The Shock Doctrine

Readers of The Shock Doctrine know that one of the most shameless examples of disaster capitalism has been the attempt to exploit the disastrous flooding of New Orleans to close down that city's public housing projects, some of the only affordable units in the city. Most of the buildings sustained minimal flood damage, but they happen to occupy valuable land that make for perfect condo developments and hotels.

The final showdown over New Orleans public housing is playing out in dramatic fashion right now. The conflict is a classic example of the "triple shock" formula at the core of the doctrine.

- First came the shock of the original disaster: the flood and the traumatic evacuation.

- Next came the "economic shock therapy": using the window of opportunity opened up by the first shock to push through a rapid-fire attack on the city's public services and spaces, most notably it's homes, schools and hospitals.

Nativity scenes are plentiful in San Cristóbal de las Casas, a colonial city in the highlands of Chiapas, Mexico. But the one that greets visitors at the entrance to the TierrAdentro cultural center has a local twist: figurines on donkeys wear miniature ski masks and carry wooden guns.

It is high season for "Zapatourism," the industry of international travelers that has sprung up around the indigenous uprising here, and TierrAdentro is ground zero. Zapatista-made weavings, posters and jewelry are selling briskly. In the courtyard restaurant, where the mood at 10 pm is festive verging on fuzzy, college students drink Sol beer. A young man holds up a photograph of Subcomandante Marcos, as always in mask with pipe, and kisses it. His friends snap yet another picture of this most documented of movements.

Anyone tired of lousy news from the markets should talk to Douglas Lloyd, director of Venture Business Research, a company that tracks trends in venture capitalism. "I expect investment activity in this sector to remain buoyant," he said recently. His bouncy mood was inspired by the money gushing into private security and defense companies. He added, "I also see this as a more attractive sector, as many do, than clean energy."

Got that? If you are looking for a sure bet in a new growth market, sell solar, buy surveillance; forget wind, buy weapons.

The world saw a video last week of Royal Canadian Mounted Police officers using a Taser against a Polish man in the Vancouver International Airport in October. The man, Robert Dziekanski, died soon after the attack. In recent days, more details have come out about him. It turns out that the 40-year-old didn't just die after being shocked -- his life was marked by shock as well.

Dziekanski was a young adult in 1989, when Poland began a grand experiment called "shock therapy" for the nation. The promise was that if the communist country accepted a series of brutal economic measures, the reward would be a "normal European country" like France or Germany. The pain would be short, the reward great.

So Poland's government eliminated price controls overnight, slashed subsidies, privatized industries. But for young workers such as Dziekanski, "normal" never arrived. Today, roughly 40% of young Polish workers are unemployed. Dziekanski was among them. He had worked as a typesetter and a miner, but for the last few years, he had been unemployed and had had run-ins with the law.

I used to worry that the United States was in the grip of extremists who sincerely believed that the Apocalypse was coming and that they and their friends would be airlifted to heavenly safety. I have since reconsidered. The country is indeed in the grip of extremists who are determined to act out the biblical climax--the saving of the chosen and the burning of the masses--but without any divine intervention. Heaven can wait. Thanks to the booming business of privatized disaster services, we're getting the Rapture right here on earth.

Just look at what is happening in Southern California. Even as wildfires devoured whole swaths of the region, some homes in the heart of the inferno were left intact, as if saved by a higher power. But it wasn't the hand of God; in several cases it was the handiwork of Firebreak Spray Systems. Firebreak is a special service offered to customers of insurance giant American International Group (AIG)--but only if they happen to live in the wealthiest ZIP codes in the country. Members of the company's Private Client Group pay an average of $19,000 to have their homes sprayed with fire retardant. During the wildfires, the "mobile units"--racing around in red firetrucks--even extinguished fires for their clients.

One customer described a scene of modern-day Revelation. "Just picture it. Here you are in that raging wildfire. Smoke everywhere. Flames everywhere. Plumes of smoke coming up over the hills," he told the Los Angeles Times. "Here's a couple guys showing up in what looks like a firetruck who are experts trained in fighting wildfire and they're there specifically to protect your home."

On a recent visit to Calgary, Alberta, I was taken aback to see my book on disaster capitalism selling briskly at the airport. Calgary is ground zero of North America's oil and gas boom, where business suits and cowboy hats are the de facto uniform. I had a sudden sinking feeling: did Calgary's business class think The Shock Doctrine was a how-to guide - a manual for making millions from catastrophe? Were they hoping for tips on landing no-bid contracts if the US bombs Iran?

When I get worried about inadvertently fueling the disaster complex, I take comfort in the response the book has elicited from the world's leading business journalists. That's where I learn that the very notion of disaster capitalism is my delusion - or, as Otto Reich, former adviser to President George Bush, told BBC Business Daily, it is the work "of a very confused person".

'We didn't want to get stuck with a lemon." That's what Homeland Security Secretary Michael Chertoff said to a House committee last month. He was referring to the "virtual fence" planned for the U.S. borders with Mexico and Canada. If the entire project goes as badly as the 28-mile prototype, it could turn out to be one of the most expensive lemons in history, projected to cost $8 billion by 2011.

Boeing, the company that landed the contract -- the largest ever awarded by the Department of Homeland Security -- announced this week that it will finally test the fence after months of delay due to computer problems. Heavy rains have confused its remote-controlled cameras and radar, and the sensors can't tell the difference between moving people, grazing cows or rustling bushes.

But this debacle points to more than faulty technology. It exposes the faulty logic of the Bush administration's vision of a hollowed-out government run everywhere possible by private contractors.

The tall graduate student, visiting the United States from Sweden, would not be satisfied with a quip. He wanted answers.

"They cannot only be driven by greed and power. They must be driven by something higher. What?"

Don't knock power and greed, I tried to suggest--they have built empires. But he wanted more.

"What about a belief that they are building a better world?"

Since I began touring with my book The Shock Doctrine, I have had a number of exchanges like this, revolving around the same basic question: When hard-right political leaders and their advisers apply brutal economic shock therapy, do they honestly believe the trickle-down effects will build equitable societies--or are they just deliberately creating the conditions for yet another corporate feeding frenzy? Put bluntly, Has the world been transformed over the past three decades by lofty ideology or by lowly greed?

Recently, as protesters gathered outside the Security and Prosperity Partnership (SPP) summit in Montebello, Quebec, to confront US President George W. Bush, Mexican President Felipe Calderón and Canadian Prime Minister Stephen Harper, the Associated Press reported this surreal detail: "Leaders were not able to see the protesters in person, but they could watch the protesters on TV monitors inside the hotel.... Cameramen hired to ensure that demonstrators would be able to pass along their messages to the three leaders sat idly in a tent full of audio and video equipment.... A sign on the outside of the tent said, 'Our cameras are here today providing your right to be seen and heard. Please let us help you get your message out. Thank You.'"

Yes, it's true: Like contestants on a reality TV show, protesters at the SPP were invited to vent into video cameras, their rants to be beamed to protest-trons inside the summit enclave. It was security state as infotainment--Big Brother meets, well, Big Brother.

Gaza in the hands of Hamas, with masked militants sitting in the president’s chair; the West Bank on the edge; Israeli army camps hastily assembled in the Golan Heights; a spy satellite over Iran and Syria; war with Hezbollah a hair trigger away; a scandal-plagued political class facing a total loss of public faith.

At a glance, things aren’t going well for Israel. But here’s a puzzle: why, in the midst of such chaos and carnage, is the Israeli economy booming like it’s 1999, with a roaring stock market and growth rates nearing China’s?