The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

  There was a brief window of two or three weeks when it seemed that the drowning of New Orleans would provoke a crisis for the economic logic that had greatly exacerbated the human disaster with its relentless attacks on the public sphere. “The storm exposed the consequences of neoliberalism’s lies and mystifications, in a single locale and all at once,” wrote the political scientist and New Orleans native Adolph Reed Jr.3 The facts of this exposure are well known—from the levees that were never repaired, to the underfunded public transit system that failed, to the fact that the city’s idea of disaster preparedness was passing out DVDs telling people that if a hurricane came, they should get out of town.

  Then there was the Federal Emergency Management Agency (FEMA), a laboratory for the Bush administration’s vision of government run by corporations. In the summer of 2004, more than a year before Katrina hit, the State of Louisiana put in a request to FEMA for funds to develop an in-depth contingency plan for a powerful hurricane. The request was refused. “Disaster mitigation”—advance government measures to make the effects of disasters less devastating—was one of the programs gutted under Bush. Yet that same summer FEMA awarded a $500,000 contract to a private firm called Innovative Emergency Management. Its task was to come up with a “catastrophic hurricane disaster plan for Southeast Louisiana and the City of New Orleans.”4

  The private company spared no expense. It brought together more than a hundred experts, and when money ran out, it went back to FEMA for more; eventually the bill for the exercise doubled to $1 million. The company came up with scenarios for a mass evacuation covering everything from delivering water to instructing neighboring communities to identify empty lots that could immediately be transformed into trailer parks for evacuees—all the sensible things that didn’t happen when a hurricane like the one they were imagining actually hit. That’s partly because, eight months after the contractor submitted its report, no action had been taken. “Money was not available to do the follow-up,” explained Michael Brown, head of FEMA at the time.5 The story is typical of the lopsided state that Bush built: a weak, underfunded, ineffective public sector on the one hand, and a parallel richly funded corporate infrastructure on the other. When it comes to paying contractors, the sky is the limit; when it comes to financing the basic functions of the state, the coffers are empty.

  Just as the U.S. occupation authority in Iraq turned out to be an empty shell, when Katrina hit, so did the U.S. federal government at home. In fact, it was so thoroughly absent that FEMA could not seem to locate the New Orleans superdome, where twenty-three thousand people were stranded without food or water, despite the fact that the world media had been there for days.

  For some free-market ideologues, this spectacle of what the New York Times columnist Paul Krugman termed “the can’t do government” provoked a crisis of faith. “The collapsed levees of New Orleans will have consequences for neoconservatism just as long and deep as the collapse of the Wall in East Berlin had on Soviet Communism,” wrote the repentant true believer Martin Kelly in a much-circulated essay. “Hopefully all of those who urged the ideology on, myself included, will have a long time to consider the error of our ways.” Even neocon stalwarts like Jonah Goldberg were begging “big government” to ride to the rescue: “When a city is sinking into the sea and rioting runs rampant, government probably should saddle-up.”6

  No such soul-searching was in evidence at the Heritage Foundation, where the true disciples of Friedmanism can always be found. Katrina was a tragedy, but, as Milton Friedman wrote in his Wall Street Journal op-ed, it was “also an opportunity.” On September 13, 2005—fourteen days after the levees were breached—the Heritage Foundation hosted a meeting of like-minded ideologues and Republican lawmakers. They came up with a list of “Pro-Free-Market Ideas for Responding to Hurricane Katrina and High Gas Prices”—thirty-two policies in all, each one straight out of the Chicago School playbook, and all of them packaged as “hurricane relief.” The first three items were “automatically suspend Davis-Bacon prevailing wage laws in disaster areas,” a reference to the law that required federal contractors to pay a living wage; “make the entire affected area a flat-tax free-enterprise zone”; and “make the entire region an economic competitiveness zone (comprehensive tax incentives and waiving of regulations).” Another demand called for giving parents vouchers to use at charter schools.7 All these measures were announced by President Bush within the week. He was eventually forced to reinstate the labor standards, though they were largely ignored by contractors.

  The meeting produced more ideas that gained presidential support. Climate scientists have directly linked the increased intensity of hurricanes to warming ocean temperatures.8 This connection, however, didn’t stop the working group at the Heritage Foundation from calling on Congress to repeal environmental regulations on the Gulf Coast, give permission for new oil refineries in the United States and green-light “drilling in the Arctic National Wildlife Refuge.”9 All these measures would increase greenhouse gas emissions, the major human contributor to climate change, yet they were immediately championed by the president under the guise of responding to the Katrina disaster.

  Within weeks, the Gulf Coast became a domestic laboratory for the same kind of government-run-by-contractors that had been pioneered in Iraq. The companies that snatched up the biggest contracts were the familiar Baghdad gang: Halliburton’s KBR unit had a $60 million gig to reconstruct military bases along the coast. Blackwater was hired to protect FEMA employees from looters. Parsons, infamous for its sloppy Iraq work, was brought in for a major bridge construction project in Mississippi. Fluor, Shaw, Bechtel, CH2M Hill—all top contractors in Iraq—were hired by the government to provide mobile homes to evacuees just ten days after the levees broke. Their contracts ended up totaling $3.4 billion, no open bidding required.10

  As many remarked at the time, within days of the storm it was as if Baghdad’s Green Zone had lifted off from its perch on the Tigris and landed on the bayou. The parallels were undeniable. To spearhead its Katrina operation, Shaw hired the former head of the U.S. Army’s Iraq reconstruction office. Fluor sent its senior project manager from Iraq to the flood zone. “Our rebuilding work in Iraq is slowing down and this has made some people available to respond to our work in Louisiana,” a company representative explained. Joe Allbaugh, whose company New Bridge Strategies had promised to bring Wal-Mart and 7-Eleven to Iraq, was the lobbyist in the middle of many of the deals. The similarities were so striking that some of the mercenary soldiers, fresh from Baghdad, were having trouble adjusting. When David Enders, a reporter, asked an armed guard outside a New Orleans hotel if there had been much action, he replied, “Nope. It’s pretty Green Zone here.”11

  Other things were pretty Green Zone too. On contracts valued at $8.75 billion, congressional investigators found “significant overcharges, wasteful spending, or mismanagement.”12 (The fact that exactly the same errors as those made in Iraq were instantly repeated in New Orleans should put to rest the claim that Iraq’s occupation was merely a string of mishaps and mistakes marked by incompetence and lack of oversight. When the same mistakes are repeated over and over again, it’s time to consider the possibility that they are not mistakes at all.)

  In New Orleans, as in Iraq, no opportunity for profit was left untapped. Kenyon, a division of the mega funeral conglomerate Service Corporation International (a major Bush campaign donor), was hired to retrieve the dead from homes and streets. The work was extraordinarily slow, and bodies were left in the broiling sun for days. Emergency workers and local volunteer morticians were forbidden to step in to help because handling the bodies impinged on Kenyon’s commercial territory. The company charged the state, on average, $12,500 a victim, and it has since been accused of failing to properly label many bodies. For almost a year after the flood, decayed corpses were still being discovered in attics.13

  Another pretty Green Zone touch: relevant experience often appeared to have nothing to do with how contrac
ts were allocated. AshBritt, the company paid half a billion dollars to remove debris, reportedly didn’t own a single dump truck and farmed out the entire job to contractors.14 Even more striking was the company that FEMA paid $5.2 million to perform the crucial role of building a base camp for emergency workers in St. Bernard Parish, a suburb of New Orleans. The camp construction fell behind schedule and was never completed. When the contractor was investigated, it emerged that the company, Lighthouse Disaster Relief, was actually a religious group. “About the closest thing I have done to this is just organize a youth camp with my church,” confessed Lighthouse’s director, Pastor Gary Heldreth.15

  As in Iraq, government once again played the role of a cash machine equipped for both withdrawals and deposits. Corporations withdrew funds through massive contracts, then repaid the government not with reliable work but with campaign contributions and/or loyal foot soldiers for the next elections. (According to The New York Times, “the top 20 service contractors have spent nearly $300 million since 2000 on lobbying and have donated $23 million to political campaigns.” The Bush administration, in turn, increased the amount spent on contractors by roughly $200 billion between 2000 and 2006.)16

  Something else was familiar: the contractors’ aversion to hiring local people who might have seen the reconstruction of New Orleans not only as a job but as part of healing and reempowering their communities. Washington could easily have made it a condition of every Katrina contract that companies hire local people at decent wages to help them put their lives back together. Instead, the residents of the Gulf Coast, like the people of Iraq, were expected to watch as contractors created an economic boom based on easy taxpayer money and relaxed regulations.

  The result, predictably, was that after all the layers of subcontractors had taken their cut, there was next to nothing left for the people doing the work. For instance, the author Mike Davis tracked the way FEMA paid Shaw $175 a square foot to install blue tarps on damaged roofs, even though the tarps themselves were provided by the government. Once all the subcontractors took their share, the workers who actually hammered in the tarps were paid as little as $2 a square foot. “Every level of the contracting food chain, in other words, is grotesquely overfed except the bottom rung,” Davis wrote, “where the actual work is carried out.”17

  According to one study, “a quarter of the workers rebuilding the city were immigrants lacking papers, almost all of them Hispanic, making far less money than legal workers.” In Mississippi, a class-action lawsuit forced several companies to pay hundreds of thousands of dollars in back wages to immigrant workers. Some were not paid at all. On one Halliburton/KBR job site, undocumented immigrant workers reported being wakened in the middle of the night by their employer (a subsubcontractor), who allegedly told them that immigration agents were on their way. Most workers fled to avoid arrest; after all, they could end up in one of the new immigration prisons that Halliburton/KBR had been contracted to build for the federal government.*18

  The attacks on the disadvantaged, carried out in the name of reconstruction and relief, did not stop there. In order to offset the tens of billions going to private companies in contracts and tax breaks, in November 2005 the Republican-controlled Congress announced that it needed to cut $40 billion from the federal budget. Among the programs that were slashed were student loans, Medicaid and food stamps.19 In other words, the poorest citizens in the country subsidized the contractor bonanza twice—first when Katrina relief morphed into unregulated corporate handouts, providing neither decent jobs nor functional public services, and second when the few programs that directly assist the unemployed and working poor nationwide were gutted to pay those bloated bills.

  Not so long ago, disasters were periods of social leveling, rare moments when atomized communities put divisions aside and pulled together. Increasingly, however, disasters are the opposite: they provide windows into a cruel and ruthlessly divided future in which money and race buy survival.

  Baghdad’s Green Zone is the starkest expression of this world order. It has its own electrical grid, its own phone and sewage systems, its own oil supply and its own state-of-the-art hospital with pristine operating theaters—all protected by five-meter-thick walls. It feels, oddly, like a giant fortified Carnival Cruise Ship parked in the middle of a sea of violence and despair, the boiling Red Zone that is Iraq. If you can get on board, there are poolside drinks, bad Hollywood movies and Nautilus machines. If you are not among the chosen, you can get yourself shot just by standing too close to the wall.

  Everywhere in Iraq, the wildly divergent value assigned to different categories of people is crudely evident. Westerners and their Iraqi colleagues have checkpoints at the entrance to their streets, blast walls in front of their houses, body armor and private security guards on call at all hours. They travel the country in menacing armored convoys, with mercenaries pointing guns out the windows as they follow their prime directive to “protect the principal.” With every move they broadcast the same unapologetic message: we are the chosen; our lives are infinitely more precious. Middle-class Iraqis, meanwhile, cling to the next rung down the ladder: they can afford to buy protection from local militias, and they are able to pay off kidnappers to have a family member released. But the vast majority of Iraqis have no protection at all. They walk the streets wide open to any possible violence, with nothing between them and the next car bomb but a thin layer of fabric. In Iraq, the lucky get Kevlar, the rest get prayer beads.

  At first I thought the Green Zone phenomenon was unique to the war in Iraq. Now, after years spent in other disaster zones, I realize that the Green Zone emerges everywhere that the disaster capitalism complex descends, with the same stark partitions between the included and the excluded, the protected and the damned.

  It happened in New Orleans. After the flood, an already divided city turned into a battleground between gated green zones and raging red zones—the result not of water damage but of the “free-market solutions” embraced by the president. The Bush administration refused to allow emergency funds to pay public sector salaries, and the City of New Orleans, which lost its tax base, had to fire three thousand workers in the months after Katrina. Among them were sixteen of the city’s planning staff—with shades of “de-Baathification,” laid off at the precise moment when New Orleans was in desperate need of planners. Instead, millions of public dollars went to outside consultants, many of whom were powerful real estate developers.20 And of course thousands of teachers were also fired, paving the way for the conversion of dozens of public schools into charter schools, just as Friedman had called for.

  Almost two years after the storm, Charity Hospital was still closed. The court system was barely functioning, and the privatized electricity company, Entergy, had failed to get the whole city back online. After threatening to raise rates dramatically, the company managed to extract a controversial $200 million bailout from the federal government. The public transit system was gutted and lost almost half its workers. The vast majority of publicly owned housing projects stood boarded up and empty, with five thousand units slotted for demolition by the federal housing authority.21 Much as the tourism lobby in Asia had longed to be rid of the beachfront fishing villages, New Orleans’ powerful tourism lobby had been eyeing the housing projects, several of them on prime land close to the French Quarter, the city’s tourism magnet.

  Endesha Juakali helped set up a protest camp outside one of the boarded-up projects, St. Bernard Public Housing, explaining that “they’ve had an agenda for St. Bernard a long time, but as long as people lived here, they couldn’t do it. So they used the disaster as a way of cleansing the neighborhood when the neighborhood is weakest…. This is a great location for bigger houses and condos. The only problem is you got all these poor black people sitting on it!”22

  Amid the schools, the homes, the hospitals, the transit system and the lack of clean water in many parts of town, New Orleans’ public sphere was not being rebuilt, it was being erased, with the
storm used as the excuse. At an earlier stage of capitalist “creative destruction,” large swaths of the United States lost their manufacturing bases and degenerated into rust belts of shuttered factories and neglected neighborhoods. Post-Katrina New Orleans may be providing the first Western-world image of a new kind of wasted urban landscape: the mold belt, destroyed by the deadly combination of weathered public infrastructure and extreme weather.

  The American Society of Civil Engineers said in 2007 that the U.S. had fallen so far behind in maintaining its public infrastructure—roads, bridges, schools, dams—that it would take more than a trillion and half dollars over five years to bring it back up to standard. Instead, these types of expenditures are being cut back.23 At the same time, public infrastructure around the world is facing unprecedented stress, with hurricanes, cyclones, floods and forest fires all increasing in frequency and intensity. It’s easy to imagine a future in which growing numbers of cities have their frail and long-neglected infrastructures knocked out by disasters and then are left to rot, their core services never repaired or rehabilitated. The well-off, meanwhile, will withdraw into gated communities, their needs met by privatized providers.

  Signs of that future were already in evidence by the time hurricane season rolled around in 2006. In just one year, the disaster-response industry had exploded, with a slew of new corporations entering the market, promising safety and security should the next Big One hit. One of the more ambitious ventures was launched by an airline in West Palm Beach, Florida. Help Jet bills itself as “the first hurricane escape plan that turns a hurricane evacuation into a jet-setter vacation.” When a storm is coming, the airline books holidays for its members at five-star golf resorts, spas or Disneyland. With the reservations all made, the evacuees are then whisked out of the hurricane zone on a luxury jet. “No standing in lines, no hassle with crowds, just a first class experience that turns a problem into a vacation…. Enjoy the feeling of avoiding the usual hurricane evacuation nightmare.”24