Why Friedrich Von Hayek Must be Barred From Canada

A CULTURE OF DEFIANCE: History of the Reform-Conservative Party of Canada

I realize that Friedrich Von Hayek died in 1992, but he is one of the "scholars" who helped to draft neoconservative theory.

In Lawrence Martin's book Harperland, he states that he spoke with Harper insiders about Leo Strauss, deemed the primary neoconservative theorist, and they denied that Stephen Harper had ever read him. I'm not surprised. A bit too deep, though he does ascribe to his theory of "hidden messages". Calculated ambiguity, taught at neocon schools everywhere. Orwellian with a twist.

However, Harper's boys do suggest that their boss is an avid reader and follower of Friedrich Von Hayek, an Austrian economist, and author of The Road to Serfdom, which has become a Bible to neocon disciples.

I'm currently reading the Fiftieth Anniversary Edition, with introduction by none other than Milton Friedman, a colleague of Hayek's at the Chicago School's Committee on Social Thought.

In the first chapter, The Abandoned Road, Hayek speaks of the roots of western civilisation. The roots which he claims come from the Greeks and Romans. He also laments that we are abandoning the sage advice of Adam Smith, John Milton, Erasmus, Cicero, etc., etc., etc.

However, Canadian civilization was not based on the ramblings of the historic scholars, or the ancient Romans or Greeks. Our unique culture was based on the relationship between early European settlers and our First Nations.

When conducting trade on our river highways, they were not thinking of Adam Smith and the sovereignty of the consumer. Nor were they reading Milton's Paradise Lost or the philosophies of Marcus Tullius Cicero.

They were too busy trying to survive.

Von Hayek would never understand that. He grew up in Vienna, where his father was of minor nobility and his mother a member of the upper-class bourgeoisie. He led a privileged life, influenced by the intelligentsia of Viennese society.

So invoking the scholars was as natural to him as breathing, but understanding the needs of the general population, completely alien.

In his introduction to the Road to the Serfdom, he says that it was originally only meant to be a pamphlet, written for a British audience. He was surprised by it's success and especially the interest shown by the University of Chicago.

He even thought that he may have written it differently for the Americans. However, when he began to lecture in Canada, especially at the Fraser Institute, he should have written it differently for Canadians, because our culture is vastly different from that of the United States.

We don't thump our chests and chant "Canada, Canada, Canada", which doesn't mean that we aren't proud Canadians. We're just not annoyingly so.

And this is something that Stephen Harper doesn't understand. He's always been embarrassed by us. Socialists, lazy, a welfare state, mamby pamby Peacekeepers.

We needed to be more muscular. Tough soldiers behind state of the art heavy machinery. War toys to flaunt and intimidate others with.

He just doesn't get it.

Norm Jewison was interviewed several years and asked why he felt that Canadians were so successful in the entertainment industry. From Comedians like Jim Carey and Martin Short to directors like himself and David Cronenberg.

Jewison answered that it was because we only had six crayons, explaining to a confused interviewer, that Canadians have learned to make do. We never had the money that the American entertainment industry did, so we had to push the limits. Make do with what we had and turn those six colours into a kaledescope.

Martin Short once spoke of the successful series SCTV, that became the inspiration for Saturday Night Live. They ran the show on a shoestring, first writing the scripts, and then visiting the local Salvation Army thrift store for costumes.

Stephen Harper likes to tout our military history, without really understanding our military history. At Vimy Ridge, we were successful where so many other better equipped armies were not. And it's because we learned to make do with less.

Instead we focused on training down to the finest detail.

Stephen Harper instead follows the beliefs of people like Donald Rumsfeld, who felt that the man or woman behind the gun was not important. Only the size of the gun.

I watched a documentary about Iraq, and they interviewed several young American soldiers who admitted that they really had no idea what they were doing, or even how to properly handle those big guns. One young man said that before joining up he was working at Kentucky Fried Chicken. Now he was a member of the Intelligence Corp, charged with information gathering, and carrying a huge weapon.

Lester Pearson once said that the Americans may be richer than us, but that we were better off. We always thrived to be a nation that took care of its people.

This of course is anathema to the neoconservative, who believe that people should take care of themselves. This has never been the Canadian way. We do rely on ourselves, but also on our neighbours and our government.

Three and a half centuries ago, France sent shiploads of young brides, to help settle Quebec. Filles du roi, or 'King's Daughters. Men were told to select robust wives, capable of hard work and they were paid so much for every child born. Government intervention to encourage population growth.

My great grandfather was granted 100 acres of land in New Brunswick, for $3.00 and a set number of hours working to build roads. He also had to commit to clearing so many acres of land a year. Government intervention to build infrastructure and aid in prosperity.

A favourite social event for early settlers was the work 'Bees'. Logging bees, stumping bees, quilting bees. Communities working together. Collectivism to accomplish tasks beyond the ability of a single family. (from my Victorian Canada website)

We don't share the individualist attitudes of American history. It's rather telling that we selected Tommy Douglas as the 'Greatest Canadian'. The man who gave us universal healthcare, something Harper told the U.S. conservatives would "horrify" them.

Stephen Harper doesn't get us, he just wants to change us. Remake Canadians in the American image. An American image created by people like Friedrich Von Hayek.

In a 1997 CBC interview, Harper was asked "Is there a Canadian culture?" He replied: "Yes, in a very loose sense. It consists of regional cultures within Canada, regional cultures that cross borders with the US. We're part of a worldwide Anglo-American culture..."

Nope. He just doesn't get us.

Shock Doctrined Through Think Tanks

A CULTURE OF DEFIANCE: History of the Reform-Conservative Party of Canada
I've been reading Naomi Klein's The Shock Doctrine, and what I find interesting, is that American Imperialism over the past half century or so, has followed a pattern.

One laid out by the Chicago school and Milton Friedman. And it was done under the guise of fighting Socialism/Communism, but was really about taking over the economics of other nations, for corporate interests.

Chile provides an excellent example of how the system works.

In an attempt to combat the socialist principles of leading Latin American economist Raul Prebisch, the Chicago School offered free market courses at a Chilean university.

This was the brainchild of Albion Patterson, director of the U.S. International Cooperation Administration in Chile, and Theodore W. Schultz, chairman of the Department of Economics at the University of Chicago, who called on Friedman to work his magic.

The two men came up with a plan that would eventually turn Santiago, a hotbed of state-centred economics, into its opposite—a laboratory for cutting-edge free-market experiments, giving Milton Friedman what he had longed for: a country in which to test his cherished theories. The original plan was simple: the U.S. government would pay to send Chilean students to study economics at what pretty much everyone recognized was the most rabidly anti-"pink" school in the world—the University of Chicago. Schultz and his colleagues at the university would also be paid to travel to Santiago to conduct research into the Chilean economy and to train students and professors in Chicago School fundamentals. (1)

Friedman and his gang would also bring the media on board, and not surprisingly, the president of their largest newspaper, El Mercurio, would become Augustus Pinochet's economic minister after the U.S. led coup.

However, another important step in trying to turn the Southern Cone , and indeed the rest of the free world, to the right, came from another faculty member at the Chicago School, Friedrich von Hayek.

Hayek had come up with the notion of the corporate funded free market think tank, that he suggested should "present themselves as civil society". They churn out report after report, poll after poll, all to promote corporate interests.

And Chile was no exception. The most prominent are Libertad y Desarrollo (now the Latin American institute) and Centro de Estudios Públicos , both heralded as the saviour of Chile (next to Milton Friedman, bombs, guns and assassins).

Alejandro Chafuen wrote a piece in April of 2010: Think Tanks and the Transformation of the Chilean Economy

In it he not only praises Libertad y Desarrollo and Centro de Estudios Públicos , but also Canada's own Fraser Institute.

... the Fraser Institute in Canada, ranked today as the best market oriented institute outside the United States. Fraser has a huge influence in a Canada which is overcoming the US in economic freedoms, transparency, and several other areas.

But who is this Alejandro Chafuen?

He is the past President of the Atlas Foundation and a Senior Fellow at the Acton Institute. In fact the Acton Institute was started with funds provided by the Atlas Foundation, and is an extension of the Religious Right.

Atlas was, and is, a major sponsor of the Acton Institute run by former faith healer, evangelical, gay community organizer, and now Catholic priest, Bob Sirico. Sirico ran fundamentalist faith healing meetings until he came out as gay. Then he moved on to the Metropolitan Community Churches and started running the Gay Community Center in Hollywood ... Acton officials got heavily involved in the debate on gay marriage. With Sirico back in the closet (though some conservatives don’t think so) the position they have been taking has been to pander to bigots on the Religious Right.

The Atlas Foundation also helps to finance the Canadian Constitution Foundation, which was started in 2002, by Conservative MP John Weston. The CCF has ties to the Harper government and Canada's Neoconservative movement.

They were also behind attack ads run in the U.S. to oppose Obama's healthcare plan.

Donald Gutstein wrote an excellent book: Not a Conspiracy Theory, in which he exposes the myriad of think tanks and foundations propping up the Harper government. Gutstein tells us to follow the money, and the few connections I provided above, are only a tip of the iceberg.

If we are going to engage in non-violent civil disobedience, it's important to know what we're up against. The media is constantly quoting polls and reports from these groups, to defend or explain this government's policies.

We have to do what Gutstein suggests and follow the money. Google the name of the group or the person quoted. It won't take long to find they belong to some corporate funded think tank or "advocacy" group, many with planted MPs.

The Canadian Taxpayers Federation (Jason Kenney)
The Fraser Institute (Jason Kenney, Rob Anders)
The Montreal Institute (Maxime Bernier)
The Civitas Society (Jason Kenney)
The National Citizens Coalition (Stephen Harper and Rob Anders)

The list is endless.

Once you trace the origin, email the columnist or own the comments section. Our best weapon is education, including the education of the media. Maybe if we become enough of a pain, they may start providing some balance.

Brigette DePape started something here, putting her job on the line to make a statement. But its not enough to simply "stop" Stephen Harper. We must fight against the entire movement, before it destroys us.

Sources:

1. The Shock Doctrine: The Rise of Disaster Capitalism, By Naomi Klein, Vintage Canada, 2007, ISBN: 978-0-676-97801-8

Calgary School, Chicago School and the Committee on Social Thought

Canada's neoconservative movement has been slow to reach awareness in Canada, though throughout the 1990's, neoconservatism was a term used by many journalists and political pundits, to separate the conservatism of people like Mike Harris in Ontario, Ralph Klein in Alberta, Grant Devine in Saskatchewan and the Reform Party on the national scene; from the more traditional conservatism.

However, since Stephen Harper's "new" Conservative Party came to power, the mainstream media prefer to use the misnomer "Tory". A term that Stephen Harper himself, claimed to detest. "It's not my favourite term, but we're probably stuck with it." (Stephen Harper, Hamilton Spectator, January 24, 2004)

We are more familiar with American neoconservatism (on which our own movement is based), as represented by George W. Bush and his war mongers, and the free marketeers, who push deregulation, low or no corporate taxes, and the end of the welfare state.

However, the political philosophy is not simply about imperial wars or free market theories. It is a complete doctrine designed to change the way that we view the role of government.

Not a government that Abraham Lincoln famously claimed as being "of the people, by the people and for the people", but a government that is only there to serve the interests of profit.

The National Citizens Coalition, of which Harper has been a member for more than three decades, and once served as president, espouses the Milton Friedman theory of eliminating government altogether, except for "policing and the military" (1).

Policing to ensure that the poor don't touch the rich people's stuff, and the military, so we can lay our hands on the stuff belonging to the poor of other nations.

And this theory was galvanized at the University of Chicago, almost 60 years ago.

The Chicago School

In 1963, Time magazine ran a piece about the University of Chicago: The Return of a Giant, where they spoke of the difference a decade had made to the school.

In 1953 the University of Chicago was so close to academic anarchy that its graduate schools refused to honor degrees from its college, and only 141 freshmen entered the place. The limestone Gothic campus was marooned in a sea of slums and muggers; the trustees morosely considered moving the university out of Chicago. To sum up his problems, Chancellor Lawrence A. Kimpton told a story: "A Harvard professor about to come here went to his young son's room the night before they left Cambridge. The boy was praying: 'And now, goodbye, God. We're going to Chicago.'" (2)

What saved the school was a change in direction.

They couldn't compete for the academic liberalism of places like Harvard, so instead chose to create an academic conservatism, "where "classical" Economist Friedrich von Hayek ... [and] conservative Milton Friedman" became "Chicago's answer to Harvard's liberal John K. Galbraith."

However the economics of Friedman and Hayek, were not palpable to most Americans, and since they couldn't be pushed through the barrel of a gun, as happened in places like Chile and Argentina, it became necessary to change the way that people think.

And as sci-fi as that sounds, they set out to accomplish this with scholars, including Leo Strauss and Hannah Arendt, who were encouraged to think outside the norm.

The Committee on Social Thought

The graduate studies in unorthodox thinking, had its own outpost:

The oddest graduate school in the U.S. is a far-out arm of the University of Chicago called the Committee on Social Thought. Physically, it is a dingy office under the eaves of the social science building. Its faculty, which includes Novelist Saul Bellow and Political Scientist Hannah Arendt, numbers only eleven. But its goal is as big as the world ... The committee is a generalist's elysium, a haven for "eccentrics" commanded to "think in new areas." If they do, the school gives them the degree of Doctor of Social Thought. (3)

Not all graduates churned out conservative essays, but the ones who did, very much changed the way the U.S. government did business.

In fact, one graduate who studied under Leo Strauss, the late Irving Kristol, called himself the "Godfather of Neoconversation".

He and scholars like him, flooded the market with books and essays, promoting free markets, and the freedom of the individual, including the freedom to be poor and sick, so long as you didn't expect the government to do anything about it.

The Calgary School

The first to use the term The Calgary School, as the Canadian equivalent of The Chicago School, was David J. Rovinsky, who wrote a paper for the Washington based Center for Strategic and International Studies, entitled: THE ASCENDANCY OF WESTERN CANADA IN CANADIAN POLICY MAKING.

In the paper he confirms that neoconservatism is more than just an economic theory, but a political argument, and that the Calgary School is part of an "international neoconservative movement".

So while Stephen Harper and his government have adopted the economic principles of Milton Friedman and Friedrich von Hayek, they represent something more profound.

An increasingly successful attempt at social engineering.

They want to completely change the way we view ourselves culturally and historically.

The rise of the west as a potent force in Canadian political life has had several consequences. It has turned federal and provincial governments toward fiscal conservatism, deficit reduction, and state retrenchment; led a reexamination of policies related to immigration and multiculturalism; and exposed the scope of judicial activism in the wake of the 1982 Canadian Charter of Rights and Freedoms to new political debate. Most important, it has induced the rest of English-speaking Canada to take a new hard line on the question of recognizing Quebec’s distinctiveness in the Canadian constitution, to the point of encouraging the French-speaking province to leave the federation. Western Canada’s embrace of classical liberalism, together with its increasing demographic weight within the country, has the potential to make Canadian political debate in the early 21st century much different, and probably less distinctively Canadian, than it was for the bulk of the 20th. (4)

And The Calgary School is helping to accomplish that.

Like The Chicago School, they challenge civil rights and what they term "judicial activism". In Chicago, law professors "lambasted the U.S. Supreme Court for being "a policymaker without proper judicial restraint. (2)"

And Stephen Harper in 1997, told leading American Conservatives, "And we have a Supreme Court, like yours, which, since we put a charter of rights in our constitution in 1982, is becoming increasingly arbitrary and important ... "

I often quote a line that appeared in the Vancouver Sun several years ago, describing Harper's Reform Party:

"Reform is somewhat un-Canadian. It's about tidy numbers, self-righteous sanctimoniousness and western grievances. It cannot talk about the sea or about our reluctant fondness for Quebec, about our sorrow at the way our aboriginal people live, about the geographically diverse, bilingual, multicultural mess of a great country we are."

The Reformers, or more specifically, the neoconservatives, do not want us to "talk about the sea, our reluctant fondness for Quebec or our sorrow at the way our aboriginal people live".

So instead they create alternative Canadian stories, not the least of which is Calgary School's Tom Flanagan's book First Nations, Second Thoughts. In it he diminishes the importance of our First Nations, reducing them to just another band of immigrants.

But he is not the only Calgary scholar to try to change our history or the way we view ourselves. According to Rovinsky,

A look at classical liberalism among western intellectuals almost necessarily begins with David Bercuson and Barry Cooper. Bercuson, a University of Calgary historian, and Cooper, a political scientist at the same institution, each have a track record of publishing that features interest in neoconservatism and the Canadian west as a region. Bercuson has written a number of pieces on regionalism, and edited Canada and the Burden of Unity. Cooper has co-edited a book of comparative essays on neoconservatism in English-speaking countries and has written a stinging critique of the Canadian Broadcasting Corporation (Bercuson 1977, 1981; Cooper 1988, 1994). Yet they truly established their notoriety with their 1991 book Deconfederation: Canada Without Quebec. They state openly that the most important issue for constitutional reform is the preservation of Canada as a liberal democracy rooted in individual rights. The most significant threat to liberalism in Canada is Queberes call for special status and recognition of collective rights rooted in culture ...

And again to Harper:

"The establishment came down with a constitutional package which they put to a national referendum. The package included distinct society status for Quebec and some other changes, including some that would just horrify you, putting universal Medicare in our constitution, and feminist rights, and a whole bunch of other things." (5)

This shows that the Calgary School is alive and well in the Harper government. And before suggesting that Harper has abandoned his views on Quebec, we have to remember another Flanagan goal "how to convince Canadians that we are moving to the left, when we are not".

However, there is a more important book written by the Bercuson/Cooper team: Derailed: The Betrayal of the National Dream. In it they lay out the agenda, in a 'head in the clouds' idealism.

Bercuson and Cooper divide Canadian history into periods of good government and bad government, the latter broadly covering the Pearson, Trudeau, and Mulroney governments. Good government essentially refers to a government that worries about economic growth and that assumes that other good things, like national unity and social harmony flow from abundant material wealth. (4)

I guess they didn't hear the old adage that "money is the root of all evil".

Because the problem with this philosophy, is that "abundant material wealth" is concentrated at the top, and the "trickle down" theory, a myth.

It's important to view neoconservatism in the big picture of excessive greed and human suffering.

Naomi Klein's The Shock Doctrine: The Rise of Disaster Capitalism, does an excellent job of exposing this. It was written in 2007, before the Wall Street induced "economic crisis", engineered to put the final nail in the coffin of the welfare state.

The Opposition has got to change their strategy, by changing the channel. When was the last time that healthcare was debated? I mean really debated?

When asked, Flaherty will stick to his one liner "we are not going to alter the transfer to the provinces." Not a word on protecting the Canada Health Act, that guarantees the right to universal healthcare for all citizens.

We have to understand that the neocon way is not the Canadian way. It is the American Republican way. The Calgary School way.

"Westerners, but especially Albertans, founded the Reform/Alliance to get "in" to Canada. The rest of the country has responded by telling us in no uncertain terms that we do not share their 'Canadian values.' Fine. Let us build a society on Alberta values." Stephen Harper

Getting rid of Stephen Harper anytime soon, is unlikely, but remember this. The Calgary School is already grooming Pierre Poilievre as his replacement. Oye!



Sources:

1. The Myth of the Good Corporate Citizen: Canada and Democracy in the Age of Globalization, By Murray Dobbin, James Lorimer & Company, 2003, ISBN: 1-55028-785-0, Pg. 200-203

2. Universities: Return of a Giant, Time magazine, May 31, 1963

3. Universities: Generalist's Elysium, Time Magazine, January 03, 1964

4. THE ASCENDANCY OF WESTERN CANADA IN CANADIAN POLICY MAKING, By David J. Rovinsky, Policy Papers on the Americas, February 16, 1998, Volume IX Study 2

5. Full text of Stephen Harper's 1997 speech, Canadian Press, December 14, 2005

Milton Friedman, the Southern Cone and "Authoritarian Democracy"

A CULTURE OF DEFIANCE: History of the Reform-Conservative Party of Canada

The Southern Cone refers traditionally to the Latin American countries of Argentina, Chile, Paraguay, and Uruguay, and often includes Brazil.

In the 1970's, the area was the hotbed of left-wing ideals, with Salvadore Allende becoming the first democratically elected Marxist, when he became President of Chile.

But not everyone saw Allende's victory as positive.

Allende was hated by the Chilean monied classes for understandable reasons: he expropriated their large estates for peasant co-operatives and supported policies of large wage increases in industry. When he nationalized all U.S.-owned copper companies whose mines had been developed with U.S. capital and technology in the early years of the century and were still lucrative, he made an implacable enemy of the United States and its president, Richard Nixon. Henry Kissinger, then U.S. secretary of state, openly stated American intentions after Allende's election in 1970 when he said, "I don't see why we need to stand by and watch a country go Communist due to the irresponsibility of its people. " (1)

Fortunately for the monied classes, Chile already had a complement of free marketeers, who had been studying under the Chicago School of Economics. In the climate of the Cold War, a school was established in Santiago, to indoctrinate young students in the principles of neoliberalism.

Figuring out how to achieve that goal was the topic of discussion between two American men as they met in Santiago, Chile, in 1953. One was Albion Patterson, director of the U.S. International Cooperation Administration in Chile—the agency that would later become USAID—and the other was Theodore W. Schultz, chairman of the Department of Economics at the University of Chicago. Patterson had become increasingly concerned about the maddening influence of Raul Prebisch and Latin America's other "pink" economists. "What we need to do is change the formation of the men, to influence the education, which is very bad," he had stressed to a colleague. This objective coincided with Schultz's own belief that the U.S. government wasn't doing enough to fight the intellectual war with Marxism. "The United States must take stock of its economic programs abroad ... we want [the poor countries] to work out their economic salvation by relating themselves to us and by using our way of achieving their economic development ... (2)

The economic policy of developmentalism, then rampant in South America, was viewed as "pinko", and just a step away from Communism.

The two men came up with a plan that would eventually turn Santiago, a hotbed of state-centred economics, into its opposite—a laboratory for cutting-edge free-market experiments, giving Milton Friedman what he had longed for: a country in which to test his cherished theories. The original plan was simple: the U.S. government would pay to send Chilean students to study economics at what pretty much everyone recognized was the most rabidly anti-"pink" school in the world—the University of Chicago. Schultz and his colleagues at the university would also be paid to travel to Santiago to conduct research into the Chilean economy and to train students and professors in Chicago School fundamentals.

What set the plan apart from other U.S. training programs that sponsored Latin American students, of which there were many, was its unabashedly ideological character. By selecting Chicago to train Chileans—a school where the professors agitated for the near-complete dismantling of government with single-minded focus—the U.S. State Department was firing a shot across the bow

But despite the fact that they were churning out hand picked neoliberals, the Southern Cone was still progressive.

But the Allende victory, gave Friedman, and what were referred to as the "Chicago Boys", an opportunity to create a laboratory, to test aggressive free market principles.

And to achieve this, it was necessary to engage in what Augustus Pinochet, the planted dictator of Chile, would call "Authoritarian Democracy". And Milton Friedman, the man who once accused President Kennedy of trying to create a police state, when he announced that he would be regulating the price of steel (Time. April 22, 1962), would oversee the project from start to finish.

And not just in Chile:

... the next fix came from other countries in Latin America's Southern Cone, where the Chicago School counter-revolution quickly spread. Brazil was already under the control of a U.S.supported junta, and several of Friedman's Brazilian students held key positions. Friedman travelled to Brazil in 1973, at the height of the regime's brutality, and declared the economic experiment "a miracle."" In Uruguay the military had staged a coup in 1973 and the following year decided to go the Chicago route.

Lacking sufficient numbers of Uruguayans who had graduated from the University of Chicago, the generals invited "Arnold Harberger and [economics professor] Larry Sjaastad from the University of Chicago and their team, which included former Chicago students from Argentina, Chile, and Brazil, to reform Uruguay's tax system and commercial policy. The effects on Uruguay's previously egalitarian society were immediate: real wages dropped by 28 percent, and hordes of scavengers appeared on the streets of Montevideo for the first time. (3)

And the revolution spread:

Next to join the experiment was Argentina in 1976, when a junta seized power from Isabel Perlin. That meant that Argentina, Chile, Uruguay and Brazil—the countries that had been showcases of developmental ism —were now all run by U.S.-backed military governments and were living laboratories of Chicago School economics. According to declassified Brazilian documents just released in March 2007, weeks before the Argentine generals seized power, they contacted Pinochet and the Brazilian junta and "outlined the main steps to be taken by the future regime. (3)

And despite the human atrocities throughout this period, Milton Friedman is still considered to be a hero.

It's important for us to understand the mind of this man, because his Chicago School begat the Calgary School, and the Calgary School begat Stephen Harper. And the late Milton Friedman was one of the most influential men in the Canadian neoconservative movement.

Sources:

1. Long Shadows: Truth, Lies and History, By Erna Paris, Alfred A. Knopf, 2000, ISBN: 0-676-97251-9, Pg. 428

2. The Shock Doctrine: The Rise of Disaster Capitalism, By Naomi Klein, Vintage Canada, 2007, ISBN: 978-0-676-97801-8, Pg. 68-73

3. Klein, 2007, Pg. 102

Milton Friedman and the Destruction of Argentina

A CULTURE OF DEFIANCE: History of the Reform-Conservative Party of Canada

It is just as important to study Milton Friedman as Leo Strauss, in understanding Canada's neoconservative movement.

Friedman is one of the authors of the "shock therapy" economic system, where disasters are created or exploited, by the corporate sector. Free Marketeers will call it progress. Others see it as shocking and inhumane.

Because in order for the U.S. to control a foreign nation's economy, an authoritarian is needed, and that authoritarian is often a ruthless dictator. Case in point, Augustus Pinochet in Chile.

If you read Lawrence Martin's Harperland, or Christian Nadeau's Rogue in Power, you'll see how Stephen Harper took control, using ruthless means, and is now in a position to implement Friedman's policies. A bloodless coup.

Argentina's Shock Therapy

In her memoirs, Margaret Thatcher says of Argentina:

Whatever the Argentineans thought about it at the time ... the Falklands War provided a shock which brought first democracy and more recently, under President Menem, the economic benefits of free-market policies. Inflation has been brought down and a far-reaching privatization programme has been undertaken. Subsidies, regulation and tariffs have all been cut. Economic growth has sharply accelerated.

A little "shock" was good for them, says the lady who once declared that there was "no such thing as society".

In their book Commanding Heights, Daniel Yergin and Joseph Stanislaw, provide a bit of insight into the pre-coup Argentina, and what Thatcher called a "black economy".

Argentina had long been an economic paradox. How did a country that was one of the world's richest in the first decades of the twentieth century, end up in such economic disorder? A good part of the answer rested with Juan Peron. He is now best remembered, of course, as the husband of Evita, but in the years after World War II he was the embodiment of populism with an almost fascist tinge. Building on the prewar popularity of fascist ideas, Peron turned Argentina into a corporatist country, with powerful organized interest groups, big business, labor unions, military, farmers—that negotiated with the state and with each other for position and resources. He incited nationalist passions, stoked pretensions of grandeur, and pursued stridently anti-American policies. He nationalized large parts of the economy and put up trade barriers to defend them. He cut Argentina's links to the world economy which had been one of its great sources of wealth—embedded inflation in the society, and destroyed the foundations of sound economic growth. (2)

Viewed through a free-market lens, Peron would have been a disaster. So many opportunities for profit going to waste.

Peron was no saint, but according to Namomi Klein in The Shock Doctrine, life for Argentines was not as bad as suggested. Protectionism made many things unaffordable ($2000 just to install a phone), but the welfare state was alive and well. And like Chile, before their U.S. financed coup, the country had just undergone an intellectual revolution, where the arts thrived.

By the 1950s, Argentina had the largest middle class on the continent. Juan Peron had introduced Keynesian style economics "pouring public money into infrastructure projects such as highways and steel plants, giving local businesses generous subsidies to build their new factories, churning out cars and washing machines, and keeping out foreign imports with forbiddingly high tariffs." (3)

Naturally, this was anathema to the free marketeers, and when Peron died and his widow Isabel named leader, they sprang into action. From Henry Kissinger's records, recently made public, we learn that the U.S. were behind the 1976 coup that initiated the Argentine shock therapy.

Wages fell to 40% of what they had been and poverty became the norm.

But worse, was the wave of terror, under the planted dictator, General Jorge Videla, that followed the Chilean blueprint, to the Milton Friedman letter. According to Klein's Shock Doctrine:

When someone was targeted to be eliminated, a fleet of military vehicles showed up at that person's home or workplace and cordoned off the block, often with a helicopter buzzing overhead. In broad daylight and in full view of the neighbours, police or soldiers battered down the door and dragged out the victim, who often shouted his or her name before disappearing into a waiting Ford Falcon, in the hope that news of the event would reach the family.

Some "covert" operations were even more brazen: police were known to board crowded city buses and drag passengers off by their hair. In the city of Santa Fe, a couple was kidnapped right at the altar on their wedding day in front of a church filled with people."

The public character of terror did not stop with the initial capture. Once in custody, prisoners in Argentina were taken to one of more than three hundred torture camps across the country. Many of them were located in densely populated residential areas; one of the most notorious in a former athletic club on a busy street in Buenos Aires, another in a schoolhouse in central Bahia Blanca and yet another in a wing of a working hospital. At these torture centres, military vehicles sped in and out at odd hours, screams could be heard through the badly insulated walls and strange, body-shaped parcels were spotted being carried in and out, all silently registered by the nearby residents.

The Argentine junta was particularly sloppy about disposing of its victims. A country walk could end in horror because mass graves were barely concealed. Bodies would show up in public garbage bins, missing fingers and teeth (much as they do today in Iraq), or they would wash ashore on the banks of the Rio de la Plata, sometimes half a dozen at a time, after one of the junta's "death flights." On occasion, they even rained down from helicopters into farmers' fields."

All Argentines were in some way enlisted as witnesses to the erasure of their fellow citizens, yet most people claimed not to know what was going on. (much like Nazi Germany). There is a phrase Argentines use to describe the paradox of wide-eyed knowing and eyes-closed terror that was the dominant state of mind in those years: "We did not know what nobody could deny." (4)

As Canada is now in the throes of its own shock therapy, the need for torture chambers are not necessary.

We have our authoritarian leader in Stephen Harper, who allows no dissent. Witch hunts are now the norm, and while people don't disappear, their careers are ruined or threatened, if they dare to challenge.

The G-20 saw the worst human rights abuses and mass arrests in Canadian history; and police brutality at protests like the one over the Prison Farm closures, saw no age barrier. Those from 14 to 88 were victimized.

We are now part of the Shock Doctrine under the Harper regime, and what is happening in our country is just as shocking to many, as they were in places like Chile and Argentina.

And "the paradox of wide-eyed knowing and eyes-closed terror", was evident, when despite the horrors of the G-20, many Canadians simply shrugged and said "you should have stayed home".

Sources:

1. The Path to Power, By Margaret Thatcher, Harper Collins, 1995, ISBN: 0-06-017270-3, Pg. 583

2. The Commanding Heights: The Battle for the World Economy, By Daniel Yergin and Joseph Stanislaw, Touchstone, 2002, ISBN: 0-684-82975-4, Pg. 242

3. The Shock Doctrine: The Rise of Disaster Capitalism, By Naomi Klein, Vintage Canada, 2007, ISBN: 978-0-676-97801-8, Pg. 63

4. Klein, 2007, Pg. 106-107

The Deficit Cure: Acupuncture or Shock Therapy?

When the neoconservative movement in Canada first appeared on the radar of many journalists, it was tied to the administrations of Margaret Thatcher and Ronald Reagan. Both of these leaders launched aggressive attacks on the welfare state, and left devastation in their paths.

Grant Devine in Saskatchewan, Ralph Klein in Alberta and Mike Harris in Ontario, all sought to experiment with the Thatcher/Reagan theories in their respective provinces.

On the federal scene, the Reform Party had their ideology in check, and were just waiting for their turn.

At the time, Thatcher and Reagan were not on tour, so Canada's neocons were taught strategy by New Zealand politician, Roger Douglas.

He held information seminars, speaking to the Harris caucus in Ontario, with Tony Clement, John Baird and Jim Flaherty in attendance; and Klein's in Alberta, indoctrinating Stockwell Day.

But the most important lecture, when it comes to the future of Canada, was presented to the Reform Party of Preston Manning and Stephen Harper, at their 1991 Assembly.

Douglas was introduced by Preston Manning, the only assembly speaker to be so honoured. And Manning told the delegates: There are three basic reasons why we have invited Sir Roger Douglas to be with us ... and three reasons why Reformers should pay close attention to what he has to say ... Sir Roger is an authority in fiscal reform and has advocated and promoted many of the fiscal reforms ... He is not only a reformer in word, he is a reformer in deed. Sir Roger deregulated the financial sector, phased down agricultural and other subsidies .. phased out import controls and drastically reduced tariffs levels. He instituted a 10% flat rate consumption tax (GST)*, with virtually no exemptions ... (1)

And Roger Douglas's most important message to his followers was "don't blink". Once you start cutting, keep going.

And if you developed a case of blepharospasm, uncontrollable eye blinking, a little acupuncture would fix you right up.

Because what Douglas failed to mention was how his policies affected New Zealand.

Dr. John Warnock, travelled to New Zealand to study the effects of what New Zealanders dubbed 'Rogernomics.' The figures tell a story of devastation - a word used by New Zealand's own agricultural minister to describe the state of agriculture in four years after the 'reforms': A 40 per cent drop in farm income; a 50 per cent drop in the value of farm land; a policy of paying 3,000 farmers incentives of $ 45,000 to leave and the suggestion that another 15,000 (out of 79,000) should follow them. Unemployment, which had been at 4 per cent before Douglas's reforms, jumped to over 12 per cent in just over a year and is still increasing.

"Douglas completely eliminated regional development grants and subsidies to rural services. Says Warnock, 'They had things like subsidized petroleum - regardless of where you were the price was the same - subsidized train service, bus service, airport service. They privatized all these things and the prices immediately skyrocketed.' A massive de-population of the countryside resulted, and approximately 40,000 New Zealanders per year have since left the country for Australia to find work ... (1)

He should have blinked.

Shock Therapy

While Roger Douglas may present us with a little trip down memory lane, Stephen Harper and Jim Flaherty will probably forgo acupuncture for shock therapy.

This is the remedy prescribed by Milton Friedman, and articulated at places like the Fraser Institute. Friedman believed in taking advantage of disasters, like Katrina, but when none presented themselves, they could simply be created.

His most famous induced disaster, was the Chilean experiment.

In 1970, when a socialist, Salvador Allende, was elected president, many of Chile's elite, were not pleased.

Allende, a physician by training, understood the cost that malnutrition imposed upon the poor and set out to alleviate the grinding poverty in which so many Chileans were trapped. He ensured that every Chilean schoolchild had access to at least a half-liter of milk each day, and that their parents had access to jobs and the means to feed and educate their children. Median incomes began to rise dramatically in the first two years of Allende's term.

To pay for these social programs designed to create opportunities for the poor, rich Chileans who had lived all their lives off of rents, dividends and interest and who had never paid a dime in taxes, found themselves paying taxes for the first time and being forced to morally justify their lives of luxurious leisure at the expense of the poor. They didn't like it one bit. And they began to complain to their friends in Washington. (2)

Fortunately for them Washington was already aware of the situation, and with the help of several corporations, engineered a coup to oust Allende and place the murderous Augustus Pinochet in the presidential palace.

Friedman then took over, encouraging Pinochet to implement "shock therapy" on the people of Chile.

Friedman advised Pinochet to impose a rapid-fire transformation of the economy—tax cuts, free trade, privatized services, cuts to social spending and deregulation. Eventually, Chileans even saw their public schools replaced with voucher-funded private ones. It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a "Chicago School" revolution, since so many of Pinochet's economists had studied under Friedman at the University of Chicago. Friedman predicted that the speed, suddenness and scope of the economic shifts would provoke psychological reactions in the public that "facilitate the adjustment." He coined a phrase for this painful tactic: economic "shock treatment." In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or "shock therapy," has been the method of choice. (3)

And though Friedman and his Chicago School are still being hailed as heroes by Neoliberals/Neoconservative/Free Marketeers everywhere, his remaking of Chile was an absolute failure.

.. The country's period of steady growth that is held up as proof of its miraculous success, did not begin until the mid-eighties, a full decade after the Chicago Boys implemented shock therapy and well after Pinochet was forced to make a radical course correction.

That's because in 1982, despite its strict adherence to Chicago doctrine, Chile's economy crashed: its debt exploded, it faced hyperinflation once again and unemployment hit 30 percent—ten times higher than it was under Allende. The main cause was that the piranhas, the Enron-style financial houses that the Chicago Boys had freed from all regulation, had bought up the country's assets on borrowed money and run up an enormous debt of $14 billion.

The situation was so unstable that Pinochet was forced to do what Allende had done: he nationalized many of these companies. In the face of the debacle, almost all the Chicago Boys lost their influential government posts. (4)

So despite the fact that both of these experiments in economic reform were catastrophes, we know that it will not change Flaherty's or Harper's ideology.

Canadians will probably be subjected to a little "shock" in the upcoming budget, or if not then, in the not too distant future. The convoluted belief being that if we associate pain with social programs, we will not be too quick to want to reintroduce them (Friedman was a nut), especially if they convince us that they have been replaced with something better.

Poverty being good for the soul.

So slap on the electrodes boys. I'm ready.

Footnotes:

*The Reform Party was conflicted about the GST, with most wanting it scrapped if they came to power. Harper himself convinced them to keep the GST but eliminate any exemptions.

Sources:

1. Preston Manning and the Reform Party, By Murray Dobbin, Goodread Publishing, 1992, ISBN: 0-88780-161-7, pg. 113-114

2. Free Market Fundamentalism: Friedman, Pinochet and the "Chilean Miracle", By Scott Bidstrup

3. The Shock Doctrine: The Rise of Disaster Capitalism, By Naomi Klein, Vintage Canada, 2007, ISBN: 978-0-676-97801-8, Pg. 8

4. Klein, 2007, Pg. 123

Milton Friedman and the Chilean Experiment

A CULTURE OF DEFIANCE: History of the Reform-Conservative Party of Canada

In 1970, Salvador Allende, was elected President of Chile, a progressive nation enjoying the rewards of an intellectual movement. Poets, artists, thinkers, all contributed to the culture of a socialist society.

But Allende made a huge mistake. He had campaigned on the promise of nationalizing his country's natural resources, raising concern with foreign business interests. A concern that would bring about radical and unwelcome changes, initiated by corporate giant International Telephone and Telegraph (ITT).

In the wake of the Allende victory ITT established close contacts with the State Department, the National Security Council, the U.S. Information Agency, the CIA, the Inter-American Development Bank, the Senate Foreign Relations Committee, and other agencies with the purpose of pushing the U.S. to intervene covertly in Chile. Efforts were made to prevent Allende from taking power, which he could do only with the help of the centrist Christian Democrats. The CIA immediately implemented a program of economic destabilization to demonstrate to the Christian Democrats the folly of supporting the inauguration of Allende as president. When that failed, tactics changed. An ITT memo from field operatives in Chile read: "A more realistic hope . . . is that a swiftly deteriorating economy (bank runs, plant bankruptcies, etc.) will touch off a wave of violence resulting in a military Coup." (1)

ITT had already stated that they were "prepared to assist financially in sums up to seven figures." The tactic worked, and the civil unrest caused by the destabilization, resulted in the predicted military coup.

Finally, on September 11, 1973, as President Allende watched the tanks roll in to lay siege to the presidential palace, he made one final radio address, still defiant though clearly beaten:

"I am certain that the seed we planted in the worthy consciousness of thousands and thousands of Chileans cannot be definitively uprooted. They have the strength; they can subjugate us, but they cannot halt social processes by either crime or force. History is ours, and the people make it." (2)

Sadly, he was unaware of the force of a 5' 2" bundle of evil, Milton Friedman, and his disciples at the Chicago School of Economics.

Friedman had been waiting for just such an opportunity to test his free market theories.

Friedman advised Pinochet to impose a rapid-fire transformation of the economy—tax cuts, free trade, privatized services, cuts to social spending and deregulation. Eventually, Chileans even saw their public schools replaced with voucher-funded private ones. It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a "Chicago School" revolution, since so many of Pinochet's economists had studied under Friedman at the University of Chicago. Friedman predicted that the speed, suddenness and scope of the economic shifts would provoke psychological reactions in the public that "facilitate the adjustment." He coined a phrase for this painful tactic: economic "shock treatment." In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or "shock therapy," has been the method of choice. (3)

And Pinochet was the perfect authoritarian leader to impose these radical changes. Torture and massacres were the remedy for dissent.

And though fully aware of this, Friedman felt no compassion for the victims. According to Naomi Klein in The Shock Doctrine:

After his meeting with Pinochet, Friedman made some personal notes about the encounter, which he reproduced decades later in his memoirs. He observed that the general "was sympathetically attracted to the idea of a shock treatment but was clearly distressed at the possible temporary unemployment that might be caused."

At this point, Pinochet was already notorious the world over for ordering massacres in football stadiums; that the dictator was "distressed" by the human cost of shock therapy might have given Friedman pause. Instead, he pressed the point in a follow-up letter in which he praised the general's "extremely wise" decisions but urged Pinochet to cut government spending much further, "by 25 per cent within six months ... across-the-board," while simultaneously adopting a package of pro-business policies moving toward "complete free trade." Friedman predicted that the hundreds of thousands of people who would be fired from the public sector would quickly get new jobs in the private sector, soon to be booming thanks to Pinochet's removal of "as many obstacles as possible that now hinder the private market. Friedman assured the general that if he followed his advice, he would be able to take credit for an economic miracle ... he "could end inflation in months" while the unemployment problem would be equally "brief—measured in months—and that subsequent recovery would be rapid." Pinochet would need to act fast and decisively; Friedman emphasized the importance of "shock" repeatedly, using the word three times and underlining that "gradualism is not feasible.""

Friedman was wrong however, and it would be several years before the employment situation improved.

But that was not really his concern. Nor were the 30,000 people killed, in order to implement his plan.

It's interesting how neoconservative disciples, view the Chilean experiment. In her memoirs, Margaret Thatcher acknowledges the "authoritarian" style of Pinochet, but marvelled at how easy it was for the country to return to normal under a free market system. Of course she credits Friedman for the transformation.

Praise is still being given three decades later. But is it earned? Not according to Klein.

The facts behind the "Chilean miracle" remain a matter of intense debate. Pinochet held power for seventeen years, and during that time he changed political direction several times. The country's period of steady growth that is held up as proof of its miraculous success did not begin until the mid-eighties, a full decade after the Chicago Boys implemented shock therapy and well after Pinochet was forced to make a radical course correction.

That's because in 1982, despite its strict adherence to Chicago doctrine, Chile's economy crashed: its debt exploded, it faced hyperinflation once again and unemployment hit 30 percent—ten times higher than it was under Allende. The main cause was that the piranhas, the Enron-style financial houses that the Chicago Boys had freed from all regulation, had bought up the country's assets on borrowed money and run up an enormous debt of $14 billion.

The situation was so unstable that Pinochet was forced to do what Allende had done: he nationalized many of these companies. In the face of the debacle, almost all the Chicago Boys lost their influential government posts. (2)

Today Chile's economy is stable, but the country suffers from very high income inequality. Many Chileans live well below the poverty line, a situation that the government is looking to eradicate.

Salvador Allende died on September 11, 1973, the day the tanks rolled in, and his death was put down to suicide, something his family never accepted. His remains are now to be exhumed and we may finally learn what happened on the fateful day.

However, despite the obvious failure of Friedman's Chilean experiment, others are trying to replicate the disaster, including it would seem, our own government.

We now have an authoritarian in complete control, and our record debt and deficit, presents a perfect situation to begin to implement a bit of "shock therapy".

Relax. It won't hurt a bit.

Sources:

1. The Myth of the Good Corporate Citizen: Canada and Democracy in the Age of Globalization, By Murray Dobbin, James Lorimer & Company, 2003, ISBN: 1-55028-785-0, Pg. 77-79

2. The Shock Doctrine: The Rise of Disaster Capitalism, By Naomi Klein, Vintage Canada, 2007, ISBN: 978-0-676-97801-8, Pg. 123

3. Klein, 2007, Pg. 8