Modern Capitalism, Neoliberialism, NeoColonialism

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AOC Calls Out Billionaires at MLK Day Event | NowThis

Table of Contents

Modern Capitalism

Neoliberalism

Neocolonialism

Disaster Capitalism


Modern Capitalism

 

 

Inequalities Today

 

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PEW: Seven-in-ten people globally live on $10 or less per day

Following his election in March 2013, Pope Francis wasted little time in conveying his great unease with the state of global poverty and inequality. He wrote:

“The need to resolve the structural causes of poverty cannot be delayed, not only for the pragmatic reason of its urgency for the good order of society, but because society needs to be cured of a sickness which is weakening and frustrating it, and which can only lead to new crises. … Inequality is the root of social ills.”

The urgency expressed by Pope Francis is grounded in harsh reality.

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The vast majority of the world’s population lives on a budget that falls well short of the poverty line in advanced economies. Specifically, 4.4 billion people – 71% of the global population of 6.2 billion – lived on $10 or less per day in 2011, according to a Pew Research Center analysis of the most recently available data.

In stark contrast, the poverty line in the U.S. was $15.77 per day per capita for a four-person household in 2011. Moreover, the median daily income of poor Americans was $11.45 per capita, greater than the income of more than seven-in-ten people globally. (All dollar figures are expressed in 2011 prices and purchasing power parities.)

In our report, we divided people who live on $10 or less daily into two groups: the global poor, who live on $2 or less per day, and the global low-income population that lives on $2 to $10 per day. By this standard, the majority of the global population (3.4 billion, or 56%) is low income. A billion more people, 15% of the global population, are poor.

In a historic achievement, economic growth pulled 669 million people out of poverty from 2001 to 2011. As a result, the share of the world’s population that lived on $2 or less per day was cut in half, from 29% to 15%.

To a large extent, however, this merely served to boost the size of the next tier up – the low-income population – which increased by 694 million from 2001 to 2011. And many of the newly minted members of the low-income population are at the edge of the global poverty line, living on about $3 daily, perhaps only an economic shock from slipping back into poverty.

A closer look at where in the world poor and low-income people live, and where high-income people live, reveals a wide gulf across regions.

In 2011, 90% of poor and low-income people lived in Africa and Asia-South Pacific (South Pacific includes Australia and Fiji). On the other hand, only 4% of those managing on $10 or less daily lived in North America and Europe. By comparison, about three-quarters (74%) of the global population lives in Africa and Asia-South Pacific and 19% lives in North America and Europe. (See our report for a list of countries included in each region.)

Our report categorized people as high-income if their daily budget exceeded $50. This is not a big leap for advanced economies – the median income in many such countries is greater. However, only 9% of the global high-income population lives in Africa and Asia-South Pacific, compared with 87% in North America and Europe.

The divide between the global “haves” and “have-nots” also has not closed in the 21st century. In 2001, 86% of the world’s poor and low-income people lived in Africa and Asia-South Pacific, compared with 7% in North America and Europe. At the same time, only 6% of high-income people lived in Africa and Asia-South Pacific, compared with 91% in North America and Europe.

The living standards within most African and Asian nations point to deep levels of impoverishment. In 18 of the 28 countries in Asia-South Pacific covered in the Pew Research study, nearly eight-in-ten people or more were either poor or low income in 2011. This group includes India, where 97% of the population is poor or low income, and China, where the share is 78%.

Conditions within Africa point to even more deprivation. In 24 of 30 African countries included in the study, at least nine-in-ten people were poor or low income in 2011. That was the case in, for example, Nigeria, where 98% of the population was poor or low income in 2011, and Kenya, where it was true for 93% of the population.

It is impossible to know if and when Pope Francis’ wish for an end to global poverty and inequality will be fulfilled. Other recent Pew Research surveys find optimism among people in Africa, India and China about their economic futures. But it is not unbridled enthusiasm. Most Africans recognize the challenges ahead, including the need for improvement in health care and education. In India, there’s concern about lack of employment opportunities and rising prices. And in China, inflation, corruption and inequality top the list of public concerns.

“When you only consider what the world looked during our life time it is easy to think of the world as static – the rich, healthy and educated parts of the world here and the poor, uneducated, sick regions there – and to falsely conclude that it always was like that and that it always will be like that….

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… That it is possible to make progress against poverty is important to know because even after two centuries of progress poverty remains one of the very largest problems in the world. The the majority of the world population still lives in poverty: Every tenth person lives on less than $1.90 per day and two-thirds live on less than $10 per day. Much more progress is needed.” Our World in Data

“Each day, 25,000 people, including more than 10,000 children, die from hunger and related causes. Some 854 million people worldwide are estimated to be undernourished, and high food prices may drive another 100 million into poverty and hunger.” UN Chronicle: Losing 25,000 to Hunger Every Day

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The total wealth of the Forbes 400 reached $2.4 trillion in 2016. It was $1 trillion in 1998. The graph plots the net worth of the Forbes 400 in real 2016 dollars. In 2016, a net worth of $1.7 billion was required to join the Forbes 400. Not making the list were 153 billionaires.
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Source: Forbes Magazine, October, Forbes 400 issues published annually in October since 1982.

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Environmental Crisis

World Crunch: Colonialism, The Hidden Cause Of Our Environmental Crisis

They may only be a few short sentences, but they have sparked strong reactions among critics of Greta Thunberg, the Swedish teenager who became a figurehead for the climate movement.

On Nov. 9, 2019, an article entitled “Why we strike again,” written by Thunberg and two others, claimed, “The climate crisis is not just about the environment. It is a crisis of human rights, of justice, and of political will. Colonial, racist, and patriarchal systems of oppression have created and fueled it. We need to dismantle them all. Our political leaders can no longer shirk their responsibilities.”

The article takes up one of the arguments of de-colonial environmentalism: that the climate crisis is linked to the history of slavery and colonialism by the Western powers.

Since the 1970s, African-American researchers have made the link between the environment and colonialism. “The real solution to the environmental crisis is the decolonization of the black race,” Nathan Hare wrote in 1970. Five years later, sociologist Terry Jones spoke of “apartheid ecology,” a concept that would be further developed in the 1990s by Latin American decolonial thinkers at American universities, such as Walter Mignolo at Duke (North Carolina), Ramón Grosfoguel at Berkeley (California) or Arturo Escobar at the University of North Carolina.

“The true beginning of the Anthropocene is the European colonization of America. This major historical event, which had dramatic consequences for the Native American people and founded a capitalist world economy, has also left its mark on our planet’s geology,” write researchers Christophe Bonneuil and Jean-Baptiste Fressoz in The Shock of the Anthropocene: The Earth, History and Us, alluding to the work of British geographers Simon Lewis and Mark Maslin.”

“Bringing together flora and fauna from the Old and New Worlds completely transformed agriculture, botany and zoology across the globe, with life forms that had been separated by the break-up of Pangaea and the creation of the Atlantic Ocean 200 million years before suddenly mixing once again,” they add.

In France, researchers are seeking to show how the slave trade, slavery and the conquest and exploitation of colonies allowed capitalism to become structured around an economy of extraction. This destructive way of inhabiting our planet is responsible for ushering in a new geological epoch characterized by human industrial activity: the Anthropocene.

For decolonial thinkers, it isn’t humans (anthropos) as such who are responsible for climate change, but a certain kind of human activity linked to Western capitalism. They claim that the current environmental crisis is therefore a direct consequence of colonial history.

The populations of less economically developed countries are not responsible, but they are the ones who suffer. In a study published by the American journal PNAS in May 2019, climatologist Noah Diffenbaugh claimed that “most of the poor countries on Earth are considerably poorer than they would have been without global warming. At the same time, most of the rich countries are richer than they would have been.”

To highlight how the roots of the climate crisis lie in slavery and colonialism, researchers Donna Haraway, Nils Bubandt and Anna Tsing coined the term “plantationocene.”

“It describes the devastating transformation of different types of pasturage, cultures and forests into closed, extractive plantations, which are founded on the work of slaves and other forms of work that involve exploitation, alienation and generally spatial displacement,” Donna Haraway explained in a 2019 interview with Le Monde. “[It reminds us that] this model of establishing plantations on a large scale preceded industrial capitalism and allowed it to develop, accumulating wealth on the back of human beings reduced to slavery. From the 15th to 19th century, sugar cane plantations in Brazil, then in the Caribbean, were closely linked to the development of mercantilism and colonialism.”

We exploit both the land and the people for the sake of consumerism and pleasure somewhere far away. Establishing monocultures that destroyed biodiversity and were responsible for soil impoverishment was achieved through massive deforestation. In the Caribbean, the effects are still being felt to this day. In his essay Decolonial ecology, Malcom Ferdinand, a researcher at the French national research center CNRS, explains that the plantationocene allows us to contextualize and historicize the Anthropocene and the capitalocene so that “the genocide of Native Americans, the enslavement of Africans and their resistance are included in the geological history of the Earth.”

Marked by a “double fracture, colonial and environmental,” the modern era created a “colonial way of living” and an “Earth without people,” says Malcom Ferdinand. On one side, there is a dominant population, that of the West. On the other, there are dominated populations, considered to be too numerous and exploitable. This separation between the “zone of being” and the “zone of nonbeing” remains in place today through the global economy of extraction, of intensive monocultures and ecocides, leading to spatial injustices: We exploit both the land and the people for the sake of consumerism and pleasure somewhere far away.

For Ferdinand, the other face of the plantation is “the politics of the hold” — a reference to the slave ships — where a minority saps the vital energy from a majority and profits materially, socially and politically from the “Negro,” a human reduced to a tool for working the soil.

“Since the 1970s,” Ferdinand told Le Monde, “African-American researchers have noted that toxic waste has been disposed of near areas inhabited by black communities. They have named this practice of exposing racial minorities to environmental dangers ‘environmental racism.'” An example is the string of industrial plants between Baton Rouge and New Orleans (Louisiana), nicknamed Cancer Alley, which is home to a mainly black population that settled there after slavery and segregation and has a cancer rate that is sometimes 60 times greater than the national average.

Cancer Alley in 1972 — Source: National Archives at College Park

Ferdinand also points out that in France, nuclear tests were not carried out on French soil but in Algeria and Polynesia. The researcher also highlights how Martinique and Guadeloupe have been contaminated by the use of the toxic pesticide Chlordecone in banana production, saying that it is another chapter in the history of an “agricultural process led by a small number of individuals belonging to the Creole communities descended from the first slave-owning colonists in the French Antilles,”

“The decolonial approach allows us to move beyond the double fracture, colonial and environmental. It seeks to create a more egalitarian, more just world, and to do that we must reconsider things that have been silenced,” Ferdinand explains.

That is one of the basic principles of decolonial ecology: placing value on different, often ancestral, ways of inhabiting the world, which have been damaged by colonization, idealized or turned into folklore.

In Latin America, where the current decolonial theory was born, thinkers such as Ecuadorian economist Alberto Acosta Espinosa are calling for a new relationship with the Earth and with others. They call it “buen vivir” (living well), and it’s inspired by a Quechua concept of “feeling-thinking with the Earth” that was also developed by American-Colombian anthropologist Arturo Escobar. It calls into question the Western worldview — which separates nature and culture, body and spirit, emotion and reason — and transforms the universal into the “pluriversal,” a version of universality that accommodates differences.

These new ways of inhabiting the world also model themselves on “diplomatic cosmology,” says Bolivian researcher Diego Landivar, referring to the Bolivian constitution put forward by former president Evo Morales, who recognized the Pachamama (Mother Earth) as a legal subject. Ecuador also made nature a legal subject, and the Vilcabamba River won a case against the Loja municipality, which was accused of depositing large quantities of rock and excavation material in the river.

Decolonial ecology establishes new, non-extractive horizons: It’s an ecology of renouncement.  Decolonial thinking invites us to bring together local knowledge with scientific and technological research. This was also the recommendation of a 2019 report by the Intergovernmental Panel on Climate Change, which called for the promotion of agroecology. The UN Food and Agriculture Organization agrees. Considering native beliefs and practices sometimes means not exploiting certain natural resources. In Australia, for example, Aboriginal communities brought an end to tourism on Uluru (Ayers Rock), a sacred site that attracted 300,000 visitors per year.

“Decolonial ecology establishes new, non-extractive horizons: It’s an ecology of renouncement,” says Diego Landivar. “In the Western worldview, if we can think of something, we can do it. Today, we are even thinking about colonizing Mars. But I don’t believe we can colonize the moon, the sky, Mars, simply because they are empty.”

Coumba Sow, agro-economist at the FAO, says that local traditional knowledge often allows us to better understand natural phenomena and find effective solutions. In a 2019 interview with Le Monde Africa, she recalled the experience of Yacouba Sawadogo, who “since 1980 has been using an ancestral farming technique, zaï, which involves creating stone barriers to stop water from flowing, and also uses the channels dug by termites to collect water. In this way, he reclaimed tens of thousands of hectares from the Sahara desert.”

According to Coumba Sow, “many studies show that the local farmers who use agro-ecological practices are not only better able to resist but also to prepare for climate change, as they don’t lose as much of their harvest to drought… Traditionally, humans cultivate the land according to the same ecological principles that agro-ecology promotes, principles that are anchored in indigenous farming practices.”

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The Wealth Divide of Modern Capitalism

Exploitation of Labor

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PEW: For most U.S. workers, real wages have barely budged in decades

YahooNews: Minimum wage hasn’t been raised for the longest time in history

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Yahoo: Not just Amazon: 60 big companies paid $0 in taxes under Trump law

The Guardian: How much does union membership benefit America’s workers?

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Forbes: U.S. Inequality, Wage Stagnation Tied To Falling Union Membership In The Private Sector

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Trae Crowder Full time workers deserve to be paid living wages

NY Times: The Rich Really Do Pay Lower Taxes Than You

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VOX: Who pays the lowest taxes in the US?

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Upper Class Wealth

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INEQUALITY FOR ALL – Official Trailer

Full Movie

Interactive Graphic that Shows Wealth Shown to Scale

 

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Common Dreams: ‘Eye-Popping’: Analysis Shows Top 1% Gained $21 Trillion in Wealth Since 1989 While Bottom Half Lost $900 Billion

“The top one percent owns nearly $30 trillion of assets while the bottom half owns less than nothing.”

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“But there are times, typically in the midst of a crisis, when the true character of our society reveals itself and the brutality of our social hierarchy is laid bare . . .

You do not have a society with 607 billionaires, fully 200 more billionaires than there were in 2010, without having crushing poverty. There are 38 million people living in poverty in the US because there are 600 billionaires. They are wealthy because of low wages . . . because of the absence of sick days . . . because of homelessness . . . because of foreclosures . . . because of evictions. Then, some of them will become wealthy, and even wealthier, because of coronavirus . . .

But there has never been a single moment in the history of this country where capitalism has not created enormous misery and oppression for tens of millions of ordinary people . . .

In fact there has been no golden age of American capitalism. It has been an unbroken cycle of extraction, poverty, racism, sexism, oppression, exploitation, and struggle . . .

In reality the only forward movement has come through struggle . . . ” Keeanga-Yamahtta Taylor

AJ: Why Even Good Billionaires Are Bad

Further Reading

 


Neoliberalism

 

 

 


Neocolonialism

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Neo-Colonialism

  • Although the effects of colonialism can still be felt in many societies
    • “official” and “legal” colonialism has ended for the majority of the countries in the world
      • But this didn’t end the exploitation of poor countries by colonial powers
    • Exploitation continues in more clandestine and market based forms
      • Called Neo-colonialism

“The key to properly solving a problem is identifying its root. This is the starting point of any fruitful dialogue…when referring to colonialism and racism, I do not speak of things of the past. Colonialism and racism have been succeeded by neo-colonialism and new forms of racism.” Frank Addo – Face2Face Africa

 

 

“the use of economic, political, cultural, or other pressures to control or influence other countries, especially former dependencies” Oxford Dictionary

Neocolonialism, neo-colonialism or neo-imperialism is the practice of using capitalism, globalization and cultural imperialism to influence a developing country in lieu of direct military control (imperialism) or indirect political control (hegemony). It was coined by Kwame Nkrumah in the context of African countries undergoing decolonization in the 1960s.” Wikipedia

“The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and the poor countries of the world… The struggle against neo-colonialism is not aimed at excluding the capital of the developed world from operating in less developed countries. It is aimed at preventing the financial power of the developed countries being used in such a way as to impoverish the less developed” Kwame Nkrumah

“The dominance of developed nations over developing nations by economic and cultural influence versus traditional colonialism in which dominance is asserted through direct political control” Brittany Malcolm

What is neocolonialism?

Kwame Nkrumah (1965): Neo-Colonialism, the Last Stage of imperialism

“The neo-colonialism of today represents imperialism in its final and perhaps its most dangerous stage. In the past it was possible to convert a country upon which a neo-colonial regime had been imposed — Egypt in the nineteenth century is an example — into a colonial territory. Today this process is no longer feasible. Old-fashioned colonialism is by no means entirely abolished. It still constitutes an African problem, but it is everywhere on the retreat. Once a territory has become nominally independent it is no longer possible, as it was in the last century, to reverse the process. Existing colonies may linger on, but no new colonies will be created. In place of colonialism as the main instrument of imperialism we have today neo-colonialism.

The essence of neo-colonialism is that the State which is subject to it is, in theory, independent and has all the outward trappings of international sovereignty. In reality its economic system and thus its political policy is directed from outside.

The methods and form of this direction can take various shapes. For example, in an extreme case the troops of the imperial power may garrison the territory of the neo-colonial State and control the government of it. More often, however, neo-colonialist control is exercised through economic or monetary means. The neo-colonial State may be obliged to take the manufactured products of the imperialist power to the exclusion of competing products from elsewhere. Control over government policy in the neo-colonial State may be secured by payments towards the cost of running the State, by the provision of civil servants in positions where they can dictate policy, and by monetary control over foreign exchange through the imposition of a banking system controlled by the imperial power.

Where neo-colonialism exists the power exercising control is often the State which formerly ruled the territory in question, but this is not necessarily so. For example, in the case of South Vietnam the former imperial power was France, but neo-colonial control of the State has now gone to the United States. It is possible that neo-colonial control may be exercised by a consortium of financial interests which are not specifically identifiable with any particular State. The control of the Congo by great international financial concerns is a case in point.

The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and the poor countries of the world.

The struggle against neo-colonialism is not aimed at excluding the capital of the developed world from operating in less developed countries. It is aimed at preventing the financial power of the developed countries being used in such a way as to impoverish the less developed…

…In the first place, the rulers of neo-colonial States derive their authority to govern, not from the will of the people, but from the support which they obtain from their neo-colonialist masters. They have therefore little interest in developing education, strengthening the bargaining power of their workers employed by expatriate firms, or indeed of taking any step which would challenge the colonial pattern of commerce and industry, which it is the object of neo-colonialism to preserve. ‘Aid’, therefore, to a neo-colonial State is merely a revolving credit, paid by the neo-colonial master, passing through the neo-colonial State and returning to the neo-colonial master in the form of increased profits.

Secondly, it is in the field of ‘aid’ that the rivalry of individual developed States first manifests itself. So long as neo-colonialism persists so long will spheres of interest persist, and this makes multilateral aid — which is in fact the only effective form of aid — impossible.

Once multilateral aid begins the neo-colonialist masters are faced by the hostility of the vested interests in their own country. Their manufacturers naturally object to any attempt to raise the price of the raw materials which they obtain from the neo-colonialist territory in question, or to the establishment there of manufacturing industries which might compete directly or indirectly with their own exports to the territory. Even education is suspect as likely to produce a student movement and it is, of course, true that in many less developed countries the students have been in the vanguard of the fight against neo-colonialism.

In the end the situation arises that the only type of aid which the neo-colonialist masters consider as safe is ‘military aid’.

Once a neo-colonialist territory is brought to such a state of economic chaos and misery that revolt actually breaks out then, and only then, is there no limit to the generosity of the neo-colonial overlord, provided, of course, that the funds supplied are utilised exclusively for military purposes.

Military aid in fact marks the last stage of neo-colonialism and its effect is self-destructive. Sooner or later the weapons supplied pass into the hands of the opponents of the neo-colonialist regime and the war itself increases the social misery which originally provoked it.”

Types of Neo-Colonialism


Economic

  • World Bank Loans and IMF restructuring adjustment program (SAP)
    • Large loans, with high interest rates given to often corrupt poor governments who often can’t pay it back.
    • Countries defaulting must take IMF (International Monetary Fund) structural adjustment program (SAP) with neo-liberial requirements:
      • Austerity, or cutting government expenditures such as social programs
      • Focusing economic output on direct export and resource extraction
      • Trade liberalization, or lifting import and export restrictions
      • Removing price controls and state subsidies
      • Privations of all or part of state-owned enterprises
      • Enhancing the rights of foreign investors over national laws
      • Slimming down public bureaucracies and general downsizing of government
      • Implementation of fee-for service regimes in education and healthcare
  • Resource Exploitation
    • Western industries often support/protect/bribe/create corrupt governments with exploitative labor markets to get access to cheap raw, often untaxed, resources in developing countries
    • Instead of processing and benefiting the local economies the raw materials are often shipped to western countries to process and sell, capturing the majority of the profits
      • Leaving the poorer countries that own most of the raw wealthy minerals, receiving little to no benefit
  • Unequal exchange
    • Liberal economics theories claim that trade is a win-win situation
    • In reality many factors often make trade exploitative with unequal competition and dissimilar bargaining powers.
      • These factors between trading nations include:
        • Colonial/neo-colonial power relations that cause exploitation in trade of poorer countries
        • Unequal manufacturing power of rich countries causing poorer countries to undervalue the goods they sell and to buy goods above their value
        • Unequal labor wages and rights in poorer countries resulting in less economic benefit of poorer countries when trading with richer countries
        • The social cost of trade in terms of damage to the environment and human rights is much greater in poorer countries.
  • Free Trade Agreements
    • Free Trade Agreements such NAFTA, CAFTA, FTAA, TPP are often negotiated by powerful multinational companies and rich countries without any regard for poor workers or the poor people who live near manufacturing
      • Often remove local human and environmental rights protections to increase productivity at great cost to poorer countries.

Mallence Bart Williams: Africa Exploitation

CNN: Why the wealth of Africa does not make Africans wealthy

“Katanga province in the Democratic Republic of Congo is blessed with enormous natural wealth, including vast deposits of precious minerals such as diamonds, gold, and tantalum. Katanga saw a spectacular mining boom around the turn of the century, when President Laurent-Desire Kabila and then his son Joseph licensed international mining companies to tap its treasures.

This arrangement generated riches for the Congolese elite, and vastly more for the prospectors, but offered little to the poverty-ravaged population. From 1999 to 2002, the Kabila regime “transferred ownership of at least $5 billion of assets from the state-mining sector to private companies under its control… with no compensation or benefit for the State treasury,” a United Nations investigation found.

The bonanza coincided with a ruthless crackdown on dissent. In 2004, a small, mostly civilian group took over a mine operated by the Australian firm Anvil Mining in Kilwa village, protesting that the company was making huge profits without rewarding the local workforce. According to a UN report, the Congolese army crushed the uprising and killed around 100 people, many by summary execution.

Modern colonialism

The combination of staggering wealth, rampant violence, and abject poverty in DR Congo is no coincidence, but part of a pattern causing devastation across Africa, according to Financial Times investigative journalist Tom Burgis. In a new edition of his book The Looting Machine, the author probes the paradox of “the continent that is at once the world’s poorest and, arguably, its richest.”
Burgis, a former correspondent in Lagos and Johannesburg, finds a wide variety of kleptocrats and rackets over his travels through dozens of resource-rich countries. But a common thread is that the wholesale expropriation of resources during colonial times has barely slowed through the post-independence era, albeit with new beneficiaries.
“Western governments are not supposed to wield commercial and political power at the same time, and certainly not to use one to benefit the other,” says Burgis. “In colonial states…The British or Portugese would cultivate a small group of local people who would fuse political and commercial power to control the economy.”
“When the foreign power leaves, you are left with an elite that has no division between political and commercial power. The only source of wealth is mines or oilfields, and that is a recipe for ultra-corrupt states. Somewhere like Nigeria, an ‘extractor elite’…wanted to draw to itself the rent that oil and mining resources generate.”

Burgis cites another colonial hangover in the continued presence and power of oil and mining firms. “The multinational companies hold enormous economic and political power in post-independence African countries,” he says. “In this way, there is a pretty straight line from colonial exploitation to modern exploitation.”

Secret deals

The growth of offshore banking in the late 20th century created new opportunities for resource tycoons to cover their tracks, a practice laid bare in the Panama Papers.
Israeli businessman Dan Gertler was an early pioneer. After forging a close friendship with DR Congo President Joseph Kabila, he was granted a near monopoly on exporting the nation’s diamonds, and quickly became a billionaire. Gertler routed the cash through an elaborate network of offshore accounts in tax havens, keeping the details of controversial deals secret.
“In the case of African resource deals, offshore funds have been shown to conceal questionable transactions,” says Burgis. “In the 1980s, bribes were literally cars full of cash and you handed the key to the official you were trying to bribe.””Bribery now is much more sophisticated, and has become harder to define as bribery if it’s (through) offshore transactions or people being given equity shares in offshore companies…You have to crack open a lot of offshore secrecy to see the conflict of interest that lies at the heart of them.”
The era of global finance has opened African markets to a new generation of mysterious traders. Burgis spent years on the trail of elusive Chinese businessman Sam Pa, who has cycled through multiple aliases while making deals across the continent from Angolan oil to Zimbabwean diamonds. Pa is believed to lead the secretive Queensway investor group, and Burgis claims he has represented the Chinese state, although the government denies this…
…Responsibility for the plight of resource-dependent nations goes beyond traders and dictators. The global economy still requires a huge supply of raw materials that originate in Africa, creating an imperative to maintain the existing, destructive model. “

The Why: Stealing Africa

Al-Jazeera: Africa is not poor, we are stealing its wealth

Africa is poor, but we can try to help its people.

It’s a simple statement, repeated through a thousand images, newspaper stories and charity appeals each year, so that it takes on the weight of truth. When we read it, we reinforce assumptions and stories about Africa that we’ve heard throughout our lives. We reconfirm our image of Africa.

Try something different. Africa is rich, but we steal its wealth.

INFOGRAPHIC: Mapping Africa’s natural resources

That’s the essence of a report (pdf) from several campaign groups released today. Based on a set of new figures, it finds that sub-Saharan Africa is a net creditor to the rest of the world to the tune of more than $41bn. Sure, there’s money going in: around $161bn a year in the form of loans, remittances (those working outside Africa and sending money back home), and aid.

But there’s also $203bn leaving the continent. Some of this is direct, such as $68bn in mainly dodged taxes. Essentially multinational corporations “steal” much of this – legally – by pretending they are really generating their wealth in tax havens. These so-called “illicit financial flows” amount to around 6.1 percent of the continent’s entire gross domestic product (GDP) – or three times what Africa receives in aid.

Then there’s the $30bn that these corporations “repatriate” – profits they make in Africa but send back to their home country, or elsewhere, to enjoy their wealth. The City of London is awash with profits extracted from the land and labour of Africa.

OPINION: Africa’s natural resources – From curse to a blessing

There are also more indirect means by which we pull wealth out of Africa. Today’s report estimates that $29bn a year is being stolen from Africa in illegal logging, fishing and trade in wildlife. $36bn is owed to Africa as a result of the damage that climate change will cause to their societies and economies as they are unable to use fossil fuels to develop in the way that Europe did. Our climate crisis was not caused by Africa, but Africans will feel the effect more than most others. Needless to say, the funds are not currently forthcoming.In fact, even this assessment is enormously generous, because it assumes that all of the wealth flowing into Africa is benefitting the people of that continent. But loans to governments and the private sector (at more than $50bn) can turn into unpayable and odious debt.

Ghana is losing 30 per cent of its government revenue to debt repayments, paying loans which were often made speculatively, based on high commodity prices, and carrying whopping rates of interest. One particularly odious aluminium smelter in Mozambique, built with loans and aid money, is currently costing the country £21 for every £1 that the Mozambique government received.

British aid, which is used to set up private schools and health centres, can undermine the creation of decent public services, which is why such private schools are being closed down in Uganda and Kenya. Of course, some Africans have benefitted from this economy. There are now around 165,000 very rich Africans, with combined holdings of $860bn.

But, given the way the economy works, where do these people mainly keep their wealth?

In tax havens.

A 2014 estimate suggests that rich Africans were holding a massive $500bn in tax havens. Africa’s people are effectively robbed of wealth by an economy that enables a tiny minority of Africans to get rich by allowing wealth to flow out of Africa.

So what is the answer? Western governments would like to be seen as generous beneficiaries, doing what they can to “help those unable to help themselves”. But the first task is to stop perpetuating the harm they are doing. Governments need to stop forcing African governments to open up their economy to privatisation, and their markets to unfair competition.

If African countries are to benefit from foreign investment, they must be allowed to – even helped to – legally regulate that investment and the corporations that often bring it. And they might want to think about not putting their faith in the extractives sector.

With few exceptions, countries with abundant mineral wealth experience poorer democracy, weaker economic growth, and worse development. To prevent tax dodging, governments must stop prevaricating on action to address tax havens. No country should tolerate companies with subsidiaries based in tax havens operating in their country.

Aid is tiny, and the very least it can do, if spent well, is to return some of Africa’s looted wealth. We should see it both as a form of reparations and redistribution, just as the tax system allows us to redistribute wealth from the richest to the poorest within individual societies. The same should be expected from the global “society”.

To even begin to embark on such an ambitious programme, we must change the way we talk and think about Africa. It’s not about making people feel guilty, but correctly diagnosing a problem in order to provide a solution. We are not, currently, “helping” Africa. Africa is rich. Let’s stop making it poorer.

What is UNEQUAL EXCHANGE? What does UNEQUAL EXCHANGE mean?

Political

  • Political Intervention
    • Western countries and industries have a long history of intervening in poorer countries political systems to protect their ability to exploit the poorer countries resources including:
      • Overthrowing democratic governments
      • Bribing and supporting corrupt governments
      • Installing puppet leaders and “Banana Republics”
    • Banana Republic
      • Politically unstable country with an economy dependent upon resource exportation, such as bananas or minerals
      • Often has a society of extremely stratified social classes
        • usually a large impoverished and exploited working class
        • Ruling-class plutocracy, composed of business, political, military elites
      • In 1901, the American author O. Henry coined the term to describe Honduras and neighboring countries under economic exploitation by U.S. corporations, such as the United Fruit Company

An Economic Hit Man Confesses and Calls to Action

Foreign Aid

  • Humanitarian Aid
    • Often treats symptoms not causes of poverty
      • Often helps preserve the exploitative systems that created the poverty in the first place
      • Often focused more on temporary relief, creating welfare states, supporting corrupt governments and securing neo-colonial economic and political control rather than supporting entrepreneurship, self-sufficiency and building local and fair economies
  • Gates Foundation
    • Positives
      • Has done a lot to improve public health
    • Negatives
      • Shifts power over public health decisions from public/local institutions to private/international institutions
      • Lobbies for stronger patent laws
        • which maintain the capitalistic power structure in public health
        • which often denies poor people access
      • “philanthropic interventions are ‘radically skewing public health programs towards issues of the greatest concern to wealthy donor “Issues” which are not necessarily top priority for people in the recipient country.” Devi Sridhar at Oxford University
        • For example the Gates Foundation provides considerable support to the WHO but only as earmarked funds for preconceived projects rather than the decisions of the World Health Assembly

Whats Wrong with International Aid?

Andrew Mwenda: Aid for Africa? No Thanks

Trade not Aid

New Internationalist: The flip side to Bill Gates’ charity billions

“Philanthropic funds are common among the super-rich in the US; they enable tax avoidance provided five per cent of net investment assets are given away annually. What quickly set Gates’ fund apart was its orientation towards the poor – rather than élite culture or religion – and its sheer size.

Targeting global health and US education, Gates’ giving rapidly ballooned into the billions. In 2006, his friend Warren Buffet (the business magnate currently ranked the world’s third richest person) pledged $31 billion in company stock to the Bill and Melinda Gates Foundation. Combined with Gates’ committed assets of over $30 billion, this made it arguably the biggest philanthropic venture ever. That year, its Global Development Programme extended its activities to agriculture and economic development and, with projects multiplying, Gates began working full-time on philanthropy in 2008.

In 2010, the Foundation gave $2.5 billion in grants – 80 per cent to international projects. In total it has disbursed over $26 billion, most of it to global health. To put these figures into perspective: since 1914 the Rockefeller Foundation has given $14 billion (adjusted to today’s values). Only the US and British governments give more to global health today. The World Health Organization (WHO ), meanwhile, operates on less than $2 billion a year.

The Foundation’s achievements are undoubtedly impressive. Through supporting vaccination programmes, for example, it claims to have saved nearly six million lives. With rich world enthusiasm for foreign aid wavering, on 26 January this year Gates committed a further $750 million to the Global Fund to Fight AIDS, Tuberculosis and Malaria – an organization he claims saves 100,000 lives a month. Admirers credit the Foundation with putting global health back on world leaders’ agendas and, through Gates’ Giving Pledge initiative, encouraging several other US multi-billionaires to pledge their wealth to charity. What’s not to like?

Accountable to whom?

Philanthropy – and particularly philanthropy on this scale – isn’t a black-and-white issue though, and important questions have been raised about the way the Foundation operates, and the impact of its work.

The first question concerns accountability. While only around five per cent of the Foundation’s annual global health funding goes directly to lobbying and advocacy, this money (over $100 million) talks loudly. Gates funds institutions ranging from US university departments to major international development NGOs. The Foundation is the main player in several global health partnerships and one of the single largest donors to the WHO. This gives it considerable leverage in shaping health policy priorities and intellectual norms.

Gregg Gonsalves, an experienced AIDS activist and co-founder of the International Treatment Preparedness Coalition, welcomes the Foundation’s funding, but is concerned about its power. ‘Depending on what side of bed Gates gets out of in the morning,’ he remarks, ‘it can shift the terrain of global health.’

The Foundation’s 26 strategies are reviewed annually, and although CEO Jeff Rakes stresses that it is making ‘a systematic effort to listen’ to grantees, Gonsalves and others are sceptical: ‘It’s not a democracy. It’s not even a constitutional monarchy. It’s about what Bill and Melinda want. We depend on them learning, and it’s not as if there are many points of influence for this.’

‘The Foundation is more than a collection of grants and projects,’ says Dr David McCoy, a public health doctor and researcher at University College London and an advisor to the People’s Health Movement. ‘Through its funding it also operates through an interconnected network of organizations and individuals across academia and the NGO and business sectors. This allows it to leverage influence through a kind of “group-think” in international health.’ In 2008 the WHO’s head of malaria research, Aarata Kochi, accused a Gates Foundation ‘cartel’ of suppressing diversity of scientific opinion, claiming the organization was ‘accountable to no-one other than itself’…

…Making greed good?

Coupled with a belief in science and innovation is Gates’ vision of ‘creative capitalism’. Setting out his approach at the 2008 World Economic Forum in Davos, he said: ‘There are two great forces: self-interest and caring for others.’ To reconcile the two, the Foundation pursues partnerships in which, guided by NGOs, academics and assorted ‘stakeholders’, donor funds are used to overcome the ‘market failures’ which deny the poor access to medicine, by paying pharmaceutical companies to sell their products cheaper and pursue research projects they would otherwise ignore.

Through GAVI, the Foundation claims to have lowered the costs of Hepatitis B inoculations by 68 per cent, and is supporting a $1.5 billion ‘advanced market commitment’ to develop pneumococcal vaccines.

For supporters, it’s a win-win: the poor get new medicines faster and cheaper; and, as the Financial Times explains, it’s a leg-up for pharmaceutical companies ‘seeking to expand into faster-growing, lower-income countries where they need to charge less and co-operate more’ to share the risks of development.

The arrangements have, however, created concerns. As Tido von Schoen Angerer, Executive Director of the Access Campaign at Médecins Sans Frontières, explains, ‘The Foundation wants the private sector to do more on global health, and sets up partnerships with the private sector involved in governance. As these institutions are clearly also trying to influence policymaking, there are huge conflicts of interests… the companies should not play a role in setting the rules of the game.’

The Foundation itself has employed numerous former Big Pharma figures, leading to accusations of industry bias. Many campaigners see loosening intellectual property laws as a better way of increasing access to medicines, both in lowering prices through generic competition and in enabling innovation outside patent-hoarding companies.

However, Microsoft lobbied vociferously for the World Trade Organization’s TRIPS agreement (the agreement on trade-related aspects of intellectual property), which obliges member countries to defend patents for a minimum of 20 years after the filing date. As recently as 2007, Microsoft was lobbying the G8 to tighten global intellectual property (IP) protection, a move that would, Oxfam said, ‘worsen the health crisis in developing countries’.

Philanthro-capitalism vs democracy?

Gates’ philanthropy seeks not just to make businesses more charitable, but to make charity more business-like. Dubbed ‘philanthrocapitalism’ or ‘venture philanthropy’, the approach is based on NGOs competing for grants with their performance evaluated using business metrics.

According to Gates, ‘our net effect should be to save years of life for well under $100; so, if we waste even $500,000, we are wasting 5,000 years of life.’ Under these terms, the best results are achieved through ‘vertically’ funded projects – interventions targeted at specific diseases or health problems, largely bypassing existing health systems. The pay-offs from ‘horizontal’ integration with public-health systems can, in contrast, be comparatively slow to materialize and hard to measure.

A study in the Lancet in 2009 showed only 1.4 per cent of the Foundation’s grants between 1998 and 2007 went to public-sector organizations, while of the 659 NGOs receiving grants, only 37 were headquartered in low- or middle-income countries.

In many Majority World countries, state healthcare was eviscerated by structural adjustment programmes enforced by the World Bank and International Monetary Fund, and by the continued loss of skilled personnel in globalized labour markets. Now, says McCoy, NGOs have stepped into the breach but have also created a ‘fragmented “patchwork quilt” landscape of healthcare provision’ which governments struggle to co-ordinate and align to national priorities…

…Research by Devi Sridhar at Oxford University warns that philanthropic interventions are ‘radically skewing public health programmes towards issues of the greatest concern to wealthy donors’. ‘Issues,’ she writes, ‘which are not necessarily top priority for people in the recipient country.’

The situation is replicated at an international level. With the rise of health partnerships, the proportion of global health funding channelled through the UN fell from 32 to 14 per cent between 1990 and 2008, placing major limits on the possibility for poorer nations to influence international health policy. Although the Gates Foundation provides considerable support to the WHO, the money is, as with much of the WHO’s funding nowadays, earmarked for preconceived projects rather than the decisions of the World Health Assembly.

For critics, then, the way ‘venture philanthropy’ focuses on measurable impact may obscure the less tangible, but equally important, goals of democracy and empowerment. As the philanthropy analyst Michael Edwards has asked: ‘Would philanthrocapitalism have helped fund the civil rights movement in the US? I hope so, but it wasn’t “data driven”, it didn’t operate through competition, it couldn’t generate much revenue, and it didn’t measure its impact in terms of the numbers of people who were served each day. Yet it changed the world forever.’

The fruit or the trees?

Mark Harrington, Director of the Treatment Action Group, an AIDS advocacy thinktank which has received Foundation money in the past, also feels that, ultimately, democratically accountable governments should solve global health problems, but that in the absence of their commitment there is a need for pragmatism.

‘Medical research and global health are both public goods: the benefits accrue to everyone, even though only some people pay for them. Industry will only do it if they see return on investment; and philanthropists, well, it’s better Gates doing this with his money than what the Koch brothers [funders of the rightwing Tea Party political movement in the US] are doing with theirs. Do I think it’s good that we live in a world where some people have so much money? Not really, but I don’t get to choose that. We have to work with the world the way it is.’

McCoy insists, however, that it is important to mount a challenge: ‘Appealing to the megarich to be more charitable is not a solution to global health problems. We need a system that does not create so many billionaires and, until we do that, this kind of philanthropy is either a distraction or potentially harmful to the need for systemic change to the political economy.’

Carlos Slim, the Mexican multi-billionaire who replaced Gates at the top the world’s richlist (due to Gates’ charity), likened philanthropy to owning an orchard: ‘You have to give away the fruit, but not the trees.’ He and Gates are products of an economic system that has produced monopolies and redistributed wealth upwards for 30 years. Parallels may be drawn between the inequalities of today and the Victorian era, when health provision for the poor depended on the largesse of the rich. Oscar Wilde observed of the philanthropists of that era: ‘They seriously and very sentimentally set themselves to the task of remedying the evils that they see in poverty, but their remedies do not cure the disease: they merely prolong it.’ Then and now, as Wilde said, ‘the proper aim is to try and reconstruct society on such a basis that poverty will be impossible.’”

Further Readings

VOA: Food Aid Hurts Haiti’s Farmers


Disaster Capitalism

“the practice (by a government, regime, etc) of taking advantage of a major disaster to adopt liberal economic policies that the population would be less likely to accept under normal circumstances” dictionary.com

Naomi Klein: Shock Doctrine

“The Shock Doctrine is the gripping story of how America’s “free market” policies have come to dominate the world– through the exploitation of disaster-shocked people and countries.

At the most chaotic juncture in Iraq’s civil war, a new law is unveiled that would allow Shell and BP to claim the country’s vast oil reserves…. Immediately following September 11, the Bush Administration quietly out-sources the running of the “War on Terror” to Halliburton and Blackwater…. After a tsunami wipes out the coasts of Southeast Asia, the pristine beaches are auctioned off to tourist resorts…. New Orleans’s residents, scattered from Hurricane Katrina, discover that their public housing, hospitals and schools will never be reopened…. These events are examples of “the shock doctrine”: using the public’s disorientation following massive collective shocks – wars, terrorist attacks, or natural disasters — to achieve control by imposing economic shock therapy. Sometimes, when the first two shocks don’t succeed in wiping out resistance, a third shock is employed: the electrode in the prison cell or the Taser gun on the streets.”

Disaster Capitalism’: Puerto Rico mulls utility privatisation

The Battle for Paradise: Naomi Klein Reports from Puerto Rico

Gentrification is a form of Disaster Capitalism

“In September 2005, the New Orleans real-estate developer Finis Shelnutt told a German newspaper of the opportunities Hurricane Katrina had created for his business. “The storm destroyed a great deal,” he said, just weeks after Katrina had killed more than one thousand people and expelled tens of thousands more from the city. “And there’s plenty of space to build houses and sell them for a lot of money.” Moreover, he added, “the hurricane drove poor people and criminals out of the city, and we hope they don’t come back.” Colin Kinniburgh – New Republic

  • In 2005 Hurricane Katrina displaced 250,000 people
    • FEMA vouchers offered one-way tickets out
      • sending people to Houston, Atlanta, Baton Rouge, Utah and Minnesota
    • The displaced were overwhelmingly black, and many never came back
      • By 2015 New Orleans has 100,000 fewer black residents than it did in 2000
    • City’s demographics shifted, as developers courted wealthier, whiter residents who could stomach the higher rents.
    • Today 35% of New Orleanians devote at least half of their income to rent
      • the city has become the second-least affordable city to live in nationwide

Guardian: Naomi Klein: how power profits from disaster

“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 getting a glimpse of the 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 Donald Trump speak, with his obvious relish in creating an atmosphere of chaos and destabilisation, I often think: I’ve seen this before, 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 started to notice the same tactics in disaster zones around the world. I used the term “shock doctrine” to describe the brutal tactic of using the public’s disorientation following a collective shock – wars, coups, terrorist attacks, market crashes or natural disasters – to push through radical pro-corporate measures, often called “shock therapy”. Though Trump breaks the mould in some ways, his shock tactics do follow a script, and one that is familiar from other countries that have had rapid changes imposed under the cover of crisis.

The Republicans under Donald Trump are already seizing the atmosphere of constant crisis that surrounds this presidency to push through as many unpopular, pro-corporate policies. And we know they would move much further and faster given an even bigger external shock. We know this because 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

Rex Tillerson, the 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 US 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 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 Exxon and Mobil 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 has gone a long way towards barring 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 US, CoreCivic (formerly the Corrections Corporation of America) and the Geo Group, doubled, soaring by 140% and 98%, 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 US, the Immigration and Customs Enforcement agency (Ice) incarcerates up to 34,000 immigrants thought to be in the country illegally on any given day, and 73% 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 Trump’s new attorney general, Jeff Sessions, did was rescind the Obama administration’s decision to move away from for-profit jails for the general prison population.

Trump appointed as deputy defence 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 defence programme – 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 Interceptin March 2017, “President Donald Trump has weaponised the revolving door by appointing defence contractors and lobbyists to key government positions as he seeks to rapidly expand the military budget and homeland security programmes … At least 15 officials with financial ties to defence 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 $80bn 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, such as 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 specialise in functions that, not so long ago, it would have been unthinkable to outsource. His National Security Council chief of staff, for instance, is retired Lt Gen 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[ed] 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: L-1 Identity Solutions (specialising in biometrics), the Chertoff Group (founded by George W 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, lobbyists and staffers from these firms are now migrating back to government, where they will very likely push for even more opportunities to monetise the hunt for people 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”.

And then there’s vice-president Mike Pence, seen by many as the grownup 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 affected 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 defence. 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, 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 such as this is the Federal Emergency Management Agency (Fema), 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 organiser, 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 defences 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.

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 pleaded guilty, and the city came to a $13.3m 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 AC Thompson, for “the opportunity to hunt black people”.

I was in New Orleans during the flooding and I saw for myself how amped up the police and military were – not to mention private security guards from companies such as 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 organise 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 wishlist with maximum velocity. The famed free-market economist Milton Friedman, then 93 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 camping bed in some cavernous convention centre, 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 houses 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 13 September 2005 – just 15 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” – 32 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 labour 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 suspend the obligation for federal contractors to pay a living wage; make the entire affected area a free-enterprise zone; and “repeal or waive restrictive environmental regulations … that hamper rebuilding”. In other words, a war on the kind of red tape designed to keep communities safe from harm.

President Bush adopted many of the recommendations within the week, although, under pressure, he was eventually forced to reinstate the labour standards. Another recommendation called for giving parents vouchers to use at private and charter schools (for-profit schools subsidised with tax dollars), a move perfectly in line with the vision held by Trump’s pick for education secretary, Betsy DeVos. Within the year, the New Orleans school system became the most privatised in the US.

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 US, 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” travellers 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 gang of contractors who had descended on Baghdad when war broke out – Bechtel, Fluor, Halliburton, Blackwater, CH2M Hill and Parsons, infamous for its sloppy Iraq work – now arrived in New Orleans. They had a singular vision: to prove that the kinds of privatised services they had been providing in Iraq and Afghanistan also had an ongoing domestic market – and to collect no-bid contracts totalling $3.4bn.

The controversies were legion. Relevant experience often appeared to have nothing to do with how contracts were allocated. Take, for example, the company that Fema paid $5.2m 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 organise 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 sq ft 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 $2 per sq ft.

“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 non-existent 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 $40bn from the federal budget. Among the programmes that were slashed: student loans, Medicaid and food stamps.

So, the poorest people in the US subsidised 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 programmes that 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 freefall 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 privatised disaster response being adopted on a national scale.

The presence of highly militarised 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 $1tn in infrastructure spending. That spending will fix some roads and bridges, and it will create jobs. 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 might try to push through under cover of crisis. To become shock-resistant, we need to prepare for that, too.

Shock Doctrine: A Look at the Mass Privatization of NOLA Schools in Storm’s Wake & Its Effects Today

New Republic: How to Stop Gentrification

“In September 2005, the New Orleans real-estate developer Finis Shelnutt told a German newspaper of the opportunities Hurricane Katrina had created for his business. “The storm destroyed a great deal,” he said, just weeks after Katrina had killed more than one thousand people and expelled tens of thousands more from the city. “And there’s plenty of space to build houses and sell them for a lot of money.” Moreover, he added, “the hurricane drove poor people and criminals out of the city, and we hope they don’t come back.”…

…At the other end of the process, Moskowitz adds “stage zero”: a crisis that opens the door to sudden change. In New Orleans, Moskowitz argues, it was Hurricane Katrina; in Detroit, it was the 2013 municipal bankruptcy that allowed Michigan Governor Rick Snyder to install an unelected emergency manager with powers over the city government. While the “stage zero” chronology doesn’t always hold up (many Detroit gentrifiers, from the aspiring urban farmers to Quicken Loans’ Dan Gilbert, set their sights on the city long before it officially went bankrupt), Moskowitz makes a strong case for the broader logic: Gentrification, at its most elemental, is a form of disaster capitalism, and its widely bemoaned cultural flourishes mostly just add insult to debilitating injury.

The New Orleans case is perhaps the most extreme. Half of the city was still underwater when developers, politicians, and pundits alike began celebrating the unique opportunity Katrina provided. Nearly half of the city’s population—some 250,000 people—was displaced as a result of the storm, and columnists like David Brooks encouraged them to stay out while the city lured in more “ambitious and organized” people to take their place. Federal agencies, consciously or not, fulfilled Brooks’s prescription: FEMA vouchers offered one-way tickets out, sending people to Houston, Atlanta, Baton Rouge, even as far as Utah and Minnesota rather than sponsoring their return home. The displaced were overwhelmingly black, and tens of thousands of them never came back. As of 2015, New Orleans has some 100,000 fewer black residents than it did in 2000.

This wholesale displacement of one-fifth of the city’s population created the kind of opening that real-estate developers and their political allies could only dream of in other cities. Property values were at a low, and the potential for remaking the city unprecedented. What Marxist geographer Neil Smith called the “rent gap”—the difference between the current value of a property and its potential value—was at an all-time high across much of the city. Little surprise, then, that the city’s demographics shifted, as developers courted wealthier, whiter residents who could stomach the higher rents. Today, with some 35 percent of New Orleanians devoting at least half of their income to rent, the city has become the second-least affordable city to live in nationwide.”

The Guardian: Disaster Capitalism: Making a Killing Out of Catastrophe by Antony Loewenstein review – the management of nightmares

“At one telling moment in this unnerving and convincing book, Antony Loewenstein quotes the managing director of one of the many private military companies (“PMCs”) working in Afghanistan. The United States, says “Jack”, “is not capable of running empires”. Instead, western governments outsource imperialism to people like him in a variety of organisations – Halliburton, G4S, Serco and Capita are the best known of a long list – which make their money from incarceration, the “processing” of asylum seekers or the provision of private “security” in conflict zones. No longer able to sustain itself by selling dreams, capitalism now thrives on the management of nightmares. Even the provision of disaster relief is transformed into profit.

Disaster Capitalism takes us on a journey around the victims of this system: Greece, Afghanistan, Haiti and Papua New Guinea. It then turns its attention to the centres of outsourcing such as the US, the UK and Loewenstein’s native Australia. It charts the consequences of a double crisis: turmoil in the economic system following the financial crash, and the migration that is the unsurprising effect of the wars in Iraq, Libya, Afghanistan, Syria and elsewhere. Greece, at the heart of the eastern Mediterranean, has been the victim of both at once. Loewenstein notes that despite Syriza’s promises to challenge austerity, the state’s hands are tied not only by the troika, but by a wave of popular xenophobia, supported by a supine media. So, instead, non-state forces are stepping in: he visits the medical centres set up by leftwing volunteers to help the victims of both crises, and, more depressingly, the Greeks-only food handouts organised by Golden Dawn.

Similarly, in his account of the “relief” that followed the Haitian earthquake of January 2010, Loewenstein argues that the people of Port-au-Prince were able to organise themselves to respond to the devastation – “makeshift clinics were established”, and “young men and women worked to clear the rubble with their bare hands”. After this, however, the international response was quickly monetised, or, to quote the typically direct words of then-US ambassador to Haiti, Kenneth Merten, “the gold rush is on”. The response to the disaster combined outsourcing to the largely USAID-funded contractor Chemonics, with American and Korean companies building factories to produce consumer goods for the western market while paying workers well below the already minuscule Haitian minimum wage. A new development was the intervention of celebrity-backed NGOs. The philanthropic efforts of Wyclef Jean, Sean Penn, Bill Clinton and Bill Gates come in for particularly sharp criticism as unaccountable and aloof. All this activity rests, according to Loewenstein, on a perception of Haitians as incapable of looking after themselves, a view his account attempts to challenge. As Pierre Justinvil, the deputy mayor of Cap Haitien, puts it, surveying a housing development built by a Minnesota-based company, “I personally, with my own hands, have just built a whole school for less than the cost of one of the houses, and more quickly.”

The irony is that Britain, the US and Australia are now inflicting on themselves many of the devastations they have visited on other countries. This is visible in the US’s immense privatised prison system, providing a convict labour force which, the author estimates, is bigger than the Soviet Gulag at its early 1950s height. The militarised response to the Ferguson protests last year are another example: the tooled-up, armour-plated local police “looked like they were equipped to fight insurgents in Iraq”. And they were: a programme had sold off excess military equipment, provided in the first instance by private companies, to local police departments.

In the UK, Loewenstein tracks the results of a decision to open up emergency accommodation for asylum seekers to our beloved volume housebuilders: “Taylor Wimpey, Barratt Homes, Persimmon, Bellway, Redrow, Bovis, Crest Nicholson”. Meanwhile, Britain has become a major exporter of outsourcing, with G4S and Serco being worldwide leaders in the field.

Disaster capitalism comes across as a thuggish operation, largely based on low-wage, low-conditions work where sensitivity to the often vulnerable people being “cared” for is not a major priority. At a nightclub full of PMC staff in Afghanistan, Loewenstein is “reminded of a comment made by a human rights advocate in Kabul, that if you go to a party in the city, ‘a quarter of the men will have no necks’”, a consequence of widespread steroid use. Everyone is dehumanised by what another outsourcer calls “the human warehousing business”.

One major strength of the book is its interviews. We meet a succession of nice, apparently open spokespeople for outsourcers and mercenaries, and even a well-mannered physicist and active member of Golden Dawn. He lets them speak with their own breathtakingly cynical words. Loewenstein is unashamedly partisan, though, especially in the chapter on the Bougainville province of Papua New Guinea, where a mass revolt removed the privatised mining corporation Rio Tinto from the area, leaving it reliant – by popular demand, it would seem – on subsistence agriculture. The corporations are coming back to Bougainville, and Loewenstein gives a sympathetic account of the forces trying to stop them, noting the horrendous ecological record of the companies in question. These divisions can be a little too neat.

After a particularly harrowing account of Australia’s “Pacific solution” to migration (ie, put them all on an island), Disaster Capitalism concludes with a rather pro forma rousing address, insisting that “resistance is never futile” and pointing to those places – small French towns, the city of Hamburg – that have managed to reverse outsourcing and privatisation. That’s fair enough, but as the accounts from Haiti and Papua New Guinea make clear, the system Loewenstein describes thrives by presenting itself as the only possible conduit for development and change. By placing, say, Rio Tinto on the one side and subsistence farming on the other, the choice becomes either virtuous tradition or hyper-exploitation. A model of development that could challenge these ruthless practices would make Disaster Capitalism a lot more convincing, but as an eyewitness account of the vultures’ activities around the world, it does provide a useful warning”

The Shock Doctrine by Naomi Klein

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