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Author Naomi Klein Discusses Bailout, Economy at Stanford
"We've been living in a fairy tale" that deregulation and privatization serve the common good, the author of "The Shock Doctrine: The Rise of Disaster Capitalism" said Thursday.
Klein's book paints a dark, troubling picture of a form of capitalism that lets people in power cash in on chaos, catastrophes, wars and financial crises and snatch up lucrative contracts.
Speaking at Stanford University's Kresge Auditorium on Thursday evening as part of the Aurora Forum, Klein minced no words. She insists that deregulating the financial system has created bubbles and busts, and she called the current $700 billion bailout, or rescue plan, a "stickup."
This financial crisis and the Iraq war are examples of how economic shocks and global disasters are used to boost the profits of the elite, she said.
"The president goes on TV and dangles a plan to Congress, saying if we don't get it we're going down, and banks are going to close in your neighborhood," she said. "That's deeply crazy if you look at it. Especially about a plan that almost all economists said couldn't fix the problem."
Klein said the Bush administration's plan was reckless. She bristled at the "comfort level" Treasury Secretary Henry Paulson and President Bush have exhibited with the crisis.
"It's like they're saying, 'Hey, stuff happens,'"‰" she said. "And then a week later the whole idea of buying toxic debt they were pushing died."
Klein's ideas have been criticized by some as extreme and leftist, but her challenges to the myth of the unfettered marketplace are resonating with a growing number of people.
Klein, a former fellow at the London School of Economics, believes the policies of the last few decades have allowed a shadow banking system to flourish. It was a "disaster waiting to happen," she said.
She puts the blame on both parties, though she clearly believes the Bush administration has done more to close the curtains, allowing for deep corruption.
"There was no morality," she said. "It was all based on the get it while you can concept."
Now Klein suggests that Paulson, Bush and Congress are using the bailout to push through radical policies that favor the corporate elite.
"It's a cesspool of conflicts of interest, the people pulling together this plan," she said.
"Where are we now?" asked Terry Karl, a Stanford political science professor who was part of the conversation with Klein onstage. "Are we doomed?"
Klein said she thinks the country is at a crossroads and that this is a "moment of possibilities" that could reverse entrenched corruption. But she fears more of the same policies as the financial crisis deepens.
She believes the financial crisis will be used by Republicans against Democratic Sen. Barack Obama if he is elected president. "No, we can't" may become the new refrain, she said, from social programs that help the disadvantaged to the pursuit of alternative energy and investment in technology to combat climate change.
"Business will be in a slump, and there will be calls for tax breaks and deregulation," she said. "It's going to be a hard fight."
She also expects more attacks on civil rights and undocumented workers, as well as another attempt to privatize Social Security.
"I call for the nationalization of ExxonMobil," she said jokingly, to roaring applause. "They made $40 billion in profits from us."