Economics

The Bizarro World of Disaster Capitalism

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You might presume that a massive government intervention into the economy—the $700 billion bailout, the nationalization of Fannie Mae, Freddie Mac, and AIG—would signal a shift away from the free market and towards, in the words of Sen. Jim Bunning (R-KY.), "financial socialism." You would be wrong, says Shock Doctrine author Naomi Klein. In fact, the current proposal are merely "attempts to use [the bailout] to push through radical pro-corporate policies." Her evidence that disaster socialism is, in fact, disaster capitalism? Newt Gingrich wrote a column…and in it he suggests that America needs to "return to a Reagan-Thatcher policy of economic growth through fundamental reforms." A sample:

It would be a grave mistake to underestimate the right's ability to use this crisis—created by deregulation and privatization—to demand more of the same. Don't forget that Newt Gingrich's 527 organization, American Solutions for Winning the Future, is still riding the wave of success from its offshore drilling campaign, "Drill Here, Drill Now!" Just four months ago, offshore drilling was not even on the political radar and now the U.S. House of Representatives has passed supportive legislation. Gingrich is holding an event this Saturday, September 27 that will be broadcast on satellite television to shore up public support for these controversial policies.

Klein discusses her piece with Amy Goodman here.

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  1. You mean, $700 billion, as in how much the federal government spent altogether somewhere in the mid 1980s.

  2. This makes my mind hurt thinking about it. But I knew Naomi Klein would find a way to make this into a Friedmanite conspiracy.

  3. Didn’t Newt Gingrich say this bill stinks?

  4. Didn’t Newt Gingrich say this bill stinks?

    If facts got in the way of Naomi Klein, she’d have a permanent case of writers block.

  5. No, it is $700 million. They figured out how all the troubles with the financial markets can be fixed through buying out all outstanding mortgages on locations of Stuckey’s.

  6. The biggest enemies of capitalism have always been capitalists. If you are pro-corporate then you are probably also anti-capitalism.

  7. She’s nuts. And not in an attractive way like the women I date.

  8. It’s been clear for some time that Klein doesn’t grasp the difference between a free market and state-sponsored capitalism (aka corporatism aka economic fascism). It’s part of the long and sadly successful effort by both socialists on the left and corporatists on the right to portray the free market as synonymous with the latter.

  9. Too many libertarians either don’t or won’t recognize the difference between a free market and corporatism either. So they shouldn’t be surprised when they get lumped in with the corporatists.

  10. What does she make of the fact that most of
    Friedman’s accolytes oppose the bailout?

    My guess is that she just doesn’t realize. She strikes me as someone who doesn’t oppose the libertarian argument per se, but someone who doesn’t actually understand it enough to argue against it coherently. At least Paul Krugman gets us, even if he disagrees. Klein is simply not intelligent or informed enough. I’m sure she is truly surprised when free-marketers take one or another “unexpected” political position, because she has not figured out how to determine whether or not a proposal will jive with most libertarians’ principles.

  11. “Too many libertarians either don’t or won’t recognize the difference between a free market and corporatism either. So they shouldn’t be surprised when they get lumped in with the corporatists.”

    This is exactly the point, everything becomes confusing because very few people are consistent in the way they approach things. Heck, socialists should be pissed off that deals like this get ‘socialism’ thrown at them as an epithet, no good socialist would be in favor of this bailout!

  12. She’s nuts. And not in an attractive way like the women I date.

    Ha! Maybe you should give it a try?

    If facts got in the way of Naomi Klein, she’d have a permanent case of writers block.

    You know, I think her books should be in the Fiction section, because they’re pretty much pure Fantasy. Stock her right next to Tolkien.

  13. if AIG is any guide, they aren’t so much “buying” companies as they are providing emergency liquidity in return for most of the equity.

    In a liquidity crisis, cash is king, and no one has more cash than Uncle Sam. This might weirdly turn out to be a good investment, if only because the gummint is leveraging the advantage of having the biggest pile of poker chips.

    This guy thinks U.S. taxpayers could come out $2.2T ahead.

    http://online.wsj.com/article/SB122230704116773989.html

    As a free marketer, I still think it would be better in the long run to let these companies fail and be replaced by more efficient competitors, but this isn’t as bad as it could be.

  14. This history of American politics is a history of ideology confusion. The way libertarians feel when they get lumped together with state capitalists is the way socialists feel when they get lumped in together with Stalin.

  15. the nationalization of Fannie Mae, Freddie Mac

    ummm they got free money from the fed and were allowed to leverage it far beyond anything any other bank was allowed to and Congress gave the HUD over sight authority over both of them and pushed them to buy up sub-prime loans….

    How in the fuck were they not organs of the government before?!?!?

    Saying Fannie Mae and Freddie Mac were nationalized is like saying the CIA was nationalized in the Patriot Act.

  16. How can we believe what the government is telling us after the last few years? That’s the problem.

    “Well come out 2.2 trillion ahead!”

    Is the new

    “The smoking gun could be a mushroom cloud!”

  17. Hi, joshua corning. Will you please answer my questions now?

    You wrote that S.190, the Fannie Mae “reform” bill John McCain signed onto, would have prevented the financial meltdown, but Barack Obama voted against it.

    How do you vote against something that was killed in committee when you aren’t on that committee?

    And how would a bill to require Fannie Mae to purchase more Mortgage Backed Securities have prevented a crisis created by the proliferation of MBSs?

  18. Or would you rather just acknowledge that this whole line of argument is nonsense?

  19. “Well come out 2.2 trillion ahead!” Is the new “The smoking gun could be a mushroom cloud!”

    Or the new “The Iraq War is lost!” or possibly the new “The surge has failed!”

    Of course, that was just some guy in the WSJ, not “the government,” so your point makes little sense anyway.

  20. There were not any WMDs, Tall Dave as “uh”.

  21. The point about the government have zero credibility stands–this includes Bush and Chris Dodd who had his hand in the Countrywide till among others.

  22. if AIG is any guide, they aren’t so much “buying” companies as they are providing emergency liquidity in return for most of the equity.

    Yeah, and I didn’t buy that burrito for lunch, I just provided Qdoba with the funds so I could consume it.

  23. I tried to read the linked Klein article, but my eyes burst into flames as soon as the page loaded.

  24. There were not any WMDs, Tall Dave as “uh”.

    Nor was the ethnic cleansing of Baghdad stopped.

  25. I tried to read the linked Klein article, but my eyes burst into flames as soon as the page loaded.

    Lucky bastard.

  26. Michael Moynihan: a right-wing “News of the Weird.”

  27. In fact, the current proposal are merely “attempts to use [the bailout] to push through radical pro-corporate policies.”

    Don’t go in there! It’s a TRAP!

  28. Talldave,

    Andy Kessler is a dumbass. For all the reasons you’ve already seen on this site.

  29. With Naomi Klein, Naomi Wolf and Naomi Campbell running around loose, some rational individuals named “Naomi” need to come forward before the name becomes synonymous with “idiot.”

  30. To expect anything else from Naomi Klein is a bit much. You have appreciate how she is boxed in. She is the author of Shock Doctrine and more importantly, the underlying thesis of that work. No matter how convoluted that the idea of disaster capitalism is and how little it reflects the complexity of events in how they develop, she is at the mercy of the market share that she would lose if what she supplied didn’t satiate the niche made of grazers who get a rise out of trendy leftist drivel.

  31. Let’s start a new movement: Libertarian Populism.

    Support the free market – screw the rich!

  32. While I’m at it.
    We should all be grateful for this. Maybe the leftists will be dumb enough to believe that this bailout is a bad thing for them, and oppose it.

    Sort of like the way that now we can be glad Bush is so hated, because it means the public is automatically going to be skeptical of it.

    It’s amazing how well reverse psychology works. Bush should run around acting like a socialist all the time, thus turning the left into a horde of raving free marketeers. Too bad he’s only got a few months left in office.

  33. Klein pretty clearly doesn’t have a good grasp of the differences between various branches of conservatism, for example, free-market ideologues vs. crony capitalists vs. corporatist “national greatness” types – but her thesis that they all use disasters to push pre-existing, capitalist/pro-corporate agendas is pretty irrefutable. Particularly now that we see the House Republicans trying to squeeze capital gains tax cuts and other hobby horses into the bill.

    And yes, I understand perfectly well that there is a difference between free-market and pro-corporate. On the level of theory. On th level of practical politics – as opposed to policy – not so much.

  34. And yes, I understand perfectly well that there is a difference between free-market and pro-corporate. On the level of theory. On th level of practical politics – as opposed to policy – not so much.

    During the Schaivo euthanasia controversy, Gary North wrote a piece with a similar thesis. If the Conservative Evangelicals were serious on the issue, they would be emphasizing building an alternative to the welfare state that took care of all the Schaivos instead of engaging in the political game and not acknowledging the reality of limited resources at the heart of the problem.

    The usual response to this is, ‘hate the game, not the player’, but for the sake of principle, we should be saying, ‘build a better game.’

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