There have been times in my reporting from disaster zones when I have had the unsettling feeling that I was seeing not just a crisis in the here and now, but a glimpse of our collective future—a preview of where the road we are all on is headed unless we somehow grab the wheel and swerve. When I listen to Trump speak, with his obvious relish in creating an atmosphere of chaos and destabilization, I often think: I’ve seen this before, I’ve seen it in those strange moments when portals seemed to open up into our collective future.
One of those moments arrived in New Orleans after Hurricane Katrina, as I watched hordes of private military contractors descend on the flooded city to find ways to profit from the disaster, even as thousands of the city’s residents, abandoned by their government, were treated like dangerous criminals just for trying to survive.
I watched another such dystopian window open in 2003 in Baghdad, shortly after the invasion. At that time, the US occupation had carved the city in two. At its heart, behind enormous concrete walls and bomb detectors, there was the Green Zone—a little chunk of the United States rebuilt in Iraq, with bars serving hard liquor, fast-food joints, gyms, and a pool where there seemed to be a party 24/7. And then—beyond those walls—there was a city bombed to rubble, where there was often no electricity for hospitals, and where violence, between Iraqi factions and US occupation forces, was spiraling out of control. That was the Red Zone.
The Green Zone at the time was the fiefdom of Paul Bremer, former assistant to Henry Kissinger and director of Kissinger’s consulting firm, whom George W. Bush had named as the chief US envoy to Iraq. Since there was no functioning national government, that essentially made him Iraq’s supreme leader. Bremer’s was an entirely privatized empire. Dressed in combat boots and a sharp business suit, Bremer was always protected by a phalanx of black-clad mercenaries working for the now-defunct company Blackwater, and the Green Zone itself was run by Halliburton—one of the largest oil field companies in the world, previously headed by then vice president Dick Cheney—along with a network of other private contractors.
When US officials made forays outside the Green Zone (or the “emerald city,” as some journalists called it), they did so in heavily armored convoys, with soldiers and mercenaries pointing machine guns outward in all directions, guided by an ethic of “shoot first, ask questions later.” Regular Iraqis supposedly being liberated by all this weaponry had no protection, except for the kind provided by religious militias in exchange for loyalty. The message broadcast by the convoys was loud and clear: some lives count a hell of a lot more than others.
From deep inside his Green Zone fortress, Bremer issued decree after decree about how Iraq should be remade into a model free-market economy. Come to think of it, it was a lot like Donald Trump’s White House. And the edicts were pretty similar too. Bremer ordered, for instance, that Iraq should have a 15 percent flat tax (quite similar to what Trump has proposed), that its state-owned assets should be rapidly auctioned off (under consideration by Trump), and that government should be dramatically downsized (Trump again). The pace was frantic. Bremer, with an eye on the fossil fuel fields of Iraq and beyond, was determined to get his country makeover done before Iraqis went to the polls and had any kind of say in what their “liberated” future would look like.
In one particularly surreal chapter, Bremer and the State Department brought in advisers from Russia who had led that country’s disastrous experiment with “economic shock therapy,” the corruption-laden deregulation and privatization frenzy which produced that country’s notorious class of oligarchs. Inside the Green Zone, the visitors—including Yegor Gaidar, known as Russia’s “Dr. Shock”—lectured the US-appointed Iraqi politicians about how important it was to radically remake the economy all at once and without hesitating, before Iraq’s population recovered from the war. Iraqis would never have accepted these policies if they’d had a say (and they did in fact reject many of them later). It was only the extreme crisis that made Bremer’s plan conceivable.
In fact, Bremer’s open determination to auction off Iraq’s state-owned assets under cover of crisis did a lot to confirm the widespread perception that the invasion was more about liberating Iraq’s wealth for foreign companies than about liberating its people from despotism. The country spiraled into violence. The US military and its private contractors responded with more violence, more shocks. Unfathomable sums of money disappeared into the black hole of the contractor economy—money that came to be known as “Iraq’s missing billions.”
It wasn’t just the seamless merger of corporate power and open warfare that felt like a glimpse into the dystopian future imagined so many times in science fiction and Hollywood films. It was also the clear mechanism of using crisis to ram through policies that would never have been feasible in normal times. It was in Iraq that I developed the thesis for The Shock Doctrine. Originally, the book was going to focus exclusively on Bush’s war, but then I started to notice the same tactics (and the same contractors, such as Halliburton, Blackwater, Bechtel…) in disaster zones around the world. First came an intense crisis—natural disaster, terrorist attack—then came the blitzkrieg of pro-corporate policies. Often the strategy of crisis exploitation was discussed right out in the open—no dark conspiracy theories required.
As I delved deeper, I realized that this strategy had been a silent partner to the imposition of neoliberalism for more than forty years. That “shock tactics” follow a clear pattern: wait for a crisis (or even, in some instances, as in Chile or Russia, help foment one), declare a moment of what is sometimes called “extraordinary politics,” suspend some or all democratic norms—and then ram the corporate wish list through as quickly as possible. The research showed that virtually any tumultuous situation, if framed with sufficient hysteria by political leaders, could serve this softening-up function. It could be an event as radical as a military coup, but the economic shock of a market or budget crisis would also do the trick. In the midst of hyperinflation or a banking collapse, for instance, the country’s governing elites were frequently able to sell a panicked population on the necessity for attacks on social protections, or enormous bailouts to prop up the financial private sector—because the alternative, they claimed, was outright economic apocalypse.
Shock tactics were first deployed in the service of neoliberalism in the early 1970s, in Latin America, and they are still being used today to extract “free-market” concessions against the popular will.
We’ve seen it happen recently, before Trump, in US cities including Detroit and Flint, where looming municipal bankruptcy became the pretext for dissolving local democracy and appointing “emergency managers.” It is unfolding in Puerto Rico, where the ongoing debt crisis has been used to install the unaccountable “Financial Oversight and Management Board,” an enforcement mechanism for harsh austerity measures, including cuts to pensions and waves of school closures. It is being deployed in Brazil, where the highly questionable impeachment of President Dilma Rousseff in 2016 was followed by the installation of an unelected, zealously pro-business regime that has frozen public spending for the next twenty years, imposed punishing austerity, and begun selling off airports, power stations, and other public assets in a frenzy of privatization.
And it is happening in blatant form under the presidency of Donald Trump. On the campaign trail, he did not tell his adoring crowds that he would cut funds for meals-on-wheels, a vital source of nutrition for the elderly and disabled, or admit that he was going to try to take health insurance away from millions of Americans. He said the very opposite, as on so many other issues.
Since taking office, he’s never allowed the atmosphere of chaos and crisis to let up. The outrages come so fast and furious that many are understandably struggling to find their footing. Experiencing Trump’s tsunami of Oval Office decrees—seven executive orders in his first eleven full days, plus eleven presidential memoranda issued in that same period—has felt a little like standing in front of one of those tennis ball machines. Opponents might swat back a ball or two, but we’re all still getting hit in the face over and over again. Even the widespread belief among many (or is it hope?) that Trump will not last his full term contributes to the collective vertigo: nothing about the current situation is stable or static, which is a very difficult position from which to strategize or organize.
The last half century shows how deliberately—and effectively—the shock doctrine strategy has been deployed by governments to overcome democratic resistance to profoundly damaging policies. And some kind of democracy-avoidance strategy is needed, because many neoliberal policies are so unpopular that people reliably reject them both at the polls and in the streets. With good reason: as the tremendous hoarding (and hiding) of vast sums of wealth by a small and unaccountable global class of virtual oligarchs makes clear, those who benefit most from these radical social restructurings are a small minority, while the majority see their standard of living stagnate or slip, even in periods of rapid economic growth. Which is why, for those who are determined to push through these policies, majority rule and democratic freedoms aren’t a friend—they are a hindrance and a threat.
Not every neoliberal policy is unpopular, of course. People do like tax cuts (for the middle class and working poor, if not for the super-rich), as well as the idea of cutting “red tape” (at least in theory). But they also, on the whole, like their taxes to pay for state-funded health care, clean water, good public schools, safe workplaces, pensions, and other programs to care for the elderly and disadvantaged. Politicians planning to slash these kinds of essential protections and services, or to privatize them, are rightly wary of putting those plans at the center of their electoral platforms. Far more common is for neoliberal politicians to campaign on promises of cutting taxes and government waste while protecting essential services, and then, under cover of some sort of crisis (real or exaggerated), claim, with apparent reluctance and wringing of hands, that, sorry, we have no choice but to go after your health care.
The bottom line is that hard-core free marketers or “libertarians” (as the billionaire Koch brothers describe themselves) are attracted to moments of cataclysm because non-apocalyptic reality is actually inhospitable to their antidemocratic ambitions.
Speed is of the essence in all this, since periods of shock are temporary by nature. Like Bremer, shock-drunk leaders and their funders usually try to follow Machiavelli’s advice in The Prince: “For injuries ought to be done all at one time, so that, being tasted less, they offend less.” The logic is straightforward enough: People can develop responses to sequential or gradual change. But if dozens of changes come from all directions at once, the hope is that populations will rapidly become exhausted and overwhelmed, and will ultimately swallow their bitter medicine. (Recall the description of Poland’s shock therapy as unfolding in “dog years.”)
The Shock Doctrine was controversial when it came out in 2007. I was challenging a rosy version of history that many of us have grown up with—the version which tells us that deregulated markets and democracy advanced together, hand in hand, over the second half of the twentieth century. The truth, it turns out, is much uglier. The extreme form of capitalism that has been remaking our world in this period—which Nobel Prize–winning economist Joseph Stiglitz has termed “market fundamentalism”—very often could advance only in contexts where democracy was suspended and people’s freedoms were sharply curtailed. In some cases, ferocious violence, including torture, was used to keep rebellious populations under control.
The late economist Milton Friedman called his most famous book Capitalism and Freedom, presenting human liberation and market liberation as flip sides of the same coin. And yet the first country to put Friedman’s ideas into practice in unadulterated form was not a democracy—it was Chile, in the immediate aftermath of the CIA-supported coup that overthrew a democratically elected socialist president, Salvador Allende, and installed a far-right dictator, General Augusto Pinochet.
This was not an accident—the ideas were just too unpopular to be introduced without the help of a strong-arm despot. Richard Nixon had famously growled after Allende won the 1970 elections: “Make the economy scream.” With Allende left dead in the bloody coup, Friedman advised Pinochet that he should not blink when it came to economic transformation, prescribing what he termed the “shock treatment” approach. Under the advice of the famed economist and his former students (known in Latin America as “the Chicago Boys”), Chile replaced its public school system with vouchers and charter schools, made health care pay-as-you-go, and privatized kindergartens and cemeteries (and did many other things US Republicans have been eyeing for decades). And recall: this was in a country whose people were distinctly hostile to exactly these policies—a country which had, before the coup, democratically chosen socialist policies.
Similar regimes were installed in several Latin American countries during this period. Leading intellectuals in the region drew a direct connection between the economic shock treatments that impoverished millions and the epidemic of torture that ravaged hundreds of thousands in Chile, Argentina, Uruguay, and Brazil who believed in a fairer society. As the late Uruguayan historian Eduardo Galeano asked: “How can this inequality be maintained if not through jolts of electric shock?”
Latin America received a particularly strong dose of these twin forms of shock. Most “free-market” makeovers were not so bloody. Radical political transitions such as the collapse of the Soviet Union or the end of South African apartheid have also provided disorienting cover for neoliberal economic transformations. The most frequent midwife by far has been large-scale economic crisis, which time and again has been harnessed to demand radical campaigns of privatization, deregulation, and cuts to safety nets. But in truth, any shock can do the trick—including natural disasters that require large-scale reconstruction and therefore provide an opening to transfer land and resources from the vulnerable to the powerful.
Most people are appalled by this kind of crisis exploitation, and with good reason. The shock doctrine is the polar opposite of the way decent people, left to their own devices, tend to respond when they see widespread trauma, which is to offer help. Think of the staggering $3 billion privately donated in the aftermath of the 2010 earthquake in Haiti, or the millions offered in response to the 2015 quake in Nepal or the 2004 Asian tsunami. These disasters, like so many others, provoked extraordinary gestures of generosity from individuals around the world. Thousands upon thousands of regular people donated money and volunteered their labor.
As the American historian and writer Rebecca Solnit has so eloquently described, disasters have a way of bringing out the best in us. It is in such moments that we often see some of the most moving displays of mutual aid and solidarity. In Sri Lanka after the 2004 tsunami, despite decades of interethnic civil war, Muslims saved their Hindu neighbors and Hindus saved their Buddhist neighbors. In flooded post-Katrina New Orleans, people put their own lives at great risk to rescue and care for their neighbors. After Superstorm Sandy hit New York, a remarkable network of volunteers fanned out across the city, under the banner of Occupy Sandy—it grew out of the Occupy Wall Street movement—to serve hundreds of thousands of meals, help clear out more than a thousand homes, and provide clothing, blankets, and medical care to thousands of people in need.
The shock doctrine is about overriding these deeply human impulses to help, seeking instead to capitalize on the vulnerability of others in order to maximize wealth and advantage for a select few.
There are few things more sinister than that.
Shock doctrine logic is entirely in keeping with Trump’s view of the world. He unabashedly sees life as a battle for dominance over others—and he keeps obsessive track of who is winning. In his much-self-celebrated negotiations, the questions are always the same: What’s the most that I can get out of this deal? How do I exploit my adversary’s weakness?
In a particularly candid moment on Fox & Friends in 2011, he described a deal he made with former Libyan leader Muammar Qaddafi like this: “I rented him a piece of land. He paid me more for one night than the land was worth for the whole year, or for two years, and then I didn’t let him use the land. That’s what we should be doing. I don’t want to use the word screwed, but I screwed him. That’s what we should be doing.”
If Trump extracted predatory terms only from despised dictators, few tears would be shed. But this is Trump’s attitude to all negotiations. In Think Big, one of his how-to-be-like-me manuals, he describes his negotiation philosophy this way: “You hear lots of people say that a great deal is when both sides win. That is a bunch of crap. In a great deal you win—not the other side. You crush the opponent and come away with something better for yourself.”
This cold-blooded enthusiasm for exploiting the weakness of others has shaped Trump’s career as a real estate developer, and it is a trait he shares with many members of his administration. It’s worrying for what it tells us about not only the atmosphere of chaos his team appears to be consciously cultivating but also, far more alarmingly, how they might exploit any larger crises yet to come.
So far, Trump’s unending atmosphere of crisis has been sustained largely through his own over-the-top rhetoric—declaring cities “crime-infested” sites of “carnage” when in fact the violent-crime rate has been declining nationwide for decades; hammering away at a manufactured narrative about an immigrant crime wave; and generally insisting that Obama destroyed the country. Soon enough, however, Trump could well have some crises to exploit that are distinctly more real, since crisis is the logical conclusion of his policies on every front.
Given this, it’s well worth taking a close look at the ways in which Trump and his team have exploited moments of crisis in the past to achieve their economic and political goals. Understanding this track record will make whatever happens next a whole lot less shocking, and will ultimately help us to resist these tired tactics.
In the United States, the neoliberal revolution got a head start in New York City in the mid-1970s. Up until this point, the city had been a bold, if imperfect, experiment in social democracy, featuring the most generous public services in the United States, from libraries to mass transit to hospitals. But in 1975, federal and state cutbacks, combined with a national recession, pushed New York to the brink of all-out bankruptcy, and the crisis was seized upon to dramatically remake the city. Under cover of crisis came a wave of brutal austerity, sweetheart deals to the rich, and privatizations—with the end result of turning the city so many of us love into the temple of speculative finance, luxury consumption, and nonstop gentrification that we know today.
In Fear City, a recently published book about this little-understood chapter in America’s past, historian Kim Phillips-Fein meticulously documents how the remaking of New York City in the seventies was a prelude to what would become a global tidal wave, one that has left the world sharply divided between the one percent and the rest—and nowhere more so than in the city Donald Trump calls home. It’s also a story in which Trump plays a starring, if unflattering, role.
In 1975, with no help forthcoming from President Gerald Ford, it looked so likely that the United States’ largest and most storied city would actually go bankrupt that the New York Daily News ran a banner headline that said simply: FORD TO CITY: DROP DEAD. At the time, Trump was just twenty-nine years old and still working in the shadow of his wealthy father, who had made his fortune building distinctly unflashy middle-class homes in New York’s outer boroughs—and who was notorious as a landlord practicing systemic discrimination against African Americans.
Trump had always dreamed of making his mark in Manhattan, and with the debt crisis he saw his big chance. The opening came in 1976, when the famed Commodore Hotel, a historic midtown landmark, announced that it was losing so much money that it might have to close down. The city government was panicked at the prospect of this iconic building sitting empty, broadcasting a message of urban decay and depriving the city of tax revenue. They needed a buyer, quick, and the mood was sufficiently desperate that, as one local television broadcast put it, “beggars can’t be choosers.”
Enter Trump, proto–disaster capitalist. Partnering with the Hyatt Corporation, Trump had a plan to replace the Commodore’s classic brick facade with “a new skin” of reflective glass, and to reopen it as the Grand Hyatt Hotel (this was in the brief window before the future US president began insisting that all his developments bear his name). He extracted extraordinary terms from a city in crisis. As Phillips-Fein explains:
Trump would be allowed to purchase the property from the railroad for $9.5 million. Then he would sell it for a dollar to the Urban Development Corporation….Finally, the UDC would lease the property back to Trump and the Hyatt Corporation for ninety-nine years, allowing the developers to pay taxes far below the normal rate for four decades—a windfall worth hundreds of millions of dollars. (As of 2016, Trump’s tax break has cost New York City $360 million in uncollected taxes.)
Yes, that’s right: for $9.5 million down, Trump extracted a tax-break windfall for the property worth $360 million (and counting) from the city. The new hotel was a blight—what one architectural critic described as “an out-of-towner’s vision of city life.” In other words, it was vintage Trump, a man who would go on to sell the world on a Russian oligarch’s vision of the United States as filtered through bootleg VHS copies of the eighties soap operas Dynasty and Dallas. In Phillips-Fein’s words:
Donald Trump and the developers who exploited the city’s desperation to build their towers had little interest in the rest of New York. The fact that millions of dollars went to subsidize building projects instead of restoring public services or promoting recovery in the poor and working-class neighborhoods of the city never registered as a moral concern.
What is striking about this story is not simply that a young Trump seized on New York’s economic catastrophe to boost his own fortune, extracting predatory terms from a government in crisis. It’s also that this was not just any deal—it was the one that let Trump emerge from his father’s shadow and decisively turned him into a player in his own right. Trump’s career was forged in shock, shaped by the unique opportunities for profit presented by moments of crisis. Right from his breakout moment, his attitude toward the public sphere was that it was there to be pillaged, to enrich himself.
It’s an attitude that has stayed with him ever since. It’s worth remembering that on September 11, 2001, shortly after the Twin Towers came down, Trump gave an interview to a radio station during which he could not help observing that, with the Towers gone, he now had the tallest building in downtown Manhattan. Dead bodies were in the street, lower Manhattan looked like a war zone, and yet, with only a little encouragement from the radio hosts, Trump was thinking about his brand advantage.
When I asked Phillips-Fein what lessons she drew from studying Trump’s actions during New York’s debt crisis, her reply was all about fear. There was, she said, “this deep level of fear about bankruptcy, fear of the future. And it’s that kind of fear that really makes possible the cutbacks of the time, and also the sense that the city needs a savior in the first place.” Since the 2016 election, she has been thinking about this a lot. “The way that fear can make things that seem politically impossible suddenly feel as though they’re the only alternative. And so I think that is one of the things that we need to fight at this moment, and to find ways to resist that sense of overwhelming fear and chaos, and to find forms of solidarity that can counter it.”
It’s good advice. Especially since Trump has assembled around him an all-star cast of crisis opportunists.
Senior members of Trump’s team have been at the heart of some of the most egregious examples of the shock doctrine in recent memory. What follows is a brief overview of their exploits (which, by nature of just how many Goldman Sachs executives Trump has appointed, is by no means exhaustive).
Rex Tillerson, US secretary of state, has built his career in large part around taking advantage of the profitability of war and instability. ExxonMobil profited more than any oil major from the increase in the price of oil that was the result of the 2003 invasion of Iraq. It also directly exploited the Iraq War to defy State Department advice and make an exploration deal in Iraqi Kurdistan, a move that, because it sidelined Iraq’s central government, could well have sparked a full-blown civil war, and certainly did contribute to internal conflict.
As CEO of ExxonMobil, Tillerson profited from disaster in other ways as well. As we have already seen, as an executive at the fossil fuel giant, he spent his career working for a company that, despite its own scientists’ research into the reality of human-caused climate change, decided to fund and spread misinformation and junk climate science. All the while, according to an LA Times investigation, ExxonMobil (both before and after those two companies merged) worked diligently to figure out how to further profit from and protect itself against the very crisis on which it was casting doubt. It did so by exploring drilling in the Arctic (which was melting, thanks to climate change), redesigning a natural gas pipeline in the North Sea to accommodate rising sea levels and supercharged storms, and doing the same for a new rig off the coast of Nova Scotia.
At a public event in 2012, Tillerson acknowledged that climate change was happening—but what he said next was revealing: “as a species,” humans have always adapted. “So we will adapt to this. Changes to weather patterns that move crop production areas around—we’ll adapt to that.”
He’s quite right: humans do adapt when their land ceases to produce food. The way humans adapt is by moving. They leave their homes and look for places to live where they can feed themselves and their families. But, as Tillerson well knows, we do not live at a time when countries gladly open their borders to hungry and desperate people. In fact, he now works for a president who has painted refugees from Syria—a country where drought was an accelerant of the tensions that led to civil war—as Trojan horses for terrorism. A president who introduced a travel ban that, if it had not been blocked by the courts, would have barred Syrian migrants from entering the United States. A president who has said about Syrian children seeking asylum, “I can look in their faces and say ‘You can’t come.’ ” A president who has not budged from that position even after he ordered missile strikes on Syria, supposedly moved by the horrifying impacts of a chemical weapon attack on Syrian children and “beautiful babies.” (But not moved enough to welcome them and their parents.) A president who has announced plans to turn the tracking, surveillance, incarceration, and deportation of immigrants into a defining feature of his administration.
Waiting in the wings, biding their time, are plenty of other members of the Trump team who have deep skills in profiting from all of that.
Between election day and the end of Trump’s first month in office, the stocks of the two largest private prison companies in the USA, CoreCivic (formerly the Corrections Corporation of America) and the GEO Group, doubled, soaring by 140 percent and 98 percent, respectively.
And why not? Just as Exxon learned to profit from climate change, these companies are part of the sprawling industry of private prisons, private security, and private surveillance that sees wars and migration—both very often linked to climate stresses—as exciting and expanding market opportunities. In the United States, the Immigration and Customs Enforcement agency (ICE) incarcerates up to thirty-four thousand immigrants thought to be in the country illegally on any given day, and 73 percent of them are held in private prisons. Little wonder, then, that these companies’ stocks soared on Trump’s election. And soon they had even more reasons to celebrate: one of the first things Jeff Sessions did as Trump’s attorney general was rescind the Obama administration’s decision to move away from for-profit jails for the general prison population.
Trump appointed as deputy defense secretary Patrick Shanahan, a top executive at Boeing who, at one point, was responsible for selling costly hardware to the US military, including Apache and Chinook helicopters. He also oversaw Boeing’s ballistic missile defense program—a part of the operation that stands to profit enormously if international tensions continue to escalate under Trump.
And this is part of a much larger trend. As Lee Fang reported in the Intercept in March 2017, “President Donald Trump has weaponized the revolving door by appointing defense contractors and lobbyists to key government positions as he seeks to rapidly expand the military budget and homeland security programs….At least 15 officials with financial ties to defense contractors have been either nominated or appointed so far.”
The revolving door is nothing new, of course. Retired military brass reliably take up jobs and contracts with weapons companies. What’s new is the number of generals with lucrative ties to military contractors whom Trump has appointed to cabinet posts with the power to allocate funds—including those stemming from his plan to increase spending on the military, the Pentagon, and the Department of Homeland Security by more than $80 billion in just one year.
The other thing that has changed is the size of the Homeland Security and surveillance industry. This sector grew exponentially after the September 11 attacks, when the Bush administration announced it was embarking on a never-ending “war on terror” and that everything that could be outsourced would be. New firms with tinted windows sprouted up like malevolent mushrooms around suburban Virginia, outside Washington, DC, and existing ones, like Booz Allen Hamilton, expanded into brand-new territories. Writing in Slate in 2005, Daniel Gross captured the mood of what many called the security bubble: “Homeland security may have just reached the stage that Internet investing hit in 1997. Back then, all you needed to do was put an ‘e’ in front of your company name and your IPO would rocket. Now you can do the same with ‘fortress.’ ”
That means many of Trump’s appointees come from firms that specialize in functions which, not so long ago, it would have been unthinkable to outsource. His National Security Council chief of staff, for instance, is retired Lieutenant General Keith Kellogg. Among the many jobs Kellogg has had with security contractors since going private was one with Cubic Defense. According to the company, he led “our ground combat training business and focus on expanding the company’s worldwide customer base.” If you think “combat training” is something armies used to do all on their own, you’d be right.
One noticeable thing about Trump’s contractor appointees is how many of them come from firms that did not even exist before 9/11: L1 Identity Solutions (specializing in biometrics), the Chertoff Group (founded by Bush’s Homeland Security director Michael Chertoff), Palantir Technologies (a surveillance/big data firm cofounded by PayPal billionaire and Trump backer Peter Thiel), and many more. Security firms draw heavily on the military and intelligence wings of government for their staffing. Under Trump, a remarkable number of lobbyists and staffers from these firms are now migrating back to government, where they will very likely push for even more opportunities to monetize the hunt for people President Trump likes to call “bad hombres.”
This creates a disastrous cocktail. Take a group of people who directly profit from ongoing war and then put those same people at the heart of government. Who’s going to make the case for peace? Indeed, the idea that a war could ever definitively end seems a quaint relic of what during the Bush years was dismissed as “pre–September 11 thinking.”
Ties between the US government and the business world date back to 1776 (several of the Founding Fathers were from wealthy plantation-owning families). The revolving door has been spinning ever since, regardless of whether a Democrat or a Republican was in the Oval Office. The difference with Trump, as is so often the case, is one of volume, and shamelessness.
As of this writing, Donald Trump has appointed five current or former Goldman Sachs executives to senior roles in his administration, including Steve Mnuchin as Treasury secretary, James Donovan (formerly a Goldman Sachs managing director) as deputy Treasury secretary, Gary Cohn (formerly Goldman’s chief operating officer) as director of the White House National Economic Council, and Dina Powell (formerly Goldman’s head of impact investing) as the White House senior counselor for economic initiatives. Even Steve Bannon once worked at Goldman. And that’s not counting Trump’s pick to lead the Securities and Exchange Commission, Jay Clayton, who served as Goldman’s lawyer on multibillion-dollar deals, and whose wife is a wealth manager with the company.
Making all these Goldman appointments is particularly brazen given Trump’s invocation of the bank to attack his opponents. In a typically vicious salvo at his GOP rival Ted Cruz, he claimed the Goldman guys “have total, total control over him. Just like they have total control over Hillary Clinton.”
It’s also extremely worrying for what it says about the administration’s willingness to exploit the economic shocks that may well reverberate on their watch. Of all the major Wall Street investment banks at the center of the 2008 subprime mortgage crisis, Goldman Sachs was among the most predatory. Not only did Goldman do a huge amount to help inflate the mortgage bubble with complex financial instruments, but it then turned around and, mid crisis, allegedly bet against the mortgage market and earned billions. In 2016, the bank was ordered by the United States Justice Department to pay a settlement of $5 billion—the largest settlement Goldman had ever paid—for these and other malpractices. In 2010, it agreed to a further $550-million fine, the largest ever paid by a Wall Street firm in the then 76-year history of the Securities and Exchange Commission, for its role in the financial crisis.
Democratic senator Carl Levin, who headed the 2010 Senate subcommittee that investigated Goldman Sachs following the financial crisis, summarized their misdeeds:
The evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients and our communities…. Goldman Sachs didn’t just make money. It profited by taking advantage of its clients’ reasonable expectation that it would not sell products that it didn’t want to succeed, and that there was no conflict of economic interest between the firm and the customers it had pledged to serve. Goldman’s actions demonstrate that it often saw its clients not as valuable customers, but as objects for its own profit. This matters because instead of doing well when its clients did well, Goldman Sachs did well when its clients lost money.
Even among Goldman alumni, Steven Mnuchin has distinguished himself by his willingness to profit off misery. After the 2008 Wall Street collapse, and in the midst of the foreclosure crisis, Mnuchin purchased a California bank. The renamed company, OneWest, earned Mnuchin the nickname “Foreclosure King,” reportedly collecting $1.2 billion from the government to help cover the losses for foreclosed homes and evicting tens of thousands of people between 2009 and 2014. One attempted foreclosure involved a ninety-year-old woman who was behind on her payments by 27 cents.
These predatory practices drew fire during Mnuchin’s confirmation hearing for Treasury secretary (though not enough for Republicans to vote against him). Oregon Democratic senator Ron Wyden said during the hearing that, “while Mr. Mnuchin was CEO, the bank proved it could put more vulnerable people on the streets faster than just about anybody,” and charged “OneWest churned out foreclosures like Chinese factories churned out Trump suits and ties.”
And then there’s Vice President Mike Pence, seen by many as the grown-up in Trump’s messy room. Yet it is Pence, the former governor of Indiana, who actually has the most disturbing track record when it comes to bloody-minded exploitation of human suffering.
When Mike Pence was announced as Donald Trump’s running mate, I thought to myself, “I know that name. I’ve seen it somewhere.” And then I remembered. He was at the heart of one of the most shocking stories I’ve ever covered: the disaster capitalism free-for-all that followed Katrina and the drowning of New Orleans. Mike Pence’s doings as a profiteer from human suffering are so appalling that they are worth exploring in a little more depth, since they tell us a great deal about what we can expect from this administration during times of heightened crisis.
Before we delve into Pence’s role, what’s important to remember about Hurricane Katrina is that, though it is usually described as a “natural disaster,” there was nothing natural about the way it impacted the city of New Orleans. When Katrina hit the coast of Mississippi in August 2005, it had been downgraded from a Category 5 to a still-devastating Category 3 hurricane. But by the time it made its way to New Orleans, it had lost most of its strength and been downgraded again, to a “tropical storm.”
That’s relevant, because a tropical storm should never have broken through New Orleans’s flood defense. Katrina did break through, however, because the levees that protect the city did not hold. Why? We now know that despite repeated warnings about the risk, the Army Corps of Engineers had allowed the levees to fall into a state of disrepair. That failure was the result of two main factors.
One was a specific disregard for the lives of poor Black people, whose homes in the Lower Ninth Ward were left most vulnerable by the failure to fix the levees. This was part of a wider neglect of public infrastructure across the United States, which is the direct result of decades of neoliberal policy. Because when you systematically wage war on the very idea of the public sphere and the public good, of course the publicly owned bones of society—roads, bridges, levees, water systems—are going to slip into a state of such disrepair that it takes little to push them beyond the breaking point. When you massively cut taxes so that you don’t have money to spend on much of anything besides the police and the military, this is what happens.
It wasn’t just the physical infrastructure that failed the city, and particularly its poorest residents, who are, as in so many US cities, overwhelmingly African American. The human systems of disaster response also failed, the second great fracturing. The arm of the federal government that is tasked with responding to moments of national crisis like this is the Federal Emergency Management Agency, with state and municipal governments also playing key roles in evacuation planning and response. All levels of government failed.
It took FEMA five days to get water and food to people in New Orleans who had sought emergency shelter in the Superdome. The most harrowing images from that time were of people stranded on rooftops—of homes and hospitals—holding up signs that said HELP, watching the helicopters pass them by. People helped each other as best they could. They rescued each other in canoes and rowboats. They fed each other. They displayed that beautiful human capacity for solidarity that moments of crisis so often intensify. But at the official level, it was the complete opposite. I’ll always remember the words of Curtis Muhammad, a longtime New Orleans civil rights organizer, who said this experience “convinced us that we had no caretakers.”
The way this abandonment played out was deeply unequal, and the divisions cleaved along lines of race and class. Many people were able to leave the city on their own—they got into their cars, drove to a dry hotel, called their insurance brokers. Some people stayed because they believed the storm defenses would hold. But a great many others stayed because they had no choice—they didn’t have a car, or were too infirm to drive, or simply didn’t know what to do. Those are the people who needed a functioning system of evacuation and relief—and they were out of luck. It felt like Baghdad all over again, with some people taking shelter in their own private Green Zones while many more were left stranded in the Red Zone—where the worst was yet to come.
Abandoned in the city without food or water, those in need did what anyone would do in those circumstances: they took provisions from local stores. Fox News and other media outlets seized on this to paint New Orleans’s Black residents as dangerous “looters” who would soon be coming to invade the dry, white parts of the city and surrounding suburbs and towns. Buildings were spray-painted with messages: “Looters will be shot.” Checkpoints were set up to trap people in the flooded parts of town. On Danziger Bridge, police officers shot Black residents on sight (five of the officers involved ultimately pled guilty, and the city came to a $13.3-million settlement with the families in that case and two other similar post-Katrina cases). Meanwhile, gangs of armed white vigilantes prowled the streets looking, as one resident later put it in an exposé by investigative journalist A.C. Thompson, for “the opportunity to hunt Black people.” In the Red Zone, apparently, anything goes.
I was in New Orleans and I saw for myself how amped up the police and military were—not to mention private security guards from companies like Blackwater who were showing up fresh from Iraq. It felt very much like a war zone, with poor and Black people in the crosshairs—people whose only crime was trying to survive. By the time the National Guard arrived to organize a full evacuation of the city, it was done with a level of aggression and ruthlessness that was hard to fathom. Soldiers pointed machine guns at residents as they boarded buses, providing no information about where they were being taken. Children were often separated from their parents.
What I saw during the flooding shocked me. But what I saw in the aftermath of Katrina shocked me even more. With the city reeling, and with its residents dispersed across the country and unable to protect their own interests, a plan emerged to ram through a pro-corporate wish list with maximum velocity. Milton Friedman, then ninety-three years old, wrote an article for the Wall Street Journal stating, “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 to radically reform the educational system.”
In a similar vein, Richard Baker, at that time a Republican congressman from Louisiana, declared, “We finally cleaned up public housing in New Orleans. We couldn’t do it, but God did.” I was in an evacuation shelter near Baton Rouge when Baker made that statement. The people I spoke with were just floored by it. Imagine being forced to leave your home, having to sleep in a cot in some cavernous convention center, and then finding out that the people who are supposed to represent you are claiming this was some sort of divine intervention—God apparently really likes condo developments.
Baker got his “cleanup” of public housing. In the months after the storm, with New Orleans’s residents—and all their inconvenient opinions, rich culture, and deep attachments—out of the way, thousands of public housing units, many of which had sustained minimal storm damage because they were on high ground, were demolished. They were replaced with condos and town-homes priced far out of reach for most who had lived there.
And this is where Mike Pence enters the story. At the time Katrina hit New Orleans, Pence was chairman of the powerful and highly ideological Republican Study Committee (RSC), a caucus of conservative lawmakers. On September 13, 2005—just fourteen days after the levees were breached and with parts of New Orleans still under water—the RSC convened a fateful meeting at the offices of the Heritage Foundation in Washington, DC. Under Pence’s leadership, the group came up with a list of “Pro-Free-Market Ideas for Responding to Hurricane Katrina and High Gas Prices”—thirty-two pseudo relief policies in all, each one straight out of the disaster capitalism playbook.
What stands out is the commitment to wage all-out war on labor standards and the public sphere—which is bitterly ironic, because the failure of public infrastructure is what turned Katrina into a human catastrophe in the first place. Also notable is the determination to use any opportunity to strengthen the hand of the oil and gas industry. The list includes recommendations to “automatically suspend Davis–Bacon prevailing wage laws in disaster areas” (a reference to the law that requires federal contractors to pay a living wage); “make the entire affected area a flat-tax free-enterprise zone”; and “repeal or waive restrictive environmental regulations…that hamper rebuilding.”
President Bush adopted many of the recommendations within the week, although, under pressure, he was eventually forced to reinstate the labor standards. Another recommendation called for giving parents vouchers to use at private and charter schools (for-profit schools subsidized with tax dollars), a move perfectly in line with the vision held by Trump’s pick for education secretary, Betsy DeVos. Within the year, New Orleans became the most privatized school system in the United States.
And there was more. Though climate scientists have directly linked the increased intensity of hurricanes to warming ocean temperatures, that didn’t stop Pence and his committee from calling on Congress to repeal environmental regulations on the Gulf Coast, give permission for new oil refineries in the United States, and green-light “drilling in the Arctic National Wildlife Refuge.” It’s a kind of madness. After all, these very measures are a surefire way to drive up greenhouse gas emissions, the major human contributor to climate change, which leads to fiercer storms. Yet they were immediately championed by Pence, and later adopted by Bush, under the guise of responding to a devastating hurricane.
It’s worth pausing to tease out the implications of all of this. Hurricane Katrina turned into a catastrophe in New Orleans because of a combination of extremely heavy weather, possibly linked to climate change, and weak and neglected public infrastructure. The so-called solutions proposed by the group Pence headed at the time were the very things that would inevitably exacerbate climate change and weaken public infrastructure even further. He and his fellow “free-market” travelers were determined, it seems, to do the very things that are guaranteed to lead to more Katrinas in the future.
And now Mike Pence is in a position to bring this vision to the entire United States.
The oil industry wasn’t the only one to profit from Hurricane Katrina. Immediately after the storm, the whole Baghdad gang of contractors—Bechtel, Fluor, Halliburton, Blackwater, CH2M Hill, and Parsons, infamous for its sloppy Iraq work—descended on New Orleans. They had a singular vision: to prove that the kinds of privatized services they had been providing in Iraq and Afghanistan also had an ongoing domestic market—and to collect no-bid contracts totaling $3.4 billion in the process.
The controversies were legion, too many to delve into here. Relevant experience often appeared to have nothing to do with how contracts were allocated. Take, for example, the company that FEMA paid $5.2 million to perform the crucial role of building a base camp for emergency workers in St. Bernard Parish, a suburb of New Orleans. The camp construction fell behind schedule and was never completed. Under investigation, it emerged that the contractor, Lighthouse Disaster Relief, was in fact a religious group. “About the closest thing I have done to this is just organize a youth camp with my church,” confessed Lighthouse’s director, Pastor Gary Heldreth.
After all the layers of subcontractors had taken their cut, there was next to nothing left for the people doing the work. Author Mike Davis tracked the way FEMA paid Shaw $175 per square foot to install blue tarps on damaged roofs, even though the tarps themselves were provided by the government. Once all the subcontractors took their share, the workers who actually hammered in the tarps were paid as little as two dollars per square foot. “Every level of the contracting food chain, in other words, is grotesquely overfed except the bottom rung,” Davis wrote, “where the actual work is carried out.” These supposed “contractors” were really—like the Trump Organization—hollow brands, sucking out profit and then slapping their name on cheap or nonexistent services.
In order to offset the tens of billions going to private companies in contracts and tax breaks, in November 2005 the Republican-controlled Congress announced that it needed to cut $40 billion from the federal budget. Among the programs that were slashed: student loans, Medicaid, and food stamps. So, the poorest people in the United States subsidized the contractor bonanza twice: first, when Katrina relief morphed into unregulated corporate handouts, providing neither decent jobs nor functional public services; and second, when the few programs that directly assist the unemployed and working poor nationwide were gutted to pay those bloated bills.
New Orleans is the disaster capitalism blueprint—designed by the current vice president and by the Heritage Foundation, the hard-right think tank to which Trump has outsourced much of his administration’s budgeting. Ultimately, the response to Katrina sparked an approval ratings free fall for George W. Bush, a plunge that eventually lost the Republicans the presidency in 2008. Nine years later, with Republicans now in control of Congress and the White House, it’s not hard to imagine this test case for privatized disaster response being adopted on a national scale.
The presence of highly militarized police and armed private soldiers in New Orleans came as a surprise to many. Since then, the phenomenon has expanded exponentially, with local police forces across the country outfitted to the gills with military-grade gear, including tanks and drones, and private security companies frequently providing training and support. Given the array of private-military and security contractors occupying key positions in the Trump administration, we can expect all of this to expand further with each new shock.
The Katrina experience also stands as a stark warning to those who are holding out hope for Trump’s promised trillion dollars in infrastructure spending. That spending will fix some roads and bridges, and it will create jobs (though—as we’ll see in Chapter 10—far less than green infrastructure investment to transition off fossil fuels would). Crucially, Trump has indicated that he plans to do as much as possible not through the public sector but through public-private partnerships—which have a terrible track record for corruption, and may result in far lower wages than true public works projects would. Given Trump’s business record, and Pence’s role in the administration, there is every reason to fear that his big-ticket infrastructure spending could become a Katrina-like kleptocracy, a government of thieves, with the Mar-a-Lago set helping themselves to vast sums of taxpayer money.
New Orleans provides a harrowing picture of what we can expect when the next shock hits. But sadly, it is far from complete: there is much more that this administration may try to push through under cover of crisis. To become shock resistant, we need to prepare for that too.