Shocking the Shock Doctrine: What Recovery in Puerto Rico Could Look Like

The cover of Naomi Klein's best-seller The Shock Doctrine. The book is available here.

by Gaius Publius

If neoliberalism is the belief that the proper role of government is to enrich the rich — in Democratic circles they call it "wealth creation" to hide the recipients; Republicans are much more blatant — then the "shock doctrine" is its action plan.

Click the link above for more information (or read the book), but in essence the idea is to use any form of disaster, whether earthquake or economic/political crisis, to remake a society in the neoliberal image. To reconstruct the destroyed world, in other words, to the liking of holders of great wealth — by privatizing everything of value held by the public (think water rights, public roads); by forcing austerity on cash-strapped governments as the price for "aid" (think loans, not grants, repaid by unwritten social insurance checks); by putting "managers," or simply loan officers, in charge of democratic decision-making.

In simple, a "shock doctrine" solution always takes this form: "Yes, we'll help you, but we now own your farm and what it produces. Also, your family must work on it for the next 50 years."

This is what happened in Chile after Pinochet and his coup murdered the democratically elected socialist Salvador Allende and took over the government. It's what's happening to Greece, victim of collusion between greedy international bankers and the corrupt Greek politicians they cultivated. And it's what happened in the U.S. during the 2008 bailout of bankers, by which government money was sent in buckets to companies like AIG so they could pay their debts in full to companies like Goldman Sachs. While millions of mortgaged homeowners crashed and burned to the ground.

The populist reaction to neoliberal "reform" is usually social revolt, often or usually ineffective, since creditors are, almost by definition, people with money, and people with money, almost by definition, control most governments. In Greece, the revolt sparked the election of an (ineffective) "socialist" government — plus the rise of the Greek neo-Nazi party, Golden Dawn. In the U.S. the revolt still still sparks universal (and ineffective) hatred of the 2008 bank bailout — plus the rise of the failed Sanders candidacy and the successful Trump presidency.

The form this same revolt will take in 2018 and 2020 is still to be determined. 

The Shock Doctrine and Puerto Rico

The "shock doctrine" — the stripping of wealth from the devastated by the already-way-too-wealthy — is now being applied to Puerto Rico. Even before the hurricanes hit it, Puerto Rico was a second-class citizen relative to states of the U.S., even among its non-state territories. In contrast to Puerto Rico, for example, the American Virgin Islands were instantly much better treated when it came to relief from the Jones Act, a sign of already-established prejudice.

The reason should be obvious. In Puerto Rico, English is the primary language of less than 10% of the people, while Spanish is the dominant language of the school system and daily life. In the American Virgin Islands, English is the dominant language, and Spanish is spoken by less than 20% of the population. The fact that two-thirds of the population of the U.S. Virgin Islands is black seems to be lost on most Americans, a fact that likely benefits those inhabitants greatly in times like these.

Thus, to most Americans the citizens of Puerto Rico are conveniently (for neoliberals) easy to paint as "them," the undeserving, which changes what atrocities can be committed in the name of "aid" — much like it did after Hurricane Katrina devastated "them"-inhabited New Orleans.

In Puerto Rico's case, they entered the recent hurricane season burdened with load of debt, much (or most) of it bought on the secondary market and held by the hedge funds and the vulture banks you might expect to hold it. I haven't been able to find specific documentation on this, but I strongly suspect that much (or most) of this debt was purchased for pennies on the dollar by "investors" hoping to make the U.S. government make sure Puerto Rico never defaults on it, thus guaranteeing profit to the tune of many multiples of the original purchase price, profit of many hundreds of percent.

That plan — forcing the U.S. government to force Puerto Rico to make every "investor" whole — was already in effect under the Obama administration, and it's in effect today. Classic bipartisan neoliberals in action.

Then came hurricane season, with the kind of apocalyptic, lingering devastation you've most likely already heard about. Before the storms hit the island, Puerto Rico needed debt relief. Now they need humanitarian relief as well. They need not only to rebuild their economy, they need to rebuild the entire island itself.

Debt "Relief" or Debt Forgiveness?

What's killing the modern world, as I've noted for years and years, is the world-wide overhang of personal debt — not government deficits, which are entirely different, but the mortgage, credit card, payday and student debt that makes it impossible for too many households to return to their pre-2008 "normal," as constrained as even that that likely was.

Put simply, if U.S. government policy is to "make every lender whole" before anything else is done, the mass of the U.S. population will see no recovery in their lifetimes. No economy in the world can grow at more than a snail's pace if every dollar earned is taken to pay unpayable debts — which is were we are today despite the illusory signs of "recovery" in many of our cities.

Remember, debts that cannot be repaid won't be repaid., despite the best effort of creditors to squeeze debtors even to the grave. All that can happen is an escalation of social cruelty. In cases like these, when governments become the creditors' enforcement mechanism, revolts are bound to follow.

In the U.S., we're living with the consequences of that revolt today, in the form of the current presidency. (Imagine the state of that revolt if Sanders had been available, and elected instead. Imagine government as the friend, not the enemy, of the long-suffering debtor class.)

In Puerto Rico, the problem is even worse than on the mainland. The "bankers" — a term I'll use to mean "holders of Puerto Rican debt" — are demanding that Puerto Rico pay them even before it pays its pension obligations, the equivalent of its Social Security checks. 

And now, in response to hurricane devastation, those same "bankers" are inducing the U.S. government to offer hurricane "relief" in the form of even more loans. Put simply, to get out of hurricane trouble, they must make their debt trouble worse or live with the status quo.

Climate writer Naomi Klein and Elizabeth Yeampierre, writing in The Intercept:

[T]he fact that the House-approved relief package contains $5 billion in loans for the island, rather than grants, is a special kind of cruelty. Because on an island already suffering under an un-payable $74 billion debt (and another $49 billion in unfunded pension obligations), Puerto Ricans understand all too well that debt is not relief. On the contrary, it is a potent tool of perpetual impoverishment and control from which relief is urgently needed.

The very fact that the House of Representatives bundled that loan into its sweeping multi-disaster bill (up for a vote in the Senate any day now) is symbolic of a deep fear that has lurked in the background for many Puerto Ricans ever since hurricanes Irma and Maria struck. The fear is that however much islanders are suffering in the midst of their ongoing humanitarian emergency, it’s the phase after the emergency passes that could be even more perilous. That’s when policies marketed as reconstruction could well morph into their own kind of punishment, leaving the island more unequal, indebted, dependent, and polluted than it was before the hurricanes hit.

This is a phenomenon we call “the shock doctrine,” and we have seen it play out many times before. A disaster strikes, public sympathy is awakened, and there are grand pledges to “build back better,” bringing justice to those who have just lost everything. And yet almost immediately the emergency atmosphere becomes the pretext to push through a wish list for big polluters, real estate developers, and financiers at the expense of those who have already lost so much. Think of the public schools and public housing closed and torn down in New Orleans after Hurricane Katrina. Think, too, of the way the 2010 earthquake in Haiti became a pretext to push for sweatshops and luxury resorts, while basic housing was neglected and the minimum wage was suppressed.

Neoliberalism at its best — and most obvious. Note the role that racism plays in making this even palatable, here as in New Orleans.

An Anti-Neoliberal Recovery Plan

Which brings us to the real point of Yeampierre and Klein's article: Not only is an anti-neoliberal recovery plan possible, but it's starting to happen. The writers offer two data points — about power generation and agriculture — but there are other areas of restructuring that could have been brought up as well.

First, here's what an anti-neoliberal solution to damaged power facilities looks like — wide-spread installation of distributed solar infrastructure to replace the old fossil fuel generators (emphasis mine):

[T]hese are only the preconditions for the real work [examples include rescinding the Jones Act], which is not reconstructing the island as it was, but reimagining and remaking an economic system that was in direct conflict with both the island’s people and its ecology. Before Irma and Maria knocked out the vast majority of its electricity, Puerto Rico was getting 98 percent of its power from fossil fuels. A just transition would replace that extractive model with a system based on micro-grids of renewable energy generation, a decentralized network that would be more resilient in the face of inevitable weather shocks, while reducing the pollution making our climate go haywire in the first place.

This energy transition is already underway in grassroots relief efforts, thanks to innovative projects, like Resilient Power Puerto Rico, which has been distributing solar-powered generators to some of the most remote parts of the island. The organizers are working toward a full-blown, permanent solar revolution designed and controlled by Puerto Ricans themselves. “Rather than perpetuate the island’s dependence on vulnerable distribution hardware and carbon-heavy fuel,” Resilient Power explains on its website, “we prioritize clean production of energy that allows each household to be self-reliant.”

About the solar solution to rebuilding power generation, note:

• Decentralized solar generaton helps protect the island against future storm damage by reducing interdependency.

• Renewable power sources are the inverse of carbon-based sources — they're climate-friendly, not climate-destructive.

• The "bankers" and others in the world of the wealthy are heavily invested in a carbon bubble they are desperate to get out of before it collapses. Much of the money world's money is tied to unburnable in-the-ground carbon, and they need to sell as much as they can before the bubble collapses — preferably after most of them are dead or otherwise financially secure.
  
  As a result, most of the world of money will hate this idea and work to make it impossible to implement.

Imagine how our donor-bought government will respond to this, even were the government run by donor-beholden Democrats. This will be an interesting battle to watch.

Next, the anti-neoliberal plan for agricultural recovery looks like this:

Many of the island’s farmers are demanding a similar revolution in agriculture. Farmers report that Maria destroyed almost all of this season’s crops while contaminating much of the soil, providing yet another opportunity to reimagine a system that was broken before the storm. Today, far too much of Puerto Rico’s fertile land goes uncultivated, leading islanders to import roughly 80 percent of their food. Before the hurricanes, there was a growing movement to break this cycle by reviving local agriculture through farming methods, such as “agroecology,” that draw on both indigenous knowledge and modern technology (and include the added bonus of carbon sequestration).

Farmers’ groups are now calling for the proliferation of community-controlled agricultural cooperatives that would grow food for local consumption. Like the renewable energy micro-grids, it’s a model that is far less vulnerable to supply-chain shocks like hurricanes — and it has the additional benefit of generating local wealth and increasing self-sufficiency.

As with the solar-powered generators, Puerto Rico’s farmers aren’t waiting for the emergency to subside before beginning this transition. On the contrary, groups like Boricuá Organization for Ecological Agriculture have “agroecology brigades” traveling from community to community to deliver seeds and soil so that residents can begin planting crops immediately. Katia Avilés-Vázquez, one of Boricuá’s farmers, said of a recent brigade: “Today I saw the Puerto Rico that I dream being born. This week I worked with those who are giving it birth.”

Can you imagine what Monsanto, for example, thinks of the dissemination of free "seeds and soil" as a solution to Puerto Rico's agriculture crisis? Certainly it looks through their lens as the loss of a prime "wealth creating" opportunity. Pay attention to the battle over agriculture recovery in Puerto Rico

As I said, there are other areas that reconstruction could take a decidedly anti-neoliberal shape, but these two show what anti-neoliberal solutions look like.

The Battle for Puerto Rico

The obvious fight in Puerto Rico is the fight to create more seaside golf courses and five-star resorts ("wealth creation") as part of the price for "recovery." But there's so much more to this story. What we're about to witness in Puerto Rico is an island-wide pitched battle for and against broad-stroke neoliberal solutions to the island's combined and massive debt and hurricane crises.

As you watch the battle unfold, watch through this wider lens, not just the lens of loans-for-aid and seaside resorts. If the Puerto Rican residents hold firm, as the writers seem to think they might, this could get very ugly fast, but it's a battle that must be joined everywhere. The Puerto Ricans may not go down easily; and they may even win. Good for them if they do; they deserve all of our help for just that effort alone.

GP