CiARRET KEIZER l:ALL:-; r o n A liENERAL :-;TRIKE HARPER'S MAGAZINE/OCTOBER 2007 ------------. ------------ DISASTER CAPITALISM The New Economy of Catastrophe By Naomi Klein THE RIVER IS A ROAD Searching for Peace in Congo By Bryan Mealer ADMIRAL A story by T. C. Boyle $6.9SUS $7.9SCAN Also: John]. Sullivan and Wyatt Mason ------------. ------- E S SAY DISASTER CAPITALISM The new economy of catastrophe By Naomi Klein Only acrisis--actual orperceived-produces realchange. When thatcrisisoccurs, the actions that are taken depend on the ideas that are lying around. -Milton Friedman Tee yearsago,when Iwasin Bagh- dad on assignment for this magazine, I paid an early-morning visit to Khadamiya, amostly Shiite area. An Iraqi colleague had heard that part of the neighborhood had flooded the night before, asitdid regularly. When we arrived, the streets were drenched in slick green-blue liquid that was bub- bling up from sewage pipes beneath exhausted asphalt. A family invited us toseewhat the frequent floodshad done to their once lovelyhome. The walls were moldy and cracked, and every item-books, photos, sofas-was caked in the algae-like scum. Out back, awalled garden wasafetid swamp, with a child's swingdangling forlornly from adead palm tree. "It wasabeautiful gar- den," Durdham Yassin, the owner, told us."Igrew tomatoes." For the frequent flooding, Yassin spread the blame around. There was Saddam, who spent oil money on weapons instead of infrastructure during the Iran-Iraq War. There was the first Gulf War, when U.S. missiles struck anearby electricity plant, knocking out power to the sewage-treatment fa- cility. Next came the years ofU.N. sanctions, when city workers could not replace crucial parts of the sewage system. Then there was the 2003 inva- sion, which further fried the power grid.And, more recently, there werecom- panies like Bechtel and General Electric, which were hired to fixthis mess, and which failed. Around the corner, atruck was idling with alarge hose down amanhole. "The most powerful vacuum loader in the world," it advertised, in English, on its side. Yassin explained that the neighbors had pooled their money to pay the company to suck away the latest batch ofsludge, acostly and tem- porary solution. The mosque had helped, too. As we drove away, Inoticed that there were similar private vacuum trucks on every other block. Later that day Istopped byBaghdad's world-famous Green Zone. There, the challenges of living without functioning public infrastructure are also addressed byprivate actors. The difference isthat in the Green Zone, the Naomi Klein's most recent articlefor Harper's Magazine, "Baghdad Year Zero," appeared intheSeptember 2004 issue. Her new book, The Shock Doctrine, from which thisessaywas adapted, was just published byMetropolitan Books. ESSAY 47 LIKEMOST PEOPLE, ITHOUGHT solutions actually work.The enclave has itsown electrical grid,itsown phone and sanitation systems, itsown oil supply, and its own state-of-the-art hos- THE DMDE BETWEEN BAGHDAD'S pital with pristine operating theaters-all protected bywallsfivemeters thick. It felt, oddly, like agiant fortified Carnival Cruise ship parked in the mid- GREEN AND RED ZONES WAS A dle ofaseaofviolence and despair, the boiling Red Zone that isIraq. Ifyou SIMPLE BY-PRODUCT OF THE WAR could get on board, there were pools ide drinks, bad Hollywood movies, and Nautilus machines. Ifyou were not among the E chosen, you could get shot just for standing too close to the wall. verywhere in Iraq, the wildly divergent values assigned to dif- ferent categories of people are on crude display. Westerners and their Iraqi colleagues have checkpoints at the entrances to their streets, blast walls in front of their houses, body armor, and private security guards on call at all hours. They travel the country in menacing armored convoys, with mercenaries pointing guns out the windows as they follow their prime directive to "protect the principal." With every move they broad- cast the same unapologetic message: We are the chosen, our lives are in- finitely more precious than yours. Middle-class Iraqis, meanwhile, cling to the next rung down the ladder: they can afford to buy protection from local militias, they are able to ransom a family member held by kidnap- pers, they may ultimately escape to a life of poverty in Jordan. But the vast majority of Iraqis have no protection at all. They walk the streets exposed to any possible ravaging, with nothing between them and the next car bomb but athin layer of fabric. In Iraq, the lucky get Kevlar; the rest get prayer beads. Like most people, I saw the divide between Baghdad's Green and Red zonesasasimple by-product ofthe war:This iswhat happens when the rich- est country in the world sets up camp in one of the poorest. But now, af- ter years spent visiting other disaster zones, from post-tsunami Sri Lanka to post-Katrina New Orleans, I've come to think ofthese Green Zone/Red Zone worlds assomething else: fast-forward versions ofwhat "free market" forces are doing to our societies even in the absence of war. In Iraq the phones, pipes, and roads had been destroyed by weapons and trade em- bargoes. In many other parts ofthe world, including the United States, they have been demolished by ideology, the war on "big government," the re- ligion oftax cuts, the fetish for privatization. When that crumbling infra- structure isblasted with increasingly intense weather, the effects can be as devastating as war. LastFebruary, for instance, Jakarta suffered one ofthese predictable disas- ters. The rains had come, as they always do, but this time the water didn't drain out ofJakarta's famously putrid sewers, and half the city filled up like a swimming pool. There were mass evacuations, and at least fifty-seven people were killed. No bombs or trade sanctions were needed for Jakarta's infrastructure to fail-in fact, the steady erosion of the country's public sphere had taken place under the banner of "free trade." For decades, Washington-backed structural-adjustment programs had pampered in- vestors and starved public services, leading to such cliches of lopsided de- velopment asglittering shopping malls with indoor skating rinks surround- ed bymoats ofopen sewers. Now those sewers had failed completely. In wealthier countries, where public infrastructure wasfarmore robust be- fore the decline began, it has been possible to delay this kind of reckoning. Politicians have been free to cut taxes and rail against biggovernment even astheir constituents drove on, studied in, and drank from the huge public- worksprojects ofthe 1930sand 1940s.But after afewdecades, that trick stops working. The American Society of Civil Engineers has warned that the United States has fallen so far behind in maintaining its public infrastruc- ture-roads, bridges, schools, dams-that itwould take more than atrillion and a half dollars over five years to bring it back up to standard. This past summer those statistics came to life:collapsing bridges, flooding subways,ex- 48 HARPER'S MAGAZINE IOCTOBER 2007 ploding steam pipes, and the still-unfolding tragedy that began when New EVERY TIME A NEW CRISIS HITS, Orleans's levees broke. After each new disaster, it's tempting to imagine that the lossof lifeand THE FEAR AND DISORIENTATION productivity will finally serve asawake-up call, provoking the political class THAT FOLLOW LEADTO RADICAL to launch some kind of "new New Deal." In fact, the opposite is taking place: disasters have become the preferred moments for advancing avision ECONOMIC RE-ENGINEERING ofaruthlessly divided world, one in which the very idea ofapublic sphere has no place at all. Call itdisaster capitalism. Every time anew crisis hits- even when the crisis itself isthe direct by-product offree-market ideology- the fear and disorientation that follow are harnessed for radical social and economic re-engineering. Each new shock ismidwife to anew course ofeco- nomic shock therapy. The end result isthe same kind ofunapologetic par- tition between the included and the excluded, the protected and the damned, that ison display in Baghdad. Consider the instant reactions to last summer's various infrastructure dis- asters. Four days after the Minneapolis bridge collapsed, aWall Stxeetlow- nal editorial had the solution: "tapping private investors to build and oper- ate public roadsand bridges,"with the cost made upfromever-escalating tolls. After heavy rain caused the shutdown ofNew York City's subway lines, the New Yark Sun ran an editorial under the headline "Sell the Subways."Itcalled for individual train lines to compete against one another, luring customers with the safest,driest service-and "charging higher fareswhen the competing lines, stingier on their investments, were shut down with tracks under wa- ter."[ It's not hard to imagine what this free market in subways would look like:high-speed lines ferrying commuters from the Upper West Side to Wall Street, while the trains serving the South Bronx wouldn't just continue their long decay-they would simply drown. The same week as the bridge collapse, hysteria erupted over canceled flights and delays at London's Heathrow airport, prompting The Economist to demand "radical reform" ofthe "grubby, cramped" facility. London's airports are already privatized, but now, according to the magazine, they should be deregulated, allowing terminals tocompete againstone another: "differentfirms could provide different forms ofsecurity checks, some faster and dearer than others." Meanwhile, in New Orleans, schools were getting ready to reopen for fall. More than half the city's students would be attending newly mint- edcharter schools, where they would enjoy small classes,well-trained teach- ers,and refurbished libraries, thanks to special state and foundation funding pouring into what the New York Times has described as "the nation's pre- eminent laboratory for the widespread useofcharter schools." But charters are only for the students who are admitted to the system-an educational Green Zone. The restofNew Orleans's public-school students-many ofthem with special emotional and physical needs, almost allofthem African Amer- ican-are dumped into the pre-Katrina system:no extra money, overcrowded classrooms, more guards than teachers. An educational Red Zone. Other institutions that had attempted to bridge the gapbetween New Or- leans's super-rich and ultra-poor were also under attack: thousands of units ofsubsidized housing were slotted fordemolition, and Charity Hospital, the city's largest public-health facility, remained shuttered. The original disaster wascreated and deepened bypublic infrastructure that wason itslast legs;in the yearssince, the disaster itselfhas been usedasan excuse tofinish the job. There willbe more Katrinas, The bones ofour states-so frail and aging- will keep getting buffeted bystorms both climatic and political. And askey pieces ofthe infrastructure are knocked out, there isno guarantee that they 1 If thesesolutions seemed topresent themselves with uncanny speed, itislargelybecause Washington's thinktankshavebeenon suchanaggressivecampaigntoprivatizetheessential functions of thestate. As aMay 2007 coverstory inBusiness Week explained, "In the pastyear, banksandprivateinvestment firms havefalleninlovewithpublicinfrastructure. They're smitten bytherichcashflows thatroads,bridges,airports,parkinggaragesandship- pingportsgenerate-and themonopolistic advantages thatkeep thosecashflows assteady asabeatingheart.... Investorscan't getinfast enough." Illustrations byJohn Ritter ESSAY 49 THE DISASTER-CAPITALISM will be repaired or rebuilt, at least not asthey were before. More likely, they willbeleftto rot, with the well-offwithdrawing into gated communities, their COMPLEX AIMS, ULTIMATELY, TO needs met byprivate suppliers. Not solongago,disasterswereperiodsofsocial leveling, raremoments when REPLACE THE STATE WITH ITS atomized communities put divisions aside and pulled together. Today they OWN PROFITABLE ENTERPRISES are moments when we are hurled further apart, when we lurch into a radi- cally segregated future where some ofuswill fall offthe map and others as- cend to a parallel privatized state, one equipped with well- A paved highways and skyways, safe bridges, boutique charter schools, fast-lane airport terminals, and deluxe subways. IraqandNew Orleans both reveal,the markets opened upbycrises aren't only the roads, schools, and oil wells; the disasters themselves are ma- jor new markets. The military-industrial complex that Dwight D.Eisenhow- er warned against in 1961 has expanded and morphed into what isbest un- derstood as a disaster-capitalism complex, in which all conflict- and disaster-related functions (waging war,securing borders, spyingon citizens, re- building cities, treating traumatized soldiers) can beperformed bycorporations at aprofit. And this complex isnot satisfied merely to feed offthe state, the waytraditional military contrac- torsdo;itaims,ultimately, to replace corefunctions ofgovernment with its ownprofitable enterprises, asitdid in Baghdad's Green Zone. It happened in New Orleans. Within weeksofHurricane Katrina, the Gulf Coast became a domestic laboratory forthe same kind ofgov- ernment run bycontractors that was pioneered in Iraq. The companies that snatched up the biggest con- tracts were the familiar Baghdad gang: Halliburton's KBR unit re- ceived a$60 million contract to re- construct military bases along the coast.Blackwaterwashired toprotect FEMA operations, with the compa- ny billing an average of $950 aday per guard. Parsons, infamous for its sloppy work in Iraq, was brought in foramajor bridge-construction proj- ect in Mississippi. Fluor, Shaw, Bechtel, CH2M Hill-all top contractors in Iraq-were handed contracts on the Gulf Coast to provide mobile homes to evacuees just ten daysafter the levees broke. Their contracts ended up total- ing$3.4 billion, noopen bidding required. To spearhead itsKatrina operation, Shaw hired the former head ofthe U.S. Army's Iraqreconstruction office.Flu- or sent itssenior project manager from Iraq to the flood zone. "Our rebuild- ingwork in Iraq isslowing down, and this has made some people available to respond to our work in Louisiana," acompany representative explained. Joe Allbaugh, whose company, New Bridge Strategies, had promised to bring Wal-Mart and 7-Eleven to Iraq,wasthe lobbyist in the middle ofmany ofthe deals. The feeling that the Iraq warhad somehow just been franchised wasso striking that some of the mercenary soldiers, fresh from Baghdad, were hav- ing trouble adjusting. When David Enders, areporter, asked an armed guard outside aNew Orleans hotel ifthere had been much action, he replied, "Nope. It's pretty Green Zone here." Since then, privatized disaster response has become one ofthe hottest in- dustries inthe South. Justone yearafter Hurricane Katrina, aslewofnew cor- porations had entered the market, promising safety and security should the 50 HARPER'S MAGAZINE /OCTOBER 2007 Source photograph byFEMA News Photo next BigOne hit. One ofthe more ambitious ventures waslaunched byachar- THE VAST INFRASTRUCTURE OF terairservice inWest Palm Beach, Florida. Help Jet billsitselfas"the world's firsthurricane escape plan that turns ahurricane evacuation into ajet-setter THE DISASTER INDUSTRY, BUILT vacation." When astorm iscoming, the charter company books holidays for UP WITH TAXPAYERS' MONEY, IS itsmembers atfive-star golfresorts,spas,orDisneyland. With the reservations made, the evacuees are then whisked out of the hurricane zone on a luxury ALL PRIVATELY CONTROLLED jet. "No standing in lines, no hassle with crowds, just afirstclassexperience that turns aproblem into avacation .... Enjoy the feeling ofavoiding the usu- alhurricane evacuation nightmare." Forthe people leftbehind, there isadif- ferent kind of privatized solution. In 2006, the Red Cross signed a new disaster-response partnership with Wal-Mart. "It's allgoing to beprivate en- terprise before it'sover," said BillyWagner, chief ofemergency management forthe Florida Keys."They've got the expertise. They've got the resources." He wasspeaking at the National Hurricane Conference inOrlando, Florida, afast-growing annual trade show for the companies selling everything that might come inhandy during the next disaster. Dave Blandford, an exhibitor showing offhis"self-heating meals" at the conference, observed: "Some folks here said, 'Man, this ishuge business-this ismynew business. I'm not inthe landscaping businessanymore; I'm going tobeahurricane-debris contractor.''' Much ofthe parallel disaster economy has been built with taxpayers' mon- ey, thanks to the boom in privatized war-zone reconstruction. The giant contractors that have servedas"the primes"inIraqand Afghanistan have spent large portions oftheir income from government contracts on their own cor- porate overhead-between 20and 55 percent, according to a 2006 audit of Iraq contractors. Much of those funds has, quite legally, gone into huge in- vestments in corporate equipment, such as Bechtel's battalions of earth movers, Halliburton's fleets ofplanes and trucks, and the surveillance archi- tecture built byL-3, CACI, and BoozAllen. Most dramatic has been Black- water's investment initsparamilitary infrastructure. Founded in 1996,the com- pany hasuseditssteadystream ofcontracts tobuildupaprivate armyof20,000 on-call mercenary soldiers and a military base in North Carolina worth be- tween $40 million and $50 million. It reportedly has the ability to fieldmas- sive humanitarian operations faster than the Red Cross, and boasts afleet of aircraft ranging from helicopter gunships to aBoeing 767.2 Blackwater has been called "al Qaeda forthe good guys"byitsright-wing admirers. It's astriking analogy. Wherever the disaster-capitalism complex has landed, it has produced a proliferation of armed groups that operate outside the state. That ishardly asurprise:when countries arerebuilt bypeople who don't believe ingovernments, the states they build are invariably weak, creating a market for alternative security forces, whether T Hezbollah, Blackwater, the Mahdi Army, or the gang down the street in New Orleans. he reach ofthe disaster industry extends farbeyond policing. When the contractor infrastructure built up during the Bush years islooked at as a whole, what we see is a fully articulated state-within-a-state that is as muscular and capable as the actual state isfrail and feeble. This corporate shadow-state hasbeen built almost exclusively with public resources,including the training ofitsstaff:90 percent ofBlackwater's revenues come from state contracts, and the majority of itsemployees are former politicians, soldiers, and civil servants. Yet the vast infrastructure is all privately owned and controlled. The citizens who funded it have absolutely no claim to this parallel economy or its resources. 2 One of the most alarming aspects of this industry is how unabashedly partisan it is. Blackwater, for instance, is closely aligned with the anti-abortion movement and other right-wing causes. It donates almost exclusively to the Republican Party, rather than hedging its bets like most bigcorporations. Halliburton sends 93 percent of its campaign contributions to Republicans; Fluor, 78 percent. Is itfar-fetched to imagine aday when political parties will hire these companies to spy on their rivals during an election cam- paign--or toengage incovert operations too shady even for theCIA? ESSAY 51 THE COMPANIES AT THE HEART The actual state, meanwhile, has lost the ability to perform itscore func- tions without the help ofcontractors. Its own equipment isout ofdate, and OF THE DISASTER COMPLEX the best experts have fledtothe private sector. When Katrina hit, FEMA had to hire a contractor to award contracts to contractors. Similarly, when it INCREASINGLY SEE THE STATE AND came time toupdate the Army manual on the rulesfordealing with contractors, NONPROFITS AS COMPETITORS the Army outsourced the job to one ofitsmajor contractors, MPRI, because itno longer had the in-house expertise. The CIA has lost somany staffers to the privatized spysector that ithas had to bar contractors from recruiting in the agency dining room. "One recently retired case officer said he had been approached twice while in line for coffee," reported the LosAngeles Times. And when the Department ofHomeland Security decided itneeded to build "virtual fences"on the U.S. borderswith Mexico and Canada, Michael P.Jack- son, deputy secretary ofthe department, told contractors, "This isan unusu- alinvitation .... We're askingyoutocome back and tell ushow todoour busi- ness."The department's inspector general explained that Homeland Security "does not have the capacity needed to effectively plan, oversee, and execute the [Secure Border Initiative] program." Under George W. Bush, the state still has all the trappings of agovern- ment-the impressive buildings, presidential press briefings, policy battles-but it no more does the actual work of govern- T ing than the employees at Nike's Beaverton, Oregon, campus stitch running shoes. he implications ofthe decision bythe current crop ofpoliticians to systematically outsource their elected responsibilities will reach farbeyond a singleadministration. Once amarket hasbeen created, itneeds tobeprotected. The companies at the heart ofthe disaster-capitalism complex increasingly regard both the state and nonprofits ascompetitors; from the corporate per- spective, whenever governments or charities fulfill their traditional roles, they are denying contractors work that could be performed at aprofit. "Neglected Defense: Mobilizing the Private Sector to Support Home- land Security," a 2006 report whose advisory committee included some of the largest corporations in the sector, warned that "the compassionate federal impulse to provide emergency assistance to the victims of disasters affects the market's approach to managing its exposure to risk." Published by the Council on Foreign Relations, the report argued that if people know the government will come to the rescue, they have no incentive to pay for protection. Inasimilar vein, a year after Katrina, CEOs from thir- ty of the largest corporations in the United States joined together under the umbrella of the Business Roundtable, which includes in its member- ship Fluor, Bechtel, and Chevron. The group, calling itself Partnership for Disaster Response, complained of "mission creep" by the nonprofit sector in the aftermath of disasters. The mercenary firms, meanwhile, have been loudly claiming that they are better equipped than the U.N. to engage in peacekeeping in Darfur. Much ofthis new aggressiveness flowsfrom suspicion that the golden era ofbottomless federal contracts might not last much longer. The U.S. gov- ernment isbarreling toward an economic crisis, thanks in no small part to the deficit spending that has bankrolled the privatized disaster economy. Sooner rather than later, the contracts are likely to dip significantly. In late 2006 defense analysts began predicting that the Pentagon's acquisitions budget could shrink by asmuch as 25 percent in the coming decade. When the disaster bubble bursts, firmssuch asBechtel, Fluor, and Black- water will lose much of their primary revenue streams. They will still have all the high-tech equipment bought at taxpayer expense, but they will need to find anew business model, anew way to cover their high costs. The next phase of the disaster-capitalism complex isall too clear: with emergencies on the rise, government no longer able to foot the bill, and citizens strand- ed bytheir hollow state, the parallel corporate state will rent back itsdisas- ter infrastructure to whoever can afford it, at whatever price the market 52 HARPER'S MAGAZINE IOCTOBER 2007 IMAGES OF PEOPLE STRANDED willbear. Forsalewillbeeverything fromhelicopter ridesoffrooftops todrink- ing water to beds in shelters. ON ROOFTOPS IN NEW ORLEANS Wealth already provides an escape hatch from most disasters-it buys early-warning systemsfortsunami-prone regions and stockpiles ofTamiflu for FORESHADOW A COLLECfIVE the next outbreak. Itbuysbottled water, generators, satellite phones, and rent- FUTURE OF DISASTER APARTHEID a-cops. During the Israeli attack on Lebanon in 2006, the U.S. government initially tried to charge American citizens for the cost of their own evacua- tion, though itwaseventually forced to back down. Ifwecontinue in this di- rection, the images of people stranded on New Orleans rooftops will not only have been aglimpse ofAmerica's unresolved past ofracial inequality but willalsohave foreshadowed acollective future ofdisaster apartheid, inwhich survival isdetermined primarily byone's ability to pay. Perhaps part ofthe reason somany ofour elites, both political and corpo- rate, aresosanguine about climate change isthat they are confident they will beable to buytheir wayout ofthe worst ofit.This mayalso partially explain whysomany Bushsupporters areChristian end-timers. It's not just that they need tobelieve there isan escape hatch from the world they arecreating. It's that the Rapture is a parable for what they are building down here on Earth-a system that invites destruction and disaster, then A swoops inwith private helicopters and airlifts them and their friends to divine safety. s contractors rush to develop alternative stable sources of rev- enue, one avenue ofbusiness isin disaster-proofing other corporations. This wasPaulBremer's lineofworkbeforehe became Bush'sproconsul inIraq:turn- ingmultinationals into security bubbles able to function smoothly even ifthe states in which they are doing business crumble around them. The early re- sultscan beseen in the lobbies ofmany officebuildings inNew YorkorLon- x- don-airport-style check-ins complete with photo-H) requirements and raymachines-but the industry hasfargreater ambitions, including privatized global communications networks, emergency health and electricity services, and the ability to locate and provide transportation foraglobal workforce in the midst ofamajor disaster. Another potential growth area identified bythe disaster-capitalism complex ismunicipal government: the contracting out of police and firedepartments to private security companies. "What they dofor the military in downtown Fallujah, they can do for the police in downtown Reno," aspokesperson forLockheed Martin said in November 2004. The contracting industry predicts that these new markets willexpand dra- matically over the next decade. A frank vision of where these trends are leading isprovided byJohn Robb, aformer covert-action mission comman- der with Delta Force turned management consultant. In awidely circulated manifesto forFastCompany magazine, he describes the "end result" ofthe war on terror as"anew, more resilient approach to national security, one built not around the state but around private citizens and companies .... Security will become afunction ofwhere youlive and whom youwork for,much ashealth care isallocated already." Robb writes, "Wealthy individuals and multinational corporations willbe the firstto bailout ofour collective system, opting instead tohire private mil- itary companies, such as Blackwater and Triple Canopy, to protect their homes and facilities and establish aprotective perimeter around daily life.Par- allel transportation networks--evolving out of the time-share aircraft com- panies such asWarren Buffett's NetJets-will cater to this group, leapfrog- ging itsmembers from one secure, well-appointed lilypad to the next." That elite world isalready largely in place, but Robb predicts that the middle class will soon follow suit, "forming suburban collectives to share the costs ofse- curity." These "'armored suburbs' will deploy and maintain backup genera- torsand communications links"and be patrolled byprivate militias "that have received corporate training and boast their own state-of-the-art emergency response systems." In other words, aworld ofsuburban Green Zones. As forthose outside the 54 HARPER'S MAGAZINE /OCTOBER 2007 securedperimeter, "they willhave to make dowith the remains ofthe national OUTSIDE THE WEALTHY SUBURBS, system. They willgravitate to America's cities, where they will besubject to ubiquitous surveillance and marginal or nonexistent services. For the poor, THE NEW ORLEANS VERSION OF there will be no other refuge." The future Robb describes sounds very much THE RED ZONE RESEMBLED A POST- like the present in New Orleans, where two very different kinds of gated communities emerged from the rubble. On the one hand were the so-called APOCALYPTIC NO-MAN'S-LAND FEMA-villes: desolate, out-of-the-way trailer camps forlow-income evacuees, built byBechtel or Fluor subcontractors and administered byprivate securi- ty companies that patrolled the gravel lots, restricted visitors, kept journal- istsout, and treated survivors likecriminals. On the other hand were the gat- ed communities built in the wealthy areas ofthe city like Audubon and the Garden District, bubbles offunctionality that seemed to have seceded from the state altogether. Within weeksofthe storm, residents there had water and powerful emergency generators. Their sick were treated in private hospitals, and their children went to private orcharter schools. And they had no need forpublic transit. In St. Bernard Parish, aNew Orleans suburb, DynCorp had taken overmuch ofthe policing; other neighborhoods hired securitycompanies directly. Between the two kinds ofprivatized city-states wasthe New Orleans version of the Red Zone, where the murder rate soared and A neighborhoods like the storied Lower Ninth Ward descend- ed into apostapocalyptic no-man's-land. nother glimpse of a disaster-apartheid future can be found in a wealthy Republican suburb outside Atlanta. Its residents decided that they were tired ofwatching their property taxes subsidize schools and police in the county's low-income African-American neighborhoods. They voted to in- corporate as their own city, Sandy Springs, which could spend most of its taxes on services for its 100,000 citizens and minimize the revenue that would be redistributed throughout Fulton County. The only difficulty wasthat Sandy Springs had no government structures and needed to build them from scratch-everything from tax collection to zoning to parks and recreation. In September 2005, the same month that New Orleans flooded, the res- idents of Sandy Springs were approached by the construction and consulting giant CH2M Hill with aunique pitch: Let usdo itforyou. Forthe starting price of$27 million ayear, the contractor pledged to build acomplete city from the ground up. A few months later, Sandy Springs became the first "contract city." Only four people worked di- rectly forthe new municipality--everyone elsewas acontractor. Rick Hirsekorn, heading up the proj- ect for CHZM Hill, described Sandy Springs as"a clean sheet ofpaper with no governmental process- es in place." The Atlanta Journal-Constitution re- ported that "when Sandy Springs hired corporate workers to run the new city, it was considered a bold experiment." Within a year, however, contract-city mania was tearing through Atlanta's wealthy suburbs, and ithad become "standard pro- cedure in north Fulton [County]." Neighboring communities took their cue from Sandy Springs and alsovoted to become stand-alone cities and contract out their government. One new city, Milton, immediately hired CH2M Hill for the job-after all, ithad the experience. Soon, acampaign began forthe new corporate cities tojoin together toform their own county. The plan has encountered fierceopposition outside the proposed enclave, where politicians saythat without those tax dollars, they will no longer be able to afford their ESSAY 55 IT WAS FORMERLY BELIEVED THAT large public hospital and public transit system; that partitioning the county would create afailed state on the one hand and ahyperserviced one on the GENERALIZED MAYHEM WAS A other. What they were describing sounded alot like New Orleans and a lit- tle like Baghdad. DRAIN ON THE GLOBAL ECONOMY. In these wealthy Atlanta suburbs, the long crusade to strip-mine the THAT TRUISM ISNO LONGER TRUE state isnearing completion, and it isparticularly fitting that the new ground wasbroken byCH2M Hill. The corporation wasamultimillion-dollar con- tractor in Iraq, paid to perform the core government function of oversee- ing other contractors. In Sri Lanka after the tsunami, it not only had built ports and bridges but was, according to the U.S. State Department, "re- sponsible forthe overall management ofthe infrastructure program." In post- Katrina New Orleans, CH2M Hill was awarded $500 million to build FEMA-villes and wasput on standby for the next disaster. A master ofpri- vatizing the core functions ofthe state during extraordinary circumstances, the company was now doing the same under ordinary ones. E lf disasters had served aslaboratories ofextreme privatization, the testing phase was clearly over. ordecades, the conventional wisdom wasthat generalized mayhem was adrain on the global economy. Individual shocks and crises could be har- nessed asleverage to force open new markets, ofcourse, but after the initial shock had done its work, relative peace and stability were required for sus- tained economic growth. That was the accepted explanation for why the Nineties had been such prosperous years:with the Cold War over, economies were liberated to concentrate on trade and investment, and ascountries be- came more enmeshed and interdependent, they were far lesslikely to bomb one another. At the 2007 World Economic Forum in Davos, Switzerland, however, po- litical and corporate leaders were scratching their heads over astate of af- fairs that seemed to flout this conventional wisdom. It wasbeing called the "Davos Dilemma," which FinancialTimes columnist Martin Wolf described as"the contrast between the world's favourable economics and troublesome politics." AsWolf put it,the economy had faced "aseriesofshocks: the stock market crash after 2000; the terrorist outrages ofSeptember 11, 2001; wars in Afghanistan and Iraq; friction over US policies; ajump in real oil prices to levels not seen since the 1970s; the cessation of negotiations in the Doha round [ofWTO talks]; and the confrontation over Iran's nuclear am- bitions"-and yet itfound itselfin"agolden period ofbroadly shared growth." Put bluntly, the world wasgoing to hell, there was no stability in sight, and the global economy was roaring its approval. This puzzling trend has also been observed through an economic indica- torcalled "the guns-to-caviar index." The index tracks the salesoffighter jets (guns) and executive jets (caviar). Forseventeen years,itgenerally found that when fighter jets were selling briskly, sales of luxury executive jets went down, and viceversa:when executive-jet saleswereon the rise,fighter-jet sales dipped. Ofcourse, ahandful ofwarprofiteers alwaysmanaged to get rich from selling guns, but they were economically insignificant. It wasatruism ofthe contemporary market that you couldn't have booming economic growth in the midst ofviolence and instability. Except that the truism isno longer true. Since 2003, the year of the Iraq invasion, the index hasfound that spending has been going upon both fight- erjets and executive jets rapidly and simultaneously, which means that the world isbecoming lesspeaceful while accumulating significantly more prof- it. The galloping economic growth in China and India has played a part in the increased demand for luxury items, but sohas the expansion ofthe nar- row military-industrial complex into the sprawling disaster-capitalism com- plex. Today, global instability does not just benefit a small group of arms dealers; itgenerates huge profits forthe high-tech-homeland-security sector, forheavy construction, forprivate health-care companies, forthe oil and gas sectors-and, ofcourse, fordefense contractors. 56 HARPER'SMAGAZINE/OCTOBER 2007