PHA-Exch> DISASTER CAPITALISM: THE NEW ECONOMY OF CATASTROPHE

[Laura Turiano]

Harper's Magazine, October 1, 2007

DISASTER CAPITALISM: THE NEW ECONOMY OF CATASTROPHE

By Naomi Klein

[An excerpt from Naomi Klein's new book, The Shock Doctrine: The Rise of
Disaster Capitalism (New York: Metropolitcan Books, 2007).

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. -- Milton Friedman

Three years ago, when I was in Baghdad on assignment for this magazine, I
paid an early-morning visit to Khadamiya, a mostly Shiite area. An Iraqi
colleague had heard that part of the neighborhood had flooded the night
before, as it did regularly. When we arrived, the streets were drenched in
slick green-blue liquid that was bubbling up from sewage pipes beneath
exhausted asphalt. A family invited us to see what the frequent floods had
done to their once lovely home. The walls were moldy and cracked, and every
item -- books, photos, sofas -- was caked in the algae-like scum. Out back,
a walled garden was a fetid swamp, with a child's swing dangling forlornly
from a dead palm tree. "It was a beautiful garden," Durdham Yassin, the
owner, told us. "I grew tomatoes."

For the frequent flooding, Yassin spread the blame around. There was Saddam,
who spent oil money on weapons instead of infrastructure during the
Iran-Iraq War. There was the first Gulf War, when U.S. missiles struck a
nearby electricity plant, knocking out power to the sewage-treatment
facility. Next came the years of U.N. sanctions, when city workers could not
replace crucial parts of the sewage system. Then there was the 2003
invasion, which further fried the power grid. And, more recently, there were
companies like Bechtel and General Electric, which were hired to fix this
mess, and which failed.

Around the corner, a truck was idling with a large hose down a manhole. "The
most powerful vacuum loader in the world," it advertised, in English, on its
side. Yassin explained that the neighbors had pooled their money to pay the
company to suck away the latest hatch of sludge, a costly and temporary
solution. The mosque had helped, too. As we drove away, I noticed that there
were similar private vacuum trucks on every other block.

Later that day I stopped by Baghdad's world-famous Green Zone. There, the
challenges of living without functioning public infrastructure are also
addressed by private actors. The difference is that in the Green Zone, the
solutions actually work. The enclave has its own electrical grid, its own
phone and sanitation systems, its own oil supply, its own state-of-the-art
hospital with pristine operating theaters -- all protected by walls five
meters thick. It felt, oddly, like a giant fortified Carnival Cruise ship
parked in the middle of a sea of violence and despair, the boiling Red Zone
that is Iraq. If you could get on boardm there were poolside drinks, bad
Hollywood movies, and Nautilus machines. If you were not amonmg ythe chosen,
you could get shot just for standing too close to the wall.

Everywhere in Iraq, the wildly divergent values assigned to different
categories of people are on crude display. Westerners and their Iraqi
colleagues have checkpoints at the entrances to their streets, blast walls
in front of their houses, body armor, and private security guards on call at
all hours. They travel the country in menacing armored convoys, with
mercenaries pointing guns out the windows as they follow their prime
directive to "protect the principal." With every move they broadcast the
same unapologetic message: We are the chosen, our lives are infinitely more
precious than yours. Middle- class Iraqis, meanwhile, cling to the next rung
down the ladder: they can afford to buy protection from local militias, they
are able to ransom a family member held by kidnappers, they may ultimately
escape to a life of poverty in Jordan. But the vast majority of Iraqis have
no protection at all. They walk the streets exposed to any possible
ravaging, with nothing between them and the next car bomb but a thin layer
of fabric. In Iraq, the lucky get Kevlar; the rest get prayer beads.

Like most people, I saw the divide between Baghdad's Green and Red zones as
a simple by-product of the war: This is what happens when the richest
country in the world sets up camp in one of the poorest. But now, after
years spent visiting other disaster zones, from post- tsunami Sri Lanka to
post-Katrina New Orleans, I've come to think of these Green Zone/Red Zone
worlds as something else: fast-forward versions of what "free market" forces
are doing to our societies even in the absence of war. In Iraq the phones,
pipes, and roads had been destroyed by weapons and trade embargoes. In many
other parts of the world, including the United Stares, they have been
demolished by ideology, the war on "big government," the religion of tax
cuts, the fetish for privatization. When that crumbling infrastructure is
blasted with increasingly intense weather, the effects can be as devastating
as war.

Last February, for instance, Jakarta suffered one of these predictable
disasters. The rains had come, as they always do, but this time the water
didn't drain our of Jakarta's famously putrid sewers, and half the city
filled up like a swimming pool. There were mass evacuations, and at least
fifty-seven people were killed. No bombs or trade sanctions were needed for
Jakarta's infrastructure to fail in fact, the steady erosion of the
country's public sphere had taken place under the banner of "free trade."
For decades, Washington-backed structural-adjustment programs had pampered
investors and starved public services, leading to such cliches of lopsided
development as glittering shopping malls with indoor skating rinks
surrounded by moats of open sewers. Now those sewers had failed completely.

In wealthier countries, where public infrastructure was far more robust
before the decline began, it has been possible to delay this kind of
reckoning. Politicians have been free to cut taxes and rail against big
government even as their constituents drove on, studied in, and drank from
the huge public-works projects of the 1930s and 1940s. But after a few
decades, that trick stops working. The American Society of Civil Engineers
has warned that the United States has fallen so far behind in maintaining
its public infrastructure -- roads, bridges, schools, dams -- that it would
take more than a trillion and a half dollars over five years to bring it
back up to standard. This past summer those statistics came to life:
collapsing bridges, flooding subways, exploding steam pipes, and the still-
unfolding tragedy that began when New Orleans's levees broke.

After each new disaster, it's tempting to imagine that the loss of life and
productivity will finally serve as a wake-up call, provoking the political
class to launch some kind of "new New Deal." In fact, the opposite is taking
place: disasters have become the preferred moments for advancing a vision of
a ruthlessly divided world, one in which the very idea of a public sphere
has no place at all. Call it disaster capitalism. Every time a new crisis
hits -- even when the crisis itself is the direct by-product of free-market
ideology -- the fear and disorientation that follow are harnessed for
radical social and economic re-engineering. Each new shock is midwife to a
new course of economic shock therapy. The end result is the same kind of
unapologetic partition between the included and the excluded, the protected
and the damned, that is on display in Baghdad.

Consider the instant reactions to last summer's various infrastructure
disasters. Four days after the Minneapolis bridge collapsed, a Wall Street
Journal editorial had the solution: "tapping private investors to build and
operate public roads and bridges," with the cost made up from
ever-escalating tolls. After heavy rain caused the shutdown of New York
City's subway lines, the New York Sun ran an editorial under the headline
"Sell the Subways." It called for individual train lines to compete against
one another, luring customers with the safest, driest service and "charging
higher fares when the competing lines, stingier on their investments, were
shut down with tracks under water."' It's not hard to imagine what this free
market in subways would look like: high-speed lines ferrying commuters from
the Upper West Side to Wall Street, while the trains serving the South Bronx
wouldn't just continue their long decay they would simply drown.

The same week as the bridge collapse, hysteria erupted over canceled flights
and delays at London's Heathrow airport, prompting The Economist to demand
"radical reform" of the "grubby, cramped" facility. London's airports are
already privatized, but now, according to the magazine, they should be
deregulated, allowing terminals to compete against one another: "different
firms could provide different forms of security checks, some faster and
dearer than others." Meanwhile, in New Orleans, schools were getting ready
to reopen for fall. More than half the city's students would be attending
newly minted charter schools, where they would enjoy small classes, well-
trained teachers, and refurbished libraries, thanks to special state and
foundation funding pouring into what the New York Times has described as
"the nation's pre-eminent laboratory for the widespread use of charter
schools." But charters are only for the students who are admitted to the
system -- an educational Green Zone. The rest of New Orleans's public-school
students -- many of them with special emotional and physical needs, almost
all of them African American -- are dumped into the pre-Katrina system: no
extra money, overcrowded classrooms, more guards than teachers. An
educational Red Zone.

Other institutions that had attempted to bridge the gap between New
Orleans's super-rich and ultra-poor were also under attack: thousands of
units of subsidized housing were slotted for demolition, and Charity
Hospital, the city's largest public-health facility, remained shuttered. The
original disaster was created and deepened by public infrastructure that was
on its last legs; in the years since, the disaster itself has been used as
an excuse to finish the job.

There will he more Katrinas. The bones of our states -- so frail and aging
-- will keep getting buffeted by storms both climatic and political. And as
key pieces of the infrastructure are knocked out, there is no guarantee that
they will he repaired or rebuilt, at least not as they were before. More
likely, they will he left to rot, with the well-off withdrawing into gated
communities, their needs met by private suppliers.

Not so long ago, disasters were periods of social leveling, rare moments
when atomized communities put divisions aside and pulled together. Today
they are moments when we are hurled further apart, when we lurch into a
radically segregated future where some of us will fall off the map and
others ascend to a parallel privatized state, one equipped with well-paved
highways and skyways, safe bridges, boutique charter schools, fast-lane
airport terminals, and deluxe subways.

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