The Shock Doctrine

Naomi Klein wrote an article on global warming that I thought was pretty interesting, so when I was at the library and saw an audio book by her I thought I'd check it out. "The Shock Doctrine." Apparently an assault on Milton Friedman and the world wide effects of his policies. Right up my alley.

It was so interesting that I had to go get the book as well from the library. The audio is abridged. I finished the audio, but I'm still reading the book. There's also a movie that I haven't yet seen (available on Youtube here.) This book must have had a huge impact. Surprising that I hadn't heard of it.

I recommended it to my friend HP and he was helpful enough to provide links to criticisms, which I always like to have. The most detailed one was here from Johan Norberg at reason.com. I read that and his other links because it helps me process claims if I have criticism in the back of my mind.

The book's central claim is this. Extremely wealthy people benefit enormously from neoliberal policies. I don't think that's debatable. Here's what's also not debatable. Implementation of those policies via democracy is very difficult. People don't generally perceive that these policies are in their own best interest. Bryan Caplan would say that this shows that people are irrational (see here). I would say it shows how intelligent the common man is. But in any case this means to implement these policies you have to bypass democracy, and one way to do that is to impose the policies when people are in a state of shock, like after a disaster of some kind. Perhaps war or environmental destruction. Disoriented people often allow these kinds of changes because they just aren't interested in those sorts of subjects at the moment. They are focused more on staying alive or picking up the pieces. Klein argues that this is how the neoliberal agenda has proceeded.

I want to make just a couple of comments in response to the criticism HP provided. Not in detail because I haven't finished the book. But to just note some interesting things I notice so far. First of all Norberg in response says thing like "But Milton Friedman opposed the war in Iraq." This is totally beside the point. Nobody is saying that Friedman wants our government to run around nuking people or causing mayhem. It's just that Fiedman noticed, correctly, that imposition of his preferred policies is possible after disaster and difficult otherwise. He's not advocating disaster. He's just saying look, the tsunami went through. Lots of people died. We all recognize that as a tragedy. But let's also keep in mind that this is an opportunity to correct some (in his view) harmful economic conditions. So Norberg is just missing the point here.

But here's something I thought was quite fascinating. Norberg is writing in October 2008 and he criticizes Klein for focusing on the privatization and deregulation disasters while ignoring the successes. These are the countries Norberg points to as free market successes. Iceland, Ireland, Estonia, and Australia. What do we notice about the first three countries he mentions? Iceland was on the very leading edge of the economic melt down. Their banking system is literally unraveling as Norberg writes. Ireland and Estonia likewise are poster childs for the 2008 debacle. The first three states held up as examples of the success of neoliberalism are in fact about to enter catastrophic economic conditions. Iceland has turned sharply leftward since then and is on a decent path. Ireland pursues right wing solutions and remains in the doldrums. Same with Estonia.

Reality has not been good to right wing economic theory.