A Good Idea?

By Brent Erickson
From Postmodern Times
2007

"Gandhi was once asked what he thought of Western Civilization and his answer was 'Maybe it would be a good idea.', and you can say the same for capitalism, 'Maybe it would be a good idea.', we've never had anything remotely resembling it and the reason we don't have it is the powerful would never permit it. They know very well if capitalist institutions were established it would destroy the economy in no time. Therefore they insist on a powerful state which intervenes to protect them from the ravages of the market." -Noam Chomsky 2004

Western Civilization is not capitalist? That can't be correct. Everybody knows that America is the world-wide example of the so called Free Market, the polar opposite to Communism. The U.S exports Capitalism through "Economic Globalization". That is what we're told isn't it? From billboards for Forbes Magazine proudly reading, "Capitalism served fresh daily.", to critiques of the economic system by Author Michael Parenti proclaiming "Capitalism is the problem!" the word is regularly used.

Though it is true that the western economic model does have capitalist features to it, many Americans and Canadians do benefit little if any from the billions spent by their governments every year and are left to "fend for themselves". However, with a closer look at how our economic system actually functions it becomes clear that "Free Market Capitalism" is an incorrect label to give the prevailing economic system in North America.

J.K Galbraith, the legendary Canadian-American economist addresses the issue of the free market in his 1966 BBC Reith Lecture "The New Industrial State". "I have under-taken to show in these lectures, that the modern industrial society, or that part of it which is composed of the large corporation is in all essentials a planned economy...Now, I'm not arguing that market influences are entirely excluded from effects on [economic] decisions. Economics as it exists, rather than how it is taught, has very few pure cases...But the notion that the consumer is a sovereign influence in the economy that all decisions begin with him is a pure case that will not do, or it will serve only those who wish to believe in fairy tales."

Government Spending
One way that our economic system is not "Free" is that direct government spending is a huge part of our overall economy. From schools, libraries, and arts funding to military, police and business subsidies, the state is there.

If the government were to cut taxes radically and slash state intervention in the economy, leaving what is now government funded to the open market, our society would be quite different.

But wait a minute, hasn't the government been "privatizing" services, and "cutting the pork of Big Government" for years? While since the early 1980's, the government has been "privatizing" certain sectors of society like Medicare, and slashing funding to Aboriginal people, Women's groups and the Environment, they have been increasing funding to others, like Police and Military, and Business.

Ronald Reagan is a symbol of so called free market ideology. He slashed welfare to the poor and spoke often of his belief in free markets. Noam Chomsky notes that Reagan had granted more import relief to U.S. industry than any of his predecessors in more than half a century; in fact, more than all predecessors combined. Market discipline, writes Chomsky is; "...for you but not for me, unless the 'playing field' happens to be tilted in my favor, typically as a result of large-scale state intervention. It’s hard to find another theme so dominant in the economic history of the past three centuries...Another chapter of the story includes the huge transfer of public funds to private power, often under the traditional guise of "security." Without such extreme measures of market interference, it is doubtful that the U.S. automotive, steel, machine tool, semiconductor industries, and others, would have survived Japanese competition or been able to forge ahead in emerging technologies, with broad effects through the economy."

"Corporate Welfare"
"Corporate Welfare" is a term (said to be first coined by Ralph Nader in 1956) usually used to describe direct government subsidies of for-profit Corporations, but it is more than that. "Corporate Welfare" is, writes Nader, "...the enormous and myriad subsidies, bailouts, giveaways, tax loopholes, debt revocations, loan guarantees, discounted insurance and other benefits conferred by government on business...Corporate welfare programs siphon funds from appropriate public investments, subsidize companies ripping minerals from federal lands, enable pharmaceutical companies to gouge consumers, perpetuate anti-competitive oligopolistic markets, injure our national security, and weaken our democracy."

Corporate welfare is nothing new. Both Canada and the U.S would not be the countries they are today without massive state subsides. Giveaways of public land is one of the oldest forms of corporate welfare. The U.S National Mineral Act of 1866 gave millions of acres of prime land to mining companies for free. Railroad corporations received over 100 million acres of land, and millions of dollars in federal subsidies for rail construction. Meanwhile, the signed commitments made to Native people, to honor land treaties, remain unrealized to this day.

U.S congressman Bernie Sanders questions the wisdom of the current economic model of systemic corporate welfare. "This country has a $6 trillion national debt, a growing deficit and is borrowing money from the Social Security Trust Fund in order to fund government services. We can no longer afford to provide over $125 billion every year in corporate welfare - tax breaks, subsidies and other wasteful spending - that goes to some of the largest, most profitable corporations in America. One of the most egregious forms of corporate welfare can be found at a little known federal agency called the Export-Import Bank, an institution that has a budget of about $1 billion a year and the capability of putting at risk some $15.5 billion in loan guarantees annually. At a time when the government is under-funding veterans' needs, education, health care, housing and many other vital services, over 80% of the subsidies distributed by the Export-Import Bank goes to Fortune 500 corporations. Among the companies that receive taxpayer support from the Ex-Im are Enron, Boeing, Halliburton, Mobil Oil, IBM, General Electric, AT&T, Motorola, Lucent Technologies, FedEx, General Motors, Raytheon, and United Technologies."

The Impact of Corporate Welfare is felt not only by the domestic population, who are footing the bill for our economic system, but the effect on developing countries is even more severe. The subsidies the governments of the U.S and Canada give to corporations lower the price of goods worldwide, making it almost impossible for producers in developing countries to compete with the North Americans, driving small business out of production. This is an important aspect of what is misleadingly called "Free Trade".

In India, there has been an epidemic of suicides by farmers, over the past ten years. Author, physicist and ecologist Vandana Shiva blames the western economic system for destroying the lives of her countrymen. "Indian farmers had never committed suicide on a large scale, it's something totally new, it's linked to the last decade of 'Globalization', and 'Trade Liberalization', under a corporate driven economy...A few weeks ago [Nov,2006] I was in Punjab, 2,800 widows of farmer suicides, have lost their land, are having to bring up children as landless workers on others land, and yet the system does not respond to it because there is only one response. Get Monsanto out of the seed sector, they are part of this Genocide, and ensure that WTO (World Trade Organization) rules are not bringing down the prices of agriculture produce in the U.S, in Canada, in India, and allow trade to be honest. I don't think we need to talk about 'free trade' and 'fair trade' we need to talk about honest trade. Todays trade system, especially in agriculture, is dishonest and this dishonesty has become a war against farmers, it's become a Genocide "

"True Cost Accounting"
Despite the fact technologies exist to replace the fossil fuel engine, oil and automobiles play a huge roll in modern industrial society. It has been said that alternatives to oil are not cost effective, but once the true cost of oil subsides are revealed, renewable technologies make even more sense. The price not only of direct subsidies, but of costs transferred to governments or to the public is calculated in what has been called "True Cost Accounting".

According to Adbusters magazine, "True cost is such a revolutionary idea because in a true cost market place every product tells the ecological truth. The Price tag of an automobile would include the pollution it causes over its lifetime, the building and maintaining of roads, the medical costs of accidents and the noise and degradation caused by urban sprawl, the traffic policing and military protection of oil fields and supply lines, plus the real but hard-to- estimate cost to future generations of oil depletion and climate change...The [U.S] National Defense Council Foundation Estimates that the Pentagon spends $49.1 billion a year preserving access to Persian Gulf oil, an amount equal to adding $1.17 to the cost of a gallon of gasoline. And that before the U.S invaded Iraq."

The Ontario Medical Association, (“The Illness Costs of Air Pollution Ontario” June 2000) estimates that air pollution costs Ontario's twelve million residents over $1 billion per year in hospital admissions, emergency room visits and worker absenteeism. Private insurers hit by climate change costs released a report in 2001 demonstrating that more frequent tropical cyclones, loss of land, as a result of rising sea levels, and damage to fishing stocks, agriculture and water supplies, amounted to an annual bill of over $300 billion.

The government and the public are there to accommodate the oil and automobile corporations, paying the "externalities" created from this ecologically devastating form of transport, money that could be spent on sustainable development. But if you do drive, consider yourself a capitalist, and like to pay your own way, I'm sure the government will gladly accept a cheque.

"[Have you ever wondered] what would it cost to drive if the price tag of gas included air pollution, road construction and maintenance; property taxes lost from land cleared for freeways; free parking paid for by taxes; noise and vibration damage to structures; protection of petroleum supply lines; sprawl and loss of transportation options; auto accidents; and congestion? A number of researchers have tried to answer this question. John Holtzclaw of the Sierra Club, "America's Autos on Welfare", profiled eight studies that, when averaged, estimated the true price of gas at $6.05 a gallon. As for vehicles, transportation analyst Todd Litman [“Transportation Costs & Benefits,”] June 2004 has calculated that the external costs of driving would add $42,363 to the sticker price of a shiny new car, based on a 12.5 year lifespan.", (from Adbusters).

Jobs and Taxes
It is common to hear argued that although the public are footing the bill for the so-called capitalists, at least the corporations are providing jobs and paying taxes. Unfortunately, even though large corporations are good at making money, they are less successful at providing jobs. In 2005, revenues for the Fortune 500, the five hundred most profitable corporations in the U.S, were over $9 trillion or over 73 percent of U.S. GDP. Soon Fortune 500 revenues are expected even to surpass the total economic output of the United States. If the Fortune 500 constituted a nation, their economy would be larger than the economies of Japan, the UK, Germany and France combined. However the percentage of Americans employed by Fortune 500 companies has steadily dropped from 20 percent of the workforce in 1980 to less than 9 percent today.

According to the Canadian Federation of Independent Business,(CFIB) "Seventy-five per cent of all businesses in Canada employ fewer than five employees and almost 60 per cent of employed Canadians work for a small or medium-sized business." In America "About three quarters of all U.S. business firms have no payroll." Reports the U.S Census Bureau. "Most are self-employed persons operating unincorporated businesses." Despite the fact that most of the citizens in North America are employed by small business, or the state itself, the government continues to bow to the pressure of large corporations to pay, what should be, their expenses or to subsidize them directly. This is a systematic violation of the free market.

As for paying taxes, the AFL-CLO reports, "Nearly one-third of the nation’s largest and most profitable corporations paid no federal income tax between 2001 and 2003—yet still received billions of dollars in tax rebates, according to a new study.

'Corporate Income Taxes in the Bush Years', released by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy, finds 82 of 275 companies CTJ examined enjoyed at least one year in 2001–2003 in which they paid no federal income taxes yet received billions of dollars in outright tax rebates. In 2003 alone, 46 of the companies paid no federal income taxes and in some cases, received tax rebates.

The tax burden in north America is shouldered primarily by the middle class, who must work to live and do not enjoy protection from the market as corporations do. As Cassandra Q. Butts writes in a 2004 article, "The Corporate Tax Dodge" for The Center for American Progress; "The news that more than 60 percent of U.S. corporations failed to pay any federal taxes from 1996 through 2000 when corporate profits were soaring and that corporate tax receipts had fallen to just 7.4 percent of overall federal tax revenue in 2003 – the lowest since 1983 and the second-lowest rate since 1934 – is an outrage. But it should come as no surprise to anyone who has been paying attention to national tax policy over the past few years."

Consider Argentina
If you think that North America has been privatized, and that the state is not very involved in economics, or that more privatization would help our society, consider the case of Argentina. As Noam Chomsky noted recently, "Argentina was the poster child for the IMF, (International Monetary Fund) and following IMF rules, lead to the worst economic disaster in its history. It totally collapsed, then violating IMF rules radically, they pulled out of it and have had rapid growth."

Naomi Klein, award winning Canadian Author and Filmmaker, recently produced a film about Argentina entitled "The Take". She warns that true capitalist polices can lead to disaster. "Argentina, had adopted all the same polices that we've just been talking about in Iraq, the attacks on the state, the privatization of absolutely everything. Argentina is the most privatized country I've ever seen, even the street signs are sponsored, they are sponsored by Master Card, I mean nothing has not been sold in this country. The results were an absolute disaster because they created a capitalist wild west and money was just able to travel, just flee the country. $40 Billion left the country in cash, in the two weeks before the economic crisis, and so people responded in this amazing way...workers who were told 'O.k you're fired, your factory's closing, were moving it somewhere cheaper.', they just refused to leave. We actually wanted to call the movie, 'Rage for the Machines' because what they were saying was, 'You can leave, but we're going to keep the machines and keep them running,', and they turned these factories into democratically run workers co-operatives."

Alternative Economic Systems
Proponents of the current economic model, that has by now affected every nation on earth, will tell you they are conservative and pragmatic, that there is "no alternative" to their seemingly unjust system. Fortunately for Canada, since 1994 the Canadian Centre for Policy Alternatives, (CCPA) has produced an Alternative Federal Budget(AFB), demonstrating "that governments budgets can be created in a way that is both fiscally and socially responsible...The CCPA has coordinated the AFB with the participation and support of researchers, activists and leadership from a broad spectrum of civil society organizations representing millions of Canadians". Judy Randall is coordinator of the 2006 Alternative Federal Budget for the CCPA. "Our budget adds up, it is balanced - it has no increase in overall net taxes. But unlike Mr. Harper and Mr. Flaherty we do not believe every problem can be solved with a tax cut. We start from the premise that this government has an unparalleled opportunity to help move Canada forward and create better lives for all Canadians.", from the CCPA Monitor.

Although it seems there is no way to combat economic injustice and inequity, people around the world are defying the odds. From Venezuela, to Spain, Kibbutz's in Israel, to micro-credits in Bangladesh, large societies and small communities are all rejecting "Neo-Liberalism" and are living proof that a better world is possible.

Ode magazine journalist Stephan Herrera traveled to the Himalayan nation of Bhutan, ("Zen and the Art of Happiness" Nov. 2005) to discover that even "developing nations" can prosper, when people come before profits. "Today the vast majority of Bhutan’s hard currency comes from ecotourism and hydro power-generated electricity. Its economy is one of the fastest growing in Asia. And the political structure is peacefully making the transition from monarchy to a kind of Asian-style democracy—at the king’s behest. King Wangchuk created a novel development plan three decades ago, early on mandating that his country’s success be judged in part by the degree to which it makes the Bhutanese citizenry happy. Yes, happy. In Bhutan, happiness is a measuring stick by which all aspects of modernization are judged. The King believes that gross national happiness (GNH) is more important than the widely used measure of economic well-being, gross national product (GNP)...the four 'pillars' of GNH—environmental conservation, socio-economic development, culture, and good governance, have just been enshrined in the country’s first constitution as the guiding principles of the government’s contract with its people."

E.F Schumacher was an internationally influential economic thinker, according to The Times Literary Supplement, his book "Small Is Beautiful" is among the 100 most influential books published since World War II. Adbusters, in a feature titled "The Revolutionaries" points out, "Schumacher coined the term 'Buddhist Economics' to describe the opposite of the Western economic model [one that didn’t allow governments to finance corporate domination, but instead invested in renewable resources to benefit society]. For those who questioned what Buddhism had to do with economics, Schumacher replied, 'Economics without Buddhism, i.e., without spiritual, human and ecological values, is like sex without love.'".


Turning on Canada’s Tap

By Tony Clarke
From Canadian Dimension
2006

When Prime Minister Stephen Harper sat down with President George W. Bush in their first White House meeting on July 6, one of the “unmentionable” items on their agenda may well have been the question of bulk water exports from Canada. After all, Bush himself raised the issue back in July, 2001, when he talked “off the cuff” to reporters about growing water shortages in his home state of Texas and elsewhere in the country, saying he would like to begin negotiations with Ottawa on water exports from Canada. In Texas, he said, “water is more valuable than oil.” “A lot of people don’t need it, but when you head south and west, we need it,” Bush declared, adding that he “looked forward” to discussing the matter with then-prime minister Jean Chretien.

At the time, the reaction from Canadian officials was swift and blunt. “We’re absolutely not going to export water, period,” proclaimed David Anderson, then Canada’s environment minister. Anderson’s comment reflected what seems to be a general public consensus that water should not be treated like other natural resources (like oil, natural gas, minerals, timber, etc.), as a commodity to be bought and sold on the open market to U.S. customers. After Anderson’s reaction, the issue seemed to fade from the news headlines until former U.S. ambassador Paul Cellucci revived the issue in the early stages of the 2005-06 federal election.

The question now is whether Canada’s new PM is willing to put water on the table in negotiating a new relationship with the United States. Although Harper’s specific views on water exports are not known, he has called for more “economic and security integration” with the U.S., highlighting the need for a continental energy strategy that would include “a range of other natural resources.” As a new era of Canada-U.S. relations opens up, Canadians would do well to take a closer look at the forces moving behind the scenes to turn on the taps for massive water exports to the United States.

The Growing American Thirst
Today, the largest world’s largest economic and military superpower is facing the problem of acute water shortages within its own borders. Twenty-one per cent of farmland irrigation in the U.S. comes from pumping groundwater at rates that exceed the water’s ability to recharge. In effect, this means those aquifers that are the country’s source of freshwater are rapidly being depleted and are drying up. The lethal combination of severe droughts and dried-up wells has become the plague of many U.S. farmers. Every year, now, it is estimated that more than U.S. $400 billion is lost in America’s farmlands because of the depletion of aquifers. A prime example is the Ogallala aquifer, one of the world’s most famous underground bodies of water, which is being depleted at a rate 14 times faster than nature can restore it.

In California, the major aquifers are also drying up. With the Colorado River strained to the limit, the water table under California’s San Joaquin Valley has dropped nearly ten meters in some areas during the past fifty years. In the state’s Central Valley, overuse of underground water supplies has resulted in a loss of over forty per cent of the combined storage capacity of all the human-made reservoirs in California. The desert regions of the American southwest — Arizona, Nevada and New Mexico — largely barren of water, continue to experience population growth. In Bush’s home state of Texas, water scarcity is also approaching a critical stage, where cities like El Paso are expected to be dried up by 2030. Moving further into the American Midwest, Chicago and Milwaukee could also be facing severe water shortages. The huge sandstone aquifer underlying the Illinois-Wisconsin border, which supplies these two major cities with their water supplies, is currently overtaxed and may well be depleted in the near future, say scientists, unless there are significant reductions in groundwater withdrawals.

In short, the U.S. is becoming more and more thirsty, even as it reaches the danger point of running out of its own freshwater sources. When the U.S. government surveyed the fifty states of the Union in 2003, it found that more than two-thirds predicted they would face water shortages in one form or another over the next ten years. And the U.S. government appears unprepared to confront this impending water crisis. In June, 2004, the National Academies of Science and the U.S. Geological Survey reported that Washington is ill-prepared to deal with water shortages emerging across the country.

Water-Rich Canada?
As the U.S. water crisis intensifies, one quick-fix solution is to tap into what is perceived to be Canada’s considerable water wealth. According to this scenario, Canada is a giant green sponge full of freshwater lakes and rivers — a massive reservoir of water that can be tapped to serve the insatiable thirst of people and industries in urban America. Globally speaking, Canada is ranked fourth in the world in terms of surface sources of freshwater — lakes, rivers and glaciers. All it would take is the construction of a network of new dams, reservoirs, canals, tunnels, pipelines and supertankers to transport water in bulk form from Canada to the United States.

The largest freshwater system on the planet is, of course, the Great Lakes lying between Canada and the United States, which contain no less than twenty per cent of the world’s freshwater. But the Great Lakes have also been a dumping ground for industrial wastes, contaminating much of the lake water and ground water in the region. Indeed, the International Joint Commission declared in its 2000 Final Report on the Protection of Waters in the Great Lakes, that there is no surplus water in the Great Lakes and emphatically warned against any new diversions. Moreover, scientists are now warning that drought patterns are returning to the prairies, as river systems like the South Saskatchewan, Old Man, Peace and Athabasca show signs of drying up. And these re-emerging drought patterns are bound to intensify with global warming. Already, the glacier that feeds Alberta’s Bow River is melting so quickly that there may be no water left in it fifty years from now.

Although there is no doubt that Canada is blessed by nature’s endowment with numerous freshwater lakes and rivers, it should also be noted that sixty per cent of our rivers flow north into Hudson’s Bay and the Arctic region. As a result, sixty per cent of Canada’s freshwater flows in the opposite direction of the U.S. and is largely inaccessible. Even so, say politicians, engineers and economists on both sides of the border, there are ways of overcoming these obstacles through new technologies and investment.

Mega Export Schemes
Over the past four decades, a series of mega-diversion schemes have been planned for massive bulk water transfers from Canada to the U.S. In retrospect, these megaprojects can be categorized in terms of three major water corridors. Western Corridor: The centerpiece of the western water corridor flowing from Canada to the U.S. is the North American Water and Power Alliance. NAWAPA was originally designed to bring bulk water from Alaska and northern British Columbia for delivery to 35 U.S. states. By building a series of large dams, the northward flow of the Yukon, Peace, Liard and a host of other rivers (Tanana, Copper, Skeena, Bella Coola, Dean, Chilcotin, and Fraser) would be reversed to move southward and pumped into the Rocky Mountain Trench, where the water would be trapped in a giant reservoir approximately 800 kilometres long. A canal would then be built to take the water southward into Washington State, where it would be channeled through existing canals and pipelines to supply freshwater for customers in 35 states. The annual volume of water to be diverted through the NAWAPA project is estimated to be roughly equivalent to the average total yearly discharge of the entire St. Lawrence River system.

Central Corridor: Another water corridor consists of a series of water-diversion schemes proposed from the Northwest Territories through the prairies to the U.S. In 1968, the Washington State Resource Center developed plans for the Central North American Water Project (CeNAWAP). The plan calls for a series of canals and pumping stations linking Great Bear Lake and Great Slave Lake in the N.W.T. to Lake Athabaska and Lake Winnipeg and then to the Great Lakes for bulk water exports to the U.S. A variation on the CeNAWAP is the Kuiper Diversion Scheme, which proposes to link the major western rivers into a mega-diversion scheme involving the Mackenzie, Peace, Athabasca, North Saskatchewan, Nelson and Churchill river systems.

Eastern Corridor: The principal eastern water corridor is known as the Great Recycling and Northern Development (GRAND) Canal. As originally conceived, the GRAND Canal plans called for the damming and rerouting of northern river systems in Quebec in order to bring freshwater through canals down into the Great Lakes, whence it would be flushed into the American Midwest. A dike would be built across James Bay at its mouth at Hudson Bay (whose natural flow is northward), thereby turning the bay into a giant, 30,000-square-mile reservoir of freshwater from the twenty rivers that flow into it. Through a system of dikes, canals, dams, power plants and locks, the water would then be diverted from the reservoir and rerouted southward down a 167-mile canal at a rate of about 282,000 litres per second into two of the Great Lakes —Superior and Huron. From there, the water would be flushed through canals into markets in both the American Midwest and Sun Belt.

There are, of course, multiple reasons why none of these massive water corridors have been built in the intervening decades since they were first proposed. One reason is that America’s thirst has been temporarily quenched by internal bulk water transfers within the U.S. A second reason is the problem of securing sufficient capital to pay for highly expensive bulk water export schemes like those described above, and whether this should come from private or public investment. A third reason may also have been the need for new or improved engineering technologies required for some of the more geographically challenging projects.

Yet, underlying all these reasons is the question of political will. According to opinion polls, most Canadians remain skeptical about selling our water to the U.S. In a 2002 survey conducted by the Centre for Research and Information on Canada, 69 per cent were opposed to bulk water exports. Three years before this poll was taken, the House of Commons actually passed a motion (introduced by the New Democrats) calling on the federal government to ban the export of water. In response, the Liberal government of the day refused to issue a ban on water exports, contending it would contravene Canada’s obligations under NAFTA and, instead, worked with the provinces to develop a Canada-wide Water Accord aimed at discouraging bulk water exports. Yet, precisely because of NAFTA, which prohibits countries from putting a ban or quota on the exports of their natural resources, the water accord is largely ineffective.

Which brings us back to Stephen Harper. Will he and his government be the ones who finally muster the political will to give Washington the green light and permit bulk water takings? Is this the price that Harper is prepared to pay, on behalf of Canadians, to seal a new grand bargain with the U.S., just as Brian Mulroney did when he gave away Canada’s energy resources in the eleventh hour of the free-trade negotiations?

Pay To Be Saved: The Future of Disaster Response

By Naomi Klein
From NoLogo.org
2006

The Red Cross has just announced a new disaster-response partnership with Wal-Mart. When the next hurricane hits, it will be a co-production of Big Aid and Big Box. This, apparently, is the lesson learned from the government’s calamitous response to Hurricane Katrina: Businesses do disaster better.

“It’s all going to be private enterprise before it’s over,” Billy Wagner, emergency management chief for the Florida Keys, currently under hurricane watch for Tropical Storm Ernesto, said in April. “They’ve got the expertise. They’ve got the resources.”

But before this new consensus goes any further, perhaps it’s time to take a look at where the privatization of disaster began, and where it will inevitably lead.

The first step was the government’s abdication of its core responsibility to protect the population from disasters. Under the Bush administration, whole sectors of the government, most notably the Department of Homeland Security, have been turned into glorified temp agencies, with essential functions contracted out to private companies. The theory is that entrepreneurs, driven by the profit motive, are always more efficient (please suspend hysterical laughter).

We saw the results in New Orleans one year ago: Washington was frighteningly weak and inept, in part because its emergency management experts had fled to the private sector and its technology and infrastructure had become positively retro. At least by comparison, the private sector looked modern and competent (a New York Times columnist even suggested handing FEMA over to Wal-Mart).

But the honeymoon doesn't last long. “Where has all the money gone?” ask desperate people from Baghdad to New Orleans, from Kabul to tsunami-struck Sri Lanka. One place a great deal of it has gone is into major capital expenditures for these private contractors.

Largely under the public radar, billions of taxpayer dollars have been spent on the construction of a privatized disaster-response infrastructure: the Shaw Group’s new state-of-the-art Baton Rouge headquarters, Bechtel’s battalions of earthmoving equipment, Blackwater USA’s 6,000-acre campus in North Carolina (complete with paramilitary training camp and 6,000-foot runway). I call it the Disaster Capitalism Complex. Whatever you might need in a serious crunch, these contractors can provide it: generators, water tanks, cots, port-a-potties, mobile homes, communications systems, helicopters, medicine, men with guns.

This state-within-a-state has been built almost exclusively with money from public contracts, including the training of its staff (overwhelmingly former civil servants, politicians and soldiers). Yet it is all privately owned; taxpayers have absolutely no control over it or claim to it. So far, that reality hasn’t sunk in because when these companies are getting their bills paid by government contracts, the Disaster Capitalism Complex provides its services to the public free of charge.

But here’s the catch: The U.S. government is going broke, in no small part thanks to this kind of loony spending. The national debt is $8-trillion; the federal budget deficit is at least $260-billion. That means that sooner rather than later, the contracts are going to dry up. And no one knows this better than the companies themselves. Ralph Sheridan, chief executive of Good Harbor Partners, one of hundreds of new counter-terrorism companies, explains that “expenditures by governments are episodic and come in bubbles.” Insiders call it the “homeland security bubble.”

When it bursts, firms such as Bechtel, Fluor and Blackwater will lose their primary revenue stream. They will still have all their high-tech gear giving them the ability to respond to disasters— while the government will have let that precious skill whither away—but now they will rent back the tax-funded infrastructure at whatever price they choose.

Here’s a snapshot of what could be in store in the not-too-distant future: helicopter rides off of rooftops in flooded cities ($5,000 a pop, $7,000 for families, pets included), bottled water and “meals ready to eat” ($50 per person, steep, but that’s supply and demand) and a cot in a shelter with a portable shower (show us your biometric ID—developed on a lucrative Homeland Security contract—and we’ll track you down later with the bill. Don’t worry, we have ways: spying has been outsourced too).

The model, of course, is the U.S. healthcare system, in which the wealthy can access best-in-class treatment in spa-like environments while 46-million Americans lack health insurance. As emergency-response, the model is already at work in the global AIDS pandemic: private-sector prowess helped produce lifesaving drugs (with heavy public subsidies), then set prices so high that the vast majority of the world’s infected cannot afford treatment.

If that is the corporate world’s track record on slow-motion disasters, why should we expect different values to govern fast-moving disasters, like hurricanes or even terrorist attacks? It’s worth remembering that as Israeli bombs pummeled Lebanon not so long ago, the U.S. government initially tried to charge its citizens for the cost of their own evacuations. And of course anyone without a Western passport in Lebanon had no hope of rescue.

One year ago, New Orleans’ working-class and poor citizens were stranded on their rooftops waiting for help that never came, while those who could pay their way escaped to safety. The country’s political leaders claim it was all some terrible mistake, a breakdown in communication that is being fixed. Their solution is to go even further down the catastrophic road of "private-sector solutions."

Unless a radical change of course is demanded, New Orleans will prove to be a glimpse of a dystopic future, a future of disaster apartheid in which the wealthy are saved and everyone else is left behind.

Naomi Klein’s book on disaster capitalism will be published in spring 2007. A shorter version of this piece appeared in the LA Times.