by Rick Wilson, American Friends Service Committee
[dropcap]I[/dropcap]n 2007, writer Naomi Klein stirred up controversy with her book The Shock Doctrine: The Rise of Disaster Capitalism. In it, she argued that economic elites and their political allies often take advantage of natural or social disasters to push through a radical agenda while ordinary people are still reeling from the events.
Klein defined disaster capitalism as “orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities…” The agenda pushed through at such moments includes three “trademark demands”: privatization, government deregulation, and deep cuts to social spending.
While Klein’s ideas seemed a bit paranoid to some critics, she had some points. The late “free market” economist Milton Friedman pretty much laid out the program when he stated that “only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: To develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”
Friedman practiced what he preached. When Chilean general Augusto Pinochet, with covert support from the Nixon administration, overthrew the democratically elected president of that country in 1973, imposed a military dictatorship, and set about crushing labor unions and other political opponents, Friedman and other “Chicago Boys” took advantage of the crisis and offered their services in helping the dictatorship to privatize that country’s social security system, cut social spending, and reduce regulations and taxes for businesses. Thousands of Chileans, including women and children, were murdered, tortured, raped and/or sexually abused in pursuit of this market utopia.
There are plenty of other examples of disaster capitalism. The Bush administration in the wake of the shock of 9/11 pushed through tax cuts and other business-friendly policies that had nothing to do with protecting the country from terrorist attacks. A number of corporations, with the aid of friendly governments, found ways of cashing in on calamities as diverse as the invasion of Iraq, the 2004 Indian Ocean tsunami and Hurricane Katrina.
Wisconsin Gov. Scott Walker, elected with help of the billionaire Koch brothers, played that game recently when he used state budget troubles as an excuse to attack collective bargaining rights for public employees. The budget was just a smokescreen — even when public workers agreed to wage and benefit cuts, he insisted on going farther by attacking rights on the job — while cutting corporate taxes even lower.
We are witnessing a little disaster capitalism now as extremists in Congress led by House Budget Committee Chairman Paul Ryan used deficit fears to push a radical agenda through the House that includes gutting Medicaid and CHIP; dismantling Medicare by replacing it with a voucher system to pay for private insurance; repealing health care reform; slashing domestic discretionary spending; and further extending tax cuts to corporations and the wealthiest.
Economist Dean Baker summed up the Ryan plan eloquently as “government by people who hate you.”
Robert Greenstein of the Center on Budget and Policy Priorities notes that Ryan’s plan “would get about two-thirds of its more than $4 trillion in budget cuts over 10 years from programs that help people of limited means …” The proposed cuts to Medicaid alone would harm states, individuals and health care providers and could cost nearly two million private-sector jobs, according to Ethan Pollack of the Economic Policy Institute.
Besides that, it doesn’t do much to cut the deficit because it’s so loaded with tax cuts. Christine Owens, executive director of the National Employment Law Project, stated that it “not only does nothing to raise revenues from those businesses and individuals who have enjoyed historically low tax burdens for more than the last decade, but it also proposes to actually lower taxes for corporations and the wealthiest among us.”
The Ryan plan does nothing to address the actual causes of growing deficits: the Great Recession; Bush era tax cuts to the wealthy; military adventures in Iraq and Afghanistan; the Pentagon budget; and the growing cost of health care, which will only increase when people lose guaranteed coverage and are thrown back to the tender mercies of the private insurance industry — or to no coverage at all. When you look at the details, it’s more about redistributing wealth upward than bringing deficits downward.
West Virginia Senator Jay Rockefeller said it best: “The House Republican budget plan shows how out of touch they are. They want to give trillions in tax benefits to wealthy corporations that keep profits offshore, while slashing basic health care for children, seniors, and people with disabilities. This is not just foolish — it’s cruel.”
While the plan has little chance of passing the Senate in its current form, the danger is that its supporters will use the upcoming vote on raising the federal debt ceiling to push through something like it. If the U.S. fails to raise the ceiling, it would default for the first time on its obligations, which would send shockwaves throughout the global economy.
The plan’s supporters may be willing to block the vote unless the Senate agrees to global spending caps, which could have the same effect.
If that happens, it would basically be closing time for the middle class.
We need political leaders who won’t cave in to this agenda. There are responsible ways of dealing with the federal debt. This isn’t one of them.