The vultures that prey on disaster

December 3, 2012

Gary Lapon explains how free-market orthodoxy is imposed after disasters like Superstorm Sandy--bringing man-made destruction in the wake of natural.

FREE-MARKET fundamentalists went to work on some of New York City's most vulnerable communities even before the last winds from Superstorm Sandy had died down.

Privatization and deregulation are the tools these vultures use to exploit disaster, but the irony is that Hurricane Sandy and its aftermath have shown the need for more government assistance and regulation of corporate excess, not less.

One week after Hurricane Sandy hit, Naomi Klein wrote a piece titled "Hurricane Sandy: Beware of America's disaster capitalists" to warn of attempts to apply the "shock doctrine"--the phrase she coined for how a crisis is used to further entrench corporate interests and neoliberal policy--in New York City in the wake of the storm.

Klein, author of The Shock Doctrine and a leading participant in's "Do The Math" tour to combat global warming, explained the goals of those seeking to exploit this crisis:

[T]he fact that this storm has demonstrated that poor and working-class people are far more vulnerable to the climate crisis shows that this is clearly the right moment to strip those people of what few labor protections they have left, as well as to privatize the meager public services available to them. Most of all, when faced with an extraordinarily costly crisis born of corporate greed, hand out tax holidays to corporations.

The storm surge from Hurricane Sandy washes over debris in Atlantic City

She catalogued a series of arguments from right-wingers--including those who "blamed New Yorkers' resistance to Big Box stores for the misery they were about to endure" or who warned that reconstruction would be slowed by the Davis-Bacon Act that "requires workers on public works projects to be paid not the minimum wage, but the [higher] prevailing wage in the region."

Klein also had words of caution about efforts to use the hurricane to push "public-private partnerships"--infrastructure-rebuilding projects that involve private companies that "could install tolls and keep the profits."

Some advocates of such neoliberal measures have been particularly bald-faced, according to Klein:

The prize for shameless disaster capitalism, however, surely goes to right-wing economist Russell S. Sobel, writing in a New York Times online forum. Sobel suggested that, in hard-hit areas, Federal Emergency Management Agency (FEMA) should create "free-trade zones--in which all normal regulations, licensing and taxes [are] suspended." This corporate free-for-all would, apparently, "better provide the goods and services victims need."

Even some "liberals" got in on the act. Writing in Slate, Matt Yglesias argued against laws banning price-gouging during disasters, asserting that such safeguards against profiteering cause shortages and overconsumption. He does not address what happens to poor people who cannot afford inflated prices.

At a time when more regulation is needed to stop climate change and the for-profit polluters responsible for it, these arguments are especially insidious. And less than a month after the hurricane hit, the failings of the private sector to provide relief for the victims of the storm are clear. A key lesson is that more--not less--government planning and intervention is needed.

THE MARKET fails to meet human needs even in normal times. There are tens of millions of people in the U.S.--and billions more around the world--who cannot afford what they need and therefore must go without, even when there is enough to go around.

Without money, their demand is not "effective," as economists say. During crises, the market makes this worse, not better: gaps between rich and poor sharpen, and the consequences of these disparities become more grave, even deadly.

In times of crisis, as in the "normal" periods between them, the production of goods and services under capitalism is driven by the pursuit of profit, not human need. Decades of neoliberal reforms--privatization of the public sector, attacks on unions and workers' rights, the elimination of subsidies to the poor, deregulation--have only worsened inequality and insecurity across the globe.

The most obvious immediate failing of the private sector in the wake of Sandy was widespread power outages, which hit more than 8 million households and still darkened more than 100,000 homes in New York and New Jersey nearly two weeks after the storm. The scale and the duration of the outages were almost certainly made worse by energy corporations prioritizing profits over service.

As Chris Williams pointed out at, Con Edison, a for-profit corporation that provides electricity to New York City, did not "spend the $250 million in investment the company deemed necessary to install submersible switches and move high-voltage transformers above ground level, things that may have prevented the explosion that wiped out electricity in lower Manhattan--even though the company made $1 billion in profit last year."

Without the profit motive, making these investments would have been a no-brainer, but since they would have cut into Con Ed's bottom line, the company took the chance and delayed upgrades. In addition to poor infrastructure, power companies lacked sufficient staff to deal with the emergency and were forced to call in tens of thousands of workers from across the country--workers unfamiliar with the particulars of the local power grid.

The Long Island Power Authority (LIPA) faced the most severe criticism and even a lawsuit as residents went weeks without power, leading to the resignation of its chief operating officer and an executive order from New York Gov. Andrew Cuomo to investigate the authority.

While LIPA is under the authority of New York state, it is an example of a "public-private partnership"--LIPA contracts with National Grid to provide "the operation, maintenance and construction of LIPA's transmission and distribution facilities, customer service, financial services and back-office support services." National Grid is a for-profit corporation, with the profit motive creating an incentive to cut costs as much as possible.

On the other hand, the publicly owned Metropolitan Transit Authority received the most praise for getting New York City's subway system up and running quickly--despite years of mismanagement and chronic lack of sufficient funding. Buses were back online almost immediately, running free of charge. Limited subway service was restored two days after the storm hit, and most of the lines were running when power was restored the weekend following the storm.

Despite their efforts, many MTA employees were docked for missing work on the Monday and Tuesday of the storm, when the city's transportation system was shut down.

THE AFTERMATH of the storm also brought price gouging--namely, companies charging vastly higher prices because of the sudden shift in the balance between supply and demand.

Price gouging on essential goods during a crisis is illegal in many states, including New York and New Jersey, but that didn't stop businesses from looking to make a quick buck. New York Attorney General Eric Schneiderman launched an investigation into price gouging after receiving hundreds of complaints, such as businesses jacking up prices for necessities such as food, water and gasoline.

If special "free trade zones" were set up in disaster areas, as Sobel suggested, price gouging would have been legal, and thus even more widespread, as desperate people would have no choice--due to the conspicuous absence of government aid and relief--but to pay sky-high prices for basic goods. Those without extra disposable cash would have been even less able to procure the goods and services they needed to survive.

During Hurricane Sandy, residents in areas without power had to rely on cash on hand because ATM machines and credit/debit cards didn't work in stores without power. And since many businesses were shuttered for a number of days, money was especially short for workers making hourly wages or dependent on tips from service-industry jobs.

When power went out, some households lost hundreds of dollars of perishable food. Tens of thousands of those without power in New York City were public-housing residents, nearly half of whom live below the poverty line.

According to the New York Daily News, food service workers, most of whom "are employed by catering companies in corporate dining rooms," were docked sick or vacation days during the time when their offices were closed.

At a time when needs were especially great and money exceptionally scarce, the removal of laws preventing price gouging would have made the crisis more acute for those with the least means. Even more poor and working-class people would have gone without, while businesses would have made even greater profits at their expense. The rich, as always, would have been able to afford everything they needed and then some.

Nor would allowing Wal-Mart to build in New York City have solved the problem. First of all, it's unclear how people trapped without public transportation or cars would have gotten to and from Wal-Mart in the first place. And while Wal-Mart brings lower prices, this comes at a cost.

As Wal-Mart workers standing up to the corporate giant have made clear, Wal-Mart does not pay a decent wage and is willing to do whatever it takes to bust unionization efforts. Wal-Mart is leading the race to the bottom, and its expansion into New York City--which has union density double that of the nation as a whole--would serve to further undermine living standards and thus workers' ability to ride out crises like Hurricane Sandy.

The recent fire that killed at least 112 people at a Bangladesh factory which produces goods for Wal-Mart is a tragic reminder of the steep costs that Wal-Mart imposes on workers around the world in order to keep prices low and profits high.

Similarly, the removal of protections for workers employed in various aspects of Sandy cleanup and recovery is not only unfair, but it would also set a precedent that would plunge more workers into poverty, turning every day into a manmade crisis for those getting the city back on its feet.

AT THE core of arguments in favor of privatization and deregulation is the idea that the best way to coordinate economic life is through unleashing private gain as a motivating factor--in other words, the profit motive. In this view, government will only get in the way.

One major problem with this argument is that in an unequal society, where large sections of the population don't have the money to buy what they need, the market won't provide for the needs of everybody. That's especially true in New York City, the most unequal city in the most unequal country in the advanced industrialized world.

Those who face social and economic oppression and marginalization--poor and working-class people, people of color, undocumented immigrants and others--will be least able to afford to buy what they need on the market, especially during crises, when high demand and scarce supply drive up prices.

This dynamic was evident in the aftermath of Hurricane Katrina in New Orleans. Thousands of poor and working-class residents--overwhelmingly African American--were left to fend for themselves and then demonized by the media and hunted by police.

During Hurricane Sandy, disproportionately Black and Latino public-housing residents, nearly half of whom live in poverty and many of whom are elderly or disabled, were less likely to have the means to evacuate and were far more likely to be left stranded without power and heat. And poor and working-class neighborhoods were some of the hardest-hit areas, but among the last to receive attention from the government.

Preyed upon by payday lenders and corner-store price gougers in normal times, the private sector abandoned the poorest people in the wake of the hurricane because they lacked the ability to pay for what they desperately needed: food, water, warm clothes and other essentials.

Instead, tens of thousands of volunteers sprung into action, answering the call put out by Occupy Sandy and other community organizations to meet the urgent needs of residents abandoned by city, state and federal agencies. In any case, these agencies have been gutted over they years by budget cuts and layoffs--cuts that were justified by tall tales about the "invisible hand of the market" meeting the needs of those stuck in disaster scenarios, instead of government agencies.

Driven by a sense of solidarity and an ethos that anyone in need is deserving, some 50,000 volunteers have already donated their time, and countless thousands more donated their money and supplies. As in so many disasters, ordinary people--driven not by the promise of personal gain but by a desire to serve the common good--sought to fill the vacuum left by the private sector, the hollow neoliberal state and the shredded social safety net.

A KEY lesson of Hurricane Sandy is that, after decades of neoliberal privatization, the free-market fundamentalists have gotten much of what they want. Seemingly unlimited resources are available for record profits, wars abroad and repression here at home--to secure markets for Corporate America and to expand the wealth of the elite--while these same elites claim there is not enough for social spending and basic public services.

There is a need for more, not less, government intervention in disaster relief, prevention and reconstruction. Many more relief workers--including hundreds of thousands of un- and underemployed New Yorkers who need the work--could have been mobilized had government funds been made available to pay them for their efforts.

And the impact of what efforts did take place could have been exponentially increased had the government provided trucks and buses, rather than leaving volunteers to rely on private cars, U-Hauls and other donated private vehicles.

The shortages of goods that worried Yglesias could be easily addressed by the government providing necessities free of charge. The state distributed free gasoline during the storm--there is no reason why this should not have been expanded to include food, water, diapers, cleaning supplies and other basics that Occupy Sandy and various community groups continue to scramble to get to those in need.

If the U.S. government is able to maintain military bases in three-quarters of the world's countries, including equipping an occupying force of nearly 70,000 troops in Afghanistan, certainly it has the resources and technical know-how to supply the people of the New York-New Jersey metropolitan area with basic goods in the wake of Hurricane Sandy.

Beyond the nearly $1 trillion spent each year on war, the richest 400 Americans alone are worth $1.7 trillion. The money is there. It is simply a question of priorities.

Finally, the workers who do the difficult and dangerous work of reconstruction in the months and years following the storm should receive a living wage and full benefits to support a family. The reconstruction effort provides the opportunity to implement a public jobs program at a time when workers continue to face high rates of unemployment.

A system of affirmative action in hiring could make a dent in the Black unemployment rate, which is more than double that of whites. And an effort to employ those with felony convictions would be a blow against the New Jim Crow and the exclusion of Blacks and Latinos from the economy.

This is not without precedent. The mass struggles of the Civil Rights and Black Power movements of the 1950s and 60s, including the ghetto uprisings that involved hundreds of thousands, forced the government at all levels to expand social services. Public-sector union organizing won decent pay and benefits. These struggles won bans against racial discrimination, the result of which is that public-sector jobs became a key means of advancement for African Americans.

Weeks after the storm, residents of impacted areas, union and nonunion workers, activists and others have begun to build movements to demand that the city, state and federal government address needs for decent housing, health care and a "peoples' recovery." While these efforts remain modest, they are a step towards the mass struggles needed to shift the balance of class forces and begin to turn the demands outlined above into a reality.

Further Reading

From the archives