NEO-LIBERAL GLOBALIZATION, THE SHOCK DOCTRINE AND THE IMPACTS OF 9/11 ON THE U.S. ECONOMY

Harry Targ

(Comments prepared for a panel discussion entitled “September 11: Ten Years Later” on Tuesday, September, 13, 2011, at Purdue University)

The Historical Context of the 9/11 Tragedy

The impacts of monumental tragedies on the lives of a people are derived both from the immediacy of the tragedy in question and from the long-term historical context in which the tragedy occurs. Just to reflect for a moment on the history of American economic and political conflict before 9/11 we must recognize two essential struggles.

First, from the Great Depression of the 1930s to the Fair Deal of the Truman era to Lyndon Johnson’s Great Society programs of the 1960s, policymakers believed that a partnership of government with the private sector was likely to provide economic well-being for most Americans. Economists argued that government programs, including fiscal stimuli, supports for the needy, and regulations of unbridled banks and corporations were required to smooth out the negative consequences of capitalism.

As a result of rapidly changing events in the 1970s, from the oil shocks of that decade to increased government deficits at home, some political leaders and economists advocated a return to economic policies that minimized government, maximized corporate and banking freedom, and returned to the pre-Depression philosophy promoting “the magic of the marketplace.”

In response to global challenges to the mixed economy policy model, the International Monetary Fund, the World Bank, and the most powerful nations in the world pressured weaker countries to shift their policy programs to what became known as “neo-liberal” policies. These policies called for cutting government spending (even vital programs for the needy), deregulation of the private sector, and privatization of government programs including transportation, education, health care, and even the provision of fresh water. In many countries, these new policies included challenging the rights of workers, peasants, and others to organize and make demands on corporations and government.

In the 1980s, the so-called “Reagan revolution” expanded and in some cases initiated new neo-liberal programs in the United States. According to David Harvey, the long-term impacts of this dramatic shift in public policy since the 1980s has involved massive outsourcing of work, deindustrialization, and transformation from a manufacturing and service economy to one based on financial speculation. As a result, the impacts for the next thirty years included growing income and wealth inequality, a rising proportion of society’s wealth accumulated by the top 1 per cent of the population, growing consolidation of corporations and banks, increased personal, state, and national debt, and declining real wages, living standards, access to public services, and quality of life for most Americans.

On the international front, U.S. policymakers launched a worldwide crusade against what Reagan era policymakers defined as the threat of “international communism.” After the collapse of the Soviet Union, policymaking elites who had entered the foreign policy establishment in the Nixon years and continued their service through the Reagan years and two Bush presidencies lobbied for a foreign policy of global domination. Their lobbying vehicle, the Project for a New American Century (PNAC), engaged actively in the 1990s to mobilize support for war on Iraq and Iran and the establishment of friendly regimes all across the broad swath of territory from Northern South America, to the Horn of Africa, to the Middle East and Persian Gulf to East Asia.

Then 9/11 Happened

So the economic policy agenda and advocacy for a global foreign policy was in place and/or well represented and articulated before the tragedy of 9/11. Then we all saw the brutal images of the twin towers destroyed, the plane downed over Pennsylvania, and the Pentagon attacked. Selfless men and women came to the rescue as best they could to save lives and comfort the loved ones of victims.

Within days of 9/11, the Bush Administration was debating making war on Iraq and deciding in an intervening period to launch a war on Afghanistan, on October 6, 2001. A year and a half campaign followed leading to attacks on Iraq in March, 2003. These decisions were supported by the beginning of qualitative increases in military spending (roughly tripling military spending from 2001 to 2011), expanding a program of tax cuts for the rich that had begun before 9/11, and organizing a sustained program of downsizing, privatizing, and deregulating the economy. In the context of the grieving nation, the programs of shifting the economy further to banks and corporations and maintaining and expanding a global presence (more than 800 U.S. bases everywhere) were readily accepted. Instead of pursuing the perpetrators of the crimes of 9/11, the United States launched a “war on terrorism,” defined an “axis of evil,” and announced its new “Doctrine of Preemption.”

The Shock Doctrine

In 2007, Naomi Klein published a fascinating book called The Shock Doctrine: The Rise of Disaster Capitalism. In it she develops the idea of the shock doctrine, paying homage to the source of the concept, Milton Friedman, the renowned free market economist. In one of his essays she quotes the following: “…only a crisis--actual or perceived--produces real change. When the 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.”

Klein references one of the other infamous 9/11s, 9/11/73 when the Chilean military carried out a brutal coup against an elected socialist government, causing the death of President Salvador Allende, terrorizing and killing thousands of citizens, abolishing trade unions and political parties, and moving the Chilean economy from mixed public and private institutions to so-called markets. In fact, Professor Friedman and his colleagues were invited to Chile to advise the new dictatorship about how to create a “free market” economy.

Costs of War

So since 9/11, the United States has been engaged in at least two wars with no end in sight, tripled its military spending, and reestablished a global military presence with both armies and private contractors on every continent while at home working people are suffering through economic crises. Political discourse, for the most part, omits serious attention to the pain and suffering of most Americans.

Joseph Stiglitz, in his essay “The Price of 9/11,” reflected on the relationship between the tragedy, the U.S. military response and the long-term consequences the tragedy has had for the American people.

“Today, America is focused on unemployment and the deficit. Both threats to America’s future can, in no small measure, be traced to the wars in Afghanistan and Iraq. Increased defense spending, together with the Bush tax cuts, is a key reason why American went from a fiscal surplus of 2 % of GDP when Bush was elected to its perilous deficit and debt position today.
Direct government spending on those wars so far amounts to roughly $2 trillion--$17,000 for every U.S. household--with bills yet to be received increasing this amount by more than 50%.”

Costofwar.org provides very useful data on war spending and the U.S. economy. For example they indicate:

-Spending for the wars in Afghanistan and Iraq from 2001 through the end of fiscal 2011 totals $1.26 trillion.
-Total spending on “security” since 9/11 has been $7.6 trillion.
-There has been a 96% increase in “security” discretionary spending since 9/11 and only a 39 % increase in non-security discretionary spending.
-Annual funding for “homeland security” has increased by 301% since 2001.
-Increased DOD annual base budget (not counting the wars) has gone up by $235.6 billion since 2001.
-Currently the United States and its NATO allies account for 65 % of global military spending.
-52% of U.S. war veterans returning from Afghanistan and Iraq have been treated by the Veterans Administration (650,000 of 1.25 million) at a cost of $32.6 billion.

The National Priorities Project presents data on “trade-offs,” that is if spending on 9/11 related wars were used to serve the needs of citizens. For the state of Indiana for example:

-The cost of the Afghan War in 2011 alone would provide Head Start funding for all eligible Indiana children for 22.7 years, while now budgets can only provide for 1/3 of those children eligible for the program.

-Total Indiana costs for the Afghan War (2001-2011) would pay for all those without health insurance in the state for 1.9 years.

-Afghan and Iraq war total spending “would fund all in-state expenses of a four-year education for each incoming freshman class for the next 46.2 years” at the Indiana/Purdue University campus in Indianapolis.

In sum, United States economic policy has been on a thirty year trajectory to eliminate the connections between government programs and human needs. United States foreign policy from the Reagan Doctrine, to President Clinton’s “humanitarian interventions,” to the War on Terror and the Doctrine of Preemption parallels the advocacy and institutionalization of economic policy. The shock of 9/11 advanced both the domestic and foreign policy agendas to a considerable degree.

Fight Like Hell for the Living

The anti-war/social justice movement Code Pink believes that both economic policies that privilege the rich and foreign policies that dominate and control other countries must be challenged. That, Code Pink implies, is the meaning of 9/11 for us today. One contributor to the Code Pink website, Janet, wrote the following:

“On a button on my pink jacket, and on my heart, I carry the words of Mary “Mother” Jones, a labor organizer: ‘Mourn for the dead, and fight like hell for the living.’ Today…and every day, I will try to live up to those words, and to help make a world where the young bury the old, and rarely the reverse—and where war is as unthinkable as cannibalism.”