Friday, June 15, 2012

Rebutting Shock Doctrine

Yesterday I had a conversation with a friend that I have spent some time thinking about; I promised I would. It was concerning a documentary designed to worry us about our loss of freedom. I’m very much interested in ways of restoring and preserving our freedom, so I paid attention. But there are ways to gauge whether what you’re hearing is truth or simply propaganda. I suggest starting with a few questions:

·         What is the point of view of the information source?
·         Do the themes coincide with known principles?
·         Is there documented and verifiable evidence following a line of logic, rather than implication and accusation?
The case study today, to practice identifying truth vs. propaganda, is a documentary called Shock Doctrine, by Naomi Klein, who also wrote a book by that name.
What I was told about it was that this documentary was about this economist from Chicago named Milton Friedman, who along with his powerful followers, has been involved in all kinds of crises around the world, where big businesses take advantage of chaos (possibly of their making) and make big money at the expense of the people.
To begin with, I am fairly familiar with Milton Friedman, a free-market economist and Nobel laureate, who has indeed spread free-market principles so that now, after three quarters of a century of Keynesian and socialist experiments in government controlled economies, free-market principles (lower taxes, less regulation, and limited government) are widely accepted as mainstream and provably true. I’ve heard him speak in person, and in various online videos, lectures, and debates. He is always calm, logical, and consistent. And there isn’t anything conspiratorial about his massive body of work. Here are a couple of my favorites: an Uncommon Knowledge classic, and a panel debate along with a young Thomas Sowell, against Frances Fox Piven and others.
I was given the name of this video with the evidence, but not the name of the person, but it was easy enough to find online. Naomi Klein is a Keynesian disciple, and probably also a socialist. She supports the Occupy movement, along with Frances Fox Piven. So, before I even look at either her writings, speeches, or documentary, I know that she favors a government controlled economy and quite likely radical disruptive means to that end.
What she claims is the pattern of the Milton Friedman-style free market economics is actually the pattern of Cloward & Piven—leftists whose goal is to inflect socialism worldwide. They are among the 60s and 70s radicals who gathered groups to occupy banks with the intention of forcing banks to give business and housing loans to people who could not qualify based on merit. Some of this action against banks started in Chicago, where training was provided by community organizers that a young Barack Obama met with weekly (see Stanley Kurtz’s Radical in Chief, pp. 34-35). The disruptions were intended to force banks (or whatever target) to capitulate to the demands of the trained crowds, or else lose business, because the crowds were too overwhelming for local law enforcement. The demands led to changes in banking, including lowering of standards, which led to unsafe lending practices, which resulted in the housing bubble, bank failures, and inevitable economic crash we recently experienced.
Klein tries to instill a fear of Milton Friedman, but she never tells the truth about him or his beliefs. Milton Friedman never advocated creating chaos for the purpose of starting with a clean slate. The “shock therapy” theme she ascribes to him doesn’t appear in his writings. She shows him using the term one time, in the 1970s, in Chile, but we do not get to hear it in context. What we do know is that it is not the context she implies. She wants us to believe that he created, or at least encouraged, the chaos in Chile under severe dictator Pinochet, including economic upheaval, saying that such “shock therapy” would create a blank slate on which to impose “purer” free market economic principles. But even the timing of the supposed quote shows that such a suggestion is impossible. Friedman was brought to Chile a year after union-led riots in the streets began, so there was already chaos—caused not by freer markets, but by a combination of tyrannical policies and labor unions—just as Cloward & Piven would prescribe. (The debate panel linked above mentions both Piven's and Friedman's views on the situation in Chile as it was ongoing.)
She also quotes Friedman from an op-ed he wrote at age 93, shortly before his death, following the Hurricane Katrina disaster in New Orleans. Here is Friedman’s supposedly damning statement: “Most New Orleans schools are in ruins, as are the homes of the children who have attended them. The children are now scattered all over the country. This is a tragedy. It is also an opportunity."
I’m sorry if I don’t see the problem with the statement. I was in Houston at the time, where our crime rates (temporarily?) skyrocketed following the importation of the New Orleans poor, who were brought here for refuge. New Orleans was a city where it was easy to live poor. Generations of people were born and raised in housing projects, with no attempt to leave, were trapped by a system of government largesse combined with ingrained laziness and hopelessness. The schools in question were failing to meet even the lowest expectations of a public school system. Transporting these people to other parts of the country did indeed give them an opportunity to find an alternative, better way of life. There’s nothing in Friedman’s statement to disagree with. Nor is there anything to imply that he prefers a crisis to simply choosing free market alternatives.
Klein implies that any movement toward lower taxes, deregulation, and freer markets is the chaos inducer, but she shows nowhere that such policies are implemented. She only recounts dictatorships followed by union-led rioting.
Until she gets to Margaret Thatcher. There, she again shows union-led riots in the streets, claiming that lower taxes, less regulation, and other basic free-market principles were so unpopular that Thantcher had no right to try them. Oddly, she claims that Thatcher may have created the chaos of the Falkland Islands War to force through free-market ideas. The piece is rather vague, however, about how Thatcher persuaded Argentina to invade the island of English-speaking British citizens, or why it would have been better to abandon those citizens to the Argentine invaders, where they would have to submit to dictatorial rule in a language they didn’t speak. Thatcher did what a leader is expected to do: provide protection from foreign invasion. And she dispatched the whole thing in a mere three months.
Klein repeats the argument with the Soviet Union, claiming that Friedman’s Chicago “gang” had control of our government so that no aid would be offered to Gorbachev in his efforts toward freedom unless he followed the “drastic” “shock therapy” version of moving toward freer markets that would induce chaos.
Eventually Klein offers a clue about her point of view: she claims that the Keynesian policies of price controls implemented during the Nixon and Carter years worked brilliantly, but all that progress was ruined by Reagan, who subscribed to those terrible Chicago free-market ideas.
Klein is considerably younger than I am. I lived through the Nixon price controls. (Interestingly, Dick Cheney, in his memoir, talks about that season when he was working for Donald Rumsfeld in the Nixon administration; price controls weren’t the result of some brilliant group of economists coming up with the correct numbers, but rather the guesses of a few staffers during an all-night session trying to meet a deadline. And Nixon knew they wouldn’t work but figured giving in to the Democratic Congressional pressure would allow evidence that they didn’t work. If that was true, he was right. See In My Time, pp. 59-61).
During my first college semester, I took basic economics and had the advantage of a free-market teacher, which was somewhat rarer in those pre-Reagan days. We talked about those price controls—and why they never worked. The lesson stuck because I had lived through the price control experiments and knew how harmful they had been to the economy and spent my college years seeing Carter's policies provide malaise and what Reagan accurately termed a high misery index.
Klein’s main point is that freer economic policies always lead to chaos. And she insists that Milton Friedman’s style of free-market economics was radical, experimental, and manipulative on the world stage. But she provides no evidence that upheaval in the places she shows iwas caused by anything but political unrest against tyranny combined with purposeful union-led rioting, rather than actual grassroots dissent (tactics embraced by her cohorts, but not by her enemies).
She seems to define free-market economics very differently from how I do. To her, big business in collusion with corrupt government equals free-market economics, and insists that is Friedman’s plan.
I heard Milton Friedman speak in person in 1980. During that speech, he showed that better conditions for more people are provided by free markets than any other way—in other words it is the most moral and ethical system. About big business, he warned that they aren’t promoting free enterprise when they ask for handouts and regulations and controls to avoid competition.
Naomi Klein is considered one of the world’s foremost young intellectuals—a consideration only given to “leftists.” She did not complete her university degree in journalism and makes money by encouraging socialist philosophy. Her works, as far as I can see, are neither well documented, well thought out, or remotely truthful. But if you follow her thread of thought to its logical conclusion, she is saying that more government control is the only good economic system, and big business, which she equates to the free market, is a worldwide conspiracy intent on draining money from the poor to enrich themselves.
Milton Friedman could easily have rebutted Klein, if he had found her worth bothering about. Thirty-two years ago, I heard him say this:
The two greatest enemies of free society are intellectuals and businessmen—for opposite reasons. Intellectuals want freedom for themselves but no one else. Businessmen want free enterprise for everyone else, but special consideration for themselves.
Do large corporations take advantage of crisis situations? Certainly. They offer bribes in exchange for special favors, and legislation that protects them from competition. This is what we call “crony capitalism.” It’s rampant not just worldwide, but in our own country today. It is the practice of socialism to claim fairness while elites decide who gets favored, often based on bribes and corruption. Crony capitalism does not resemble in the slightest the principles taught by the late Milton Friedman.
If Klein were honest, she could say outright that she is in favor of governmentally controlled economy, and then present actual evidence to support her views. Instead, she vilifies an enemy of her viewpoint in a way that not only distorts his views beyond recognition, but hides her own intentions from the casual observer.
The basic principle, that whoever earns the money should decide how to spend the money, is still true. Klein is apparently among those elites who think you’re too stupid to know how best to spend what you earn, so you should subject yourself to your betters to decide for you. But she can’t come right out and say that, so she obfuscates. She’s about propaganda, not truth.

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