Subscribe Feed (RSS)The Shock Doctrine: Book Review
March 27th, 2010 by Yank Elliott | No Comments | Filed in Book Review, PoliticsAbout this book review:
I am totally dedicated to the survival and prosperity of the capitalist system. Politically, I’m Independent.I like nothing any political group is doing. Right now, they are all idiots. I particularly dislike the attitude of the author of this book, but it is well researched and describes exactly what is going on now in America. You should pay attention so you aren’t blindsided by government tactics; it’s all evil right now.
This book is important because it describes exactly what is happening right now, this very minute, in the US. The Chicago School makes up the vast majority of people in the Obama administration. They not only have all the undesirable traits discussed in this book, they have the added distinction of bringing along Chicago gangster tactics and all the corruption that exists in and around Chicago.
We, the People, are the only ones who can change this. You people under thirty, who largely brought in the evil regime, need to read this review, and perhaps, the book. It should open your eyes to the disaster unfolding now in the US; you have the power to stop this nonsense. Besides, have you considered how you will pay for it long after we older folks are gone?
Pay attention!
**************************************
BOOK REVIEW:
The Shock Doctrine: The Rise of Disaster Capitalism
by Naomi Klein
Reviewed by Yank Elliott, MBA
In college I took many economics courses, including a number that dealt strictly with International Economics. All the theories in those courses sort of soared over my head without meaning anything to me. That is why, when everything in this book occurred on my watch, I had no idea what was happening. All I could do was react in the best way available just to keep my company afloat—all the other executives were as unknowing as I and we just sat around wringing our hands as sales and profits continued their decline until finally reaching the bottom and rebounding. We had no idea what was happening or why.
The Shock Doctrine was like a bomb when it revealed things about all those economic conditions I just accepted as things that happened and would eventually pass. This book must have had a similar impact on many people because it remains No. 337 among Amazon’s best sellers. The ideas presented are significant to us all because they show how opportunities surrounding every catastrophe may be used to benefit those who identify and act upon them. Much has been in the media about the politics of never letting a crisis go by without using it to achieve some difficult goal. A crisis or catastrophe always disrupts normal operations causing needs to go unfilled or redirected to new and unknown sources. These disruptions are being used by politicians now in control right here in the US.
The book is controversial because the author, Naomi Klein, is an activist who does not love capitalism or the concept of a Global Economy. Of course, like many others, she is a Bush era basher and has very few compliments for the various schools of economic thought extant in the 20th Century, with particular wrath directed at the Chicago School. You can interpret her thoughts any way you wish, but she gives an in depth description of all the major economic trends that occurred since the Great Depression. The facts are a great source of information you should try to know for understanding the economic world—how you digest her interpretation of the facts is between you and Naomi. As Fox News says, “We report, you decide.”
Naomi Klein is a Canadian journalist, author, and activist who has written for many publications including the Toronto Globe and Mail, This Magazine (Canada), The Nation, and many others. Her thinking has been influenced by grandparents who once were active Communists in Russia, and most of all by an event in 1989 known as the Montreal Massacre. This disaster was perpetrated by a young man blaming feminist women for ruining his life. He used legally obtained weapons to shoot 28 people, killing 14, before killing himself. All these factors have shaped Ms. Klein’s present disillusionment with big corporations and corporate globalization. She backs her articles with much research, but she is often criticized from every political angle as using opinion journalism. When you read the book, draw your own conclusions about this.
There are several significant economists mentioned in the book who may not be familiar to all readers. A few of the more important ones are described here.
John Maynard Keynes was a British economist who is credited with the famous quotation, “In the long run, we’re all dead.” This was an answer to criticism of his advocating immediate government intervention to lessen the bad effects of recessions, depressions, and booms. This body of ideas became known as Keynesian Economics, most of which finally became accepted by Western nations near the end of the 1929 Great Depression. These policies remained primary during the 1950’s and 1960’s.
Among his many accomplishments was accurate prediction that the World War I Armistice terms were too severe and would cause serious harm to the German economy in its attempts to rebuild. This happened with hyperinflation beginning in 1923 and eventually was a leading cause of the rise of Hitler. Keynes also acquired enough Spanish pesetas at one time to defeat a British Government move and make the peseta much cheaper and more available to the world market. Time Magazine, in its article, “The Time 100, 2000,” said, “Keynes probably saved capitalism from itself and surely kept latter-day Marxists at bay.”
The American economist, Milton Friedman, took the opposite theory of Keynes advocating much less government intervention. Friedman received the Nobel Memorial Prize in Economic Sciences and became the leader of an economic system of thinking known as the Chicago School of Economics, a part of the University of Chicago. Ms. Klein repeatedly attacks this group throughout her book. Friedman originally supported the Keynes theory, but later came out with his own monetarism policy advocating little government control and lower taxes. He said there is a natural unemployment level that can’t be changed and people would resist any government efforts to do this because they would be able to see what any such policies were trying to do and change their actions in such a way as to defeat the government. His laissez-faire ideas were embraced by many world leaders including Ronald Reagan, Margaret Thatcher, and Augusto Pinochet.
Paul Volker served as Chairman of the Federal Reserve under Presidents Carter and Reagan and he is now chairman of President Obama’s Economic Recovery Advisory Board. In the early Reagan years Mr. Volker was faced with the serious problem of recession along with very high inflation, called stagflation. He successfully brought this under control after raising the interest rate to 21.5%. I remember this well, though I knew nothing of the underlying causes, because my job was to borrow $1 million at a rate well over 20%; hard to stomach when your products never have a margin greater than 5%. There were many protests about these policies including the tractor march of farmers on Washington, DC.
The author accuses these people, and many others whose names you will recognize, of planning and carrying out raids on various governments using the wake of catastrophic events. She says certain groups use disasters as marvelous market opportunities which they exploit. Her term for this is “disaster capitalism,” a term appearing in the book title. Ms. Klein accuses Milton Friedman of developing the idea that major economic change can only take place alongside some traumatic occurrence when it is easier to get the public to accept policies they would never agree to in the absence of severe trauma. Because of the necessity of acting quickly, Friedman suggested within six to nine months, there need to be alternative plans already in place so they can be implemented immediately. He further suggests a prime activity of economic planners is to develop and keep alive ideas to use when politically unthinkable actions become reasonable behind a disaster. The actions must be quick and irreversible, so that once in place, they can’t be changed, before the populace gets over the shock they have received and begins to revert to their old ways.
Keynes did not receive too much of a bashing in the book. The author seems to credit his policies with a relatively peaceful economic era from the late 1930’s into the 1960’s. This attitude toward Keynes may stem from his statements that the depression did not signal the end of capitalism but it was the end of laissez-faire, the end of letting the markets regulate themselves. John Kenneth Galbraith, the US heir to Keynesian thinking, said, during these economically quiet years, that the main mission of politicians and economists was to avoid depression and prevent unemployment.
Then, the author says, Friedman’s Chicago Boys, from The Chicago School of Economic Thought, began an economic cultural revolution extending to every corner of the world. It included these situations after some form of catastrophe:
- Chile after Pinochet’s violent coup
- China following Tiananmen Square
- Russia after Yeltsin sent tanks and set fire to the parliament building
- The Falklands War helped Margaret Thatcher begin privatization of companies in the UK.
- A NATO attack on Belgrade privatization of Yugoslavia.
- Other Latin American struggling economies
- Some nations in Africa
- The so-called Asian Tigers, once wildly prosperous, like South Korea
- Iraq
- The US after 9/11
- US Homeland Security now
A specific example of the shock doctrine discussed in the book is the overthrow of the Indonesian government of President Sukarno in 1966. Ms. Klein says the coup which put General Suharto in as President was engineered, in part, by economists from the University of Indonesia in Jakarta. These economists were trained by the Chicago Boys and worked very closely with the military before the coup. They worked with the army and General Suharto, who knew little about economics. They developed contingency plans in case the Sukarno government were to fall unexpectedly, as well as a “cookbook” detailing exactly what economic steps should be taken. This group actually taught General Suharto about economics and he retained many of them as advisors in his new government.
All of the severe economic changes in the book followed a similar path. The initial shock of a coup was immediately followed by two other shock forms. One was the severe economic change to be crammed down the throats of the populace as outlined in the Friedman plan to use a disaster as a change mechanism. The last shock was some form of torture to insure nobody would ever question what was happening. These ideas were first purveyed by Machiavelli in 1513 when he said, “For injuries ought to be done all at one time, so that, being tasted less, they offend less.” This is exactly what Milton Friedman advised General Pinochet, in Chile, to do. In a letter he said if the shock approach were adopted, it should be announced publicly in great detail so the people make their reactions and adjust to the changes. The result of the Chicago actions did not necessarily result in jolting the economy into health, but rather, boosting all the wealth to the top and removing much of the middle class from existence. Ms. Klein relates this shock strategy to the plight of author Ernest Hemingway who said, “Well, what is the sense of ruining my head and erasing my memory. It was a brilliant cure but we lost the patient.” He was referring to electric shock treatment he received and the remarks were made in 1961 shortly before he committed suicide.
The author mentions several examples of trying to influence the US economy. One was in 1971 when Richard Nixon was president. There was an economic downturn, high unemployment, and increasing prices on many necessities. Nixon knew if these conditions continued the angry and unhappy voters would never reelect him. He placed caps on major items like rent and oil in hopes of causing economic conditions to improve. Milton Friedman was incensed. Of all possible government interventions (distortions, he called them) price controls were the absolute worst. He likened them to a cancer that can destroy the economic system’s ability to function.
In 1982, in the Reagan years, Dr. Friedman wrote an influential paper summarizing his shock doctrine. In part, he said, “Only a real crisis, actual or perceived, produces real change. When that crisis occurs, all 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 was a time when there was high unemployment accompanied by great inflation. Chicago School economics became the thing in Washington and the policies became known as Reaganomics.
This is when Paul Volker, Chairman of the Federal Reserve, began his own new kind of shock by using enormous increases in the prime interest rate to defeat inflation and the economy finally revived, though not before my company and many others went down the tubes. It was a time when the high interest rates made it impossible for many people with mortgages to make their payments and bankruptcies multiplied.
Ms. Klein says Dr. Friedman and President Reagan forced emerging countries around the world into the Democratic tradition by going from one crisis to another. She says they were constantly exploring new opportunities and treating each situation as they saw fit. Russia is a case in point. During the Russian crisis years after the split-up of the Soviet Union all the US government people involved with Russian policy did their jobs well. They did absolutely nothing hoping for a capitalist government to emerge. It did, but it was the age of oligarchs where a few wealthy individuals were able to buy all the state’s assets like the big oil and gas companies and all the other natural resource companies.
The Chicago School crusade always creates an underclass of between 25 and 60 percent of the population. It is always a certain class of war with an associated number of mass evictions and discarded cultures. Many years ago John Maynard Keynes said there are always political consequences for this kind of punishing peace, including bloodier wars.
Tags: capitalism, catastrophe, chicago, chicago school, corruption, depression, disaster, friedman, galbraith, gangster, hitler, keynes, nixon, obama, opportunity, Politics, reagan, russia, thatcher, volker
