A few months ago, I wrote about Naomi Klein’s latest book The Shock Doctrine and the assertions it makes about the privatization efforts underway in New Orleans in the aftermath of Hurricane Katrina. But The Shock Doctrine is not only about New Orleans. Indeed, according to Klein, the dismantling of the public school system and the depletion of funding for public hospitals and low-income rental housing are merely symptoms of a larger economic paradigm, one primarily informed by the Chicago School and famed economist Milton Friedman. It is a paradigm predicated on the “science” of the “free markets,” and it rejects the validity of most government regulations and publicly-owned services (in favor of sweeping privatization). Because of this, politicians frequently couch this economic policy in the language of democracy, and while citizens think they’re experiencing the shock therapy needed to transition into a true democracy, they are actually being led into adopting a new economic policy, which, as Klein eloquently demonstrates, has been proven disastrous in country after country throughout the last part of the twentieth century.
When Jonas Salk found the cure for polio, he said that patenting it would be like trying to patent the sun: It belongs to all of us. But today, we have no problem with multinational corporations who patent life-saving drugs and cures for potential plagues (i.e. avarian flu and the drug Tamiflu). Tesla once said that he couldn’t imagine a world in which people sold electricity, and today, countries across the world are privatizing everything from their airwaves to their water supply. We’ve come along way since the New Deal, and much of it probably has to do with the sustained threat of Cold War Russia (and the ability of a handful of individuals to marry “communism” with practically all public works and public services).
Klein compares the Chicago School paradigm to a crack high; by selling off publicly-owned companies (always at a severe discount) to a group of well-connected, politically powerful individuals, governments can immediately create a new class of billionaires– and along with that class, the undeserved perception that the economy must be working, despite skyrocketing unemployment (privatization almost always comes with huge lay-offs), illiteracy rates, inflation, and poverty rates.
Friedman’s first foray into drafting economic policy was in Chile during the tenure of notorious General Augusto Pinochet. Pinochet came to power in a bloody coup in which the democratically-elected socialist President Allende was killed and thousands of “dissidents” were subsequently rounded up, tortured, and then murdered. He privatized, deregulated, and adopted Milton Friedman’s blueprint for success, and within a matter of months, Chile went from being one of the most prosperous South American countries to one of the most impoverished. The numbers do not lie.
Friedman and his disciples moved on to other places across the globe: Bolivia, Argentina, China, South Africa, Poland, and yes, eventually, even Russia (during the Yeltsin years). The next frontier is, of course, Iraq, where United States economic policy has restricted locally-owned investment through targeted language in RFPs, laid off 500,000 government employees, and sold a handful of publicly-owned companies to a very small group of multinationals, most of whom are housed right here in the United States (which means Iraq doesn’t even receive the full tax benefits… which, by the way, the US reduced anyway by over 20 points).
I say all of this to pose some (implied) questions, because certainly, there are many people who believe wholeheartedly in the efficacy of the Chicago School. There are others who assert the United States is in Iraq for “moral” and not economic reasons. And there are many people right here in Louisiana who believe that New Orleans will only recover if the government gives tax breaks and tax credits to the rich and to rich corporations.
Personally, I have never heard a story of this system working for the poor and the working lower and middle classes, who make up the majority of practically every country in the world. Modern history seems to be filled with the horror stories– escalating violence, a surge in people living under the poverty line, a dramatic decrease in health care and education– and it all seems to be done by an incredibly small group of people who wait in line to collect the windfall profits while the majority are subjected to a severe economic depression.
CenLamar 
It seems obvious to me from your post that you despise capitalism, so I’m probably banging my head against the wall here, but,here goes.
You “have never heard a story of this system working for the poor and the working lower and middle classes, who make up the majority of practically every country in the world.” If by “this system” you mean capitalism, I’ll give you the most obvious example (there are many more): the United States. There is no example in history of a nation so dramatically improving the living standards of its people over such an extended period of time. You may claim (with justification) that not everyone has benefited. But I don’t see how you claim that “the majority” have not benefited. Compare living standards and life spans of the upper, middle and lower classes of today with those of 25, 50 and 100 years ago. Which are not better off? How did this success happen? Capitalism – unless you have a different explanation.
Hold on there…. I don’t mean “capitalism;” I am specifically referring to the subject of Klein’s book: Milton Friedman and the Chicago School.
Many have argued that the primary reason America got out of the Great Depression was through the economic policies of Keynes– who believed in increasing government spending and putting people to work on large public projects.
The U.S. has never been able to truly implement Friedman’s economic policy, but we still know what it tastes like. Think about Bush’s tax plan: The United States is no better off now than we were ten years ago; in fact, our currency is underperforming, the middle class’s average income has dropped, America has outsourced and/or lost millions of jobs…. but the billionaire class has expanded and the rich are even richer. This isn’t “capitalism,” per se; it’s an economic policy constructed around rewarding the wealthy.
Well, I certainly agree with you that the US is not practicing pure capitalism. I believe conditions would be better (and are better) the less interference there is with the market.
I don’t agree with your claim that the United States is no better off than ten years ago. First of all that is a complicated and in many ways subjective assessment. But the examples you cite are inconclusive at best and in some ways misleading. “Underperforming” currency? Relative to what? And while the weaker dollar increases the costs of imports and international travel for Americans, it makes our exports more attractive and is creating a tourism boom. So who’s to say we’re worse off?
Middle class incomes? Also not so clear cut. There are numerous studies showing they are not dropping at all when including all factors, such as benefits and government assistance. Plus, looking at averages ignores the effect of people moving from one income class to another, as discussed in a recent Treasury Department study on income mobility.
More billionaires? So what? As long as they are playing within the rules why should I care? And in fact, why isn’t it a good thing, since the rich get richer by making good investments, generating economic growth, creating jobs, etc.
Meanwhile, have you noticed what has happened to GDP and employment since the tax cuts? Steady and uninterrupted increases. It’s hard for me to interpret that as “the United States is no better off.”
I could go on about whether Keynesianism is actually what saved the country during the depression but that could be a rather lengthy tangent, and I want to return to your original point about Milton Friedman, which I may not understand. I believe economies and people fare best when they have the type of free market system that Friedman advocated. There are precious few pure examples but the less the “distortion” caused by government interference the better (and vice versa: the more the distortion the worse the performance). This can be documented amply and objectively. I still do not understand your comment that you “have never heard a story of this system working for the poor and the working lower and middle classes.”
The free market economy as espoused by the Chicago School is based upon assumptions that are not based in reality. The assumptions are: 1) no barriers to entry into a business enterprise, 2) free flow of information, 3) equal access to capital markets. There are a few more that I can’t rattle off right now.
Now, if you assume that the moon is made of green cheese, you may well arrive at a lot of conclusions that are simply erroneous.
I really can’t say whether a free market economy would make the best decisions re employment of capital, etc. because a free market economy has never existed. It will not exist in our lifetimes unless things change at a very rapid rate.
This is a fascinating subject, but one that requires a lot more time and ink than I can devote to it.
gator80, I think we are approaching the same subject from two very different perspectives; as I said in the previous comment, the United States has never been able to truly implement Chicago School economics. The Bush tax plan and the US-directed economic development policy in Iraq, however, are definitely informed by the Chicago School.
Middle class incomes have dropped during the Bush administration, though last year they did rise slightly.
Although it is great that Europeans are now able to travel more frequently to the United States due to the lower exchange rates, I don’t think this is a testament to economic success; the strength of the US dollar has weakened recently– compare its performance to the euro, and it’s hard to deny.
On another note, as we have witnessed during the past eight years, a growing billionaire class may seem like a good thing, but unfortunately, too many of them do not “play by the rules.”
And while I continue to hear a lot of rhetoric about the efficacy of trickle-down economics, I still have yet to see concrete data that supports any assertion that this policy actually helps the working poor and middle classes. All I’ve been offered are hackneyed phrases without any sources.
Incidentally, no, I have not noticed that the tax cuts have led to “steady” increases in employment; I have seen the way in which certain data can be manipulated to appear as if the US gained 2 million jobs in a quarter, but this data has been vigorously debated by many who believe the information does not indicate any net increases. Say what you will about the Clinton administration, but at the end of his tenure, he was able to truthfully claim that 22 million new jobs were created in his eight years.
Also, thanks to Baton Rouge du Nord; you’re right. This is an incredibly complex subject and whittling it down to sound bites is, ultimately, not productive.
Lamar,
You may want to listen to Fresh Air tonight on NPR, or catch the podcast if you can since you’ll probably be watching coverage of the Iowa caucuses. Tonight’s interview will be with David Cay Johnston of the New York Times who has just written a book entitled “Free Lunch” about how the American economy has been rigged by government regulations and laws that favor big business, the wealthy, and the politically connected. From the reviews I’ve read and heard, it would serve you well to pick up a copy because it deals specifically with the participation of city governments in this collusion. The book also serves as a good counterpoint to Naomi Klein.
I’ve read this tonight and I feel an affinity to you. The Shock Doctrine put a number of my hunches into perspective, and I would like to be a part of a little bit of my world that changed things and emancipated people to believe that a bit of self-regulation and giving a ‘bugger’ can change things, not just for you, but those around you. We are not all what we seem. Who are you?