Naomi Klein

The Shock Doctrine
The Rise of Disaster Capitalism
Around the world in Britain, the United States, Asia and the Middle East, there are people with power who are cashing in on chaos; exploiting bloodshed and catastrophe to brutally remake our world in their image. They are the shock doctors. Thrilling and revelatory, The Shock Doctrine cracks open the secret history of our era. Exposing these global profiteers, Naomi Klein discovered information and connections that shocked even her about how comprehensively the shock doctors' beliefs now dominate our world - and how this domination has been achieved. Raking in billions out of the tsunami, plundering Russia, exploiting Iraq - this is the chilling tale of how a few are making a killing while more are getting killed.
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IMF Go to Hell

On Tuesday in Buenos Aires, only a few blocks from where Argentinian President Eduardo Duhalde was negotiating with the International Monetary Fund, a group of residents were going through a negotiation of a different kind. They were trying to save their home.

In order to protect themselves from an eviction order, the residents of 335 Ayacucho, including 19 children, barricaded themselves inside and refused to leave. On the concrete façade of the house, a hand printed sign said: "IMF Go To Hell."

What does the IMF, in town to set conditions for releasing $9-billion in promised funds, have to do with the fate of the residents of 335 Ayacucho? Well, here in a country where half the population now lives below the poverty line, it's hard to find a single sector of society whose fate does not somehow hinge on the decisions made by the international lender.

For example, librarians, teachers and other public sector workers, who have been getting paid in hastily printed provincial currencies (sort of government IOUs) won't get paid at all if the provinces agree to stop printing this money, as the IMF is demanding. And if deeper cuts are made to the public sector, as the lender is also insisting, unemployed workers, between 20 and 30 per cent of population, will have even less protection from the homelessness and hunger that has led tens of thousands to storm supermarkets demanding food.

And if a solution isn't found to the "medical state of emergency" declared this week, it will certainly affect an elderly woman I met recently on the outskirts of Buenos Aires. In a fit of shame and desperation, she pulled up her blouse and showed a group of foreigners the open wound and hanging tubes from a stomach operation that her doctor was not able to stitch up or dress due to lack of medical supplies.

Maybe it seems rude to talk about such matters in the context of the IMF's visit. Economic analysis is supposed to be about the peg to the dollar, "peso-ification," and the dangers of "stagflation"—not families losing homes and gaping wounds. Yet reading the reckless advice that the international business community is hurling at the IMF and Argentina's government, perhaps a little personalizing is in order.

For weeks, Argentina has been scolded like a small child that shouldn't get desert until it finishes dinner. Despite a commitment to slash 60 per cent from provincial deficits, Argentina apparently hasn't done enough to "deserve" a loan. "The news is all on the surface," sniffs an economist from Credit Suisse First Boston. President Duhalde warns that Argentina's desperate population cannot support deeper cuts— the National Post calls this mere "procrastination."

The consensus is that the IMF should see Argentina's crisis not as an obstacle but as an opportunity: the country is so desperate for cash, it will do whatever the IMF wants.

"During a crisis is when you need to act, it's when Congress is most receptive," explains Winston Fritsch, chairman of Dresdner Bank AG's Brazilian unit. The National Post editorial concurs: "The opportunities for reform have never been better ... the IMF must withhold any further bailouts until Argentina dramatically overhauls its public sector and legal system and reopens its economy."

The most draconian suggestion comes from Rocardo Cabellero and Rudiger Dornbusch, a pair of MIT economists writing in the Financial Times. "It's time to get radical," they say. Argentina "must temporarily surrender its sovereignty on all financial issues... give up much of its monetary, fiscal, regulatory and asset management sovereignty for an extended period, say five years." The country's economy—its "spending, money printing and tax administration"—should be controlled by "foreign agents" including "a board of experienced foreign central bankers."

In a nation still scarred by the "disappearance" of 30,000 people during the 1976-1983 military dictatorship, only a "foreign agent" would have the nerve to say, as the MIT team does, that, "somebody has to run the country with a tight grip." And that, with the Argentinians out of way, the country could be saved by prying open markets, introducing deep spending cuts, and of course, a "massive privatization campaign."

It's obvious to anyone who has been paying attention to Argentina's social upheavals that such an economic dictatorship could only be enforced through terrifying state repression and bloodshed. But there's another hitch: Argentina has already done it all.

As the IMF's model student throughout the nineties, it flung open its economy (that's why it's been so easy for capital to flee since the crisis began). As far as Argentina's supposedly wild public spending goes, a full third goes directly to servicing the external debt. Another third goes to pension funds, which have already been privatized. The remaining third is what we think of when we say "public spending"—health, education, social assistance. Far from spiraling out of control, these expenditures have fallen far behind population growth, which is why shipments of donated food and medicine are arriving by boat from Spain.

As for "massive privatization," Argentina has dutifully sold off so many of its services, from trains to phones, that the only examples of further assets Mr. Cabellero and Mr. Dornbusch can think of privatizing are the country's ports and customs offices.

No wonder economists and bankers are in such a rush to blame the victims of this crisis, to claim that Argentinians overspent, were greedy, corrupt. Of course it's true that the political system here is contaminated with cultures of both payola and impunity. But the same financiers that happily lined the pockets of politicians and army generals in exchange for local contracts are hardly the ones who should be trusted to do Argentina's house cleaning.

Argentina's housewives have a better idea. Last week, on International Women's Day, hundreds took to the streets with brooms in hand and announced that they wouldn't clean their homes until they had swept the corruption out of congress. Their protest was one tiny wave in a massive tide of grassroots mobilization that has already brought down successive governments and now is threatening to do something far more radical: bring in real democracy.

Following the model started by the "Piqueteros," Argentina's militant unemployed, tens of thousands of residents are organizing themselves into neighborhood assemblies, networked at the city and national levels. In town squares, parks and on street corners, neighbors discuss ways of making their democracies more accountable and filling in where government has failed. They are talking about creating a "citizen's congress" to demand transparency and accountability from politicians. They are discussing participatory budgets and shorter political terms, while organizing communal kitchens for the unemployed and planning film festivals in the streets. The president, who wasn't even elected, is scared enough of this growing political force that he has begun calling the "asambleas" anti-democratic.

There is reason to pay attention. The asambleas are also talking about how to kick-start local industries and re-nationalize assets. And they could go even further. Argentina, as the obedient pupil for decades, miserably failed by its IMF professors, shouldn't be begging for loans; it should be demanding reparations.

The IMF had its chance to run Argentina. Now it's the people's turn.

This column first appeared in The Globe and Mail.

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