalisation of the mines, banks and monopoly industries is the policy
of the ANC (and changing) our views....is inconceivable. Black economic
empowerment is a goal we fully support and encourage, but in our situation
state control of certain sectors of the economy is unavoidable." That
belief became ANC policy in 1955 in its Freedom Charter. The liberation
struggle wasn't just about a political system but an economic one as well.
White workers in mines earned 10 times more than blacks, and large
industrialists worked with the military to enforce order and disappear
dissenters.

Once apartheid ended, a new way was possible, and Mandela seemed poised to
lead it. The ANC had "a unique opportunity to reject the free market
orthodoxy of the day" and choose a "third path between Communism and
capitalism." ANC candidates swept the 1994 elections and Mandela became
president at a time South Africa surpassed Brazil as the most unequal
society in the world. Negotiations were held with the ruling National
Party, and a peaceful handover was achieved but not without "prevent(ing)
South Africa's apartheid-era rulers from wreaking havoc on their way out
the door."

Negotiations took place on two parallel tracks - political and economic.
Mandela and his chief negotiator, Cyril Ramaphosa, "won on almost every
count" politically. But along side it, economic negotiations were held
with the country's current president, Thabo Mbeki, in charge with the
outcome in the end far different. With ANC leaders preoccupied with
controlling Parliament, the former white supremacist government and
industrialists were determined to safeguard their wealth, and they
succeeded by assuring Washington Consensus policies would be instituted
when political power changed hands.

ANC economists and lawyers were outfoxed or outgunned by the opposition,
IMF, World Bank, GATT and power of big capital against inexperienced
politicians and technocrats who ended up losers. Black officials
controlled the government, but discovered the real power was elsewhere. As
Klein put it: "The bottom line was that South Africa was free but
simultaneously captured." The leadership mistakenly thought once firmly in
power they could undo earlier made transition compromises.

They couldn't or didn't for the same reasons other developing countries
accept free market rules. Adopt them or be punished by the market as
Mandela learned when he was freed. The South African stock market
collapsed in panic, and the country's currency (the rand) dropped by 10%.
He acknowledged the problem later on saying it's "impossible for
countries....to decide economic policy without regard to the likely
response of these markets." It's too bad he didn't know how Hugo Chavez
managed after 1999 (oil aside). He achieved what Mandela reneged on, and
Venezuela's economy is booming. Had he and ANC officials stood their
ground early on, South Africa (with its mineral riches) might have done
the same thing - had a growth economy in a socially democratic state and a
model for its neighbors.

They didn't, black South Africans lost out, Mandela's legacy is tainted,
and a key factor was current president Thabo Mbeki. He spent spent years
studying in exile in England during the apartheid years during which time
"he was breathing in the fumes of Thatcherism." He became the ANC's free
market tutor, believed in market fundamentalism, and its prescription was
"growth and more growth." It meant neoliberal shock therapy with the full
Friedman package Mbeki supported. He later professed: "Just call me a
Thatcherite," and Mandela told journalist John Pilger the same thing in
retirement saying: "....you can call it Thatcherite but, for this country,
privatization is the fundamental policy."

After over a decade of that agenda (1994 - 06), Klein highlighted the toll
showing conditions today much worse than under apartheid, and ANC's
leadership responsible:

the number of people living on less than $1 a day doubled from two to
four million;
the unemployment rate more than doubled to 48% from 1991 - 2002;
only 5000 of 35 million black South Africans earn over $60,000 a year;

• the ANC government build 1.8 million homes while two million South
  Africans lost theirs;
• nearly one million South Africans were evicted from farms in the first
  decade of democracy; as a result, the shack dweller population grew by
  50%, and in 2006, 25% of South Africans lived in them with no running
  water or electricity. And there's more:
• the HIV/AIDS infection rate is about 20%, and the Mbeki government
  shamefully denied the severity of the crisis and did little to alleviate
  it; it's been a major reason why average life expectancy in the country
  declined by 13 years since 1990;
• 40% of schools have no electricity;
• 25% of people have no access to clean water and most who do can't
  afford the cost; and
• 60% of people have inadequate sanitation, and
  
• 40% no telephones.

"Freedom" for these people and all black South Africans came at a high
price, and no efforts are being made to ameliorate it. Political
empowerment was traded for economic apartheid under Chicago School
fundamentalist rules. Klein observed: "Never before had a
government-in-waiting been so seduced by the international community." If
China, Vietnam and even Russia saw "the neoliberal light," Mandela was
told, how could South Africa resist it. The ANC leadership might have (and
Mandela had the credentials to lead them) had they examined the wreckage
around the world in Friedman-seduced countries. Instead, they took the
easy way out and surrendered.

Russia Chooses "the Pinochet Option"

The man who ignited political and social change in Russia wasn't around
long enough to lead it. Mikhail Gorbachev became head of the Soviet
Union's Communist Party in March, 1985, believing the economy stalled and
needed change. His solution became glasnost (liberalizing opening up) and
perestroika (reconstruction), and Soviet Russia would never be the same
again. By the early 1990s the press was freed, the constitutional court
was independent, and elections were held for Russia's parliament, local
councils, president and vice-president. In addition, Gorbachev favored a
Scandinavian-style social democracy combining free market capitalism with
strong social safety net protections. He hoped to build "a socialist
beacon for all mankind." He never got the chance.

While still in office at the 1991 G7 meeting in London, his fellow heads
of state delivered a free market message Chicago School-style. Later, the
IMF, World Bank and other international lending agencies reinforced it -
Soviet-era debts must be honored and aid depended on adopting strict shock
therapy rules. The Soviet Union soon dissolved, Gorbachev was out, Boris
Yeltsin became Russia's president, and Chicago School fundamentalism was
adopted as needed "reform." Klein calls what happened next "one of the
greatest crimes committed against a democracy (in peacetime) in modern
history."

Yeltsin assembled a team of Chicago School ideologues to remake the
economy. Jeffrey Sachs showed up, too, with other US-funded transition
experts to help write privatization decrees, launch a New York-style stock
exchange, and craft a total radical economic makeover for a country long
used to central planning. Only one thing stood in the way - democracy, and
a parliament able to vote down what Yeltsin's team designed. A clash of
wills drew closer in the spring of 1993 when parliament's budget diverged
from IMF demands for strict austerity. Yeltsin reacted with the "Pinochet
option." He issued decree 1400 dissolving parliament and abolishing the
constitution. Two days later, parliament voted 636 - 2 to impeach him, and
battle lines were drawn.

Yeltsin sent troops to surround parliament and cut off power, heat and
phone lines. The army backed him and he pressed on. He then proceeded to
dissolve all city and regional councils in the country. Then, on October
4, 1993, he ordered the army to storm the parliament, set it ablaze and
"defend Russia's new capitalist economy from the grave threat of
democracy." The assault took about 500 lives, wounded nearly 1000 others
with the enthusiastic support from the West in headlines like the
Washington Post proclaiming "Victory Seen for Democracy" in Russia. Some
democracy.

Yeltsin now had unchecked dictatorial power, the West had its man in
Moscow, and shock therapy had an open field to inflict wreckage on
Russia's people who didn't know what him them as it unfolded. A
corporatist state replaced a communist one, and its apparatchiks were
winners along with a handful of western mutual fund managers who made
"dizzying returns investing in newly privatized Russian companies." In
addition, "a clique of nouveaux billionaires" (17 in all called "the
oligarchs") were empowered to strip mine the country of its wealth and
ship profits offshore at the rate of $2 billion a month.

As a result, Yeltsin's popularity plunged so he did what all desperate
leaders do to hold power with the next election to worry about. He began a
war in 1994 in the breakaway Chechen republic killing 100,000 civilians by
the late 90s. Elections were held in 1996, and Yeltsin won by overcoming
his low approval ratings with huge oligarch-funding and near-total control
of television coverage. He then quietly handed power to Vladimir Putin on
December 31, 1999 without an election but with the stipulation he was
exempt from criminal prosecution. His legacy was devastating with Klein
noting "never have so many lost so much in so short a time." When Russia's
1998 financial crisis hit:

• 80% of Russia's farmers were bankrupt;
• around 70,000 states factories had closed;
• an "epidemic" of unemployment raged;
• before shock therapy in 1989, two million Russians lived in poverty on
  less than $4 a day; by the mid-90s, the World Bank estimated 74 million
  were impoverished and by 1996 conditions for 25% (almost 37 million)
  Russians were "desperate" and the country's underclass remained permanent;
• Russians drink twice as much now as before; painkilling and hard drug
  use increased 900%, and HIV/AIDS threatens to become epidemic with a
  20-fold jump in infections since 1995; suicides are also rising, and
  violent crime increased more than fourfold; and
• Russia's population is declining by 700,000 a year with capitalism
  having already having killed off 10% of it as one more example of free
  market-inflicted disaster. That's the brave new world disease spreading
  everywhere with another scorched-earth stop below. Friedman called it
  "freedom."

The Looting of Asia

In the summer of 1997, economic crisis hit Asia from no apparent cause
beyond rumors the Thai bhat was in trouble, and Thailand didn't have
enough dollars to back it. Hot money in became an electronic stampede out
with "Asian Contagion" unleashed and heading for Indonesia, South Korea
and other so-called Asian Tiger countries that were fast-growth miracles
until they crashed together with the plight of one affecting the others.
It then got worse and spread to Latin America and Russia with US markets
also affected briefly in 1997 and then again with a severe jolt in the
summer of 1998.

The 1997 Asian panic was crippling with $600 billion in stock market
wealth taking decades to build wiped out in a year. Klein notes "a classic
fear cycle" ignited the crisis that might have been contained by the same
type "quick, decisive loan" rescue package offered Mexico in 1994 in their
so-called Tequila Crisis. It would have been a strong signal to markets
the US Treasury and international lending agencies wouldn't let the Asian
Tigers fail. No help came, and the message instead was: "Don't help Asia."
Why? Because "Asia's catastrophe was an opportunity (for predatory western
corporations and vulture investors) in disguise."

Asian Tigers grew by protecting their markets and barring foreign
companies from ownership of land or national firms. They also restricted
imports from the West and Japan and instead built up their own domestic
markets. Western predators wanted unfettered entry to the region with the
right to scoop up the best Asian companies but needed a way to do it. Now
they had it from an event Klein calls "the fall of a second Berlin Wall,"
as important to western capital as the first one.

Enter the IMF with crisis-struck Asian countries too sick to resist it.
They needed help, and the lending agency had plenty to offer on similar
terms as to previous crisis recipients. With economies in trouble and
empty treasuries, the Tigers got no choice. First, they had to remove all
"trade and investment protectionism and activist state intervention that
were the key ingredients of the Asian miracle." IMF also demanded big
spending cuts, "flexible" workforces (meaning mass layoffs and constrained
wages and benefits), privatized basic services, and the rest of the
package they demand for loans.

The regional toll was devastating with the International Labor
Organization estimating 24 million lost jobs along with "what was so
remarkable about the region's 'miracle' in the first place: its large and
growing middle class." In addition, 20 million people fell into the
"planned misery" of poverty, reversing an earlier trend reducing it. Women
and children suffered most with families selling daughters to human sex
traffickers to survive as child prostitution had a new growth market.

So did Wall Street as IMF structural adjustments put "pretty much
everything in Asia....up for sale" in the affected countries. The more
markets panicked, the lower asking prices became, and the more pressured
hurting companies were to sell out for what they could get or face
bankruptcy. It was a bonanza for buyers, and major deals went through in a
great fire sale at bargain prices. Asia became hugely transformed with
hundreds of local brands replaced by western transnational ones. The New
York Times called it "the world's biggest going-out-of-business sale." It
also became an early glimpse of post-9/11 disaster capitalism - a way for
corporate predators to exploit crises in what's become common practice in
the age of "terror" creating opportunities galore and big profits for
well-connected firms.

Klein notes the Asian crisis never ended as desparation took root after 24
million people lost jobs in two years. No nation handles that, and the
fallout can be unpredictable. It led to a rise in religious extremism in
Indonesia and Thailand and "the explosive growth in the child sex trade."
Unemployment is still high and layoffs continue with new foreign owners
demanding higher profits with jobs disappearing to provide them.

Eventually things settle down but never to where they once were. Throwing
people overboard, displacing small farmers and business owners and
crushing unions means those affected stay that way. "They end up in slums,
now home to one billion people (and rising); they end up in brothels or in
cargo ship containers. They are the disinherited (or what) German poet
Rainer Maria Rilke (called) 'ones to whom neither the past nor the future
belongs.' " They're the human wreckage left behind by countries swallowing
Chicago School economic medicine. Its promised miracle is people-poison
but not for vulture investors thriving on it. Disaster capitalism is on a
roll, and its growth market potential is unlimited and guaranteed to
continue unless mass public outrage stops it as one day it will.

Part 5 - The Rise of the Disaster Capitalism Complex -

Shock Therapy in the USA

Richard Nixon knew before the rest of us that Donald Rumsfeld is "a
ruthless little bastard." He also has a knack for making enemies even
inside the Pentagon he ran as Defense Secretary. He planned to "reinvent
warfare for the twenty-first century (making it) more psychological than
physical, more spectacle than struggle, and far more profitable" than ever
before. Talk aside, he wanted to revolutionize the military by running it
like the corporate world, and that meant using methods like outsourcing
and branding. His idea was for fewer full-time troops, more as-needed ones
from the Reserves and National Guard, and a lot of backup help from
private contractors like Blackwater USA for security and Halliburton for a
range of functions unrelated to soldiering. He wanted less staff and more
tax dollars diverted to private companies. The Pentagon brass wasn't
pleased, but Rumsfeld was boss and Dick Cheney backed him.

Klein calls them both "proto-disaster capitalists" who practice "the
central tenet of the Bush regime (that) the job of government is not to
govern but to subcontract." The privatization mania was kick-started in
the Reagan era, but Bill Clinton bought it as well. Now the feeling is
anything government can do, private business can do better so let them.
That means fire departments, prisons, public schools, public health, data
management, border control and even parts of the military. As Klein
explained: "crisis-exploiting methods....honed over the previous three
decades would be used to (privatize) the infrastructure of disaster
creation and....response. Friedman's crisis theory was going postmodern
(to create a) privatized police state" by auctioning it off.

"Then came 9/11 [911 was engineered, Naomi, it didn't just come!],
and the idea of hollowing out government seemed opposite
of what a frightened public wanted - a strong central government to
protect them. Bush promised it in speeches, but "his inner circle had no
intention of converting to Keynesianism." September 11 security failures
only reinforced their belief that private firms could handle the challenge
better than government, and that meant transferring hundreds of billions
of public dollars to corporate pockets. The Bush administration exploited
shock and fear "to push through its radical vision of a hollow government
in which everything from war fighting to disaster response was a
for-profit venture."

Mass disorientation post-9/11 provided the opportunity, and the "war on
terror" became a "bold evolution of shock therapy....built to be private
from the start" to capitalize on it. It came in two stages. First,
policing, surveillance, detention and war-making powers of the executive
were dramatically increased though nothing in the Constitution permits it.
Then, the whole package, including occupation and "reconstruction," was
outsourced to well-connected private firms that responded with generous
campaign funds to keep the mutually reinforcing daisy chain humming. Using
the ploy of fighting "terrorism," the homeland disaster capitalism complex
emerged as a full-blown new economy and what Klein calls "a virtual fourth
branch of government."

The Bush administration's idea of government, with security as one
function, wasn't to provide it but to buy it at cost-plus market prices
with lots of latitude for the plus. Just as the internet launched the
dot-com bubble, from 9/11 emerged the disaster capitalism one, and it was
off to the races "in an ad hoc....chaotic fashion."

Fighting "terrorism" is big business, and one of the first opportunities
was the market for surveillance cameras with 30 million of them installed
in the US, billions of hours of footage, analytic software to scan it,
digital image enhancement to help it, and information management and data
mining technology to handle all data government collects on everyone and
everything. September 11 unlocked the potential, a huge new growth market
was created, and protection from terror became more important than big
brother watching. In six short years, an industry that barely existed is
now much larger than Hollywood or the music business, and its potential
looks limitless.

Klein calls it "an unprecedented convergence of unchecked police powers
and unchecked capitalism, a merger of the shopping mall and the secret
prison" in a frightening brave new world most people barely understand or
know exists. It generates enormous wealth that creates a powerful
incentive for its winners to sell fear for more of it and partnering with
government makes it easy, especially the kind in power now.

Capitalism Becomes Corporatism in a Corporatist State

Proto-disaster capitalism defines the Bush administration as crises, wars
and other disasters "conflate with what's good for Lockheed, Halliburton,
Carlyle and (Rumsfeld's old company) Gilead" Sciences. Cataclysm is a
growth business that in the current climate involved "some of the seediest
and most blatant corruption scandals in recent history," war-profiteering
in the hundreds of billions, and a "whirling revolving door between
government and business" taken to a new level. The limitless homeland
security and war-profiteering markets are so alluring, hundreds of
administration officials can't wait to cash in like earlier ones did.
Klein names some noted ones like Richard Pearle, James Baker, Henry
Kissinger, Paul Bremer, George Shultz, John Ashcroft, Tom Ridge, Rudi
Giuliani, Richard Clarke, James Woolsey, Joe Allbaugh, and Michael Brown
who wrote an infamous memo to a fellow FEMA staffer asking: "Can I quit
now?"

That's the whole idea in a get rich quick environment - get an impressive
government title, stay in office long enough in a department handing out
big contracts, collect insider information with market value, then quit
and cash in. Klein calls public service now "little more than a
reconnaissance mission for future work in the disaster capitalism
complex." She also quotes Danielle Brian, executive director of the
Project on Government Oversight (a nonprofit watchdog group) saying: "It's
impossible to tell where the government ends and Lockeed begins." She also
believes that corporatist economic goals and right to limitless profit
seeking lie at the heart of the most committed neocons who talk a good
game but value great wealth their top priority. They partnered permanent
war and homeland security with the disaster capitalism complex to get it,
and it's hard indeed telling where one ends and the other begins. But it's
centerpiece project is Iraq, and its headquarters is in Baghdad's heavily
fortified Green Zone.

Part 6 - Iraq, Full Circle - Overshock - Erasing A Country

Perhaps no country provides a greater untapped opportunity for unfettered
capitalism than Iraq. It represents the planet's last remaining
low-hanging oil resources fruit with potentially more of it than Saudi
Arabia according to some oil analysts. It's also strategically located in
the heart of the oil-rich Middle East (with two-thirds of proved reserves)
Klein calls the "crusade's....final frontier." Iraq's potential alone is
so enormous it made war the way to crack open its market potential because
peaceful methods hadn't worked. Its conquest would then serve as "a
different model in the heart of the Arab-Muslim world" that could become a
catalyst to opening the whole region.

The potential is a giant free-trade zone, the illusion of newly created
democracies, and the freedom for unfettered capitalism "to feed off
freshly privatized states." Klein explained this as "the model theory,"
Iraq as the model, with the idea not being nation-building but
nation-creating. But what of the nation already there that's known as the
"cradle of civilization." It would have to be erased, and Chicago School
fundamentalism would create a new one in its place in its own image with a
blank slate to work from.

Bush administration war planners considered the full array of possible
shocks and went with them all - blitzkrieg "shock and awe," elaborate
PsyOps, use of fear as a weapon, repressive occupation, mass detention and
torture, and "the fastest and most sweeping political and economic shock
therapy program attempted anywhere....From the start, the invasion was
(Washington's message) to the world....in the language of fireballs,
deafening explosions and city-shattering quakes." It said dare challenge
US authority, and you're next. Shock and awe planners designed its
strategy to deter "the public will of the adversary to resist (to render)
the adversary completely impotent" from the effects of sensory deprivation
and overload inducing disorientation and regression.

In March, 2003, Baghdad got it on a massive scale. The ministry of
communication and four telephone exchanges was blitzed and set ablaze
cutting off millions of phones and preventing people from learning if
their family and friends were alive. Television and radio transmitters
were also destroyed along with the electrical grid plunging the city into
"an awful, endless night." Residents were trapped in their homes unable to
speak or hear each other or see outside at night. "LIke a prisoner
destined for a CIA black site, the entire city was shackled and hooded.
Next it was stripped."

Unchecked looting did the most to erase the "country that was....Gone are
80% of the museum's 170,000 priceless objects....the national library is a
blackened ruin....the Ministry of Religious Affairs....was left a
burned-out shell (and the) national heritage was lost." Paul Bremer's
senior economic advisor, Peter McPherson, wasn't bothered. It made his job
of radically downsizing the state and selling it off easier. Cleaning the
slate and erasing the nation was proceeding fast. It "all unfolded in a
matter of weeks." Baghdad was "open for business," and the fire sale for
its assets began with US firms having first dibs on everything, except
oil, and that would come later as it has now but is stalled.

While he was there, Paul Bremer was Washington's man in Baghdad charged
with readying the launch of Iraq, Inc. He saw to it laws were passed
smoothing the way for Chicago School shock therapy. Two hundred firms were
to be privatized immediately to get "inefficient state enterprises into
private (predatory) hands...." New economic laws followed that comprised a
"wish list....foreign investors and donor agencies dream of," according to
The Economist. The corporate tax was cut from 45% to a flat 15%; another
allowed foreign companies to own 100% of Iraqi assets and take all profits
out of the country; all restrictions on imports were removed; and
investors could sign deals and leases lasting 40 years so no future
government could change them.

Iraq became a bold new experiment with invasion, occupation and
reconstruction transforming the country into a fully privatized new market
"with a huge pot of public money" doing it. Klein called the adventure an
"anti-Marshall plan," mirror opposite the post-WW II plan, and guaranteed
"to further undermine Iraq's badly weakened industrial sector and send
Iraqi unemployment soaring." No funds went to Iraqis or their industries
nor was anything done to build a sustainable economy, or rebuild local
infrastructure like electrical grids, schools, and hospitals. Iraqis
played no role in planning, local firms weren't even given
"subsubsubcontracts," jobs were destroyed not created while thousands of
serf-type foreign workers were brought in and abused, and critically
needed social services were ignored.

Another goal was for a fully outsourced, hollow government with no
function so "core" a contractor couldn't handle it for profit. It was pure
pillage, but nothing went as planned. "Each miscalculation provoked
escalating levels of resistance" with occupying forces responding with
counterrepression "sending the country into an inferno of (unending)
violence." Everything "tearing Iraq apart today - rampant corruption (and
unfettered plundering), ferocious sectarianism, the surge in religious
fundamentalism and the tyranny of death squads (including US 'Salvador
option' ones) - escalated in lockstep with....Bush's anti-Marshall Plan."
In that environment, the country became "a cutthroat capitalist
laboratory" for shameless pillage. Iraq today is a model, a metaphor for
everything wrong with Chicago School dogma showing it to be savage,
ruthless, heartless and bankrupt.

Its implementation is the core reason for resistance that continues and
grows, but it caught war planners off guard when it began. They thought
the shock and awe of attack, invasion, occupation and rapid transformation
on the ground would be disorienting. Instead, Iraqis demanded a say from
the start in how their country would be rebuilt and transformed. "And it
was the Bush administration's response to this unexpected turn of events
that generated the most blowback of all" that became even worse by
crushing democracy and effectively installing a puppet government in the
fortified Green Zone masquerading as a real one.

The result was predictable and so was the harsh response - mass
detentions, aggressive interrogations, administration-sanctioned gloves
off torture, and US unleashed "Salvador option" death squads making it
hard to know who's doing the killing and blasting away at selected
targets. What is clear are the consequences - "millions of psychologically
and physically (traumatized, angry and) shattered people, first by Saddam,
(then) by war, (then) by one another (and the occupation). Bush's in-house
disaster capitalists didn't wipe Iraq clean, they just stirred it
up....Countries, like people, don't reboot to zero with a good shock; they
just break and keep breaking....Which....requires more blasting - upping
the dosage...."

Slowly, it's disappearing, disintegrating, erasing an entire country -
women behind veils and doors, children from schools, four million
displaced, Iraqi industry collapsed, a new growth industry in kidnapping
for ransom, a country so unstable investment is high-risk, and even the
heavily fortified Green Zone is too unsafe for George Bush to visit on one
of his "surprise trips" to the country. Bremer's charge was to build a
"corporate utopia" but instead unleashed a "ghoulish dystopia," and, on an
April, 2004 visit to the country, Klein thought she was witnessing a mass
contractor exodus with 1500 of them leaving in one week.

Now she's not sure. Big investors like Wal-Mart, HSBC and Procter and
Gamble never showed up, and in December, 2006, the Pentagon announced a
new project to get state-owned factories operating with plans to buy
cement and machinery from them instead of the usual corporate suppliers.
Does it signal a change of disaster capitalism tactics? Not at all, and
it's likely this amounts to no more than tinkering and tokenism that in
the end will do little for the local economy and even less to reduce
hardened anger.

The Big Oil drafted Hydrocarbon Law is still a work in progress but
already inflamed things further, and well it should. It's an anti-Marshall
Plan project at its worst, and in whatever final form is a shameless act
of theft on the grandest scale. It's a privatization blueprint for plunder
giving Big Oil a bonanza and Iraqis a mere sliver of their own resources.
In one draft, Iraq's National Oil Company got exclusive control of just 17
of the country's 80 known oil fields with all yet-to-be-discovered
deposits set aside for foreign investors. Even worse, Big Oil is free to
expropriate all earnings with no obligation to invest anything in Iraq's
economy, partner with Iraqi companies, hire local workers, respect union
rights, or share new technologies. In addition, foreign investors are
guaranteed long-term contracts up to 30 or more years, dispossessing Iraq
and its people of their own resources in a naked scheme to steal them and
deny them the one source of revenue able to rebuild their shattered
country and lives.

The battle for Iraq continues that involves clinging to if not winning the
hearts and minds on the home front as well. The country is a wasteland,
the nation creation project bankrupt, and the prospect for success bad and
worsening. Iraq has been a graveyard for past imperial powers, and it may
just be a matter of time until history again repeats. The Brits in the
South know it, and after four and a half futile years are tiptoeing out to
the dismay of their "coalition" partners. One day, Washington may join
them, and for shocked Iraqis it can't come too soon. For now, though, the
shock continues, and Iraq more closely resembles hell than "the cradle of
civilization."

Part 7 - The Movable Green Zone: Blanking the Beach - "The Second Tsunami"

For coastal Sri Lankans, like those in Arugam Bay, December 26, 2004 felt
more like 1945 Hiroshima than life before that fateful day changing
everything for them. A devastating tsunami took 250,000 lives and left 2.5
million homeless throughout the region. It affected Arugam Bay, "a fishing
and faded resort village" on the island's east coast that government was
showcasing in its plans to "build back better." Indeed, but not for the
villagers hoteliers, developers and the government wanted removed but
weren't sure how until nature did what they couldn't. Everything was gone,
and a blank slate remained for what the tourist industry long wanted - "a
pristine beach (in a prime area), scrubbed clean of all the messy signs of
people working, a vacation Eden. It was the same up and down the coast
once rubble was cleared....paradise."

"New rules" forbade homes on the beach and a "buffer zone" imposed insured
it. Beaches were off-limits, displaced Sri Lankans were shoved into
temporary grim barracks camps inland, and "menacing, machine-gun-wielding
soldiers" patrolled to keep them there.

Tourist operators were treated differently. They were encouraged to build
and expand on prime vacated oceanfront land. It was all in a document
called the "Arugam Bay Resource Development Plan" to transform the former
fishing village into a "high-end 'boutique tourism destination' (with)
five-star resorts, luxury....chalets, (and even a) floatplane pier and
helipad." Arugam Bay was to be a model for transforming up to 30 similar
"tourism zones" into a "South Asian Riviera." When the plan leaked out,
people in Arugam Bay and around the country were outraged.

The grand scheme to remake Sri Lanka was around two years earlier and
began when the civil war ended. It was to be the country's reentry into
the world economy as one of the last remaining uncolonized places
globalization hadn't touched, and a high-end tourism project was seen as
the right option. It would be a luxury destination for the "plutonomy
set," once a few changes were made. Government's 80% land ownership had to
be opened to private buyers, more "flexible" labor laws were needed, and
modernized infrastructure had to be developed with World Bank and IMF
providing funds on their usual shock therapy terms discussed above. With
mass public opposition to the ideas, it wouldn't be easy, and before the
tsunami hit, militant strikes and street protests held it back.

Sri Lanka's president, Chandrika Kumaratunga, was elected on an "overtly
antiprivatization platform," but the tsunami changed everything and helped
her see "the free market light." Four days after the disaster, her
government passed a bill "pav(ing) the way for water privatization." It
also raised gasoline prices and began crafting legislation to privatize
the electricity company in pieces. It was like a second tsunami, and the
same scheme followed hurricane Mitch in October, 1998 with Hondurus,
Guatemala and Nicaragua hardest hit like New Orleans discussed below.

Klein explained when the tsunami struck in 2004, "Washington was ready to
take the Mitch model (now familiar) to the next level - aiming not just at
individuals laws but at direct corporate control over the construction."
Sri Lanka's president complied and created a new body called the Task
Force to Rebuild the Nation fully empowered to proceed. On it were the
most powerful business leaders from banking and industry including key
players from the beach tourism sector. Absent were villagers, farmers,
environmentalists or even a "disaster-reconstruction specialist." Klein
called the task force a new type corporate coup d'etat mother nature made
possible.

In ten days, then had a complete reconstruction blueprint from "housing to
highways" with aid money directed to corporate development and nothing for
disaster victims. They were destined to become permanent shantytown
dwellers similar to the kinds ringing most Global South cities and
populating Global North inner ones. Similar stories of law changes and
land grabs came out of other affected Southeast Asian countries like
Indonesia, Thailand, the Maldives and India where around 150 Tamil Nadu
displaced women had to sell their kidneys for food.

A year after the tsunami, NGO ActionAid surveyed the aftermath in five
Asian countries and found the same pattern everywhere - residents barred
from rebuilding, living in militarized temporary camps, hotels "showered
with incentives," no restoration of homes lost, and "entire ways of life"
destroyed. In July, 2006 in Sri Lanka, the Tamil Tigers ended their
cease-fire and war resumed. It's hard knowing if disaster capitalism had a
role because peace was always precarious, the government offered little,
and continued violence at least promised a chance for something better
before and more than ever now given the choice between disaster capitalism
and hope.

Disaster Apartheid - A World of Green and Red Zones

On August 29, 2005, Hurricane Katrina hit the Gulf Coast and flooded New
Orleans. The well-off left town, "checked into hotels, and called their
insurance companies." For 120,000 others without cars or means of
transportation, it was another story. They depended on the state, waited
for help and got none. FEMA is supposed to provide it, too, but it was one
of the many government functions Bush gutted advancing savage capitalism
at the expense of public service.

Katrina was disastrous for those affected, but Milton Friedman saw "an
opportunity" in a Wall Street Journal op-ed. It was easy for him to say
from his luxury San Francisco digs as well as his like-minded ideologues
who met 14 days later to plan how to pounce on the tragedy for profit.
They produced 32 Chicago School-type schemes packaged as "hurricane
relief" that was a wish list for developers and hell for the displaced.
They ranged from suspending Davis-Bacon prevailing wage laws in disaster
areas and making the whole area a flat tax free enterprise zone to erasing
public schools by giving parents vouchers for privately-run charter ones.
They also wanted environmental regulations suspended on the Gulf Coast and
permission to drill in the Arctic National Wildlife Refuge that showed how
far afield they'd go to capitalize on the shock of a local tragedy.

Things moved fast, and within weeks "the Gulf Coast became a domestic
laboratory for the same kind of (outsourcing schemes) pioneered in Iraq."
The names were familiar with Halliburton first in line along with Bechtel,
Blackwater USA and a host of others homing in for the kill. Billions were
at stake, and no open bidding was required, just good connections. As
Klein put it: "within days of the storm it was as if Baghdad's Green
Zone....lifted from....the Tigris and landed on the bayou....As in Iraq,
government once again played the role of a cash machine equipped for both
withdrawals and deposits." Corporations took one and repaid with the other
in sizable campaign contributions in a pattern now familiar.

They also ignored unemployed locals and relied instead on cheap imported
undocumented labor easily exploited. The Bush administration showed its
type compassion, too, with $40 billion in budget cuts for essentials like
Medicaid, food stamps, student loans and more so funds could go to
contractors and the wars in Iraq and Afghanistan. Again, a familiar
pattern.

In visiting Iraq, Klein first thought the "Green Zone phenomenon was
unique to the war in Iraq." She then discovered it emerges wherever
disaster capitalism lands with the same stark divisions between the
included and excluded. It was evident in New Orleans with "gated green
zones and raging red" ones - not from flood damage but from predatory free
market solutions only for the privileged.

The Bush administration refused emergency funds for public sector salaries
so 3000 city workers were fired. Charity Hospital closed and still isn't
open. Public transit was gutted losing half its workers, and most public
housing is still boarded up and empty by design. Some sits on prime land
close to the French Quarter, developers want it for luxury properties, and
New Orleans is being erased for profit just like Iraq. It was all planned
with the storm the excuse to do it.

Earlier "creative destruction" opportunities generated "rust belts,"
neglected neighborhoods, and underfunded inner city public schools.
Creative neglect is at work as well as the American Society of Civil
Engineers in 2007 said it will cost $1.5 trillion over five years to bring
essential public infrastructure back to standard. Instead it continues to
deteriorate while the well-off withdraw into gated communities and luxury
condos with all their needs met by private providers. Klein calls this
trend a "state-within-a-state that is muscular" and as able as the public
one is frail. It no longer can function without help from contractors as
government is hollowed so business can prosper.

New Orleans is a window on the future in which survival depends on the
ability to pay, and those who can't are discarded like trash. It promises
a world of protected Green Zones with those outside it neglected,
abandoned, ignored and forgotten.

Losing the Peace Incentive - Israel As Warning

Conventional wisdom once thought economic growth and prosperity required
peace and stability. No longer. Post-9/11, the terror scare was ignited,
wars rage in Iraq and Afghanistan, more war is threatened on Iran, oil
prices touched $80 a barrel, the WTO Doha Round trade talks collapsed, and
"a golden period of broadly shared growth" prevails (at least until the
recent credit crunch). How come?

Conflict and global instability don't just benefit arms related
industries. They help the high-tech security sector, heavy construction,
private health care companies treating soldiers and oil and gas. The
business bonanza in Iraq alone is hugely profitable with all sorts of
companies cashing in. The same goes for New Orleans and Gulf Coast
overall. Terrorist attacks are good for business. The more destruction,
the more to rebuild - a great market for disaster capitalism it pounces on
with every incentive to assure the trend continues unchallenged, and why
not when government throws public tax dollars at it.

Today, "instability is the new stability," and Israel is its "Exhibit A."
In the post-1993 Oslo years, the Jewish state designed its economy to
expand in response to escalating violence at home at first and now
everywhere. The nation's technology firms pioneered the homeland security
industry, and they still dominate it. In addition, its economy overall is
the most "tech-dependent in the world," according to Business Week
magazine, twice as dependent as the US representing half its exports.

Following the 2000 dot-com crash, Israel's leading tech companies needed a
new global niche, and the government encouraged expansion beyond
information and communications technologies into security and
surveillance. It launched a slew of start-ups "specializing in everything
from 'search and nail,' data mining, surveillance cameras, to terrorist
profiling." It was perfect timing for a market that exploded post-9/11,
and Israel's economy is thriving with one of the fastest growth rates in
the world. Klein calls the country "a kind of shopping mall for homeland
security technologies," and Forbes magazine says it's "the go-to country
for antiterrorism technologies." Today, the country's counterterrorism
industry is booming, and its defense-related exports make it the fourth
largest arms dealer in the world, larger than the UK.

Klein notes: "With more and more countries turning themselves into
fortresses (with walls and high-tech fences part of it), 'security
barriers' may prove to be the biggest disaster market of all." In the case
of Israel, it's also another "Chicago School frontier marked by rapid
stratification of society between rich and poor inside the state." The
security boom fueled a wave of privatizations accompanied by social
program cuts, "an epidemic of inequality," and the virtual end of Labor
Zionism. Klein notes 24.4% of Israelis live in poverty, including 35.2% of
children, compared to 8% twenty years earlier (but she doesn't say if
these figures include Arab Israeli citizens comprising 20% of the
population). She concludes Israeli industry no longer fears war as it
thrives on it.

Today, Baghdad, New Orleans and suburban Atlanta Sandy Springs are
glimpses of a gated community future run by the disaster capitalism
complex. But it's in its most advanced state in Israel - "an entire
country (turned into) a fortified gated community, surrounded by
locked-out people living in (the) permanently excluded red zones" of Gaza
and the West Bank that aren't just left out but are encroached on and
under attack. Disaster capitalism thrives in this environment so it yearns
to bring it to a neighborhood near you, and that's a prospect to fear.

Hopeful Signs - Shock Wears Off

Klein quotes Canada's National Post editor, Terence Corcoran, wondering if
the Chicago School movement Milton Friedman launched could continue as
before after his November, 2006 death. The movement's pinnacle was
capturing the Congress in 1994 that it lost in 2006 for three reasons -
public disenchantment with the Iraq war, political corruption, and a
growing class divide unseen since the Gilded Age of the "robber barons" or
roaring 20s. Each factor related to core Chicago School economics -
privatization, deregulation and cutting government services. In the US, it
created a wealth disparity economist Paul Krugman calls unprecedented
while poverty is growing and the middle class dying in the richest country
in the world that's also the least caring one.

Everywhere Chicago School fundamentalism shows up, the results are the
same. A small elite gains hugely while most others don't. But cracks in
the ideology are visible as many of its front line adherents got caught up
"in an astonishing array of scandals and criminal proceedings (from the)
earliest laboratories in Latin America to the most recent one in Iraq."

Before he died, Pinochet was under house arrest. In Argentina, courts
stripped former junta leaders of immunity. Bolivia's de Lozada got chased
from the country and is now a wanted man. In Russia, many of the oligarch
fraudsters were either in exile or jail. In Canada, newspaper magnate
Conrad Black was convicted of fraud. In the US, a rogue's gallery of CEOs
were charged and convicted as well, and other high level types were caught
up in scandals like lobbyist Jack Abramoff's influence-peddling one.

Klein notes another hopeful sign as well - shock effects were beginning to
wear off, and in Argentina's 2001 economic crisis forced out five
presidents in three weeks. It was spreading and most apparent in Latin
America where it began with opponents of Chicago School doctrine winning
elections like Hugo Chavez in Venezuela, but he wasn't alone. It showed a
renewed faith in democracy and condemnation of Washington Consensus dogma
when people made a choice at the polls in free and open elections. Today's
movements aren't replicas of the past, and one of the differences "is an
acute awareness of the need for protection from shocks of the past" -
coups, foreign shock therapists, torturers, debt and currency shocks.

They've learned from the past and are building "shock absorbers into their
organizing models." It's in movements less centralized, Venezuela's
grassroots community councils, Brazil's Landless Peoples Movement, and the
streets of Oaxaca, Mexico where thousands battled police since a year ago
May and still won't quit. In addition, governments are rejecting old trade
models and adopting new ones like Venezuela's ALBA bartering system making
it less vulnerable to turbulent markets.

They're also rejecting World Bank and IMF debt slavery, and the change is
dramatic. In 2005, 80% of IMF's lending portfolio was to Latin America. It
dropped to 1% in 2007. And IMF's 2005 $81 billion dollar portfolio shrank
to $11.8 billion in three years with nearly all of it in Turkey. The World
Bank is also being rejected. Venezuela severed its relationship, and
Ecuador's Raphael Correa suspended bank loans and declared its country
representative persona non grata in an extraordinary move the equivalent
of a well-deserved slap in the face. In addition, the Doha Round trade
talks collapsed, and some observers thought it signaled "globalization is
dead," or if not, it's at least breathing hard.

Resistance is showing up in Europe, too, with voters in France and the
Netherlands rejecting the European Constitution the French call "savage
capitalism" and a codification of the corporatist order they reject. The
Putin era in Russia is also seen as a backlash against the shock therapy
of the 90s that impoverished millions of its people still left out and
many desperate. The same is true in South Africa where people in slums
abandoned the ANC to protest against their broken Freedom Charter
promises. It even surfaced in China where, according to official
government sources, 87,000 large protests were held involving over four
million workers and peasants. They won major victories for new rural area
spending, better health care, and pledges to eliminate education fees.

Millions of Lebanese were in the streets as well that wasn't a show of
strength by Hezbollah as the major media characterized it. It was a
rejection of the Siniora government's willingness to accept Chicago School
reforms in exchange for billions of needed reconstruction loans to recover
from Israel's summer, 2006 blitzkrieg attack. Klein called their actions
"a poor and working-class people's revolt."

Examples are everywhere but so far just ripples in a pond needing greater
numbers for real change. They were in tsunami-struck Thailand where,
unlike in Sri Lanka, many settlements were successfully rebuilt in months
but not by the government offering no aid. So hundreds of villagers
"engaged in what they called land 'reinvasions,' " defied their government
with direct-action, and rebuilt their communities making them better than
before the destruction.

The same thing happened in New Orleans. In February, 2007, housing project
residents "reinvaded" their old homes and reclaimed them in another
example of "people rebuilding for themselves" and bypassing government
indifferent to their needs and rights. Klein calls this phenomenon "the
antithesis of the disaster capitalism complex's ethos." The actions are
communal with people helping each other, rebuilding rubble, and aiming to
end the erasure "of history, of culture, of memory."

It's a message of collective shock resistance replacing shock, but it's
too early to declare victory. The signs are encouraging, and with enough
of them who knows what's possible. Hopefully a better world replacing the
bankrupt notion that markets work best and government is the problem.
That's an idea for the trash bin of history where it belongs and where it
one day will be.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and listen to The Steve
Lendman News and Information Hour on TheMicroEffect.com Saturdays at noon
US central time.

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