Corporate New Deal

"For economic shock therapy to be applied without restraint -- as it was in Chile in the seventies, China in the late eighties, Russia in the nineties and the U.S. after September 11, 2001 -- some sort of additional major collective trauma has always been required, one that either temporarily suspended democratic practices or blocked them entirely. This ideological crusade was born in the authoritarian regimes of South America, and in its largest newly conquered territories -- Russia and China -- it coexists most comfortably, and most profitable, with an iron-fisted leadership to this day." ---- The Shock Doctrine - The Rise of Disaster Capitalism, by Naomi Klein

Just four years ago, Naomi Klein's best selling book, The Shock Doctrine, accurately and vividly described what's going on in America today. It was four years ago, but she was able to predict the future; she saw the writing on the wall. What we've been witnessing in Wisconsin the last couple of weeks is the Shock Doctrine -- "disaster capitalism" -- occurring on a smaller scale.  

It's not a coincidence that last week's revelation that the U.S. Army illegally ordered a team of soldiers specializing in "psychological operations" to manipulate visiting American senators into providing more troops and funding for the war in Afghanistan. The program for CIA psychological torture techniques originally developed after the Second World War and extended into the 1960s. In the U.S., at least two lines of thought converged; one was about how to alter people's minds without leaving marks and scars, and the other was about what was the best way of organizing a given economy. The first grew out of experiments in psychological torture (electroshock therapy). The second came from the mind of Milton Friedman. Both embrace working from a "blank slate" and starting all over again.  

The premise of Ms. Klein's book, brilliant and fascinating, and at the same time painfully simple in its argument and revelation, argues that free market fundamentalism has risen to distinction in some countries because it was pushed through while the citizens were reacting to disasters or upheavals; that some crises may have been created with the intention of being able to push through unpopular reforms in their wake. In other words, taking advantage of a major disaster -- natural, as in the case of Hurricane Katrina, or manmade, as with the invasion and occupation of Iraq -- to adopt radical economic policies that the population would be less likely to accept under normal circumstances. The well-rehearsed and carefully arranged attacks on the public domain in the aftermath of catastrophic events, combined with the "treatment of disasters as exciting market opportunities", Ms. Klein coined as "disaster capitalism". 

Milton Friedman, an economist and professor at the University of Chicago, and economic advisor to President Ronald Reagan, observed that "only a crisis -- actual or perceived -- produces real change. When the 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." This is exactly what has been happening in Wisconsin.

Public union employees, their friends, families, and students sympathetic to their cause, have been demonstrating for weeks because the newly installed governor, Scott Walker, claimed he needed to deny them their collective bargaining rights in order to balance the state budget -- despite the fact the workers expressed their willingness to concede completely to the governor's wage and benefit concessions. With several budget crises consuming the country, and Governor Walker's own state budget in arrears due to giant corporate give-aways just weeks before, this planted the seeds for the quintessential rock 'em sock 'em, kick 'em while they're down, corporate-government forcible takeover that's so quintessential disaster capitalism. As economist Paul Krugman observed, "What’s happening in Wisconsin is, instead, a power grab — an attempt to exploit the fiscal crisis to destroy the last major counterweight to the political power of corporations and the wealthy. And the power grab goes beyond union-busting. The bill in question is 144 pages long, and there are some extraordinary things hidden deep inside." Let's take a peek. 

Aside massive cuts in health coverage for low-income families, there's this: “Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state-owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).” In other words, the bill would allow for the selling of state-owned power plants without bids and without concern for the legally-defined public interest. Privatize what's owned by the state...the people...and sell it off.

In other words, Governor Walker took Professor Friedman's legacy to heart, acted swiftly and decisively, and attempted to ramrod a bill through the state legislature that would eliminate public unions in the state and, at the same time, impose by law rapid and irreversible change. It's a microeconomic version of what occurred in the aftermath of the U.S. Iraqi invasion, essentially no different than what happened in the soggy remains of New Orleans after Katrina, and so similar to the predatory capitalist racketeering that devoured the former Soviet Union after its collapse in the early '90s. 

The conservative trademark priorities to eliminate collective bargaining, privatize public-owned infrastructure and commons, and the slashing of social spending to the detriment of those who need it most, is all here. This is how the Shock Doctrine takes control, and unless it's stopped in its tracks and prevented from spreading beyond the boundaries of Wisconsin, you can bet it's coming to a town near you.