The Shock Doctrine - The Rise of Disaste Part 8

The Korean t.i.tan Samsung, for instance, was broken up and sold for parts: Volvo got its heavy industry division, SC Johnson Son its pharmaceutical arm, General Electric its lighting division. A few years later, Daewoo's once-mighty car division, which the company had valued at $6 billion, was sold off to GM for just $400 million-a steal worthy of Russia's shock therapy. But this time, unlike what happened in Russia, local firms were getting wiped out by the multinationals.43 Other big players who got a piece of the Asian distress sale included Seagram's, Hewlett-Packard, Nestle, Interbrew and Novartis, Carrefour, Tesco and Ericsson. Coca-Cola bought a Korean bottling company for half a billion dollars; Procter and Gamble bought a Korean packaging company; Nissan bought one of Indonesia's largest car companies. General Electric acquired a controlling stake in Korea's refrigerator manufacturer LG; and Britain's Power-gen nabbed LG Energy, a large Korean electricity-and-gas company. According to BusinessWeek, BusinessWeek, the Saudi prince Alwaleed bin Talal was "jetting across Asia in his cream-colored Boeing 727, collecting bargains"-including a stake in Daewoo. the Saudi prince Alwaleed bin Talal was "jetting across Asia in his cream-colored Boeing 727, collecting bargains"-including a stake in Daewoo.44 Fittingly, Morgan Stanley, which had been the loudest in calling for a deepening of the crisis, inserted itself into many of these deals, collecting huge commissions. It acted as Daewoo's adviser on the sale of its automotive division and on brokering the privatization of several South Korean banks.45 It wasn't only private Asian firms that were being sold to foreigners. Like earlier crises in Latin America and Eastern Europe, this one also forced governments to sell public services to raise badly needed capital. The U.S. government eagerly antic.i.p.ated this effect early on. In arguing why Congress should authorize billions to the IMF for the Asia makeover, the U.S. trade representative Charlene Barshefsky offered a.s.surances that the agreements would "create new business opportunities for US firms": Asia would be forced to "accelerate privatization of certain key sectors-including energy, transportation, utilities and communications." It wasn't only private Asian firms that were being sold to foreigners. Like earlier crises in Latin America and Eastern Europe, this one also forced governments to sell public services to raise badly needed capital. The U.S. government eagerly antic.i.p.ated this effect early on. In arguing why Congress should authorize billions to the IMF for the Asia makeover, the U.S. trade representative Charlene Barshefsky offered a.s.surances that the agreements would "create new business opportunities for US firms": Asia would be forced to "accelerate privatization of certain key sectors-including energy, transportation, utilities and communications."46 Sure enough, the crisis set off a wave of privatizations, and foreign multinationals cleaned up. Bechtel got the contract to privatize the water and sewage systems in eastern Manila, as well as one to build an oil refinery in Sulawesi, Indonesia. Motorola got full control over Korea's Appeal Telecom. The New York-based energy giant Sithe got a large stake in Thailand's public gas company, the Cogeneration. Indonesia's water systems were split between Britain's Thames Water and France's Lyonnaise des Eaux. Canada's Westcoast Energy snapped up a huge Indonesian power plant project. British Telecom purchased a large stake in both Malaysia's and Korea's postal services. Bell Canada got a piece of Korea's telecom Hansol 47 47 All told, there were 186 major mergers and acquisitions of firms in Indonesia, Thailand, South Korea, Malaysia and the Philippines by foreign multinationals in a span of only twenty months. Watching this sale unfold, Robert Wade, an LSE economist, and Frank Veneroso, an economic consultant, predicted that the IMF program "may even precipitate the biggest peacetime transfer of a.s.sets from domestic to foreign owners in the past fifty years anywhere in the world."48 The IMF, while admitting some errors in its early responses to the crisis, claims that it quickly corrected them and that the "stabilization" programs were successful. It's true that Asia's markets eventually calmed down, but at a tremendous and ongoing cost. Milton Friedman, at the height of the crisis, had cautioned against panic, insisting that "it will be over. ... As they get this financial mess settled, you can see a return to growth in Asia, but whether it will be one year, two years, three years, n.o.body can tell you."49 The truth is that Asia's crisis is still not over, a decade later. When 24 million people lose their jobs in a span of two years, a new desperation takes root that no culture can easily absorb. It expresses itself in different forms across the region, from a significant rise in religious extremism in Indonesia and Thailand to the explosive growth in the child s.e.x trade.

Employment rates have still not reached pre-1997 levels in Indonesia, Malaysia and South Korea. And it's not just that workers who lost their jobs during the crisis never got them back. The layoffs have continued, with new foreign owners demanding ever-higher profits for their investments. The suicides have also continued: in South Korea, suicide is now the fourth most common cause of death, more than double the pre-crisis rate, with thirty-eight people taking their own lives every day.50 That is the untold story of the policies that the IMF calls "stabilization programs," as if countries were ships being tossed around on the market's high seas. They do, eventually, stabilize, but that new equilibrium is achieved by throwing millions of people overboard: public sector workers, small-business owners, subsistence farmers, trade unionists. The ugly secret of "stabilization" is that the vast majority never climb back aboard. They end up in slums, now home to 1 billion people; they end up in brothels or in cargo ship containers. They are the disinherited, those described by the German poet Rainer Maria Rilke as "ones to whom neither the past nor the future belongs."51 These people weren't the only victims of the IMF's demand for perfect orthodoxy in Asia. In Indonesia, the anti-Chinese sentiment I witnessed in the summer of 1997 continued to build, stoked by a political cla.s.s happy to deflect attention away from itself. It got much worse after Suharto raised the price of basic survival items. Riots broke out across the country, and many of them targeted the Chinese minority; approximately twelve hundred people were killed, and dozens of Chinese women were gang-raped.52They too should be counted among the victims of Chicago School ideology.

Anger in Indonesia did, finally, direct itself at Suharto and the presidential palace. For three decades, Indonesians had been kept more or less in line by the memory of the bloodbath that brought Suharto to power, a memory that was refreshed by periodic ma.s.sacres in the provinces and in East Timor. Anti-Suharto rage had burned under the surface all this time, but it took the IMF to pour the gasoline-which it did, ironically, by demanding that he raise the price of gasoline. After that, Indonesians rose up and pushed Suharto from power.

Like a prison interrogator, the IMF used the extreme pain of the crisis to break the Asian Tigers' will, to reduce the countries to total compliance. But the CIA's interrogation manuals warn that this process can go too far-apply too much direct pain and, instead of regression and compliance, the interrogators face confidence and defiance. In Indonesia that line was crossed, a reminder that it is possible to take shock therapy too far, provoking a kind of blowback that was about to become very familiar, from Bolivia to Iraq.

Free-market crusaders are, however, slow learners when it comes to the unintended consequences of their policies. The only lesson learned from the enormously lucrative Asian sell-off appears to have been yet more confirmation for the shock doctrine, more evidence (as if any more was needed) that there is nothing like a true disaster, a genuine churning of society, to open up a new frontier. A few years after the peak of the crisis, several prominent commentators were even willing to go so far as to say that what happened in Asia, despite all the devastation, was a blessing in disguise. The Economist The Economist noted that "it took a national crisis for South Korea to turn from an inward-looking nation to one that embraced foreign capital, change and compet.i.tion." And Thomas Friedman, in his best-selling book noted that "it took a national crisis for South Korea to turn from an inward-looking nation to one that embraced foreign capital, change and compet.i.tion." And Thomas Friedman, in his best-selling book The Lexus and the Olive Tree The Lexus and the Olive Tree, declared that what happened in Asia wasn't a crisis at all. "I believe globalization did us all a favor by melting down the economies of Thailand, Korea, Malaysia, Indonesia, Mexico, Russia, and Brazil in the 1990s, because it laid bare a lot of rotten practices and inst.i.tutions," he wrote, adding that "exposing the crony capitalism in Korea was no crisis in my book."53 In his In his New York Times New York Times columns supporting the invasion of Iraq, a similar logic would be on display, except that the melting down would be done with cruise missiles, not currency trades. columns supporting the invasion of Iraq, a similar logic would be on display, except that the melting down would be done with cruise missiles, not currency trades.

The Asian crisis certainly showed how well disaster exploitation worked. At the same time, the destructiveness of the market crash and the cynicism of the West's response sparked powerful countermovements.

The forces of multinational capital got their way in Asia, but they provoked new levels of public rage, with the rage eventually directed squarely at the inst.i.tutions advancing the ideology of unfettered capitalism. As an unusually balanced Financial Times Financial Times editorial put it, Asia was a "warning signal that public unease with capitalism and the forces of globalization is reaching a worrying level. The Asian crisis showed the world how even the most successful countries could be brought to their knees by a sudden outflow of capital. People were outraged at how the whims of secretive hedge funds could apparently cause ma.s.s poverty on the other side of the world." editorial put it, Asia was a "warning signal that public unease with capitalism and the forces of globalization is reaching a worrying level. The Asian crisis showed the world how even the most successful countries could be brought to their knees by a sudden outflow of capital. People were outraged at how the whims of secretive hedge funds could apparently cause ma.s.s poverty on the other side of the world."54 Unlike in the former Soviet Union, where the planned misery of shock therapy could be pa.s.sed off as part of the "painful transition" from Communism to market democracy, Asia's crisis was plainly a creation of the global markets. Yet when the high priests of globalization sent missions to the disaster zone, all they wanted to do was deepen the pain.

The result was that these missions lost the comfortable anonymity they had enjoyed previously. The IMF's Stanley Fischer recalled the "circus atmosphere" around the Seoul Hilton when he visited South Korea at the start of the negotiations. "I got imprisoned in my hotel room -couldn't move out because [if] I opened the door, there were 10,000 photographers." According to another account, in order to reach the banquet room where the negotiations were taking place, IMF representatives were forced "to take a circuitous route to a back entrance that involved going up and down flights of stairs and through the Hilton's vast kitchen."55 At the time, IMF officials were unaccustomed to such attention. The experience of being prisoners in five-star hotels and conference centers would become familiar for emissaries of the Washington Consensus in the years to come, as ma.s.s protests started to greet their gatherings around the world. At the time, IMF officials were unaccustomed to such attention. The experience of being prisoners in five-star hotels and conference centers would become familiar for emissaries of the Washington Consensus in the years to come, as ma.s.s protests started to greet their gatherings around the world.

After 1998, it became increasingly difficult to impose the shock therapy-style makeovers by peaceful means-through the usual IMF bullying or arm-twisting at trade summits. The defiant new mood coming from the South made its global debut when the World Trade Organization talks collapsed in Seattle in 1999. Though the college-age protesters received the bulk of the media coverage, the real rebellion took place inside the conference center, when developing countries formed a voting bloc and rejected demands for deeper trade concessions as long as Europe and the U.S. continued to subsidize and protect their domestic industries.

At the time, it was still possible to dismiss the Seattle breakdown as a minor pause in the steady advance of corporatism. Within a few years, however, the depth of the shift would be undeniable: the U.S. government's ambitious dream of creating a unified free-trade zone encompa.s.sing all of Asia-Pacific was abandoned, as were a global investors' treaty and plans for a Free Trade Area of the Americas, stretching from Alaska to Chile.

Perhaps the greatest impact of the so-called antiglobalization movement was that it forced the Chicago School ideology into the dead center of the international debate. For a brief moment at the turn of the millennium, there was no pressing crisis to deflect attention -the debt shocks had faded, the "transitions" were complete, and a new global war had not yet arrived. What was left was the real world track record of the free-market crusade: the dismal reality of inequality, corruption and environmental degradation left behind when government after government embraced Friedman's advice, given to Pinochet all those years ago, that it was a mistake to try "to do good with other people's money."

In retrospect, it is striking that capitalism's monopoly period, when it no longer had to deal with competing ideas or counterpowers, was extremely brief-only eight years, from the collapse of the Soviet Union in 1991 to the collapse of the WTO talks in 1999. But rising opposition would not slow the determination to advance this extraordinarily profitable agenda; its advocates would simply ride the waves of fear and disorientation created by bigger shocks than ever before.

PART 5.

SHOCKING TIMES.

THE RISE OF THE DISASTER CAPITALISM COMPLEX.

Creative destruction is our middle name, both within our own society and abroad. We tear down the old order every day, from business to science, literature, art, architecture, and cinema to politics and the law____

They must attack us in order to survive, just as we must destroy them to advance our historic mission.

-Michael Ledeen,The War against the Terror Masters, 2002 2002.

George's answer to any problem at the ranch is to cut it down with a chain saw-which I think is why he and Cheney and Rumsfeld get along so well.

-Laura Bush, White House Correspondents' a.s.sociation Dinner, April 30, 2005

CHAPTER 14.

SHOCK THERAPY IN THE U.S.A.

THE HOMELAND SECURITY BUBBLE.

He's a ruthless little b.a.s.t.a.r.d. You can be sure of that.

-Richard Nixon, U.S. president, referring to Donald Rumsfeld, 19711.

Today I fear that we are in fact waking up to a surveillance society that is already all around us.

-Richard Thomas, U.K. information commissioner, November 20062.

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."

-Daniel Gross, Slate, Slate, June 2005 June 20053.

It was a muggy Monday in Washington, and Donald Rumsfeld was about to do something he hated: talk to his staff. Since taking office as defense secretary, he had solidified his reputation among the Joint Chiefs of Staff as high-handed, secretive and-a word that kept coming up-arrogant. Their animosity was understandable. Since setting foot in the Pentagon, Rumsfeld had brushed aside the prescribed role of leader and motivator and acted instead like a bloodless hatchet man-a CEO secretary on a downsizing mission.

When Rumsfeld accepted the post, many wondered why he would even want it. He was sixty-eight years old, had five grandchildren and a personal fortune estimated at as much as $250 million-and he had already held the same post in the Gerald Ford administration.4 Rumsfeld, however, had no desire to be a traditional defense secretary, defined by the wars waged on his watch; he had greater ambitions than that. Rumsfeld, however, had no desire to be a traditional defense secretary, defined by the wars waged on his watch; he had greater ambitions than that.

The incoming defense secretary had spent the past twenty-odd years heading up multinational corporations and sitting on their boards, often leading companies through dramatic mergers and acquisitions, as well as painful restructurings. In the nineties, he had come to see himself as a man of the New Economy, directing a company specializing in digital TV, sitting on the board of another promising "e-business solutions," and serving as board chairman of the very sci-fi biotech firm that held the exclusive patent on a treatment for avian flu as well as on several important AIDS medications.5 When Rumsfeld joined the cabinet of George W. Bush in 2001, it was with a personal mission to reinvent warfare for the twenty-first century- turning it into something more psychological than physical, more spectacle than struggle, and far more profitable than it had ever been before. When Rumsfeld joined the cabinet of George W. Bush in 2001, it was with a personal mission to reinvent warfare for the twenty-first century- turning it into something more psychological than physical, more spectacle than struggle, and far more profitable than it had ever been before.

Much has been written about Rumsfeld's controversial "transformation" project, which prompted eight retired generals to call for his resignation and eventually forced him to step down after the 2006 midterm elections. When Bush announced the resignation he described the "sweeping transformation" project-and not the war in Iraq or the broader "War on Terror"-as Rumsfeld's most profound contribution: "Don's work in these areas did not often make the headlines. But the reforms that set in motion-that he has set in motion-are historic."6 They are indeed, but it has not always been clear what those reforms consist of. They are indeed, but it has not always been clear what those reforms consist of.

Senior military officials derided "transformation" as "empty buzz words," and Rumsfeld often seemed determined (almost comically) to prove the critics right: "The Army is going through what is a major modernization," Rumsfeld said in April 2006. "It's moving from a division-oriented force to a modular brigade combat team force . . . from service-centric war-fighting to deconfliction war-fighting to interoperability and now toward interdependence. That's a hard thing to do."7 But the project was never quite as complicated as Rumsfeld made it sound. Beneath the jargon, it was simply an attempt to bring the revolution in outsourcing and branding that he had been part of in the corporate world into the heart of the U.S. military. But the project was never quite as complicated as Rumsfeld made it sound. Beneath the jargon, it was simply an attempt to bring the revolution in outsourcing and branding that he had been part of in the corporate world into the heart of the U.S. military.

During the 1990s, many companies that had traditionally manufactured their own products and maintained large, stable workforces embraced what became known as the Nike model: don't own any factories, produce your products through an intricate web of contractors and subcontractors, and pour your resources into design and marketing. Other companies opted for the alternative, Microsoft model: maintain a tight control center of shareholder/employees who perform the company's "core competency" and outsource everything else to temps, from running the mailroom to writing code. Some called the companies that underwent these radical restructurings "hollow corporations" because they were mostly form, with little tangible content left over.

Rumsfeld was convinced that the U.S. Department of Defense needed an equivalent makeover; as Fortune Fortune said when he arrived at the Pentagon, "Mr. CEO" was "about to oversee the same sort of restructuring that he orchestrated so well in the corporate world." said when he arrived at the Pentagon, "Mr. CEO" was "about to oversee the same sort of restructuring that he orchestrated so well in the corporate world."8 There were, of course, some necessary differences. Where corporations unburdened themselves of geography-bound factories and full-time workers, Rumsfeld saw the army shedding large numbers of full-time troops in favor of a small core of staffers propped up by cheaper temporary soldiers from the Reserve and National Guard. Meanwhile, contractors from companies such as Blackwater and Halliburton would perform duties ranging from high-risk chauffeuring to prisoner interrogation to catering to health care. And where corporations poured their savings on labor into design and marketing, Rumsfeld would spend his savings from fewer troops and tanks on the latest satellite and nano-technology from the private sector. "In the twenty-first century," Rumsfeld said of the modern military, "we're going to have to stop thinking about things, numbers of things, and ma.s.s, and think also and maybe even first about speed and agility and precision." He sounded very much like the hyperactive management consultant Tom Peters, who declared in the late nineties that companies had to decide if they were "pure 'players' in brain-ware" or "lumpy-object purveyors." There were, of course, some necessary differences. Where corporations unburdened themselves of geography-bound factories and full-time workers, Rumsfeld saw the army shedding large numbers of full-time troops in favor of a small core of staffers propped up by cheaper temporary soldiers from the Reserve and National Guard. Meanwhile, contractors from companies such as Blackwater and Halliburton would perform duties ranging from high-risk chauffeuring to prisoner interrogation to catering to health care. And where corporations poured their savings on labor into design and marketing, Rumsfeld would spend his savings from fewer troops and tanks on the latest satellite and nano-technology from the private sector. "In the twenty-first century," Rumsfeld said of the modern military, "we're going to have to stop thinking about things, numbers of things, and ma.s.s, and think also and maybe even first about speed and agility and precision." He sounded very much like the hyperactive management consultant Tom Peters, who declared in the late nineties that companies had to decide if they were "pure 'players' in brain-ware" or "lumpy-object purveyors."9 Not surprisingly, the generals who were used to holding sway in the Pentagon were pretty sure that "things" and "ma.s.s" still mattered when it came to fighting wars. They soon became deeply hostile to Rumsfeld's vision of a hollow military. After a little more than seven months in office, the secretary had already stepped on so many powerful toes that it was rumored his days were numbered.

It was at this moment that Rumsfeld called a rare "town hall meeting" for Pentagon staff. The speculation began immediately: Was he going to announce his resignation? Was he going to try his hand at a pep talk? Was he belatedly trying to sell the old guard on transformation? As hundreds of Pentagon senior staff filed into the auditorium that Monday morning, "the mood was definitely one of curiosity," one staffer told me. "The feeling was, How are you going to convince us? Because there was already a huge amount of animosity toward him."

When Rumsfeld made his entrance, "we politely stood up and sat down." It rapidly became clear that this was not a resignation, and it most certainly was not a pep talk. It may have been the most extraordinary speech ever given by a U.S. secretary of defense. It began like this: The topic today is an adversary that poses a threat, a serious threat, to the security of the United States of America. This adversary is one of the world's last bastions of central planning. It governs by dictating five-year plans. From a single capital, it attempts to impose its demands across time zones, continents, oceans and beyond. With brutal consistency, it stifles free thought and crushes new ideas. It disrupts the defense of the United States and places the lives of men and women in uniform at risk.

Perhaps this adversary sounds like the former Soviet Union, but that enemy is gone: our foes are more subtle and implacable today.. . . The adversary's closer to home. It's the Pentagon bureaucracy.10 As Rumsfeld's rhetorical gimmick revealed itself, the faces in the audience went stony. Most of the people listening had devoted their careers to fighting the Soviet Union and didn't appreciate being compared to Commies at this stage in the game. Rumsfeld wasn't finished. "We know the adversary. We know the threat. And with the same firmness of purpose that any effort against a determined adversary demands, we must get at it and stay at it. . . today we declare war on bureaucracy."

He'd done it: the defense secretary had not only described the Pentagon as a grave threat to America but declared war against the inst.i.tution where he worked. The audience was stunned. "He was saying we were the enemy, that the enemy was us. And here we were thinking we were doing the nation's business," the staffer told me.

It wasn't that Rumsfeld wanted to save taxpayer dollars-he had just asked Congress for an 11 percent budget increase. But following the corporatist principles of the counterrevolution, in which Big Government joins forces with Big Business to redistribute funds upward, he wanted less spent on staff and far more public money transferred directly into the coffers of private companies. And with that, Rumsfeld launched his "war." Every department needed to slash its staff by 15 percent, including "every base headquarters building in the world. It's not just the law, it's a good idea, and we're going to get it done."11 He had already directed his senior staff to "scour the Department [of Defense] for functions that could be performed better and more cheaply through commercial outsourcing." He wanted to know, "Why is DoD one of the last organizations around that still cuts its own checks? When an entire industry exists to run warehouses efficiently, why do we own and operate so many of our own? At bases around the world, why do we pick up our own garbage and mop our own floors, rather than contracting services out, as many businesses do? And surely we can outsource more computer systems support."

He even went after the sacred cow of the military establishment: health care for soldiers. Why were there so many doctors? Rumsfeld wanted to know. "Some of those needs, especially where they may involve general practice or specialties unrelated to combat, might be more efficiently delivered by the private sector." And how about the houses for soldiers and their families -surely these could be done through "public-private partnerships."

The Defense Department should focus on its core competency: "warfighting . . . But in all other cases, we should seek suppliers who can provide these non-core activities efficiently and effectively."

After the speech, plenty of Pentagon staffers griped that the only thing standing in the way of Rumsfeld's bold vision of outsourcing the army was the small matter of the U.S. Const.i.tution, which clearly defined national security as the duty of government, not private companies. "I thought the speech was going to cost Rumsfeld his job," my source told me.

It didn't, and the coverage of his declaration of war on the Pentagon was spa.r.s.e. That's because the date of his contentious address was September 10, 2001. 10, 2001.

It is a strange historical footnote that CNN Evening News CNN Evening News on September 10 carried a short story under the headline "Defense Secretary Declares War on the Pentagon's Bureaucracy" and that, the next morning, the network would report on an attack on that inst.i.tution of a distinctly less metaphorical kind, one that killed 125 Pentagon employees and seriously wounded another 110 of the people whom Rumsfeld had portrayed as enemies of the state less than twenty-four hours earlier. on September 10 carried a short story under the headline "Defense Secretary Declares War on the Pentagon's Bureaucracy" and that, the next morning, the network would report on an attack on that inst.i.tution of a distinctly less metaphorical kind, one that killed 125 Pentagon employees and seriously wounded another 110 of the people whom Rumsfeld had portrayed as enemies of the state less than twenty-four hours earlier.12

Cheney and Rumsfeld: Proto-Disaster Capitalists

The idea at the heart of Rumsfeld's forgotten speech is nothing less than the central tenet of the Bush regime: that the job of government is not to govern but to subcontract the task to the more efficient and generally superior private sector. As Rumsfeld made clear, this task was about nothing as prosaic as tr.i.m.m.i.n.g the budget, but was, for its advocates, a world-changing crusade on a par with defeating Communism.

By the time the Bush team took office, the privatization mania of the eighties and nineties (fully embraced by the Clinton administration, as well as state and local governments) had successfully sold off or outsourced the large, publicly owned companies in several sectors, from water and electricity to highway management and garbage collection. After these limbs of the state had been lopped off, what was left was "the core"-those functions so intrinsic to the concept of governing that the idea of handing them to private corporations challenged what it meant to be a nation-state: the military, police, fire departments, prisons, border control, covert intelligence, disease control, the public school system and the administering of government bureaucracies. The earlier stages of the privatization wave had been so profitable, however, that many of the companies that had devoured the appendages of the state were greedily eyeing these essential functions as the next source of instant riches.

By the late nineties, a powerful move was afoot to break the taboos protecting "the core" from privatization. It was, in many ways, merely a logical extension of the status quo. Just as Russia's oil fields, Latin America's tele-corns, and Asia's industry had supplied the stock market with superprofits in the nineties, now it would be the U.S. government itself that would play that central economic role-all the more crucial because the backlash against privatization and free trade was spreading rapidly through the developing world, closing off other avenues for growth.

It was a move that brought the shock doctrine to a new, self-referential phase: until that point, disasters and crises had been harnessed to push through radical privatization plans after the fact, but the inst.i.tutions that had the power both to create and respond to cataclysmic events-the military, the CIA, the Red Cross, the UN, emergency "first responders"-had been some of the last bastions of public control. Now, with the core set to be devoured, the crisis-exploiting methods that had been honed over the previous three decades would be used to leverage the privatization of the infrastructure of disaster creation and disaster response. Friedman's crisis theory was going postmodern.

At the vanguard of the push to create what can only be described as a privatized police state were the most powerful figures in the future Bush administration: d.i.c.k Cheney, Donald Rumsfeld and George W. Bush himself.

For Rumsfeld, the idea of applying "market logic" to the U.S. military was a project that dated back four decades. It began in the early sixties, when he used to attend seminars at the University of Chicago's Economics Department. He had developed a particularly close connection with Milton Friedman, who, after Rumsfeld was elected to Congress at the age of thirty, took the precocious Republican under his wing, helping him to develop a bold free-market policy platform and tutoring him in economic theory. The two men remained close over the years, with Rumsfeld attending an annual birthday celebration for Friedman, organized every year by the Heritage Foundation's president, Ed Feulner. "There is something about Milton that when I am around him, and talking to him, I feel smarter," Rumsfeld said of his mentor when Friedman turned ninety.13 The admiration was mutual. Friedman was so impressed with Rumsfeld's commitment to deregulated markets that he aggressively lobbied Reagan to name Rumsfeld as his running mate in the 1980 election instead of George H. W. Bush-and he never did quite forgive Reagan for disregarding his advice. "I believe that Reagan made a mistake when he chose Bush as his vice-presidential candidate," Friedman wrote in his memoirs; "indeed, I regard it as the worst decision not only of his campaign but of his presidency. My favorite candidate was Donald Rumsfeld. Had he been chosen, I believe he would have succeeded Reagan as president, and the sorry Bush-Clinton period would never have occurred."14 Rumsfeld survived being pa.s.sed over as Reagan's running mate by throwing himself into his burgeoning business career. As CEO of the international drug and chemical company Searle Pharmaceuticals, he used his political connections to secure the controversial and extraordinarily lucrative Food and Drug Administration (FDA) approval for aspartame (marketed as Nu-traSweet); and when Rumsfeld brokered the deal to sell Searle to Monsanto, he personally earned an estimated $12 million.15 The high-stakes sale established Rumsfeld as a corporate power player, landing him seats on the boards of such blue-chip firms as Sears and Kel-logg's. His status as a former defense secretary, meanwhile, made him a score for any company that was part of what Eisenhower had called the "military-industrial complex." Rumsfeld sat on the board of the aircraft manufacturer Gulfstream and was also paid $190,000 a year as a board member of ASEA Brown Boveri (ABB), the Swiss engineering giant that gained unwanted attention when it was revealed to have sold nuclear technology to North Korea, including the capacity to produce plutonium. The nuclear reactor sale went through in 2000, and at the time Rumsfeld was the only North American on the ABB board. He claims to have no memory of the reactor sale coming before the board, though the company insists that "board members were informed about the project."16 It was in 1997, when Rumsfeld was named chairman of the board of the biotech firm Gilead Sciences, that he would firmly establish himself as a proto disaster capitalist. The company had registered the patent for Tamiflu, a treatment for many kinds of influenza and the preferred drug for avian flu.41 If there was ever an outbreak of the highly contagious virus (or the threat of one), governments would be forced to buy billions of dollars' worth of the treatment from Gilead Sciences. If there was ever an outbreak of the highly contagious virus (or the threat of one), governments would be forced to buy billions of dollars' worth of the treatment from Gilead Sciences.

The patenting of drugs and vaccines to treat public health emergencies remains a controversial subject. The U.S. has been epidemic-free for several decades, but when the polio outbreak was at its peak in the mid-fifties, the ethics of disease profiteering were hotly debated. With close to sixty thousand known cases of polio, and parents terrified that their children were going to contract the crippling, often fatal, disease, the search for a cure was frantic. When Jonas Salk, a scientist at the University of Pittsburgh, found it and developed the first polio vaccine in 1952, he did not patent the lifesaving treatment. "There is no patent," Salk told the broadcaster Edward R. Mur-row: "Could you patent the sun?"17 It's safe to say that if you could patent the sun, Donald Rumsfeld would have long since put in an application with the U.S. Patent and Trademark Office. His former company Gilead Sciences, which also owns the patents on four AIDS treatments, spends a great deal of energy trying to block the distribution of cheaper generic versions of its lifesaving drugs in the developing world. It has been targeted for these activities by public health activists in the U.S., who point out that some of Gilead's key medicines were developed on grants funded by taxpayers.18 Gilead, for its part, sees epidemics as a growth market, and it has an aggressive marketing campaign to encourage businesses and individuals to stockpile Tamiflu, just in case. Before he reentered government, Rumsfeld was so convinced that he was on to a hot new industry that he helped found several private investment funds specializing in biotechnology and pharmaceuticals. Gilead, for its part, sees epidemics as a growth market, and it has an aggressive marketing campaign to encourage businesses and individuals to stockpile Tamiflu, just in case. Before he reentered government, Rumsfeld was so convinced that he was on to a hot new industry that he helped found several private investment funds specializing in biotechnology and pharmaceuticals.19 These companies are banking on an apocalyptic future of rampant disease, one in which governments are forced to buy, at top dollar, whatever lifesaving products the private sector has under patent. These companies are banking on an apocalyptic future of rampant disease, one in which governments are forced to buy, at top dollar, whatever lifesaving products the private sector has under patent.

d.i.c.k Cheney, a protege of Rumsfeld's in the Ford administration, has also built a fortune based on the profitable prospect of a grim future, though where Rumsfeld saw a boom market in plagues, Cheney was banking on a future of war. As secretary of defense under Bush Sr., Cheney scaled down the number of active troops and dramatically increased reliance on private contractors. He contracted Brown Root, the engineering division of the Houston-based multinational Halliburton, to identify tasks being performed by U.S. troops that could be taken over by the private sector for a profit. Not surprisingly, Halliburton identified all kinds of jobs that the private sector could perform, and those findings led to a bold new Pentagon contract: the Logistics Civil Augmentation Program, or LOGCAP. The Pentagon was notorious for its multi-billion-dollar contracts with weapons manufacturers, but this was something new: not supplying the military with gear but serving as manager for its operations.20 A select group of companies was invited to apply to provide unlimited "logistical support" for U.S. military missions, an extremely vague work description. Furthermore, no dollar value was attached to the contract: the winning company was simply a.s.sured that whatever it did for the military, it would have its costs covered by the Pentagon, plus a guaranteed profit- what is known as a "cost plus" contract. These were the final days of the Bush Sr. administration, and the company that won the contract in 1992 was none other than Halliburton. As the Los Angeles Times Los Angeles Times s T. Christian Miller noted, Halliburton "beat out thirty-six other bidders to win a five-year contract-not surprising perhaps, given that it was the company that drew up the plans." s T. Christian Miller noted, Halliburton "beat out thirty-six other bidders to win a five-year contract-not surprising perhaps, given that it was the company that drew up the plans."

In 1995, with Clinton in the White House, Halliburton recruited Cheney as its new boss. While the Halliburton division Brown Root had a long history as a U.S. military contractor, under Cheney's leadership Halliburton's role was to expand so dramatically that it would transform the nature of modern war. Thanks to the loosely worded contract that Halliburton and Cheney had crafted when he was at the Pentagon, the company was able to stretch and expand the meaning of the term "logistical support" until Halliburton was responsible for creating the entire infrastructure of a U.S. military operation overseas. All that was required of the army was to provide the soldiers and the weapons-they were, in a way, content providers, while Halliburton ran the show.

The result, first on display in the Balkans, was a kind of McMilitary experience in which deploying abroad resembled a heavily armed and perilous package vacation. "The first person to greet our soldiers as they arrive in the Balkans and the last one to wave goodbye is one of our employees," a Halliburton spokesperson explained, making the company's staff sound more like cruise directors than army logistics coordinators.21 That was the Halliburton difference: Cheney saw no reason why war shouldn't be a thriving part of America's highly profitable service economy-invasion with a smile. That was the Halliburton difference: Cheney saw no reason why war shouldn't be a thriving part of America's highly profitable service economy-invasion with a smile.

In the Balkans, where Clinton deployed nineteen thousand soldiers, U.S. bases sprang up as mini Halliburton cities: neat, gated suburbs, built and run entirely by the company. And Halliburton was committed to providing the troops with all the comforts of home, including fast-food outlets, supermarkets, movie theaters and high-tech gyms.22 Some senior officers wondered what the strip-mailing of the military would do to troop discipline-but they too were enjoying the perks. "Everything with Halliburton was gold-plated," one told me. "So we weren't complaining." As far as Halliburton was concerned, keeping the customer satisfied was good business -it guaranteed more contracts, and because profits were calculated as a percentage of costs, the higher the costs, the higher the profits. "Don't worry, it's cost plus," was a saying made famous in Baghdad's Green Zone, but the deluxe war spending was pioneered during the Clinton era. In just five years at Halliburton, Cheney almost doubled the amount of money the company extracted from the U.S. Treasury, from $1.2 billion to $2.3 billion, while the amount it received in federal loans and loan guarantees increased fifteenfold. Some senior officers wondered what the strip-mailing of the military would do to troop discipline-but they too were enjoying the perks. "Everything with Halliburton was gold-plated," one told me. "So we weren't complaining." As far as Halliburton was concerned, keeping the customer satisfied was good business -it guaranteed more contracts, and because profits were calculated as a percentage of costs, the higher the costs, the higher the profits. "Don't worry, it's cost plus," was a saying made famous in Baghdad's Green Zone, but the deluxe war spending was pioneered during the Clinton era. In just five years at Halliburton, Cheney almost doubled the amount of money the company extracted from the U.S. Treasury, from $1.2 billion to $2.3 billion, while the amount it received in federal loans and loan guarantees increased fifteenfold.23And he was well rewarded for his efforts. Before taking office as vice president, Cheney "valued his net worth at between $18 million and $81.9 million, including between $6 million and $30 million worth of stock in Halliburton Co. . . . Overall, Cheney was given some 1,260,000 Halliburton options, with 100,000 already used, 760,000 eligible to be redeemed and 166,667 to become valid this December [2000]."24 The push to expand the service economy into the heart of government was, for Cheney, a family affair. In the late nineties, while he was turning military bases into Halliburton suburbs, his wife, Lynne, was earning stock options in addition to her salary as a board member at Lockheed Martin, the world's largest defense contractor. Lynne's time on the board, from 1995 to 2001, coincided with a key period of transition for companies like Lockheed.25The Cold War was over, defense spending was dropping, and with nearly their entire budgets coming from government weapons contracts, these firms needed a new business model. At Lockheed and its fellow arms manufacturers, a strategy emerged to aggressively pursue a new line of work: running the government for a fee.

In the mid-nineties, Lockheed began taking over information technology divisions of the U.S. government, running its computer systems and a great deal of its data management. Largely under the public radar, the company went so far in this direction that, in 2004, The New York Times The New York Times reported, "Lockheed Martin doesn't run the United States. But it does help run a breathtakingly big part of it. . . . It sorts your mail and totals your taxes. It cuts Social Security checks and counts the United States census. It runs s.p.a.ce flights and monitors air traffic. To make all that happen, Lockheed writes more computer code than Microsoft. reported, "Lockheed Martin doesn't run the United States. But it does help run a breathtakingly big part of it. . . . It sorts your mail and totals your taxes. It cuts Social Security checks and counts the United States census. It runs s.p.a.ce flights and monitors air traffic. To make all that happen, Lockheed writes more computer code than Microsoft.4226 It made for a powerful husband-and-wife team. While d.i.c.k was steering Halliburton to take over the infrastructure of warfare abroad, Lynne was helping Lockheed to take over the day-to-day running of government at home. At times husband and wife found themselves in direct compet.i.tion. In 1996, when the state of Texas announced that corporations could bid to run its welfare program-a contract worth up to $2 billion over five years- both Lockheed and the IT giant Electronic Data Systems, which boasted d.i.c.k Cheney as a board member, bid on the contract. In the end, the Clinton administration intervened and halted the auction. Though it was generally an enthusiastic supporter of outsourcing, deciding who was eligible to receive welfare was determined to be an essential role of government, not suitable for privatization. Both Lockheed and EDS cried foul, as did the governor of Texas, George W. Bush, who thought privatizing the welfare system was a terrific idea.27 George W. Bush didn't distinguish himself as governor in too many ways, but there was one area in which he excelled: parceling out to private interests the various functions of the government he was elected to run - especially security-related functions, a preview of the privatized War on Terror he would soon unleash. Under his watch, the number of private prisons in Texas grew from twenty-six to forty-two, prompting The American Prospect The American Prospect magazine to call Bush's Texas "the world capital of the private-prison industry." In 1997, the FBI launched an investigation into a jail in Brazoria County, forty miles outside Houston, after a local television station aired a videotape of guards kicking unresisting inmates in the groin, shooting them with stun guns and attacking them with dogs. At least one of the violent guards in the video was wearing the uniform of Capital Correctional Resources, a private company contracted to supply guards for the prison. magazine to call Bush's Texas "the world capital of the private-prison industry." In 1997, the FBI launched an investigation into a jail in Brazoria County, forty miles outside Houston, after a local television station aired a videotape of guards kicking unresisting inmates in the groin, shooting them with stun guns and attacking them with dogs. At least one of the violent guards in the video was wearing the uniform of Capital Correctional Resources, a private company contracted to supply guards for the prison.28 Bush's enthusiasm for privatization was in no way dampened by the Brazoria incident. A few weeks later, he had what appears to have been an epiphany when he met Jose Pinera, the Chilean minister who had privatized social security during the Pinochet dictatorship. This is Pinera's description of the meeting: "By his concentrated focus, his body language [and] his relevant questions, I knew immediately that Mr. Bush had fully understood the essence of my idea: that Social Security reform could be used both to provide a decent retirement and to create a world of worker-capitalists, an ownership society. ... He was so enthusiastic that at the end he whispered in my ear with a smile, 'Go and tell all this to my little brother in Florida. He will also love it.' "29 The future president's commitment to auctioning off the state, combined with Cheney's leadership in outsourcing the military and Rumsfeld's patenting of drugs that might prevent epidemics, provided a preview of the kind of state the three men would construct together-it was a vision of a perfectly hollow government. Though this radical program did not form the centerpiece of Bush's campaign for the presidency in 2000, there were hints of what was in store: "There are hundreds of thousands of full-time federal employees that are performing tasks that could be done by companies in the private sector," Bush said in one campaign speech. "I will put as many of these tasks as possible up for compet.i.tive bidding. If the private sector can do a better job, the private sector should get the contract."30

September 11 and the Civil Service Comeback

As Bush and his cabinet took their posts in January 2001, the need for new sources of growth for U.S. corporations took on even greater urgency. With the tech bubble now officially popped and the Dow Jones tumbling 824 points in their first two and half months in office, they found themselves staring in the face of a serious economic downturn. Keynes had argued that governments should spend their way out of recessions, providing economic stimulus with public works. Bush's solution was for the government to deconstruct itself-hacking off great chunks of the public wealth and feeding them to corporate America, in the form of tax cuts on the one hand and lucrative contracts on the other. Bush's budget director, the think-tank ideologue Mitch Daniels, p.r.o.nounced, "The general idea-that the business of government is not to provide services, but to make sure that they are provided-seems self-evident to me."31 That a.s.sessment included disaster response. Joseph Allbaugh, the Republican Party operative whom Bush put in charge of the Federal Emergency Management Agency (FEMA)-the body responsible for responding to disasters, including terrorist attacks-described his new place of work as "an oversized ent.i.tlement program." That a.s.sessment included disaster response. Joseph Allbaugh, the Republican Party operative whom Bush put in charge of the Federal Emergency Management Agency (FEMA)-the body responsible for responding to disasters, including terrorist attacks-described his new place of work as "an oversized ent.i.tlement program."32 Then came 9/11, and all of a sudden having a government whose central mission was self-immolation did not seem like a very good idea. With a frightened population wanting protection from a strong, solid government, the attacks could well have put an end to Bush's project of hollowing out government just as it was beginning.

For a while, that even seemed to be the case. "September 11 has changed everything," said Ed Feulner, Milton Friedman's old friend and president of the Heritage Foundation, ten days after the attack, making him one of the first to utter the fateful phrase. Many naturally a.s.sumed that part of that change would be a reevaluation of the radical antistate agenda that Feulner and his ideological allies had been pushing for three decades, at home and around the world. After all, the nature of the September 11 security failures exposed the results of more than twenty years of chipping away at the public sector and outsourcing government functions to profit-driven corporations. Much as the flooding of New Orleans exposed the rotting condition of public infrastructure, the attacks pulled back the curtain on a state that had been allowed to grow dangerously weak: radio communications for the New York City police and firefighters broke down in the middle of the rescue operation, air traffic controllers didn't notice the off-course planes in time, and the attackers had pa.s.sed through airport security checkpoints staffed by contract workers, some of whom earned less than their counterparts at the food court.33 The first major victory of the Friedmanite counterrevolution in the United States had been Ronald Reagan's attack on the air traffic controllers' union and his deregulation of the airlines. Twenty years later, the entire air transit system had been privatized, deregulated and downsized, with the vast majority of airport security work performed by underpaid, poorly trained, nonunion contractors. After the attacks, the inspector general of the Department of Transportation testified that the airlines, which were responsible for security on their flights, had skimped significantly to keep costs down. The "counterpressures in turn manifested themselves as significant weaknesses in security," he told the Bush-convened 9/11 Commission. A longtime Federal Aviation Authority security official testifed before the commission that the airlines' approach to security was "decry, deny and delay."34 On September 10, as long as flights were cheap and plentiful, none of that seemed to matter. But on September 12, putting $6-an-hour contract workers in charge of airport security seemed reckless. Then, in October, envelopes with white powder were sent to lawmakers and journalists, spreading panic about the possibility of a major anthrax outbreak. Once again, nineties privatization looked very different in this new light: Why did a private lab have the exclusive right to produce the anthrax vaccine? Had the federal government signed away its responsibility to protect the public from a major public health emergency? It didn't help that Bioport, the privatized lab in question, had failed a series of inspections and that the FDA wasn't even authorizing it to distribute its vaccines at the time.35 Furthermore, if it was true, as media reports kept claiming, that anthrax, smallpox and other deadly agents could be spread through the mail, the food supply or the water systems, was it really such a good idea to be pushing ahead with Bush's plans to privatize the postal service? And what about all those laid-off food and water inspectors-could somebody bring them back? Furthermore, if it was true, as media reports kept claiming, that anthrax, smallpox and other deadly agents could be spread through the mail, the food supply or the water systems, was it really such a good idea to be pushing ahead with Bush's plans to privatize the postal service? And what about all those laid-off food and water inspectors-could somebody bring them back?

The backlash against the pro-corporate consensus only deepened in the face of new scandals like that of Enron. Three months after the 9/11 attacks, Enron declared bankruptcy, leading thousands of employees to lose their retirement savings while executives acting on insider knowledge cashed out. The crisis contributed to a general plummeting of faith in private industry to perform essential services, especially when it came out that it was Enron's manipulation of energy prices that had led to the ma.s.sive blackouts in California a few months earlier. Milton Friedman, aged ninety, was so concerned that the tides were shifting back toward Keynesianism that he complained that "businessmen are being presented in the public as second-cla.s.s citizens."36 While CEOs were falling from their pedestals, unionized public sector workers-the villains of Friedman's counterrevolution-were rapidly ascending in the public's estimation. Within two months of the attacks, trust in government was higher than it had been since 1968-and that, remarked Bush to a crowd of federal employees, is "because of how you've performed your jobs."37 The uncontested heroes of September 11 were the blue-collar first responders-the New York firefighters, police and rescue workers, 403 of whom lost their lives as they tried to evacuate the towers and aid the victims. Suddenly, America was in love with its men and women in all kinds of uniforms, and its politicians-slapping on NYPD and FDNY baseball caps with unseemly speed-were struggling to keep up with the new mood. The uncontested heroes of September 11 were the blue-collar first responders-the New York firefighters, police and rescue workers, 403 of whom lost their lives as they tried to evacuate the towers and aid the victims. Suddenly, America was in love with its men and women in all kinds of uniforms, and its politicians-slapping on NYPD and FDNY baseball caps with unseemly speed-were struggling to keep up with the new mood.

When Bush stood with the firefighters and rescue workers at Ground Zero on September 14-what his advisers call "the bullhorn moment" -he was embracing some of the very unionized civil servants that the modern conservative movement had devoted itself to destroying. Of course he had to do it (even d.i.c.k Cheney put on a hard hat in those days), but he didn't have to do it so convincingly. Through some combination of genuine feeling on Bush's part, and the public's projected desire for a leader worthy of the moment, these were the most moving speeches of Bush's political career.

For weeks after the attacks, the president went on a grand tour of the public sector-public schools, firehouses and memorials, the Centers for Disease Control and Prevention-embracing and thanking civil servants for their contributions and humble patriotism. "We have gained new heroes," Bush said in a speech, praising not only emergency services personnel but teachers, postal employees and health care workers.38 At these events, he treated work done in the public interest with a level of respect and dignity that had not been seen in the United States in four decades. Cost-cutting was suddenly off the agenda, and in every speech the president gave, he announced some ambitious new public program. At these events, he treated work done in the public interest with a level of respect and dignity that had not been seen in the United States in four decades. Cost-cutting was suddenly off the agenda, and in every speech the president gave, he announced some ambitious new public program.

"The twin demands of a sagging economy and an urgent new war on terrorism have transformed the philosophical heart of President Bush's agenda," confidently declared John Harris and Dana Milbank in The Washington Post The Washington Post eleven days after the attacks. "A man who came to power offering himself as an ideological descendant of Ronald Reagan has emerged nine months later as something closer to an heir of Franklin D. Roosevelt." They further observed that "Bush is working on a large economic stimulus package to stave off recession. He said a weak economy needs its pump primed by government with a big infusion of money-a basic precept of Keynesian economics that was at the heart of FDR's New Deal." eleven days after the attacks. "A man who came to power offering himself as an ideological descendant of Ronald Reagan has emerged nine months later as something closer to an heir of Franklin D. Roosevelt." They further observed that "Bush is working on a large economic stimulus package to stave off recession. He said a weak economy needs its pump primed by government with a big infusion of money-a basic precept of Keynesian economics that was at the heart of FDR's New Deal."39

A Corporate New Deal

Public p.r.o.nouncements and photo ops aside, Bush and his inner circle had no intention of converting to Keynesianism. Far from shaking their determination to weaken the public sphere, the security failures of 9/11 reaffirmed their deepest ideological (and self-interested) beliefs-that only private firms possessed the intelligence and innovation to meet the new security challenge. Although it was true that the White House was on the verge of spending huge amounts of taxpayer money to stimulate the economy, it most certainly was not going to be on the model of FDR. Rather, Bush's New Deal would be exclusively with corporate America, a straight-up transfer of hundreds of billions of public dollars a year into private hands. It would take the form of contracts, many offered secretively, with no compet.i.tion and scarcely any oversight, to a sprawling network of industries: technology, media, communications, incarceration, engineering, education, health care.43 What happened in the period of ma.s.s disorientation after the attacks was, in retrospect, a domestic form of economic shock therapy. The Bush team, Friedmanite to the core, quickly moved to exploit the shock that gripped the nation to push through its radical vision of a hollow government in which everything from war fighting to disaster response was a for-profit venture.

It was a bold evolution of shock therapy. Rather than the nineties approach of selling off existing public companies, the Bush team created a whole new framework for its actions-the War on Terror-built to be private from the start. This feat required two stages. First, the White House used the omnipresent sense of peril in the aftermath of 9/11 to dramatically increase the policing, surveillance, detention and war-waging powers of the executive branch-a power grab that the military historian Andrew Bacevich has termed "a rolling coup."40 Then those newly enhanced and richly funded functions of security, invasion, occupation and reconstruction were immediately outsourced, handed over to the private sector to perform at a profit. Then those newly enhanced and richly funded functions of security, invasion, occupation and reconstruction were immediately outsourced, handed over to the private sector to perform at a profit.

Although the stated goal was fighting terrorism, the effect was the creation of the disaster capitalism complex-a full-fledged new economy in homeland security, privatized war and disaster reconstruction tasked with nothing less than building and running a privatized security state, both at home and abroad. The economic stimulus of this sweeping initiative proved enough to pick up the slack where globalization and the dot-com booms had left off. Just as the Internet had launched the dot-com bubble, 9/11 launched the disaster capitalism bubble. "When the IT industry shut down, post-bubble, guess who had all the money? The government," said Roger Novak of Novak Biddle Venture Partners, a venture capitalism firm that invests in homeland security companies. Now, he says, "every fund is seeing how big the trough is and asking, How do I get a piece of that action?"41 It was the pinnacle of the counterrevolution launched by Friedman. For decades, the market had been feeding off the appendages of the state; now it would devour the core.

Bizarrely, the most effective ideological tool in this process was the claim that economic ideology was no longer a primary motivator of U.S. foreign or domestic policy. The mantra "September 11 changed everything" neatly disguised the fact that for free-market ideologues and the corporations whose interests they serve, the only thing that changed was the ease with which they could pursue their ambitious agenda. Now, rather than subjecting new policies to fractious public debate in Congress or bitter conflict with public sector unions, the Bush White House could use the patriotic alignment behind the president and the free pa.s.s handed out by the press to stop talking and start doing. As The New York Times The New York Times observed in February 2007, "Without a public debate or formal policy decision, contractors have become a virtual fourth branch of government." observed in February 2007, "Without a public debate or formal policy decision, contractors have become a virtual fourth branch of government."42 Rather than meet the security challenge posed by September