Naomi Klein put forward the thesis that free market/neo-conservative policies come about as a result of politicians using a crisis to push them through, she calls this doctrine the Shock Doctrine. Part of where Klein goes off the rails is in her insistance on equating free market policies and Milton Friedman with neo-conservative policies. A bigger problem though is that Klein just doesn’t seem to understand how government works. Government usually expands both in terms of size and scope of powers during a time of crisis not contract as you would see with free market policies. Take for example the following views expressed by Rahm Emmanuel,
RAHM Emanuel in an earlier incarnation might have helped inspire The West Wing, but in his new role as Barack Obama’s chief of staff, I like the way he puts the challenge of taking over a country that is crashing into recession.
“You never want a serious crisis to go to waste,” Emanuel declared last week.
“It’s an opportunity to do things you could not do before. If there’s a silver lining, it is: you can do big, bold things — throw long and deep.
“This is an opportunity for things that used to be long-term problems — health care, tax, energy, education, financial regulation — things that had been postponed for too long are now immediate, and must be dealt with. It’s not an argument for bigger government, or smaller government, but for more effective government.”
That is classic Shock Doctrine thinking…but is Emmanuel a neo-con? No. Is he a free market type? No. But he is more than willing to use a crisis to expand both the size and scope of power that the government has.
Paul Krugman basically makes the same point and praises Emmanuel for stating the point in public.
But Barack Obama should learn from F.D.R.’s failures as well as from his achievements: the truth is that the New Deal wasn’t as successful in the short run as it was in the long run. And the reason for F.D.R.’s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious.
About the New Deal’s long-run achievements: the institutions F.D.R. built have proved both durable and essential. Indeed, those institutions remain the bedrock of our nation’s economic stability. Imagine how much worse the financial crisis would be if the New Deal hadn’t insured most bank deposits. Imagine how insecure older Americans would feel right now if Republicans had managed to dismantle Social Security.
Can Mr. Obama achieve something comparable? Rahm Emanuel, Mr. Obama’s new chief of staff, has declared that “you don’t ever want a crisis to go to waste.” Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal health care system, that will change the shape of American society for generations to come.
Governments tend to expand in size and scope over time. They tend to expand during times of crisis such as a war and/or an economic crisis. What happened after 9/11? The Patriot Act, Homeland Security Department, expansion of TSA powers and rules, dubious wire tapping, Guantanamo Bay, etc. Now with the economic crisis there are cries that we should use the crisis to push through some sort of universal health care reform. Whiskey Tango Foxtrot? Since when did health care have anything to do with the financial crisis? Krugman has even argued that creating labor and industry wide cartels wouldn’t be a bad thing. Huh? Of course, such cartels would likely be monitored if not outright controlled by the government. Well okay then, full steam ahead. Monopoly power in the hands of government is always a good thing.
