...Over the last four years, I have been researching a little-explored area of economic history: the way that crises have paved the way for the march of the right-wing economic revolution across the globe. A crisis hits, panic spreads and the ideologues fill the breach, rapidly reengineering societies in the interests of large corporate players. It's a maneuver I call "disaster capitalism."
Sometimes the enabling national disasters have been physical blows to countries: wars, terrorist attacks, natural disasters. More often they have been economic crises: debt spirals, hyperinflation, currency shocks, recessions. ...
To be sure, desperate countries will generally do what it takes to get a bailout. An atmosphere of panic also frees the hands of politicians to quickly push through radical changes that would otherwise be too unpopular, such as privatization of essential services, weakening of worker protections and free-trade deals. In a crisis, debate and democratic process can be handily dismissed as unaffordable luxuries.
The Bush Administration has used the approach described by Ms. Klein with shameless speed time after time.
Again and again, the Bush administration has seized on crises to break logjams blocking the more radical pieces of its economic agenda. First, a recession provided the excuse for sweeping tax cuts. Next, the "war on terror" ushered in an era of unprecedented military and homeland security privatization. After Hurricane Katrina, the administration handed out tax holidays, rolled back labor standards, closed public housing projects and helped turn New Orleans into a laboratory for charter schools -- all in the name of disaster "reconstruction."
Given this track record, Washington lobbyists had every reason to believe that the current recession fears would provoke a new round of corporate gift-giving. Yet it seems that the public is getting wise to the tactics of disaster capitalism. Sure, the proposed $150-billion economic stimulus package is little more than a dressed-up tax cut, including a new batch of "incentives" to business. But the Democrats nixed the more ambitious GOP attempt to leverage the crisis to lock in the Bush tax cuts and go after Social Security. For the time being, it seems that a crisis created by a dogged refusal to regulate markets will not be "fixed" by giving Wall Street more public money with which to gamble.
Like Ms. Klein, I was sorely disappointed that the Democratic-led Congress shut out the most vulnerable of Americans from the new give-away, yet I think her pointing out what the Democrats did manage to squelch is important. Messing with Social Security and making the tax cuts for the wealthy permanent got taken off the table. The solution proposed is not perfect, and will do little in the long run to stabilize and to grow the economy in ways that benefit all Americans, not just the wealthy. In the mean time, however, progressives have their work cut out for them:
Every crisis is an opportunity; someone will exploit it. The question we face is this: Will the current turmoil become an excuse to transfer yet more public wealth into private hands, to wipe out the last vestiges of the welfare state, all in the name of economic growth? Or will this latest failure of unfettered markets be the catalyst that is needed to revive a spirit of public interest, to get serious about the pressing crises of our time, from gaping inequality to global warming to failing infrastructure?
We are in the midst of a campaign for the next president, for a new administration. Whoever wins in November will still have an economy that is ailing and will be forced, with Congress, to come up with plans that actually do something to halt the slide into a country of the very rich and the very poor. May the next president have the wisdom and the courage to do so.