Are We The Latest Victim of Economic Shock Therapy?

Naomi Klein's most recent book, The Shock Doctrine, puts forth the theory that over the past 30 or so years, the US government has either directly caused or passively enabled foreign governments to run into chaos, and before the chaos had settled, to pass through "emergency measures" -- measures which invariably favored US companies while making the situation worse for the vast majority of those countries' citizens. Chile, Bolivia, Poland, Russia, South Africa, and Iraq, among others, provide startling examples.

The current financial crisis in the United States and the government's subsequent $700 billion bailout plan whiffs of something similar: pass a plan through Congress that no one really understands, but which gives billions of dollars to American companies under the premise that doing so will save all American citizens from an even deeper crisis. What will likely really happen is that government social spending will be slashed and the already rich will miraculously become even richer, even though they are the ones that caused the crisis. Klein calls it Disaster Capitalism, wherein drastic measures are put into place before the general populace has had a chance to recover from a shock in order to protest.

The irony of disaster capitalism is that those who promote it do so under the guise of supporting free market economics, when in practice they clearly support something much more like corporatism, with high government involvement and intervention in the economy.

It's too soon to say whether or not the bailout is the next case of disaster capitalism, but there are reasons for concern: President Bush is stressing the urgency of passing the bailout, saying that doing it quickly is more important than quibbling over details; the government is keeping details of the plan largely under wraps so that most Americans are unable to understand it thoroughly or accurately; money is being given to large companies and we are expected to trust, rather than truly comprehend, how it is with "Main Street" in mind.

Klein herself writes more thoroughly about the possibility here.