[R-G] [BillTottenWeblog] Wall Street Crisis Should Be for Neoliberalism ...

[Bill Totten]

... What Fall of Berlin Wall Was for Communism

Naomi Klein

interviewed by Amy Goodman

Democracy Now! (October 06 2008)


AMY GOODMAN: The credit crunch is spreading to financial markets around
the world. Nearly 160,000 jobs were lost here in the United States in
September. That's not including losses directly resulting from the
financial meltdown. Wall Street might be breathing a little easier since
Congress passed the more-than-$700-billion bailout plan Friday, but
there are no signs of an easy or quick recovery.

Today we take a look back at the economic philosophy that championed the
kind of deregulation that led to this crisis. We spend the hour with
investigative journalist and author Naomi Klein, bestselling author of
The Shock Doctrine: The Rise of Disaster Capitalism (2007).

Naomi Klein spoke at the University of Chicago last week, invited by a
group of faculty opposed to the creation of an economic research center
called the Milton Friedman Institute. It has a $200 million endowment
and is named after the University's most famous economist, the leader of
the neoliberal Chicago School of Economics.

NAOMI KLEIN: When Milton Friedman turned ninety, the Bush White House
held a birthday party for him to honor him, to honor his legacy, in
2002, and everyone made speeches, including George Bush, but there was a
really good speech that was given by Donald Rumsfeld. I have it on my
website. My favorite quote in that speech from Rumsfeld is this: he
said, "Milton is the embodiment of the truth that ideas have consequences".

So, what I want to argue here is that, among other things, the economic
chaos that we're seeing right now on Wall Street and on Main Street and
in Washington stems from many factors, of course, but among them are the
ideas of Milton Friedman and many of his colleagues and students from
this school. Ideas have consequences.

More than that, what we are seeing with the crash on Wall Street, I
believe, should be for Friedmanism what the fall of the Berlin Wall was
for authoritarian communism: an indictment of ideology. It cannot simply
be written off as corruption or greed, because what we have been living,
since Reagan, is a policy of liberating the forces of greed to discard
the idea of the government as regulator, of protecting citizens and
consumers from the detrimental impact of greed, ideas that, of course,
gained great currency after the market crash of 1929, but that really
what we have been living is a liberation movement, indeed the most
successful liberation movement of our time, which is the movement by
capital to liberate itself from all constraints on its accumulation.

So, as we say that this ideology is failing, I beg to differ. I actually
believe it has been enormously successful, enormously successful, just
not on the terms that we learn about in University of Chicago textbooks,
that I don't think the project actually has been the development of the
world and the elimination of poverty. I think this has been a class war
waged by the rich against the poor, and I think that they won. And I
think the poor are fighting back. This should be an indictment of an
ideology. Ideas have consequences.

Now, people are enormously loyal to Milton Friedman, for a variety of
reasons and from a variety of sectors. You know, in my cynical moments,
I say Milton Friedman had a knack for thinking profitable thoughts. He
did. His thoughts were enormously profitable. And he was rewarded. His
work was rewarded. I don't mean personally greedy. I mean that his work
was supported at the university, at think tanks, in the production of a
ten-part documentary series called Freedom to Choose, sponsored by FedEx
and Pepsi; that the corporate world has been good to Milton Friedman,
because his ideas were good for them.

But he also was clearly a tremendously inspiring teacher, and he had a
gift, like all great teachers do, to help his students fall in love with
the material. But he also had a gift that many ideologues have, many
staunch ideologues have - and I would even use the word
"fundamentalists" have - which is the ability to help people fall in
love with a perfect imagined system, a system that seems perfect,
utopian, in the classroom, in the basement workshop, when all the
numbers work out. And he was, of course, a brilliant mathematician,
which made that all the more seductive, which made those models all the
more seductive, this perfect, elegant, all-encompassing system, the
dream of the perfect utopian market.

Now, one of the things that comes up again and again in the writings of
University of Chicago economists of the Friedman tradition, people like
Arnold Harberger, is this appeal to nature, to a state of nature, this
idea that economics is not a political science or not a social science,
but a hard science on par with physics and chemistry. So, as we look at
the University of Chicago tradition, it isn't just about a set of
political and economic goals, like privatization, deregulation, free
trade, cuts to government spending; it's a transformation of the field
of economics from being a hybrid science that was in dialogue with
politics, with psychology, and turning it into a hard science that you
could not argue with, which is why you would never talk to a journalist,
right? Because that's, you know, the messy, imperfect real world. It is
beneath those who are appealing to the laws of nature.

Now, these ideas in the 1950s and 1960s at this school were largely in
the realm of theory. They were academic ideas, and it was easy to fall
in love with them, because they hadn't actually been tested in the real
world, where mixed economies were the rule.

Now, I admit to being a journalist. I admit to being an investigative
journalist, a researcher, and I'm not here to argue theory. I'm here to
discuss what happens in the messy real world when Milton Friedman's
ideas are put into practice, what happens to freedom, what happens to
democracy, what happens to the size of government, what happens to the
social structure, what happens to the relationship between politicians
and big corporate players, because I think we do see patterns.

Now, the Friedmanites in this room will object to my methodology, I
assure you, and I look forward to that. They will tell you, when I speak
of Chile under Pinochet, Russia under Yeltsin and the Chicago Boys,
China under Deng Xiaoping, or America under George W Bush, or Iraq under
Paul Bremer, that these were all distortions of Milton Friedman's
theories, that none of these actually count, when you talk about the
repression and the surveillance and the expanding size of government and
the intervention in the system, which is really much more like crony
capitalism or corporatism than the elegant, perfectly balanced free
market that came to life in those basement workshops. We'll hear that
Milton Friedman hated government interventions, that he stood up for
human rights, that he was against all wars. And some of these claims,
though not all of them, will be true.

But here's the thing. Ideas have consequences. And when you leave the
safety of academia and start actually issuing policy prescriptions,
which was Milton Friedman's other life - he wasn't just an academic. He
was a popular writer. He met with world leaders around the world -
China, Chile, everywhere, the United States. His memoirs are a "who's
who". So, when you leave that safety and you start issuing policy
prescriptions, when you start advising heads of state, you no longer
have the luxury of only being judged on how you think your ideas will
affect the world. You begin having to contend with how they actually
affect the world, even when that reality contradicts all of your utopian
theories. So, to quote Friedman's great intellectual nemesis, John
Kenneth Galbraith, "Milton Friedman's misfortune is that his policies
have been tried".

AMY GOODMAN: We return to Naomi Klein, bestselling author of The Shock
Doctrine, talking at the University of Chicago on Wednesday about the
current economic crisis and the legacy of Milton Friedman.

NAOMI KLEIN: This process of measuring an elegant perfect, beautiful,
inspiring ideology against a messy reality is a painful process, and
it's a process that anyone who has tried to free themselves from the
confines of fundamentalist thinking, from ideological constraints, has
faced. My grandparents, for instance, were pretty hardcore Marxists. In
the 1930s and 1940s, they believed fervently in the dream of
egalitarianism that the Soviet Union represented. They had their
illusions shattered by the reality of gulags, of extreme repression,
hypocrisy, Stalin's pact with Hitler.

I bring this up, because the left has been held accountable for the
crimes committed in the name of its extreme ideologies, and I believe
that it's actually been a very healthy process for the left, one that
isn't over, that is continuing. But I think that the process of having
to examine the unacceptable compromises that were made in the name of
hard ideology, that they are paying off in the way the left today is
being reborn and re-imagined.

You know, the most left-wing place on the planet at the moment is,
interestingly enough, the first place where Chicago School ideology made
that leap from the textbook into the real world, and that's Latin
America. And that happened for a very specific reason, as you know. This
- in the 1950s, there was great concern at the State Department about
the fact that Latin America, then as now, as it seems to do, was moving
to the left. There was concern about what they called the "pink
economists", the rise of developmentalism, import substitution, and, of
course, socialism. And, of course, this was a concern because it greatly
affected American and European interests, because the crux of the
argument of import substitution was that countries like Chile and
Argentina, Guatemala, should stop exporting their raw natural resources
to the north and then importing expensive processed goods to the south,
that it didn't make economic sense, that they should use the same tools
of protectionism, of state supports, that built the economies of Europe
and North America. That was that crazy radical idea, and it was
unacceptable.

So, this plan was cooked up -it was between the head of USAID's Chile
office and the head of the University of Chicago's Economics Department
-to try to change the debate in Latin America, starting in Chile,
because that's where developmentalism had gained its deepest roots. And
the idea was to bring a group of Chilean students to the University of
Chicago to study under a group of economists who were considered so
extreme that they were on the margins of the discussion in the United
States, which, of course, at the time, in the 1950s, was fully in the
grips of Keynesianism. But the idea was that there would be - this would
be a battle to the - a counterbalance to the emergence of left-wing
ideas in Latin America, that they would go home and counterbalance the
pink economists.

And so, the Chicago Boys were born. And it was considered a success, and
the Ford Foundation got in on the funding. And hundreds and hundreds of
Latin American students, on full scholarships, came to the University of
Chicago in the 1950s and 1960s to study here to try to engage in what
Juan Gabriel Valdes, Chile's foreign minister after the dictatorship
finally ended, described as a project of deliberate ideological
transfer, taking these extreme-right ideas, that were seen as marginal
even in the United States, and transplanting them to Latin America. That
was his phrase - that is his phrase.

But today, we see that these ideas are reemerging in Latin America. They
were suppressed with force, overthrown with military coups, and then
Chile and Argentina, Uruguay and Brazil all became, to varying degrees,
laboratories for the ideas that were taught in the classrooms of the
University of Chicago. But now, because there was never a democratic
consent for this, the ideas are reemerging.

But one of the things that's interesting about the new left in Latin
America is that democracy is at the very center. And, you know, the
first thing that Rafael Correa did when he was elected president of
Ecuador, for instance - well, the first thing he did was give an
interview. They said, "What can we expect of your economic program?" He
said, "Well, let's put it this way: I'm no fan of Milton Friedman's".
And then he called a constituent assembly. He created an incredibly open
political process to rewrite the country's constitution. And that's what
happened in Bolivia, and that's what's happened in many Latin American
countries, because democracy is being put at the center of these
projects, because there has been a learning process of looking at the
mistakes that the left has made in the past, the ends-justify-the-means
mistakes.

So, I think all ideologies should be held accountable for the crimes
committed in their names. I think it makes us better. Now, of course,
there are still those on the far left who will insist that all of those
crimes were just an aberration - Mao, Stalin, Pol Pot; reality is
annoying - and they retreat into their sacred texts. We all know who I'm
talking about.

But lately, particularly just in the past few months, I have noticed
something similar happening on the far libertarian right, at places like
the Cato Institute and the Reason Foundation. It's a kind of a panic,
and it comes from the fact that the Bush administration adapted -
adopted so much of their rhetoric, the fusing of free markets and free
people, the championing of so many of their pet policies. But, of
course, Bush is the worst thing that has ever happened to believers in
this ideology, because while parroting the talking points of
Friedmanism, he has overseen an explosion of crony capitalism, that they
treat governing as a conveyor belt or an ATM machine, where private
corporations make withdrawals of the government in the form of no-bid
contracts and then pay back government in the form of campaign
contributions. And we're seeing this more and more. The Bush
administration is a nightmare for these guys - the explosion of the debt
and now, of course, these massive bailouts.

So, what we see from the ideologues of the far right - by far right, I
mean the far economic right - frantically distancing themselves and
retreating to their sacred texts: The Road to Serfdom (1944), Capitalism
and Freedom (1962), Free to Choose (1980). So that's why I've taken to
calling them right-wing Trotskyists, because they have this - and mostly
because it annoys them, but also because they have the same sort of
frozen-in-time quality. You know, it's not, you know, 1917, but it's
definitely 1982. Now, the left-wing Trots don't have very much money, as
you know. They make their money selling newspapers outside of events
like this. The right-wing Trots have a lot of money. They build think
tanks in Washington, DC, and they want to build a $200 million Milton
Friedman Institute at the University of Chicago.

Now, this brings up an interesting point. It's an interesting point
about the think tanks, in general, which has to do with the fact that it
does seem to take so much corporate welfare to keep these ideas alive,
which would seem to be a contradiction of the core principle of free
market ideology - I mean, and particularly now, in the context of the
Milton Friedman Institute. I mean, I could see it in the 1990s, but now,
is the world really clamoring for this? Is there really a demand that
you are supplying here? Really?

I think this points to a larger issue, and this comes up - has come up
for me again and again in talking about this ideology, this ideological
campaign. You know, is it - is it really fueled by true belief, and - or
is it just fueled by greed? Because it's not - the thoughts are so very
profitable. So they are distinctive in that way, distinctive from other
ideologies. And, of course, you know, certainly we know that religion
has been a great economic partner in imperialism. I mean, this isn't an
entirely new phenomenon. But this is a question that comes up a lot. And
I think it's very difficult to answer, and it's clear, certainly at this
school, that much of it is fueled by belief, by true belief, by falling
in love with those elegant systems.

But I think we also need to look particularly at this moment, who this
ideology benefits directly economically, keeping it alive in this
moment, and how, even in this moment, when everybody is saying, you
know, this is the end of market fundamentalism, because we're seeing
this betrayal of the basic tenets of the non-interventionist government
by the Bush administration - you know, I believe this is a myth and that
the ideology has just gone dormant, because it's ceased to be useful.
But it will come roaring back, and I'll talk a little bit more about that.

But, you know, I was interested that yesterday the Heritage Foundation,
which has always been a staunch Friedmanite think tank, that they came
out in favor of the bailout. They came out in favor of the bailout; they
said it was vital. And what's interesting about that is, of course, the
bailout is creating a crisis in the economic - in the public sphere.
It's taking a private crisis, a crisis on Wall Street, which of course
isn't restricted to Wall Street, and it will affect everyone, but it is
moving it, moving those bad debts, onto the public books.

And now the Bush administration has already left the next
administration, whoever it is, with an economic crisis on their hands,
but with this proposed transfer, they're dramatically increasing that
crisis. So, we can count, I would argue, on the Heritage Foundation
refinding their faith, refinding their faith when it becomes necessary
and useful to once again argue that the way to revive the American
economy is to cut taxes, cut regulation, to stimulate the economy - and,
by the way, we can't afford Social Security; we're going to have to
privatize it, because we've got this terrible debt and deficit on our
hands. So, the ideology is far from dead, and what we are, I think,
seeing with this proposed monument to Friedmanism is really a way of
entrenching it and making sure that it is always available to come back,
to come roaring back.

So, I said I would talk a little bit about Friedmanism and the links to
the current crisis. And, you know, it's pretty direct. Milton Friedman
is pretty much accepted as the godfather of deregulation. And this was -
this ideology was the rationale for turning the financial sector into
the casino that we see today. You know, Milton Friedman was clear about
this. He believed that "history took a wrong turn", and that's a quote;
it's a quote from a letter he wrote to Augusto Pinochet. He said,
"History took a wrong turn in your country, as well as mine". And he was
referring to the responses to the Great Depression. In Chile, it was the
rise of import substitution and developmentalism. But in the United
States, he was of course referring to the New Deal.

And I think that the Chicago School of Economics is properly understood
as a counterrevolution against the New Deal, against regulations like
Glass-Steagall, that was put in place in 1934 after having seen people
lose their life savings to the market crash, and it was a firewall, a
very simple, sensible law that said if you want to be an investment
bank, if you want to gamble, gamble with your investors' money, but the
government isn't going to help you because it's your own risk. You can
fail. And if you want to be a commercial bank, then we will help you. We
will offer insurance to make sure that those savings are safe, but you
have to restrict the risks that you take. You cannot gamble. You cannot
be an investment bank. And a firewall was put up between investment
banks and consumer banks.

And now we look at the way in which this crisis is supposedly being
solved, and what we see, actually, is a wave of mergers in the banking
sector, a wave of mergers with the banks getting bigger and bigger until
ultimately - you know, the Financial Times was predicting today that
eventually the United States will have three big banks, just like Japan
does. That's where it's heading. And, of course, all of those banks will
be too big to fail. So they all have this implicit guarantee; it's not
just Fannie and Freddie. It's any function that is too important to fail
has this implicit guarantee.


Phil Gramm is the person, you know, on the legislative side who did the
most to create the legislative context for what we're seeing right now
in the financial sector. You know, I think everyone knows that Phil
Gramm, most famously, recently is the one who said that America was in a
mental recession and a bunch of whiners and all of that. And so, he's
not officially an adviser to McCain, but there is talk that if he were
to win the elections, he would be Treasury Secretary. You know, I point
- I bring him up because Phil Gramm was a Milton Friedman fanatic. I
think you know this. In 1999, the same year that he led the charge to
strike down Glass-Steagall, he also - Phil Gramm - pressed Congress to
get the Medal of Honor for Friedman. When he ran in the - when he made
his 1996 presidential run, McCain was the co-chair of his campaign. Phil
Gramm was asked, "If you had to rely on a single person as your foremost
economic policy adviser, who would it be?" And he replied, "Dr Milton
Friedman". So we see the connections between deregulation and Friedmanism.

I also think there's something else at play in the kind of politicians
that are attracted to this particular ideology. You know, Reagan was the
first really to embrace it, and Nixon was the great disappointment to
Friedman. I'm sure you all know that. You know, he writes in his memoir
that when Nixon was elected, he was euphoric. I mean, he couldn't
imagine an American president more closely aligned ideologically than
Richard Nixon. But Richard Nixon insisted on governing, and he wanted to
win elections, and he imposed wage and price controls. And Milton
Friedman sort of had a bit of a temper tantrum and declared him the most
socialist president in modern American history. But, you know, it was -
so it was really Reagan who campaigned, you know, with his copy of
Capitalism and Freedom on the campaign trail, who was the first person
to really put Friedmanism into practice.

And I raise this because, you know, one of the things that we hear about
McCain is that he doesn't really know about economics, and so I think
that makes us inclined not to take his economic ideas seriously, not to
think he would be a really serious economic force. I think just the
opposite. And I think if you look at his campaign platform, you see just
the opposite. He wants to privatize Social Security. He is saying that
in the first 100 days they'll look at every single government program,
and they will either reform it or shut it down if it is not serving
taxpayers. I mean, they are talking about a sort of hundred-day economic
shock therapy period. And I think it's the fact that he doesn't know
about economics, and that Sarah Palin, I suspect, knows a little less,
that actually makes them so dangerous.

And I don't - you know, I don't think it is - not to be too flippant -
I'm sure that I've, you know, offended everyone, so I may as well just
say bad things about Ronald Reagan - but I do think that, you know, that
it isn't a coincidence that, you know, a movie star president champions
these ideas, or a body-builder governor, you know, who says, "Dr
Friedman changed my life" - I don't know if you've seen Arnold
Schwarzenegger's introductions to Freedom to Choose, but they're good.
You should. YouTube them. But the appeal of these ideas, I think, to
politicians who are actually in over their head on economics - and, by
the way, this goes for military dictators, too, like Pinochet - who get
control over a country and are totally clueless about how to run an
economy, is that it lets them off the hook completely. It says
government is the problem, not the solution. Leave it to the market.
Laissez-faire. Don't do anything. Just undo. Get out of the way. Leave
it to us.


AMY GOODMAN: We go back to the final portion of Naomi Klein's address at
the University of Chicago last week, invited by a faculty group opposed
to the creation of a $200 million Milton Friedman Institute, a research
center honoring the ideals of the late Chicago School economist.

NAOMI KLEIN: This crisis moment, of course, is going to play out in a
lot of different ways. And, you know, the other major contribution -
another major contribution of Friedmanism to the policy framework is not
just deregulation, but privatization, of everything. And, you know, in
Capitalism and Freedom, he lays out his wish list, everything from the
post office to national parks. So I think it's interesting to think
about how this crisis will effect future plans for privatization.

And, in fact, it already is, because the next big bubble - and, by the
way, this idea of bubbles is intimately connected to the idea of
governments who think that their role is simply to create the context
for maximum profit seeking - I mean, that you just get out of the way;
anything that makes money is good, even if, you know, it's entirely
divorced from the real economy, if it inflates - your GDP is still going
up. And the next big bubble - they went from dotcom to housing - is
projected to be infrastructure.

The crisis, you know - and this is where Friedmanism becomes a kind of a
self-fulfilling prophecy, because you neglect the public sphere and -
because you have tax cuts and because you've derided the public sphere,
and we certainly saw this in New Orleans during Hurricane Katrina, which
was not a natural disaster; it was a disaster borne of a collision
between heavy weather and a weak infrastructure. But then, that was used
to rationalize really just erasing the public sphere altogether, closing
Charity Hospital, the only hospital that treats the uninsured in New
Orleans, closing down the public housing projects. Richard Baker,
Republican congressman, said, "We couldn't clean out the housing
projects, but God did".

Milton Friedman - and I start the book with this story - wrote a piece;
it was one of his last pieces of writing, his last major policy
recommendation. He wrote a piece for the Wall Street Journal, saying
that it was an opportunity, the fact that parents and teachers and
children were scattered across the United States after Hurricane
Katrina, an opportunity to radically remake the education system. Now,
that - and, of course, turned into a voucher system.

Now, that neglect of public sphere that we saw in New Orleans is, of
course, a national crisis. The American Society of Civil Engineers
estimates that there is a deficit, an infrastructure deficit of between
$1.5 trillion and $2 trillion, just to bring the roads and bridges up to
safety standards. And the solution, up until very recently, that was
being held up, was public-private partnerships, was privatization of
essential infrastructure. You know this in Chicago, because the airport
is one of the ones on the block.

But one interesting thing that happened today is that the biggest - the
biggest test case for infrastructure privatization is the Pennsylvania
Turnpike, which was on the verge of being handed over to a consortium of
private companies on a seventy-five-year lease, and that deal fell
through today. And I think part of the reason why it fell through is
because one of the companies leading the consortium was Citigroup. And
the idea of putting more essential services, more things that are far
too important to fail, in the hands of the same people that have made
such a mess of the financial sector suddenly seems like insanity. But on
the other hand, the economic pressures on states, on the federal
government, is only going to increase, right? Because it seems
inevitable that those private debts are going to be transferred onto the
public books. So, nothing can be taken for granted in this moment.

The other way where we - the other place where I think we see the legacy
of Friedmanism in this moment is in the backlash to the Wall Street
bailout, the backlash that essentially killed the bill in Congress,
although it's clear that it's going to be revived. People got very, very
frightened yesterday when the stock market had its worst day, and they
called their Congress people with another message. And I just want to
say, on that front, that it's easy to conclude from that that people are
just untrustworthy, and they shouldn't really have a say in the economy,
which is, I think, probably what Milton Friedman would say. And this was
part of the impulse toward specialization and treating everything
economic as hard science, because that means, you know that it's out of
reach of democracy. It's not subject to any debate; these are hard rules.

Now, I think that the sort of volatility we've seen on the - in the
markets the past few days is at least partially the result of the
incredible recklessness of the Bush administration in dangling a $700
billion bailout, just free money, saying we're going to do this, before
they had any guarantee that they were going to be able to do it. So, of
course, the stock market rallies at the prospect of free money. Why
wouldn't it? And then, when it falls through, of course, it dips. And
I'm not saying this is all planned, but this sort of rollercoaster we've
been on has just been part of this pattern of incredibly poor
management, poor government, that infuses every aspect of this crisis.

And this, of course, is also part of the ideology, because the Bush
administration, far from being an aberration, is really the culmination
of the idea that government is the problem, not the solution. I think
they really believe that and totally abdicate it, their responsibility
to manage, to govern. The popping of the housing bubble was a surprise
to no one. But the only preparation was a two-and-a-half-page plan
presented by Henry Paulson that said, "Give me $700 billion, and don't
ask any questions". That is not preparing, right? This was laissez-faire
in action, a really scary kind of laissez-faire.

But the anger is, of course - the anger at Wall Street, this sort of -
you know, there was a vindictive quality to a lot of what the Congress
people heard from their constituents: "Why should we bail them out? Look
at what they've done to us." And it was Main Street versus Wall Street.
And this is - you know, this is another failure of Friedmanism, because
the idea of the ownership society was that class-consciousness was
supposed to disappear, right? Because union members were not going to
think of themselves as workers, because everybody owned a piece of the
stock market, and everybody was going to have a mortgage, so they would
think like owners, they would think like bosses, they would think like
landlords, not like tenants, not like workers. Class is suddenly back in
America, with a vengeance, and it is the result of this class war that
was waged from this school.

Now, interestingly, there is another Chicago boy, and Barack Obama is
responding to the market crisis by turning his campaign really into a
referendum; though he wouldn't call it a referendum on Friedmanism, he
seems to be turning it into a referendum on Friedmanism. He's saying
that essentially what we're seeing on Wall Street is the culmination of
an ideology of deregulation and trickle-down economics - give a lot at
the top and wait for it to trickle down to the people at the bottom -
and that is precisely what has failed. And what's interesting is that
the more he says that, the higher his ratings go in the polls.

So I think we can see a couple of scenarios for the future. One, McCain
wins, and it's economic shock therapy. You know, the thesis of The Shock
Doctrine is that we've been sold a fairy tale about how these radical
policies have swept the globe, that they haven't swept the globe on the
backs of freedom and democracy, but they have needed shocks, they have
needed crises, they have needed states of emergencies. It doesn't
necessarily have to be an outright military coup, which are the
conditions in which this ideology had its first laboratories. It can
just be a bad-enough economic crisis, a bad-enough hyperinflation
crisis, in an electoral democracy that allows politicians to say, "Sorry
about everything we said during the campaign. Sorry about the usual ways
in which we make decisions, debate discussion. We're going to have to
haul up, form an emergency economic team and impose shock therapy",
usually with the help of the International Monetary Fund and the World
Bank.

Milton Friedman understood the utility of crisis. And this is a quote -
you know, I use it a lot, but I'll use it now again, because I think
it's important - which he has at the beginning of the 1982 edition of
Capitalism and Freedom: "Only a crisis, actual or perceived, produces
real change. When that crisis occurs, the 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."

Now, because I've been studying the utility of crisis for this free
market project, which I consider to be very anti-democratic, it's really
attuned me to looking for the ideas that are lying around. And I've been
paying really close attention to people like Grover Norquist, Newt
Gingrich, the Republican Study Committee, these past few weeks. And I
have an "ideas lying around" file, which are the ideas that they are
floating right now in the midst of this economic crisis. And a lot of
them are familiar, but the point is is that they're being repackaged now
as the way out of this economic crisis. So, it's suspending the capital
gains tax, getting rid of the post-Enron regulations, getting rid of
mark-to-market accounting. In other words, more deregulation and less
money in the public coffers. And it is interesting that the way in which
this bill - the way the senators were trying to get the bailout bill
through the Senate, after it had failed to go through Congress, was by
adding tax cuts, a package of $118 billion worth of tax cuts. Some of
them are good, some of them are not. But it's a deepening of this crisis.

So, we know that the crisis is coming, and the question is, how are we
going to respond? I think there needs to be better ideas lying around. I
think the Milton Friedman Institute is about keeping the same old ideas
that have been recycled so many times, that actually make these public
crises worse, making sure that they are the ones that are ready and
available whenever the next crisis hits. I think that is what - at its
core, that's what so many of the right-wing think tanks are for, and
that's what the Institute is for. And I think that is a waste of the
fine minds at this university. I think it is a waste of your minds, your
creativity, because all of these crises - climate change, the casino
that is contemporary capitalism - all of these crises do demand answers,
do demand actions. They are messages, telling us that the system is
broken. And instead of actual solutions, we're throwing ideology, very
profitable ideology, at these problems. So we need better ideas lying
around.

We need better ideas responding to what a Barack Obama presidency would
absolutely face. As soon as he comes to office, "Yes, you can" turns
into "No, you can't; we're broke". No green jobs, no alternative energy,
no healthcare for everyone. You know, his plan for - to give healthcare
to every child in America costs $80 billion. Bailing out AIG cost $85
billion. They're spending that money. They're spending those promises.
So, the people who are going to say, "No, you can't", who are going to
use this crisis to shut down hope, to shut down possibility, are ready.

And I think it would be so wonderful to have the brilliant young
economists of the University of Chicago - I don't know if any of them
bothered to come out tonight - but to have your minds at work meeting
this crisis. We need you. We need open minds. We need flexible minds, as
creative as possible. The Milton Friedman Institute, in its name and
essence, is about trying to recapture a moment of ideological certainty
that has long passed. It has long passed because reality has intervened.
It was fun when it was all abstract. It was fun when it was all in the
realm of promise and possibility. But we are well past that. Please,
don't retreat into your sacred texts. Join us in the real world.

AMY GOODMAN: Naomi Klein, author of The Shock Doctrine: The Rise of
Disaster Capitalism. She was speaking at the University of Chicago
against the naming of the economics institute there, the Milton Friedman
Institute, invited by a group of faculty.

http://www.democracynow.org/2008/10/6/naomi_klein
http://canadiandimension.com/articles/2008/10/07/2126/


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