The Shock Doctrine (2009) - full transcript

[PROJECTOR CLICKING ♪]

♪

>> Woman: A STATE OF SHOCK IS

NOT JUST WHAT HAPPENS TO US WHEN

SOMETHING BAD HAPPENS.

IT'S WHAT HAPPENS TO US WHEN WE

LOSE OUR NARRATIVE, WHEN WE LOSE

OUR STORY, WHEN WE BECOME

DISORIENTED.

WHAT KEEPS US ORIENTED

AND ALERT, AND OUT OF SHOCK,



IS OUR HISTORY.

SO, A PERIOD OF CRISIS, LIKE

THE ONE WE ARE IN, IS A VERY

GOOD TIME TO THINK ABOUT

HISTORY, TO THINK ABOUT

CONTINUITIES, TO THINK

ABOUT ROOTS.

IT'S A GOOD TIME TO PLACE

OURSELVES IN THE LONGER HUMAN

STORY OF STRUGGLE.

[TYPEWRITER CLACKING...]

[♪...]

>> Narrator: THE STORY BEGINS

ON JUNE THE FIRST, 1951, WHEN



REPRESENTATIVES OF WESTERN

INTELLIGENCE AGENCIES SECRETLY

MET WITH ACADEMICS AT MONTREAL'S

RITZ‐CARLTON HOTEL.

THIS MEETING CONTRIBUTED TO

MILITARY‐FUNDED RESEARCH INTO

THE EFFECTS OF SENSORY

DEPRIVATION AT McGILL

UNIVERSITY.

>> SENSORY DEPRIVATION REALLY IS

A WAY OF PRODUCING EXTREME

MONOTONY.

IT CAUSES LOSS OF CRITICAL

CAPACITY, THE THINKING IS

LESS CLEAR.

THE SUBJECT COMPLAINS THAT HE

CAN'T EVEN DAYDREAM...

AND WHEN YOU HAVE COLLEGE

STUDENTS THAT CAN'T DAYDREAM,

YOU'RE, THEY'RE IN A BAD WAY.

[♪...]

I BEGAN TO THINK WHILE WE WERE

DOING OUR EXPERIMENTS THAT IT'S

POSSIBLE THAT SOMETHING THAT

INVOLVES PHYSICAL DISCOMFORT OR

EVEN PAIN MIGHT BE MORE

TOLERABLE THAN SIMPLY THE,

THE DEPRIVATION CONDITIONS THAT

WE STUDIED.

>> Narrator: HEBB DECIDED

TO STOP WORK ON THE RESEARCH.

>> WELL, I HAD NO IDEA WHEN

I SUGGESTED THAT, WHAT A, WHAT

A VICIOUS WEAPON, POTENTIALLY

VICIOUS WEAPON THIS COULD,

THIS COULD BE.

>> THESE ARE THE DAYS AND OURS

ARE THE OCCASIONS...

>> Narrator: BUT EXPERIMENTS

AT McGILL CONTINUED UNDER

THE AMBITIOUS HEAD OF

PSYCHIATRY, DR. EWEN CAMERON.

>> WHAT HE DID WAS MUCH MORE

THAN WE HAD DONE.

WE DID OUR WORK STRICTLY WITH

THE UNDERSTANDING THAT THE

SUBJECT COULD GET UP AND WALK

OUT AT ANY POINT HE, HE WISHED

TO, AND SOME OF THEM DID.

>> Narrator: CAMERON'S PATIENTS

WERE NOT SO LUCKY.

THE ALLAN MEMORIAL INSTITUTE

WHERE HE WORKED BEGAN TO

RESEMBLE A MACABRE PRISON, WHERE

CAMERON PERFORMED BIZARRE

EXPERIMENTS ON HIS PSYCHIATRIC

PATIENTS.

CAMERON WANTED TO DE‐PATTERN

OR WIPE CLEAN HIS PATIENT'S

MIND, SO HE COULD REBUILD THEM

FROM A BLANK SLATE.

JANINE HUARD WAS A YOUNG MOTHER

OF FOUR, SUFFERING FROM

POST‐NATAL DEPRESSION.

>> I USED TO SHIVER WHEN THEY

TOLD ME ABOUT, "YOU'RE GONNA GET

A SHOCK TREATMENT TOMORROW."

I USED TO SHIVER.

I WAS SO SCARED OF IT.

[♪...]

[ELECTRONIC WHINE, BUZZ...]

>> Huard: AND I WOULD WAKE UP IN

ANOTHER ROOM, ALL, ALL MIXED UP

AND SAD AND, IT USED TO MAKE ME

VERY SAD AFTER.

YOU'RE JUST LIKE A ZOMBIE

WALKING AROUND.

>> Narrator: CAMERON COMBINED

SHOCK THERAPY WITH SLEEP THERAPY

AND THE REPEATED PLAYING

OF TAPED MESSAGES.

>> Huard: IT SAYS, "JANINE,

JANINE, YOU ARE RUNNING AWAY

FROM YOUR RESPONSIBILITY.

YOU DON'T WANT TO TAKE CARE OF

YOUR HUSBAND AND CHILDREN."

ALL THE TIME, THE SAME THING.

[DISTANT, INDISTINCT VOICES...]

[BUZZING, GROWS LOUDER]

>> IT SOUNDS LIKE YOU WERE BEING

INTERROGATED.

>> YES, INTERROGATION, BUT...

FOR WHAT PURPOSE?

>> Narrator: IT WASN'T LONG

BEFORE THE C. I. A. PUT CAMERON'S

RESEARCH INTO PRACTICE.

MANY OF HIS TECHNIQUES APPEAR IN

THE AGENCY'S

KUBARK COUNTER‐

INTELLIGENCE INTERROGATION

MANUAL.

THESE WORDS ARE FROM THE MANUAL.

>> Man: "IT'S A FUNDAMENTAL

HYPOTHESIS OF THIS HANDBOOK...

[LOUD MUSIC...]

THAT THESE TECHNIQUES ARE, IN

ESSENCE, METHODS OF INDUCING

REGRESSION OF THE PERSONALITY.

[BIG DOG BARKING...]

THERE IS AN INTERVAL, WHICH MAY

BE EXTREMELY BRIEF, OF SUSPENDED

ANIMATION, A KIND OF

PSYCHOLOGICAL SHOCK

OR PARALYSIS.

[MUFFLED SCREAMS,

RAPID HEARTBEAT...]

EXPERIENCED INTERROGATORS

RECOGNIZE THIS EFFECT WHEN IT

APPEARS, AND KNOW THAT AT THIS

MOMENT THE SOURCE IS FAR MORE

OPEN TO SUGGESTION, AND FAR

LIKELIER TO COMPLY THAN HE WAS

JUST BEFORE HE EXPERIENCED

THE SHOCK."

[ZAPPING..., MUFFLED SCREAM]

[TYPEWRITER CLACKING]

[♪...]

>> Narrator: AT THE SAME TIME AS

EWEN CAMERON WAS CONDUCTING HIS

EXPERIMENTS IN MONTREAL,

AN EXPONENT OF ANOTHER KIND

OF SHOCK WAS WORKING NOT SO

FAR AWAY.

[♪...]

MILTON FRIEDMAN WAS TEACHING

ECONOMICS AT THE UNIVERSITY

OF CHICAGO.

HE BELIEVED ECONOMIC SHOCK

THERAPY COULD ENCOURAGE

SOCIETIES TO ACCEPT A PURER FORM

OF DEREGULATED CAPITALISM.

IN OCTOBER 2008, IN THE MIDST OF

THE BIGGEST FINANCIAL CRISIS

SINCE 1929, NAOMI KLEIN WENT TO

THE UNIVERSITY OF CHICAGO TO

TALK ABOUT MILTON FRIEDMAN.

>> Klein: WHEN MILTON FRIEDMAN

TURNED 90, THE BUSH WHITE HOUSE

HELD A BIRTHDAY PARTY FOR HIM

AND EVERYONE MADE SPEECHES,

INCLUDING GEORGE BUSH, BUT THERE

WAS A REALLY GOOD SPEECH THAT

WAS GIVEN BY DONALD RUMSFELD.

MY FAVORITE QUOTE IN THAT

SPEECH, FROM RUMSFELD, IS THIS.

HE SAID, "MILTON IS THE

EMBODIMENT OF THE TRUTH THAT

IDEAS HAVE CONSEQUENCES."

WHAT I WANNA ARGUE HERE IS THAT

THE ECONOMIC CHAOS THAT WE'RE

SEEING RIGHT NOW ON WALL STREET,

AND ON MAIN STREET AND IN

WASHINGTON, STEMS FROM MANY

FACTORS OF COURSE, BUT AMONG

THEM ARE THE IDEAS OF

MILTON FRIEDMAN.

[♪... VOICES CHATTER...]

>> Narrator: THE WALL STREET

CRASH OF 1929 LED TO THE

DEPRESSION OF THE '30s.

[♪..., MUFFLED SHOUTING]

CENTRAL TO FRIEDMAN'S THESIS WAS

HIS OPPOSITION TO THE NEW DEAL

ANNOUNCED BY PRESIDENT FRANKLIN

ROOSEVELT IN HIS INAUGURAL

SPEECH.

[♪...]

>> Roosevelt: OUR GREATEST

PRIMARY TASK IS TO PUT PEOPLE

TO WORK.

THIS IS NO UNSOLVABLE PROBLEM

IF WE FACE IT WISELY

AND COURAGEOUSLY.

LET ME ASSERT MY FIRM BELIEF

THAT THE ONLY THING WE HAVE TO

FEAR IS FEAR ITSELF.

>> Narrator: INFLUENCED BY THE

ECONOMIST JOHN MAYNARD KEYNES,

ROOSEVELT STARTED A PROGRAM

OF PUBLIC EMPLOYMENT TO GET

PEOPLE BACK TO WORK.

[PEOPLE TALKING,

TYPEWRITERS CLACKING...]

[♪...]

>> Newsreel announcer: TODAY,

DEPRESSION IS A FADING MEMORY.

MILLIONS OF MEN AND WOMEN HAVE

FOUND EMPLOYMENT AND WITH IT,

CONFIDENCE AND HOPE.

>> Narrator: IT WASN'T

THAT SIMPLE.

THE DEPRESSION LASTED INTO

WORLD WAR II.

BUT AFTER THE WAR, THE MARSHALL

PLAN SPREAD KEYNES'S MODEL OF

GOVERNMENT REGULATION AND

INTERVENTION TO EUROPE.

[♪..., TOOLS CLANKING...]

[HISSING, ♪...]

HIS PRINCIPLES WERE WIDELY

ACCEPTED...

[♪...]

BUT NOT IN THE ECONOMICS

DEPARTMENT OF THE UNIVERSITY

OF CHICAGO.

>> MILTON FRIEDMAN FROM THIS

UNIVERSITY WAGED A WAR

AGAINST THE NEW DEAL.

>> Narrator: FRIEDMAN WAS

A MEMBER OF A GROUP

CALLED "THE MONT PELERIN

SOCIETY", LED BY THE AUSTRIAN

ECONOMIST FRIEDRICH VON HAYEK.

THEY BELIEVED THAT IF GOVERNMENT

STOPPED PROVIDING SERVICES AND

STOPPED REGULATING MARKETS, THE

ECONOMY WOULD CORRECT ITSELF.

IN THE '50s THEY WERE SEEN AS

CRANKS, BUT OVER THE LAST 30

YEARS, THEIR IDEAS HAVE BECOME

THE DOMINANT ECONOMIC DOCTRINE.

>> Klein: THE THESIS OF THE

SHOCK DOCTRINE IS THAT WE'VE

BEEN SOLD A FAIRY TALE ABOUT

HOW THESE RADICAL POLICIES HAVE

SWEPT THE GLOBE...

THAT THEY HAVEN'T SWEPT THE

GLOBE ON THE BACKS OF FREEDOM

AND DEMOCRACY, BUT THEY HAVE

NEEDED SHOCKS, THEY HAVE NEEDED

CRISES, THEY HAVE NEEDED STATES

OF EMERGENCIES.

MILTON FRIEDMAN UNDERSTOOD THE

UTILITY OF CRISIS: "ONLY A

CRISIS, ACTUAL OR PERCEIVED,

PRODUCES REAL CHANGE.

WHEN THAT CRISIS OCCURS, THE

ACTIONS THAT ARE TAKEN DEPEND ON

THE IDEAS THAT ARE LYING

AROUND."

[TYPEWRITER CLACKING]

[♪...]

>> Narrator: IT WAS IN CHILE

THAT FRIEDMAN'S DISCIPLES FIRST

LEARNED HOW TO EXPLOIT A LARGE

SCALE SHOCK OR CRISIS.

>> Klein: USUALLY THE OFFICIAL

STORYTELLERS OF NEO‐LIBERALISM,

THE OFFICIAL PUBLICISTS, DON'T

EVEN MENTION CHILE.

THEY START THE STORY WITH

THATCHER AND REAGAN BECAUSE IT'S

MUCH MORE FLATTERING THAT WAY.

>> Narrator: IN THE '50s AND

'60s, CHILE'S PROGRESSIVE

DEVELOPMENTAL POLICIES WERE

A BEACON IN THE REGION.

THE GOVERNMENTS INVESTED IN

HEALTH, EDUCATION AND INDUSTRY.

AMERICAN CORPORATIONS WERE

WORRIED THEIR INVESTMENTS

WOULD SUFFER.

IN RESPONSE THE U. S. STATE

DEPARTMENT BEGAN SPONSORING

STUDENTS FROM CHILE AND THE REST

OF SOUTH AMERICA TO STUDY FREE

MARKET ECONOMICS WITH

MILTON FRIEDMAN.

>> THE UNIVERSITY OF CHICAGO HAD

A JOINT ARRANGEMENT WITH THE

CATHOLIC UNIVERSITY OF CHILE

UNDER WHICH A GREAT MANY CHILEAN

STUDENTS CAME TO THE UNIVERSITY

OF CHICAGO, WERE TRAINED BY US

AND RECEIVED Ph. Ds.

>> Narrator: THESE STUDENTS WENT

BACK AND TAUGHT IN CHILE.

THE CATHOLIC UNIVERSITY

ECONOMICS DEPARTMENT IN SANTIAGO

BECAME A LITTLE CHICAGO SCHOOL.

ARNOLD HARBERGER, THE ECONOMIST

IN CHARGE OF THE PROGRAM,

DESCRIBED HIMSELF AS

A "SERIOUSLY DEDICATED

MISSIONARY".

[CHEERING...]

IN 1970, SALVADOR ALLENDE'S

POPULAR UNITY GOVERNMENT WON THE

ELECTION ON A PLATFORM OF

NATIONALIZATION OF LARGE SECTORS

OF THE ECONOMY.

CHILE'S PHONE COMPANY WAS

MAJORITY‐OWNED BY THE U. S.

CORPORATION I. T. T.

IT SPEARHEADED ATTEMPTS TO STOP

ALLENDE BECOMING PRESIDENT.

IT HAD THE SUPPORT OF RICHARD

NIXON IN THE WHITE HOUSE.

>> I WAS NOT THERE, BUT I CAN

TELL YOU WHAT WE NOW KNOW TO BE

A FACT.

HE ORDERED THE C. I. A. TO, TO

PREVENT ALLENDE FROM ASSUMING

THE PRESIDENCY, AND INDEED THEY

TRIED TO GET ME TO LEAN ON THE

CHILEAN MILITARY RIGHT AFTER

ALLENDE WAS ELECTED.

>> Narrator: DESPITE THE EFFORTS

OF THE C. I. A., ALLENDE WAS SWORN

IN AS PRESIDENT.

[CROWD CHANTING,

"ALLENDE! ALLENDE...!"]

>> Narrator: RICHARD NIXON

ORDERED THE C. I. A. DIRECTOR TO

"MAKE THE ECONOMY SCREAM".

[SPEAKING SPANISH...]

>> Narrator: PREPARATIONS BEGAN

FOR THE MILITARY COUP.

THE CHILEAN CHICAGO BOYS STARTED

WORK ON A 500‐PAGE ECONOMIC

BLUEPRINT CALLED

THE BRICK.

WITH U. S. FUNDING, EVERYTHING

WAS DONE TO DESTABILIZE

THE ECONOMY.

TRUCK DRIVERS WENT ON STRIKE,

BRINGING FACTORIES AND SHOPS

TO A STANDSTILL.

[MACHINE GUN FIRE...]

THERE WAS A FAILED COUP ATTEMPT

ON JUNE 29th, 1973.

[CROWD SHOUTING, CHANTING...]

AND THEN ON SEPTEMBER 11th,

WITH GENERAL PINOCHET LEADING

THE ARMY, THE ASSAULT BEGAN

ON THE PRESIDENTIAL PALACE.

[TYPEWRITER CLACKING]

[♪...]

CHILE HAD ENJOYED 41 YEARS OF

UNINTERRUPTED PEACEFUL

DEMOCRATIC RULE.

NOW IT WAS BEING

VIOLENTLY OVERTHROWN.

PINOCHET AND HIS SUPPORTERS

DESCRIBED THE COUP AS "A WAR".

IT WAS CERTAINLY DESIGNED

TO LOOK LIKE ONE.

IT WAS A CHILEAN PRECURSOR

TO "SHOCK AND AWE".

[♪...]

[MACHINE GUN FIRES...]

[GUNFIRE...]

[EXPLOSION, GUNFIRE...]

[EXPLOSION]

[GUNFIRE...]

[EXPLOSION]

[FLAMES CRACKLE...]

>> [SPEAKING SPANISH]

>> Narrator: THE CHICAGO BOYS

DELIVERED THEIR ECONOMIC

BLUEPRINT,

THE BRICK,

TO PINOCHET.

[SHOUTING IN UNISON...]

>> Narrator: IN THE DAYS THAT

FOLLOWED, MORE THAN 13,000

OPPONENTS WERE ARRESTED

AND IMPRISONED.

THOUSANDS OF PRISONERS WERE HELD

IN THE NATIONAL STADIUM.

MANY WERE TORTURED.

CHILE BECAME NOTORIOUS

AROUND THE WORLD.

>> [SPEAKING SPANISH...]

[♪...]

>> Narrator: AT THE BEGINNING

OF NOVEMBER, 5,000 PRISONERS

WERE RELEASED.

THE 900 THEY LEFT BEHIND WERE

TRANSFERRED TO OTHER DETENTION

CENTERS.

[♪...]

[SHOUTING, OVERLAPPING VOICES]

[♪...]

LESS THAN A MONTH LATER, FIFA

ALLOWED CHILE TO PLAY A WORLD

CUP QUALIFIER IN THE VERY

SAME STADIUM.

THEIR OPPONENTS, THE SOVIET

UNION, REFUSED TO PLAY THERE, SO

CHILE WERE ALLOWED TO SCORE INTO

AN OPEN GOAL AND WENT THROUGH TO

THE 1974 WORLD CUP FINALS.

[ANNOUNCER SPEAKING SPANISH]

[TYPEWRITER CLACKS]

[MILITARY BAND PLAYS A MARCH...]

WITH THE POPULATION IN SHOCK,

PINOCHET IMPOSED THE POLICIES

RECOMMENDED BY THE CHICAGO BOYS:

REMOVAL OF PRICE CONTROLS,

THE SALE OF STATE COMPANIES,

THE REMOVAL OF IMPORT BARRIERS

AND CUTS TO GOVERNMENT

EXPENDITURE.

FRIEDMAN LATER OPENLY

ACKNOWLEDGED THE IMPORTANCE

OF THE CHILEAN EXPERIMENT.

>> Friedman: HERE WAS A FIRST

CASE IN WHICH YOU HAD A MOVEMENT

TOWARD COMMUNISM, WHICH WAS

REPLACED BY A MOVEMENT TOWARD

FREE MARKETS.

>> Narrator: IT DIDN'T WORK.

A YEAR LATER, INFLATION WAS

375% PER YEAR, THE HIGHEST

IN THE WORLD.

SO IN MARCH 1975, ARNOLD

HARBERGER AND MILTON FRIEDMAN

FLEW INTO SANTIAGO.

>> HE USED A PHRASE THAT HAD

NEVER BEFORE BEEN USED IN

A REAL WORLD ECONOMIC CRISIS.

HE CALLED FOR "SHOCK TREATMENT".

HE SAID THAT HE WAS LIKE A

DOCTOR THAT WAS GOING TO HELP A

COUNTRY THAT WAS SUFFERING AN

EPIDEMIC AND HE WAS SIMPLY

PRESCRIBING THE MEDICINE.

[MILITARY BAND PLAYS...]

>> Narrator: FRIEDMAN WROTE

THAT GENERAL PINOCHET WAS

SYMPATHETICALLY ATTRACTED TO

THE IDEA OF A SHOCK TREATMENT,

BUT WAS CLEARLY DISTRESSED AT

THE TEMPORARY UNEMPLOYMENT

IT MIGHT CAUSE.

[MILITARY MUSIC CONTINUES...]

IT RAPIDLY BECAME CLEAR THAT

FRIEDMAN'S ECONOMIC POLICIES

BENEFITED THE WEALTHY

AT THE EXPENSE OF THE POOR.

IT WAS CALCULATED THAT A FAMILY

TRYING TO LIVE ON THE AVERAGE

WAGE HAD TO SPEND 74% OF

ITS INCOME ON BREAD.

ITEMS SUCH AS BUS FARES OR MILK

BECAME LUXURIES, AND PINOCHET

GOT RID OF FREE MILK IN SCHOOL,

A MOVE THAT ECHOED THE

CONTROVERSIAL POLICY OF THE

YOUNG EDUCATION MINISTER IN

BRITAIN WHO WOULD LATER BECOME

HIS FRIEND.

>> THANK YOU.

THANK YOU VERY MUCH.

>> Narrator: IN ORDER TO ENFORCE

THESE ECONOMIC POLICIES, THERE

HAD TO BE AN ENEMY TO FEAR.

>> [SPEAKING SPANISH]

[♪...]

>> Narrator: FRIEDMAN AND

HARBERGER ARGUED THAT FREE

MARKET ECONOMICS WENT HAND IN

HAND WITH FREEDOM AND DEMOCRACY,

BUT IN CHILE, WHERE THEIR IDEAS

WERE BEING IMPLEMENTED WITHIN

THE CONTEXT OF A MILITARY

DICTATORSHIP, THE OPPOSITE

WAS TRUE.

MANY IN LATIN AMERICA SAW A

DIRECT CONNECTION BETWEEN THE

ECONOMIC SHOCKS THAT

IMPOVERISHED MILLIONS OF PEOPLE

AND THE EPIDEMIC OF TORTURE

INFLICTED ON THOSE WHO BELIEVED

IN A DIFFERENT KIND OF SOCIETY.

ONE OF THOSE WAS

ORLANDO LETELIER.

LETELIER HAD BEEN ALLENDE'S

AMBASSADOR IN WASHINGTON.

HE SPENT A YEAR IN ONE

OF PINOCHET'S PRISONS...

[MEN SINGING IN SPANISH...]

BEFORE BEING EXILED BACK

TO AMERICA.

IN 1976, LETELIER WROTE,

"THE ECONOMIC PLAN HAS HAD TO BE

ENFORCED AND IN THE CHILEAN

CONTEXT, THAT COULD ONLY BE DONE

BY THE KILLING OF THOUSANDS,

THE ESTABLISHMENT OF

CONCENTRATION CAMPS ALL OVER THE

COUNTRY AND THE JAILING OF MORE

THAN 100,000 PERSONS

IN THREE YEARS."

[♪..., INDISTINCT CONVERSATIONS]

[SIREN WAILING]

LESS THAN A MONTH LATER,

LETELIER WAS KILLED

BY A CAR BOMB.

>> Man on TV: Good evening.

A powerful bomb today tore

through a car that was driving

along Washington's usually quiet

Embassy Row.

The Chilean was Orlando

Letelier, who also had been

Foreign Minister during the last

months of the late Salvador

Allende's Marxist regime.

Richard Roth reports.

>> Narrator: MICHAEL TOWNLEY,

A MEMBER OF PINOCHET'S SECRET

POLICE, WAS BEHIND THE BOMBING.

HE'D ENTERED THE U. S. ON A FALSE

PASSPORT WITH THE KNOWLEDGE

OF THE C. I. A.

>> Michael,

buenas noches.

>> Buenas noches.. .

[BOTH SPEAKING SPANISH...]

[TIRES SCREECH]

>> Narrator: DESPITE HIS

CONFIDENCE, TOWNLEY WAS

EXTRADITED TO THE U. S. AND

CONVICTED OF LETELIER'S MURDER.

[SOLDIERS VOCALIZING...]

PINOCHET RULED CHILE AS A

MILITARY DICTATOR FOR 17 YEARS,

BUT IN A FRANK INTERVIEW,

HARBERGER REMAINED IN DENIAL.

>> YOU CANNOT HAVE A REPRESSIVE

GOVERNMENT FOR LONG WITHIN A

GENUINELY FREE ECONOMIC SYSTEM.

[GROUP CHANTING...]

>> Narrator: IN THE SAME YEAR

AS ORLANDO LETELIER'S MURDER,

MILTON FRIEDMAN WAS AWARDED

THE NOBEL PRIZE FOR ECONOMICS.

>> ...YOU KNOW, YOU PEOPLE

HAVE SUCH A DISTORTED IDEA

OF WHAT WENT ON.

LET ME TELL YA SOME FACTS.

NUMBER ONE, I WAS OFFERED TWO

HONORARY DEGREES BY UNIVERSITIES

IN CHILE BEFORE I WENT THERE,

AND I REFUSED TO TAKE THEM

BECAUSE THOSE UNIVERSITIES

WERE BEING SUPPORTED IN PART BY

PUBLIC FUNDS AND I DID NOT WANT

TO APPEAR IN ANY WAY TO PROVIDE

ANY SUPPORT TO THE POLITICAL

SYSTEM IN CHILE.

I'M NOT A REPRESENTATIVE OF

CHILE, I'M NOT AN ADVISOR TO

CHILE, I HAVE NO COMMITMENTS

TO THE GOVERNMENT OF CHILE.

[♪...]

>> Man: I NOW TURN TO YOU,

PROFESSOR MILTON FRIEDMAN.

[WHISTLE BLOWING]

>> FRIEDMAN, GO HOME!

FRIEDMAN, GO HOME!

[SPEAKING IN FOREIGN

LANGUAGE...]

>> Man: I AM VERY SORRY

FOR THIS INCIDENT.

IT COULD HAVE BEEN WORSE.

[LAUGHTER AND APPLAUSE...]

[TYPEWRITER CLACKING...]

>> WHAT I'M TRYING TO DO IN

THE SHOCK DOCTRINE IS TELL

AN ALTERNATIVE HISTORY OF HOW

THIS SAVAGE STREAM OF PURE

CAPITALISM THAT WE'VE BEEN

LIVING, CAPITALISM UNRESTRAINED,

CAME TO DOMINATE THE WORLD.

>> Narrator: CHILE WASN'T THE

ONLY COUNTRY IN SOUTH AMERICA TO

ADOPT CHICAGO SCHOOL POLICIES.

FRIEDMAN'S DISCIPLES HELD KEY

POSITIONS IN BRAZIL AND ADVISED

THE GOVERNMENT OF URUGUAY.

THEN ON MARCH THE 24th, 1976,

A MILITARY COUP OVERTURNED

THE GOVERNMENT OF ISABEL PERON

IN ARGENTINA.

A JUNTA OF THREE GENERALS

TOOK OVER THE COUNTRY,

LED BY GENERAL VIDELA.

>> GENTLEMEN...

>> Narrator: CHICAGO BOYS

LANDED KEY ECONOMIC POSTS

IN THE MILITARY GOVERNMENT...

THEY SEIZED THE OPPORTUNITY

FOR MAJOR ECONOMIC AND SOCIAL

REENGINEERING...

AND WITHIN A YEAR OF THE COUP,

WAGES LOST 40% OF THEIR

VALUE, FACTORIES CLOSED,

POVERTY SPIRALED.

JUST AS IN CHILE, PEOPLE HAD TO

BE TERRORIZED INTO ACCEPTING

THESE ECONOMIC POLICIES.

VIDELA LEARNT FROM PINOCHET'S

EXPERIENCE.

HE ADOPTED THE TACTIC OF

DISAPPEARING PEOPLE.

STRIKING A BALANCE BETWEEN

PUBLIC AND PRIVATE HORROR,

DISAPPEARANCES WERE OFTEN

CARRIED OUT IN BROAD DAYLIGHT

BUT COULD ALWAYS BE DENIED.

[MAN SPEAKING SPANISH...]

MANY OF THE TECHNIQUES

USED BY THE CHILEAN

AND ARGENTINEAN MILITARY

HAD BEEN LEARNT IN THE U. S.‐RUN

SCHOOL OF THE AMERICAS.

>> TORTURE TECHNIQUES TAUGHT

FROM RAPE TO DE‐ROBING TO

TORTURE WITH, WITH...

POINTED OBJECTS, BREAKING OF

EXTREMITIES, POKING EYES OUT,

BRANDING.

>> Man: IN LATIN AMERICA, THERE

ARE VARIOUS REGIMES WHICH AT THE

MOMENT ARE ABUSING HUMAN

RIGHTS‐‐ POLITICAL MURDER,

TORTURE, DEPORTATIONS,

IMPRISONMENT WITHOUT TRIAL‐‐

USING THE TECHNIQUES THEY

MAY HAVE LEARNED IN THIS

ESTABLISHMENT.

>> UH... YOU MAY BE RIGHT.

IF YOU CAN SAY THAT THE SKILLS

WHICH WE'VE TAUGHT HERE HAVE

BEEN APPLIED, I CAN'T DENY THAT.

>> THE USE OF TORTURE OF A KNOWN

ENEMY SOLDIER TO GAIN SOME KIND

OF MILITARY ADVANTAGE I THINK

IS JUSTIFIABLE AND SMART.

TO GO BEYOND THAT, TO USE

TORTURE TECHNIQUES MERELY TO

INTIMIDATE PEOPLE, IS COMPLETELY

WRONG, UNETHICAL AND IMMORAL.

>> Narrator: BUT IN ARGENTINA

AND CHILE, THESE TECHNIQUES

WERE NOT USED JUST ON SOLDIERS

OR TERRORISTS.

THEY WERE USED ON STUDENTS

AND UNION MEMBERS.

THEY WERE USED ON ANYONE

WHO OPPOSED THE FREE MARKET

ECONOMIC POLICIES OF THE REGIME.

IN 1978, THE ARGENTINE JUNTA

HOSTED THE WORLD CUP.

THE FINAL WAS PLAYED IN A

STADIUM LESS THAN A MILE AWAY

FROM THE BIGGEST DETENTION CAMP

IN THE COUNTRY, WHERE THOUSANDS

OF PRISONERS WERE HELD IN

TORTURE CHAMBERS.

[WOMAN SPEAKING SPANISH...]

[MAN SPEAKING SPANISH...]

AND ARGENTINA TOOK

THEIR TERROR REGIME

ONE STEP FURTHER THAN CHILE.

AMONG THE DISAPPEARED WERE

HUNDREDS OF PREGNANT WOMEN,

WOMEN WHO WERE ALLOWED TO GIVE

BIRTH BEFORE BEING MURDERED.

>> [SPEAKING SPANISH...]

>> Narrator: THOSE CHILDREN,

MANY OF WHOM WERE RAISED BY

FAMILIES CONNECTED TO THE

MILITARY, WERE A POWERFUL

REMINDER OF THE JUNTAS PROJECT

TO REENGINEER AN ENTIRE SOCIETY.

[CROWD SINGING...]

WHILE THE JUNTA WAS STILL IN

POWER, A GROUP OF MOTHERS AND

GRANDMOTHERS OF THE DISAPPEARED

STARTED TO PROTEST IN THE PLAZA

DE MAYO.

[WOMAN SCREAMS]

THEY TURNED DETECTIVE, SEARCHING

FOR THE DISAPPEARED CHILDREN.

AFTER THE JUNTA COLLAPSED,

SOME WERE FOUND AND REUNITED

WITH THEIR FAMILIES.

OCCASIONALLY THEY FOUND REMAINS.

MOSTLY THEY FOUND NOTHING.

GENERAL VIDELA WAS FOUND GUILTY

OF MURDER, KIDNAPPING,

AND TORTURE.

[MAN SPEAKING SPANISH...]

HE WAS SENTENCED TO

LIFE IN PRISON.

[♪...]

>> NOW, THESE EARLY EXPERIMENTS

IN LATIN AMERICA PRESENTED

FRIEDMAN AND HIS COHORTS WITH

A SERIOUS IDEOLOGICAL PROBLEM.

FRIEDMAN HAD PROMISED THAT THESE

POLICIES WOULD NOT JUST MAKE THE

ELITES RICHER, BUT THAT THEY

WOULD CREATE THE FREEST POSSIBLE

SOCIETIES, THAT THIS WAS A WAR

AGAINST TYRANNY, THAT CAPITALISM

AND FREEDOM WENT HAND IN HAND.

YET HERE WE SEE THAT IN THE

'70s, THE ONLY COUNTRIES PUTTING

THESE IDEAS INTO PRACTICE WERE

MILITARY DICTATORSHIPS.

NIXON HAD FULLY SUPPORTED

IMPOSING THESE TYPES OF BRUTAL

FREE‐MARKET POLICIES IN SOUTH

AMERICAN DICTATORSHIPS.

BUT WHEN IT CAME TO DOMESTIC

ECONOMIC POLICY IN THE UNITED

STATES, WHERE NIXON HAD TO WORRY

ABOUT GETTING REELECTED, IT WAS

A VERY, VERY DIFFERENT STORY.

[TYPEWRITER CLACKING...]

[♪...]

>> Narrator: FRIEDMAN ENJOYED

A FRIENDLY RELATIONSHIP WITH

NIXON.

SEVERAL OF HIS CHICAGO SCHOOL

COLLEAGUES AND DISCIPLES

WERE RECRUITED TO WORK FOR

THE GOVERNMENT.

DONALD RUMSFELD WAS ONE OF THEM.

>> SO HELP ME GOD.

>> CONGRATULATIONS.

>> THANK YOU, SIR.

>> Narrator: BUT IN 1971,

WITH THE ECONOMY IN A SLUMP,

NIXON TURNED HIS BACK ON

FRIEDMAN'S IDEAS AND IMPOSED

A WAGE AND PRICE CONTROL POLICY.

HE PUT RUMSFELD IN CHARGE.

>> ...WHICH IS ESSENTIALLY A

PROBLEM OF SUPPLY AND DEMAND.

>> I HAVE FOR LONG BEEN OPPOSED

TO THE WAGE AND PRICE CONTROL.

I BELIEVE IT INVOLVES GOVERNMENT

INTERVENTION WITH THE FREEDOM

OF INDIVIDUALS, AND I THINK

IT'S INTOLERABLE.

>> Narrator: THE KEYNESIAN

POLICY WAS A SUCCESS, AND NIXON

WON A SECOND TERM WITH

A LANDSLIDE MAJORITY.

IT WAS A BLOW FOR FRIEDMAN.

[CROWD CHEERING]

THEN IN 1979, MARGARET THATCHER

WAS ELECTED PRIME MINISTER OF

BRITAIN.

HER INTELLECTUAL GURU

WAS MILTON FRIEDMAN'S OLD

MENTOR, FRIEDRICH VON HAYEK.

AND JUST OVER A YEAR LATER,

RONALD REAGAN WAS ELECTED

PRESIDENT OF THE UNITED STATES.

BOTH BRITAIN AND AMERICA WERE

NOW RULED BY UNABASHED

FRIEDMANITES.

>> Friedman: MARGARET THATCHER'S

PROGRAM WHEN SHE CAME IN HAD

FOUR PLANKS: CUT GOVERNMENT

SPENDING, CUT TAX RATES,

REDUCE GOVERNMENT OWNERSHIP

AND OPERATION OF INDUSTRIES OR

REGULATION OF INDUSTRY, AND HAVE

A MODERATE AND STABLE MONETARY

POLICY TO BRING DOWN INFLATION.

>> Narrator: WITHIN HER FIRST

THREE YEARS IN OFFICE,

UNEMPLOYMENT DOUBLED IN PARTS

OF THE ECONOMY, LEADING TO

WAVES OF STRIKES.

THATCHER'S PERSONAL APPROVAL

RATING SLUMPED TO 25%.

THERE WERE RIOTS IN

BRITAIN'S MAJOR CITIES.

[LAUGHTER]

EVEN MARGARET THATCHER'S

ADMIRERS HAD THEIR DOUBTS.

>> THE ECONOMIC PERFORMANCE

OF THE THATCHER GOVERNMENT

HAS BEEN MIXED.

[CROWD CHANTING]

>> TO THOSE WAITING WITH BATED

BREATH FOR THAT FAVORITE MEDIA

CATCHPHRASE, "THE U‐TURN,"

I HAVE ONLY ONE THING TO SAY‐‐

YOU TURN IF YOU WANT TO.

[LAUGHTER AND APPLAUSE]

THE LADY'S NOT FOR TURNING.

[LAUGHTER]

>> Narrator: FRIEDRICH VON HAYEK

URGED THATCHER TO COPY

PINOCHET'S ECONOMIC SHOCK

THERAPY POLICIES.

THATCHER REPLIED, "IN BRITAIN,

WITH OUR DEMOCRATIC INSTITUTIONS

AND WITH THE NEED FOR A HIGH

DEGREE OF CONSENT, SOME OF

THE MEASURES ADOPTED IN CHILE

ARE QUITE UNACCEPTABLE."

[CROWD SINGING, CLAPPING]

>> THATCHER'S PROFOUND

UNPOPULARITY SEEMED TO BE

PROVING ONCE AGAIN THAT

FREE‐MARKET FUNDAMENTALISM

WAS SIMPLY TOO UNPOPULAR,

TOO DIRECTLY HARMFUL TO TOO MANY

PEOPLE, TO SURVIVE IN A

DEMOCRATIC STATE WHERE GOVERNING

REQUIRES GETTING THE CONSENT

OF THE GOVERNED, UNLIKE

A MILITARY DICTATORSHIP.

WHAT PULLED THATCHER BACK FROM

THE ABYSS AND ULTIMATELY SAVED

THE PROJECT WAS A CRISIS.

INDEED IT WAS THE ULTIMATE

CRISIS‐‐ IT WAS A WAR.

[BELL TOLLING...]

>> Thatcher: WE ARE HERE BECAUSE

FOR THE FIRST TIME FOR MANY

YEARS, BRITISH SOVEREIGN

TERRITORY HAS BEEN INVADED

BY A FOREIGN POWER.

THE GOVERNMENT HAS NOW DECIDED

THAT A LARGE TASK FORCE WILL

SAIL AS SOON AS ALL PREPARATIONS

ARE COMPLETE.

H.M.S. INVINCIBLE WILL BE

IN THE LEAD.

>> Narrator: MOST PEOPLE IN

BRITAIN HAD NEVER EVEN HEARD

OF THE FALKLANDS, BUT WHEN

ARGENTINA INVADED THE SMALL

GROUP OF ISLANDS THOUSANDS

OF MILES AWAY IN THE SOUTH

ATLANTIC, THATCHER SEIZED HER

OPPORTUNITY TO PROVE HER

CREDENTIALS AS "THE IRON LADY".

>> GENTLEMEN, I'VE JUST HEARD

THAT THE WHITE FLAG IS FLYING

OVER STANLEY.

[GROUP CHEERS]

>> Narrator: THE WAR WAS OVER

IN LESS THAN THREE MONTHS.

[CROWD CHEERING...]

AS THE TROOPS RETURNED TO

BRITAIN, A WAVE OF PATRIOTIC

CELEBRATIONS SWEPT THE COUNTRY.

[♪...]

THATCHER WON THE 1983 ELECTIONS

WITH A MASSIVE MAJORITY.

SHE COULD NOW PUSH THROUGH

A FORM OF THE ECONOMIC SHOCK

THERAPY WITNESSED IN CHILE.

[NO VOICE]

THE MOST POWERFUL UNION IN

BRITAIN WAS THE NATIONAL UNION

OF MINE WORKERS.

WHEN THE NATIONAL COAL BOARD

TRIED TO CLOSE PITS DOWN,

THE MINERS WENT ON STRIKE.

[CHEERING AND APPLAUSE...]

>> Man: PARTS OF CENTRAL LONDON

ARE BROUGHT TO A HALT AS

THOUSANDS OF MINERS AND

SYMPATHIZERS MARCH THROUGH

THE CITY IN SUPPORT OF

THE MINERS STRIKE.

IT'S BRITAIN'S LONGEST AND MOST

BITTER SINCE 1926 AND THE MOST

EXPENSIVE EVER.

>> Narrator: THE STRIKE LASTED

ALMOST A YEAR.

THATCHER USED EVERY MEANS AT HER

DISPOSAL TO DESTROY THE UNION.

[HELICOPTER ROTORS WHIRRING...]

EVENTUALLY, THE MINERS

WERE DEFEATED.

THATCHER USED THIS VICTORY

TO BRING THE CHICAGO SCHOOL

REVOLUTION TO BRITAIN.

A SERIES OF GLOSSY COMMERCIALS

PROMOTED A MASSIVE PROGRAM

OF PRIVATIZATIONS.

THATCHER SOLD OFF THE STEEL

INDUSTRY, WATER, ELECTRICITY,

GAS, TELEPHONES,

AIRLINES, OIL.

PUBLIC HOUSING WAS SOLD OFF,

COUNCIL SERVICES PUT OUT

TO TENDER.

IN 1986, FINANCIAL AND BANKING

SERVICES WERE DEREGULATED.

[BELL RINGING]

IT WAS CALLED "THE BIG BANG".

>> NO ONE HERE TONIGHT NEEDS

REMINDING THAT THE BIG BANG

IS ONLY A BEGINNING.

[♪...]

>> Narrator: IN BRITAIN BEFORE

THATCHER, A C. E. O. EARNED

10 TIMES AS MUCH AS THE

AVERAGE WORKER.

BY 2007, THEY EARNED MORE

THAN A HUNDRED TIMES AS MUCH.

[♪..., NO VOICE]

IN THE U. S. BEFORE REAGAN,

C.E.O.s EARNED 43 TIMES AS MUCH

AS THE AVERAGE WORKER.

BY 2005, THEY EARNED MORE

THAN 400 TIMES AS MUCH.

FRIEDMAN OPENLY ACKNOWLEDGED

THE IMPORTANCE OF THATCHER

AND REAGAN IN THE SPREADING

OF CHICAGO SCHOOL POLICIES

AROUND THE WORLD.

>> Thatcher: I THOUGHT IF YOU

WOULD STAND HERE...

>> Friedman: THE COINCIDENCE OF

THATCHER AND REAGAN HAVING BEEN

IN OFFICE AT THE SAME TIME WAS

ENORMOUSLY IMPORTANT FOR THE

PUBLIC ACCEPTANCE WORLDWIDE OF

A DIFFERENT APPROACH TO ECONOMIC

AND MONETARY POLICY.

>> THANK YOU VERY MUCH.

WHAT I'M DESCRIBING NOW IS

A PLAN AND A HOPE FOR THE

LONG‐TERM‐‐ THE MARCH OF FREEDOM

AND DEMOCRACY, WHICH WILL LEAVE

MARXISM AND LENINISM ON THE ASH

HEAP OF HISTORY AS IT HAS LEFT

OTHER TYRANNIES WHICH STIFLE

THE FREEDOM AND MUZZLE THE

SELF‐EXPRESSION OF THE PEOPLE.

>> NOW, WE ALL KNOW THE FAIRY

TALE ABOUT THE FALL OF

COMMUNISM, THAT THE WEST UNDER

REAGAN AND THATCHER LOOKED SO

PROSPEROUS TO THE PEOPLE OF

THE FORMER COMMUNIST BLOC

THAT THEY THEMSELVES DEMANDED

RADICAL FREE‐MARKET POLICIES.

NOW, THIS REALLY IS

A FAIRY TALE.

IT IS TRUE THAT PEOPLE WHO HAD

BEEN LIVING UNDER AUTHORITARIAN

COMMUNISM GENUINELY WANTED

DEMOCRACY, AND IT'S ALSO TRUE

THAT PEOPLE WANTED TO BE ABLE

TO GO OUT AND BUY BLUE JEANS

AND HAVE BIG MACS.

THAT IS TRUE.

BUT THAT DOES NOT MEAN THAT THEY

WANTED THE KIND OF WILD‐WEST

CAPITALISM OF OLIGARCHS GONE MAD

AND NO SOCIAL PROTECTIONS THAT

SO MANY EASTERN BLOC COUNTRIES

ACTUALLY ENDED UP WITH AND

SUFFER UNDER TO THIS DAY.

[CROWD CHANTING...]

>> Narrator: THATCHER HAD DONE

EVERYTHING SHE COULD TO BREAK

THE POWER OF THE UNIONS IN

BRITAIN, BUT IN 1988 SHE WENT TO

POLAND TO SHOW HER SUPPORT FOR

THE WORKERS UNION SOLIDARITY.

>> ...HOW DO YOU SEE IT'S THE

PROCESS FROM WHERE YOU ARE NOW

TO WHERE YOU WANT TO BE?

>> Narrator: STRIKES IN POLAND

LED TO SOLIDARITY BEING ALLOWED

TO CONTEST THE GENERAL ELECTION

IN JUNE 1989.

THIS TRIGGERED A WAVE OF

DEMONSTRATIONS THROUGHOUT

EASTERN EUROPE.

[CROWD CHEERING]

[CROWD SINGING]

IN THE PAST,

THE SOVIET UNION HAD USED

MILITARY FORCE TO CRUSH

DEMOCRATIC MOVEMENTS.

BUT THE SOVIET UNION

HAD A NEW TYPE OF LEADER,

MIKHAIL GORBACHEV, WHO WAS

COMMITTED TO GLASNOST AND

PERESTROIKA.

HE TALKED ABOUT A THIRD WAY,

A GRADUAL TRANSITION TO

SCANDINAVIAN‐STYLE SOCIAL

DEMOCRACY, SOMETHING BETWEEN

FREE‐MARKET CAPITALISM

AND COMMUNISM.

[♪...]

GORBACHEV CHARMED THE PUBLIC

AND POLITICIANS OF THE WEST.

[CROWD CHEERING...]

>> HE'S A BOLD, A DETERMINED

AND COURAGEOUS LEADER.

>> Narrator: GORBACHEV STOOD AND

WATCHED AS ONE BY ONE THE OLD

COMMUNIST REGIMES COLLAPSED.

[CROWD YELLING AND CHEERING...]

[♪...]

AT THE END OF THE YEAR, THE MOST

FAMOUS SYMBOL OF THE DIVISION OF

EUROPE CAME TUMBLING DOWN.

[CROWDS CHEERING

AND APPLAUDING...]

FOR FRIEDMAN AND THE CHICAGO

BOYS, A WHOLE NEW WORLD

OPENED UP.

IN THE SOVIET UNION, GORBACHEV

WAS HOPING TO GRADUALLY REFORM

THE RUSSIAN ECONOMY.

IN 1991, GORBACHEV WAS INVITED

TO THE G7 SUMMIT IN LONDON.

HE WAS HOPING FOR FINANCIAL

SUPPORT FOR HIS GRADUAL

ECONOMIC REFORMS.

INSTEAD, HE WAS TOLD THAT

UNLESS HE EMBRACED RADICAL

SHOCK THERAPY, THERE WOULD BE

NO AID AT ALL.

>> HOW ARE YOU? >> Man: HOW ARE

YOU, MR. PRESIDENT?

>> THAT'S NOT A LITTLE CLOSE?

>> Narrator: THE NEXT MONTH,

THERE WAS A COUP ATTEMPT

AGAINST HIM.

A GROUP OF COMMUNIST PARTY

HARDLINERS PLACED GORBACHEV

UNDER HOUSE ARREST IN HIS

HOLIDAY HOME IN THE CRIMEA.

TANKS SURROUNDED THE WHITE

HOUSE, THE RUSSIAN PARLIAMENT.

[HORNS HONKING,

TANK ENGINES REVVING...]

[EXPLOSIONS, GLASS BREAKING...]

>> Reporter: AMID THE CHAOS AND

STREET CLASHES...

[GUNFIRE...]

IT WAS OBVIOUS THAT TO

REINFORCE THEIR POSITION,

THE HARDLINERS WOULD HAVE TO

RESORT TO VIOLENCE.

[GUNFIRE...]

SUCH ACTION BETWEEN THE PEOPLE

AND THE SECURITY FORCES HAS NOT

BEEN SEEN SINCE THE EARLY DAYS

OF THE RUSSIAN REVOLUTION.

BY DAWN THIS MORNING,

AMID A SEA OF DEBRIS,

IT WAS BECOMING CLEAR THAT THE

COUP WAS DISINTEGRATING.

THE RUSSIAN PARLIAMENT BUILDING

WAS UNSCATHED... THE MILITARY

HAD NOT MADE THEIR MOVE...

INSIDE, BORIS YELTSIN WAS MORE

POWERFUL THAN EVER.

>> Crowd chanting: YELTSIN!

YELTSIN! YELTSIN! YELTSIN...!

>> Narrator: THIS WAS YELTSIN'S

FINEST HOUR.

[YELTSIN SPEAKING RUSSIAN...]

GORBACHEV WAS RELEASED AND HE

RETURNED TO MOSCOW... BUT HE HAD

LOST MUCH OF HIS POWER.

[APPLAUSE...]

>> [SPEAKING RUSSIAN...]

[APPLAUSE...]

>> Narrator: IN DECEMBER 1991,

THE SOVIET UNION WAS DISSOLVED,

A PROFOUND SHOCK FOR THE

RUSSIAN PEOPLE.

YELTSIN WAS NOW IN CHARGE

OF ECONOMIC POLICY FOR THE

RUSSIAN FEDERATION.

THE FREE MARKET CAME TO RUSSIA.

THERE WAS CHAOS.

THE ADOPTION OF CHICAGO SCHOOL

POLICIES IN RUSSIA MARKS THE

BEGINNING OF A NEW CHAPTER IN

THE FREE MARKET CRUSADE.

IT WAS ALL SHOCK, NO THERAPY.

[PEOPLE YELLING ANGRILY...]

[INDISTINCT VOICE ON P. A.]

DESPITE THE PUBLIC EFFORTS TO

PROMOTE POPULAR CAPITALISM, THE

REALITY WAS A SMALL HANDFUL OF

BUSINESSMEN MADE VAST FORTUNES.

STATE INDUSTRIES WERE SOLD OFF

AT BARGAIN BASEMENT PRICES.

THE RUSSIAN PRESS DUBBED

YELTSIN'S ADVISORS,

"THE CHICAGO BOYS."

>> [SPEAKING RUSSIAN...]

[♪...]

>> Narrator: YELTSIN'S SHOCK

THERAPY MEANT THAT IN 1992 THE

AVERAGE RUSSIAN CONSUMED 40%

LESS THAN IN 1991.

A THIRD OF RUSSIANS FELL BELOW

THE POVERTY LINE AND WAGES

WEREN'T PAID FOR MONTHS.

>> Reporter: ONE EXPERT TODAY

PREDICTED 140 MILLION RUSSIANS

WILL SOON BE LIVING BELOW

THE POVERTY LINE.

>> Narrator: CORRUPTION WAS

RIFE, ORGANIZED CRIME BOOMED.

MOSCOW BECAME THE NEW WILD WEST.

[MEN YELLING IN RUSSIAN...]

[♪...]

[MEN SPEAKING RUSSIAN...]

[THUMP, MAN GROANS]

[♪...]

[SIRENS WAILING...]

[♪...]

THE MAJORITY OF RUSSIANS OPPOSED

THE CHICAGO BOYS' RADICAL VISION

FOR THEIR COUNTRY.

IN MARCH 1993, PARLIAMENT MADE A

CRUCIAL DECISION.

IT VOTED TO REPEAL THE SPECIAL

POWERS IT HAD GIVEN TO YELTSIN.

[MAN SPEAKING RUSSIAN...]

YELTSIN DECLARED

A STATE OF EMERGENCY.

THE CONSTITUTIONAL COURT RULED

THAT IT WAS ILLEGAL.

[APPLAUSE...]

[♪...]

ON SEPTEMBER 21st, YELTSIN TOOK

THE PINOCHET OPTION AND

DISSOLVED PARLIAMENT.

>> [SPEAKING RUSSIAN...]

>> Narrator: THE WEST THREW ITS

WEIGHT BEHIND YELTSIN.

>> WE, WE FEEL THAT BORIS

YELTSIN IS THE BEST HOPE

FOR DEMOCRACY IN RUSSIA.

>> Narrator: TWO DAYS LATER,

PARLIAMENT VOTED TO IMPEACH

YELTSIN BY 636 VOTES TO TWO.

THOUSANDS OF SUPPORTERS OF THE

PARLIAMENT GATHERED OUTSIDE THE

WHITE HOUSE AND MARCHED ON THE

TELEVISION STATION.

[CROWD SINGING...]

[YELLING AND CLATTERING...]

IT LOOKED LIKE THE SUPPORTERS OF

PARLIAMENT WERE WINNING.

YELTSIN FLEW BACK TO MOSCOW

FROM HIS HOLIDAY HOME.

[CAMERAS CLICKING...]

THAT NIGHT, 100 DEMONSTRATORS

WERE KILLED AS THE YELTSIN

AUTHORITIES FOUGHT BACK.

[YELLING, CLATTERING,

GUNFIRE...]

[GUNFIRE CONTINUES...]

[WOMAN SPEAKS TEARFULLY]

Narrator: ON THE 4th

OF OCTOBER HE ORDERED TROOPS

TO STORM THE WHITE HOUSE,

SHELLING THE VERY BUILDING HE

HAD DEFENDED TWO YEARS EARLIER.

[MAN SPEAKING ON LOUDSPEAKER...]

[EXPLOSIONS AND GUNFIRE...]

[CHEERING AND APPLAUSE...]

WARREN CHRISTOPHER,

THE U. S. SECRETARY OF STATE,

SAID, "THE UNITED STATES

DOES NOT EASILY SUPPORT THE

SUSPENSION OF PARLIAMENTS, BUT

THESE ARE EXTRAORDINARY TIMES".

[PEOPLE YELLING...]

YELTSIN NOW HAD ABSOLUTE POWER.

WITH THE ADVICE OF HIS CHICAGO

BOYS, HE RULED THROUGH A FORM

OF CRONY CAPITALISM.

[♪...]

EVEN MORE STATE INDUSTRIES WERE

SOLD OFF, CREATING A NEW CLASS

OF BILLIONAIRE BUSINESSMEN WITH

HUGE POLITICAL INFLUENCE‐‐

THE OLIGARCHS.

BY 1998, 80% OF RUSSIAN FARMS

WERE BANKRUPT AND 70,000 STATE

FACTORIES WERE CLOSED.

IN EIGHT YEARS, THE NUMBER OF

PEOPLE LIVING IN POVERTY

INCREASED BY 72 MILLION.

MEANWHILE, MOSCOW WOULD GO ON

TO HAVE MORE BILLIONAIRES THAN

ANY OTHER CITY IN THE WORLD.

[TYPEWRITER CLACKING...]

[CAMERAS CLICKING...]

[♪...]

GOOD AFTERNOON,

THANK YOU FOR COMING.

TODAY IT IS MY, UH, HONOR TO

ANNOUNCE THAT I'M SUBMITTING THE

NAME OF DONALD RUMSFELD TO BE

SECRETARY OF DEFENSE.

>> I LOOK FORWARD TO SERVING

OUR COUNTRY AGAIN...

>> Narrator: RUMSFELD HAD BEEN

SECRETARY OF DEFENSE BEFORE,

UNDER GERALD FORD.

THEN THE ENEMY WE WERE SUPPOSED

TO FEAR WAS THE SOVIET UNION.

>> I'M NOT SAYING WITH CERTAINTY

THAT THE RUSSIANS ARE COMING,

I'M SAYING THE TRENDS ARE HERE.

I'M NOT SAYING THE RUSSIANS ARE

TEN FEET TALL, I'M SAYING THEY

USED TO BE 5'3", THEY'RE NOW

5'9‐1/2" AND THEY'RE GROWING.

>> Narrator: NOW THERE WAS A NEW

ENEMY CLOSER TO HOME.

ON SEPTEMBER THE 10th, 2001,

RUMSFELD MADE A SPEECH LAYING

OUT HIS PLANS TO PRIVATIZE MUCH

OF THE U. S. MILITARY.

MILTON FRIEDMAN

WOULD HAVE BEEN PROUD.

HE SAID, "THE TOPIC TODAY IS AN

ADVERSARY THAT POSES A THREAT, A

SERIOUS THREAT TO THE SECURITY

OF THE UNITED STATES OF AMERICA.

THIS ADVERSARY IS ONE OF THE

WORLD'S LAST BASTIONS

OF CENTRAL PLANNING.

IT GOVERNS BY DICTATING

FIVE‐YEAR PLANS.

PERHAPS THIS ADVERSARY SOUNDS

LIKE THE FORMER SOVIET UNION,

BUT THAT ENEMY HAS GONE.

THIS ADVERSARY'S CLOSER TO HOME.

IT'S THE PENTAGON BUREAUCRACY.

TODAY WE DECLARE WAR

ON BUREAUCRACY."

THE NEXT DAY, AMERICAN AIRLINES

FLIGHT 77 CRASHED INTO THE

PENTAGON, KILLING 184 PEOPLE.

[GUNFIRE...]

>> Man: SECOND JET...

>> Woman: WHAT WAS THAT?

OH, MY GOD! OH, MY GOD!

>> Man: OH, MY GOD!

[RUMBLING, PEOPLE SCREAMING...]

>> Klein: THINK ABOUT THAT

FEELING, AFTER THOSE ATTACKS.

WHO ARE THESE PEOPLE,

WHERE DID THEY COME FROM,

WHY DO THEY HATE US?

THERE WAS A TOTAL LOSS

OF COLLECTIVE NARRATIVE.

THIS... WE WERE NOT LIVING

IN THE WORLD THAT WE THOUGHT

WE LIVED IN, AND WE KEPT HEARING

FROM OUR POLITICAL LEADERS

THAT EVERYTHING WE THOUGHT

WE UNDERSTOOD BEFORE THE ATTACKS

NO LONGER APPLIED.

THERE WAS A NEW PHRASE,

"PRE‐9/11 THINKING," AND WHAT

HAPPENED IN THAT MOMENT IS THAT

SUDDENLY NEW STORIES SORT OF

MAGICALLY APPEARED, THAT WE WERE

IN A CLASH OF CIVILIZATIONS.

THAT'S THE WORLD THAT WE

SUDDENLY LIVED IN.

THAT THERE WAS AN AXIS OF EVIL,

AND THAT WE WERE FIGHTING

A WAR AGAINST TERROR.

>> Narrator: THIS ABSTRACT,

UNWINNABLE WAR HAS HAD HUGE

ECONOMIC CONSEQUENCES.

BEFORE 2001,

HOMELAND SECURITY BARELY

REGISTERED AS AN INDUSTRY.

TODAY IT IS BIGGER

THAN HOLLYWOOD AND THE

MUSIC INDUSTRY COMBINED.

BETWEEN SEPTEMBER THE 11th

2001 AND 2006,

THE DEPARTMENT OF HOMELAND

SECURITY HANDED OUT $130 BILLION

TO PRIVATE CONTRACTORS.

>> WE'RE GONNA KILL 'EM!

KILL THE PILOTS!

>> Narrator: THIS IS THE

DISASTER CAPITALISM COMPLEX,

A NEW ECONOMY BUILT ON FEAR.

>> THIS WILL BE A MONUMENTAL

STRUGGLE OF GOOD VERSUS EVIL.

[GUNFIRE...]

THE BEST DEFENSE AGAINST

TERROR IS A GLOBAL OFFENSIVE

AGAINST TERROR, WHEREVER IT

MIGHT BE FOUND.

[JETS WHOOSHING, EXPLOSIONS]

>> Narrator: THE FIRST PHASE

OF THIS WAR WAS THE BOMBING

OF AFGHANISTAN.

[EXPLOSIONS AND GUNFIRE...]

THE TALIBAN GOVERNMENT WAS

QUICKLY OVERTHROWN.

[MEN YELLING, GUNFIRE...]

THE AFTERMATH OF THE WAR WAS

MORE COMPLICATED.

>> George W. Bush: OUR FIGHT

AGAINST TERRORISM BEGAN

IN AFGHANISTAN BUT IT

WILL NOT END THERE.

>> WE'RE PRIMARILY LOOKING AT

DETAINEES THAT WE CAN USE FOR

COLLECTING INTELLIGENCE.

[♪...]

>> Narrator: GUANTANAMO WAS THE

FIRST TIME THAT THE TECHNIQUES

OF THE KUBARK MANUAL WERE

EXPLICITLY AND PUBLICLY BEING

USED BY AMERICAN FORCES,

OFFICIALLY SANCTIONED IN THE

WHITE HOUSE AND OPENLY BROADCAST

ON TELEVISION AROUND WORLD.

>> Man: ISOLATION, BOTH

PHYSICAL AND PSYCHOLOGICAL,

MUST BE MAINTAINED FROM THE

MOMENT OF APPREHENSION.

THE CAPACITY FOR RESISTANCE IS

DIMINISHED BY DISORIENTATION.

PRISONERS SHOULD MAINTAIN

SILENCE AT ALL TIMES.

THEY SHOULD NEVER BE ALLOWED

TO SPEAK TO EACH OTHER.

>> Narrator: THREE OF THE

PRISONERS WERE ASIF IQBAL,

RUHAL AHMED AND SHAFIQ RASUL

FROM TIPTON IN ENGLAND.

THEY SPENT MORE THAN TWO YEARS

IN GUANTANAMO BEFORE BEING

RELEASED WITHOUT CHARGE.

>> MENTALLY, YEAH, YOU COULDN'T

SPEAK TO NOBODY, YOU COULDN'T DO

NOTHING, YOU COULDN'T STAND UP,

AND JUST SITTING THERE,

JUST, LIKE, YOU'D BE IN YOUR

THOUGHTS ALL THE TIME, THINKING,

"WHAT THE HELL'S GOING ON?

WHERE THE HELL AM I?

ARE WE GONNA BE STAYING HERE

FOR THE REST OF OUR LIVES?

ARE WE GOING TO BE

GOING BACK HOME?

WILL WE EVER SEE

OUR FAMILY AGAIN?"

>> Narrator: OF THE 779

PRISONERS THAT HAVE BEEN HELD

IN GUANTANAMO BAY,

ONLY THREE HAVE EVER BEEN

CONVICTED OF ANY OFFENSE.

[♪...]

>> THE ONLY THING I KNOW

FOR CERTAIN IS THAT

THESE ARE BAD PEOPLE.

>> Klein: IT WAS A MESSAGE

TO THE WHOLE WORLD, AND THE

MESSAGE WAS CLEAR.

IT WAS, "THIS IS WHAT HAPPENS

TO YOU IF YOU GET IN OUR WAY."

[GUNFIRE...]

>> THE WAR ON TERROR IS NOT

ABOUT ONE MAN, AND IT IS NOT

ABOUT ONE COUNTRY.

>> Narrator: THERE WERE MANY

JUSTIFICATIONS GIVEN FOR THE

INVASION OF IRAQ.

BUT IF THE U. S. HAD REALLY

WANTED TO ATTACK A COUNTRY WHERE

THE LEADERS OF AL QAEDA WERE

THOUGHT TO BE HIDING, WHICH HAD

NUCLEAR WEAPONS AND WAS SELLING

NUCLEAR TECHNOLOGY TO OTHER

COUNTRIES, THEN PAKISTAN WOULD

HAVE BEEN THE OBVIOUS CHOICE.

IT HAD CLOSE CONNECTIONS

TO THE TALIBAN AND WAS BEING RUN

BY A MILITARY DICTATOR.

INSTEAD GEORGE BUSH CHOSE

TO TARGET IRAQ, A COUNTRY

WITH THE THIRD‐LARGEST OIL

RESERVES IN THE WORLD.

[CROWD CHEERING...]

[GUNFIRE...]

>> NOW ABOUT THE DEFENSE

DEPARTMENT'S WAR PLAN.

IT IS NOT LIKE THAT

FOR THE GULF WAR.

IT'S MORE ALONG THE LINES OF THE

PANAMA INVASION OF 1989.

CBS NEWS HAS BEEN TOLD IT WOULD

START ON WHAT'S CALLED A‐DAY.

"A" AS IN AIR STRIKES‐‐

AIR STRIKES SO DEVASTATING, THEY

WOULD LEAVE SADDAM'S SOLDIERS

UNABLE OR UNWILLING TO FIGHT.

THE IDEA IS TO RAIN DOWN THE

THUNDER SO HARD AS TO CREATE,

QUOTE, "SHOCK AND AWE."

>> Reporter: IF THE PENTAGON

STICKS TO ITS CURRENT WAR PLAN,

ONE DAY IN MARCH THE AIR FORCE

AND NAVY WILL LAUNCH BETWEEN

3‐ AND 400 CRUISE MISSILES

AT TARGETS IN IRAQ...

MORE THAN WERE LAUNCHED

DURING THE ENTIRE 40 DAYS

OF THE FIRST GULF WAR.

THE SHEER SIZE OF THIS

HAS NEVER BEEN SEEN BEFORE,

NEVER BEEN CONTEMPLATED BEFORE.

HARLAN ULMAN IS ONE OF THE

AUTHORS OF THE "SHOCK AND AWE"

CONCEPT, WHICH RELIES

ON LARGE NUMBERS OF

PRECISION‐GUIDED WEAPONS.

>> SO THAT YOU HAVE THIS

SIMULTANEOUS EFFECT RATHER LIKE

THE NUCLEAR WEAPONS AT

HIROSHIMA, NOT TAKING DAYS OR

WEEKS, BUT IN MINUTES.

[JET ENGINE ROARING]

[EXPLOSIONS, ♪...]

YOU ALSO TAKE THE CITY DOWN.

BY THAT I MEAN YOU GET RID

OF THEIR POWER, THEIR WATER,

AND YOU BEGIN THIS RELENTLESS

CAMPAIGN TO WEAR THEM DOWN

SO THAT TWO, THREE,

FOUR, FIVE DAYS, THEY ARE

PHYSICALLY, EMOTIONALLY AND

PSYCHOLOGICALLY EXHAUSTED.

>> Reporter: LAST NIGHT,

A SQUARE MILE IN CENTRAL BAGHDAD

SEEMED LIKE HELL ON EARTH.

[SIRENS WAILING, EXPLOSIONS...]

>> Narrator: DURING THE FIRST

WAVE OF THE BOMBING, THE

CITIZENS OF BAGHDAD SUFFERED

A VERSION OF THE SENSORY

DEPRIVATION DESCRIBED IN THE

KUBARK MANUAL.

[PEOPLE SHOUTING...]

IN THE CHAOS THAT FOLLOWED

THE OVERTHROW OF SADDAM HUSSEIN,

THE U. S. DID LITTLE TO STOP

THE LOOTING.

SOME U. S. OFFICIALS EVEN THOUGHT

IT GAVE THEM A HEAD START ON

DISMANTLING THE IRAQI STATE.

JOHN AGRESTO, DIRECTOR OF HIGHER

EDUCATION RECONSTRUCTION,

SAID HE SAW THE LOOTING

OF SCHOOLS "AS THE OPPORTUNITY

FOR A CLEAN START."

IN FACT, BEFORE SANCTIONS,

IRAQ HAD THE BEST EDUCATION

SYSTEM IN THE REGION.

89% OF IRAQIS WERE LITERATE.

BY CONTRAST IN NEW MEXICO,

JOHN AGRESTO'S HOME STATE,

46% OF THE POPULATION WERE

FUNCTIONALLY ILLITERATE.

>> IN IRAQ, YOU HAD THREE

DISTINCT FORMS OF SHOCK THAT

WERE ALL WORKING TOGETHER AND

REINFORCING EACH OTHER.

YOU HAD THE SHOCK OF THE WAR,

WHICH WAS IMMEDIATELY FOLLOWED

BY ECONOMIC SHOCK THERAPY

IMPOSED UNDER PAUL BREMER,

AND AS RESISTANCE TO THAT

ECONOMIC TRANSFORMATION, THAT

VERY RAPID ECONOMIC SHOCK,

GREW, YOU HAD THE SHOCK OF

ENFORCEMENT, INCLUDING TORTURE.

THREE DIFFERENT KINDS OF SHOCK.

[TYPEWRITER CLACKING...]

[♪...]

>> Narrator: IN MAY 2003,

PAUL BREMER WAS APPOINTED

U.S. ENVOY TO IRAQ.

TWO WEEKS AFTER HE ARRIVED,

HE DECLARED THE COUNTRY

OPEN FOR BUSINESS.

>> WE CONSIDER THAT THE

COALITION HAS VERY BROAD

AUTHORITIES TO DETERMINE THE

DIRECTION OF THE IRAQI ECONOMY.

>> Narrator: BREMER KNEW LITTLE

OF IRAQ, BUT HE KNEW ABOUT

DISASTER CAPITALISM.

HE HAD LAUNCHED CRISIS

CONSULTING PRACTICE

AT THE START OF THE HOMELAND

SECURITY BOOM.

>> TODAY IS A VERY IMPORTANT DAY

IN BAGHDAD.

>> Narrator: BREMER SPENT THE

FIRST FOUR MONTHS PASSING

CLASSIC CHICAGO SCHOOL LAWS.

RUMSFELD DESCRIBED IRAQ

AS HAVING SOME OF THE MOST

ENLIGHTENED AND INVITING TAX

AND INVESTMENT LAWS IN THE

FREE WORLD.

ONE OF THE FIRST ACTS OF BREMER

WAS TO FIRE 500,000

STATE WORKERS.

THIS WAS PARTLY AN ACT

OF DE‐BA'ATHIFICATION,

BUT SLASHING GOVERNMENTS

WAS ALSO VINTAGE FRIEDMAN.

MONEY WAS PROMISED

FOR RECONSTRUCTION.

>> George W. Bush: OUR

INVESTMENT IN THE FUTURE OF

AFGHANISTAN AND IRAQ IS THE

GREATEST COMMITMENT OF ITS KIND

SINCE THE MARSHALL PLAN.

>> Narrator: BUT IN FACT,

IT WAS JUST THE OPPOSITE.

WHEREAS THE MARSHALL PLAN

WAS INTENDED TO BOOST EUROPEAN

INDUSTRIES, U. S. AID MONEY

IN IRAQ WAS SPENT ON U. S.

CORPORATIONS.

IF WORK CAME TO IRAQIS,

IT CAME AT THE BOTTOM OF A

SERIES OF SUBCONTRACTORS.

CREATIVE ASSOCIATES RECEIVED

CONTRACTS WORTH A HUNDRED

MILLION DOLLARS TO DRAFT

THE CURRICULUM AND PRINT NEW

TEXTBOOKS FOR THE EDUCATION

SYSTEM.

MANAGEMENT AND TECHNOLOGY

CONSULTANT BearingPoint WAS

AWARDED CONTRACTS WORTH

$240 MILLION TO BUILD A

MARKET‐DRIVEN SYSTEM IN IRAQ.

NORTH CAROLINA‐BASED R.T.I.

RECEIVED CONTRACTS WORTH

$466 MILLION TO ADVISE ON

BRINGING DEMOCRACY TO IRAQ.

[CASH REGISTER DINGS]

AND HALLIBURTON WAS AWARDED

$20 BILLION IN COST‐PLUS

IRAQI CONTRACTS.

[MEN SHOUTING]

PARSONS WAS HANDED $186 MILLION

TO BUILD 142 HEALTH CLINICS.

ONLY SIX WERE EVER COMPLETED.

BASIC ELECTRICITY AND WATER

SUPPLIES HARDLY IMPROVED

DESPITE BILLIONS BEING SPENT

IN THE FIRST FOUR YEARS.

>> WE'RE GONNA SUCCEED HERE,

AND WHEN WE SUCCEED HERE WE WILL

HAVE DONE SOMETHING IMPORTANT

NOT JUST FOR 25 MILLION IRAQIS,

WE WILL HAVE DONE SOMETHING THAT

SERVES WESTERN INTERESTS IN THIS

WHOLE REGION.

>> Narrator: EVEN THE NEW IRAQI

CURRENCY WAS PRINTED ABROAD.

>> LET ME SHOW YOU AN EXAMPLE

OF THESE NOTES.

>> Narrator: THE U. S. EVEN PAID

PRIVATE CONTRACTORS TO MONITOR

THE WORK OF THE PRIVATE

CONTRACTORS WHO WON CONTRACTS.

>> Men, chanting: WE WANT JOBS!

WE WANT JOBS! WE WANT JOBS!

>> I WAS IN BAGHDAD IN 2004,

AND THIS IS THE PERIOD WHEN

BOMBS STARTED TO GO OFF

REGULARLY IN BAGHDAD.

IN FACT, THE NIGHT THAT I

ARRIVED, A BOMB WENT OFF

VERY NEAR OUR HOTEL.

BUT WHAT WAS REALLY STRIKING

TO ME IN THIS PERIOD WAS THAT

DESPITE THE VIOLENCE AND DESPITE

THE CHAOS, THE NEXT DAY, IRAQIS

WERE OUT IN THE STREETS

PROTESTING.

...19 KILLED AND 100 INJURED

IN NAJAF.

...AND WHAT THEY WERE DEMANDING

AT THIS TIME WAS ELECTIONS, THE

RIGHT TO ACTUALLY HAVE A SAY IN,

IN WHAT THE POST‐SADDAM ERA

WOULD LOOK LIKE.

NOW, IN THE EARLY DAYS OF THE

OCCUPATION, THE PROTESTS WERE

PEACEFUL, BUT AS TIME WENT ON

AND THE PROTESTS DIDN'T HAVE

AN EFFECT, MORE AND MORE IRAQIS

JOINED THE ARMED RESISTANCE.

[GUNFIRE]

[MEN CHANTING]

>> Narrator: THE VIOLENCE

SPUN OUT OF CONTROL.

[GUNFIRE]

[MEN SHOUTING]

[♪...]

AS IN SOUTH AMERICA THREE

DECADES EARLIER, BODIES WERE

OFTEN DUMPED BY THE ROADSIDE

AS A WARNING TO OTHERS.

THESE WERE IRAQ'S DISAPPEARED.

EXTREMELY AGGRESSIVE MEASURES

WERE NEEDED TO SUPPRESS

THE OPPOSITION.

[MEN SHOUTING]

[TYPEWRITER CLACKING...]

>> Soldier: GO, GO, GO!

GO, LET'S GO!

>> Narrator: THE FIRST THREE

AND A HALF YEARS OF THE

OCCUPATION, 61,500 IRAQIS

WERE CAPTURED.

BY SPRING 2007, 19,000

REMAINED IN CUSTODY.

IN PRISON, THEY WERE

INTERROGATED USING TECHNIQUES

THAT COULD BE TRACED TO THOSE

DEVISED BY THE C. I. A. FROM

EWEN CAMERON'S EXPERIMENTS

IN THE '50s.

[DOGS BARKING]

ACCORDING TO THE RED CROSS,

U.S. MILITARY OFFICIALS ADMITTED

THAT BETWEEN 70 AND 90% OF

ARRESTS IN IRAQ WERE MISTAKES.

THE CHAOS IN IRAQ SEEMS LIKE

A DEFEAT FOR SHOCK THERAPY,

BUT IN IRAQ, DISASTER CAPITALISM

MOVED ON.

>> CEASE FIRE!

>> Narrator: NOW THE DISASTER

ITSELF PROVIDED THE OPPORTUNITY

FOR PROFIT.

[GLASS BREAKING, GUNFIRE...]

[TYPEWRITER CLACKING...]

[HELICOPTER ROTORS WHIRRING]

U.S. MILITARY SPENDING HAS

ALMOST DOUBLED SINCE 2001,

NEARING $700 BILLION PER YEAR.

AS LONG AGO AS 1961, PRESIDENT

EISENHOWER, NOT A NOTED LIBERAL,

WARNED OF THE DANGER OF

A TOO‐POWERFUL MILITARY.

>> NOW, THIS CONJUNCTION OF AN

IMMENSE MILITARY ESTABLISHMENT

AND A LARGE ARMS INDUSTRY IS

NEW IN THE AMERICAN EXPERIENCE.

WE MUST GUARD AGAINST THE

ACQUISITION OF UNWARRANTED

INFLUENCE, WHETHER SOUGHT OR

UNSOUGHT, BY THE MILITARY

INDUSTRIAL COMPLEX.

WE MUST NEVER LET THE WEIGHT

OF THIS COMBINATION ENDANGER

OUR LIBERTIES OR DEMOCRATIC

PROCESSES.

>> Narrator: THE WAR IN IRAQ

IS THE MOST PRIVATIZED WAR

IN MODERN HISTORY.

THE GREEN ZONE IN BAGHDAD IS

AN EXTREME VERSION OF WHAT IS

HAPPENING AROUND THE WORLD‐‐

A PRIVATIZED, SECURE WORLD

PROTECTED FROM THE CHAOS

OUTSIDE.

[♪...]

IN 1991, IN THE FIRST GULF WAR,

FOR EVERY HUNDRED SOLDIERS,

THERE WAS ONE MILITARY

CONTRACTOR.

IN 2003, AT THE BEGINNING

OF THE WAR IN IRAQ, FOR EVERY

HUNDRED SOLDIERS, THERE WERE

10 CONTRACTORS.

BY 2006, FOR EVERY HUNDRED

SOLDIERS, THERE WERE 33

CONTRACTORS.

A YEAR LATER, FOR EVERY

HUNDRED SOLDIERS, THERE WERE

70 CONTRACTORS.

BY JULY 2007, THERE WERE

MORE CONTRACTORS THAN SOLDIERS

IN IRAQ.

THIS WAS GOING BEYOND WHAT

EVEN MILTON FRIEDMAN HAD

DARED TO HOPE.

>> THE ONLY THINGS I WOULD NOT

DENATIONALIZE ARE THE ARMED

FORCES, THE COURTS, AND SOME

OF YOUR, AND YOUR ROADS AND

HIGHWAYS.

>> Narrator: ONE OF THE MOST

HIGH‐PROFILE CONTRACTORS WAS

BLACKWATER, U. S. A.

DURING THE APRIL 2004

UPRISING IN NAJAF,

BLACKWATER ASSUMED COMMAND

OVER U. S. MARINES.

DOZENS OF IRAQIS WERE KILLED

DURING THE OPERATION.

THE U. S. HAD INDEMNIFIED THE

PRIVATE CONTRACTORS AGAINST

ANY IRAQI LAWS, SO THEY WERE

OPERATING IN A LAW‐FREE BUBBLE,

A LITTLE LIKE GUANTANAMO.

>> Woman: I ASKED YOUR SECRETARY

OF DEFENSE A COUPLE MONTHS AGO

WHAT LAW GOVERNS THEIR ACTIONS.

MR. RUMSFELD...

>> I WAS GONNA ASK HIM.

GO AHEAD!

[LAUGHTER]

HELP.

>> WELL, I WAS HOP...[LAUGHTER]

>> Narrator: JUST AS CAMERON'S

SHOCK THERAPY LEFT HIS PATIENTS

CONFUSED AND BROKEN, SO THE

MULTIPLE SHOCKS INFLICTED ON

IRAQ REDUCED THE COUNTRY TO

A LAWLESS, VIOLENT,

SECTARIAN MESS.

[MEN SPEAKING INDISTINCTLY...]

BY THE TIME OF SADDAM HUSSEIN'S

EXECUTION IN 2006, A THOUSAND

IRAQIS WERE BEING KILLED

EACH WEEK.

[♪...]

BY APRIL 2007, THE UNITED

NATIONS HIGH COMMISSION FOR

REFUGEES ESTIMATED FOUR MILLION

PEOPLE HAD HAD TO LEAVE

THEIR HOMES.

HUNDREDS OF THOUSANDS

OF IRAQIS HAD DIED.

>> I THINK THE HISTORIANS WILL

WRITE VERY CLEARLY THAT WE DID

A GREAT AND NOBLE THING HERE.

>> [CHANTING IN FOREIGN

LANGUAGE...]

[♪...]

[MEN SHOUTING]

[TYPEWRITER CLACKING...]

[HELICOPTER ROTORS WHIRRING...]

>> Narrator: WHEN HURRICANE

KATRINA HIT NEW ORLEANS IN

AUGUST 2005, THE WORLD WAS

SHOCKED TO WITNESS A SORT

OF DISASTER APARTHEID.

THE ECONOMICALLY SECURE DROVE

OUT OF TOWN, WHILE TENS OF

THOUSANDS OF THE VULNERABLE WERE

STRANDED WITH LITTLE OR NO HELP

FROM THE STATE.

>> Klein: I WENT TO NEW ORLEANS

WHILE THE CITY WAS STILL

UNDERWATER, AND WHAT I SAW WAS

THAT WHAT I HAD WITNESSED IN

IRAQ WAS REPEATING NOT IN THE

AFTERMATH OF A WAR BUT IN THE

AFTERMATH OF A TREMENDOUS

NATURAL DISASTER.

MILTON FRIEDMAN DIED IN,

IN 2006.

HIS VERY LAST PIECE OF PUBLIC

POLICY RECOMMENDATION WAS AN

OP‐ED HE WROTE FOR

THE WALL

STREET JOURNAL THREE MONTHS

AFTER KATRINA.

HE SAID, "MOST NEW ORLEANS

SCHOOLS ARE IN RUINS, AS ARE THE

HOMES OF CHILDREN WHO ATTEND,

WHO HAVE ATTENDED THEM.

THE CHILDREN ARE NOW SCATTERED

ALL OVER THE COUNTRY.

THIS IS A TRAGEDY.

IT IS ALSO AN OPPORTUNITY

TO RADICALLY REFORM THE

EDUCATION SYSTEM."

HE WAS ADVOCATING THE WHOLESALE

PRIVATIZATION OF THE SCHOOL

SYSTEM OF THIS CITY.

IT WAS HIS SORT OF SWAN SONG.

[MAN SPEAKING FOREIGN

LANGUAGE, WOMAN SCREAMING...]

I'D WITNESSED A SIMILAR PROCESS

IN SRI LANKA IN THE AFTERMATH

OF THE 2004 TSUNAMI.

PEOPLE WHO'D LIVED ON THE

BEACHES FOR GENERATIONS WERE

PREVENTED FROM RETURNING SO THAT

THE LAND COULD BE PRIVATIZED AND

SOLD OFF TO LUXURY HOTELS.

[GROUP SPEAKING

FOREIGN LANGUAGE...]

AND THIS IS EXACTLY WHAT I

MEAN BY THE SHOCK DOCTRINE‐‐

THE SYSTEMATIC RAIDING OF THE

PUBLIC SPHERE IN THE AFTERMATH

OF A DISASTER, WHEN PEOPLE ARE

TOO FOCUSED ON THE EMERGENCY,

ON THEIR DAILY CONCERNS,

TO PROTECT THEIR INTERESTS.

[♪...]

>> Narrator: MAYBE THE FIRST

ACT OF RESISTANCE IS TO REFUSE

TO ALLOW OUR COLLECTIVE MEMORY

TO BE WIPED.

IN 2008, NAOMI KLEIN VISITED

VILLA GRIMALDI WITH ISABEL

MOREL, THE WIDOW OF ORLANDO

LETELIER.

VILLA GRIMALDI IS

A MEMORIAL TO THE CRUELTY

OF THE PINOCHET REGIME AND

TO ITS EVENTUAL DEFEAT.

>> [SPEAKING SPANISH...]

>> IT'S NOT THAT I LOVED

PINOCHET, BUT I THINK THAT HE

WAS OUR TEACHER IN MANY THINGS.

WE LEARNED ABOUT EVIL.

[♪...]

>> Narrator: IN 1998,

PINOCHET WAS ARRESTED WHILE

HE WAS IN LONDON.

HIS OLD ALLY, MARGARET THATCHER,

STOOD BY HIS SIDE.

>> I KNOW HOW MUCH

WE OWE TO YOU.

[CROWD CHANTING...]

>> Narrator: IT TOOK 30 YEARS

FOR THE ECONOMIC EXPERIMENT

ORIGINALLY TEST‐DRIVEN BY

PINOCHET TO MAKE ITS WAY

AROUND THE GLOBE TO IRAQ,

BUT THE SIMILARITIES BETWEEN

PAST AND PRESENT ARE STARTLING:

BETWEEN PINOCHET'S CONCENTRATION

CAMPS AND BUSH'S GUANTANAMO

DETENTION CENTER...

BETWEEN THE DISAPPEARED IN CHILE

AND THOSE IN IRAQ...

BETWEEN THE EXPERIMENTS

OF EWEN CAMERON AND THE TORTURE

METED OUT ON THE PRISONERS

OF ABU GHRAIB.

>> THESE ARE THE DAYS

AND HOURS...

>> HE ERASED ALL THE PAST‐‐

THAT'S WHY HE GAVE

ELECTROSHOCKS‐‐ ALL THE PAST

FROM THE PATIENT, AND HE WOULD

IMPLANT SOME NEW IDEAS.

>> Narrator: BUT JANINE

RESISTED.

IN 1988, THE C. I. A. AGREED TO

PAY COMPENSATION TO JANINE AND

OTHER VICTIMS OF EWEN CAMERON'S

EXPERIMENTS.

>> Klein: JANINE, ARE YOU PROUD

THAT THEY TRIED TO BREAK YOU

AND THAT YOU HAVE FOUGHT SO HARD

AND WON?

>> IN A WAY, I AM.

IN A WAY, I AM.

BECAUSE I MUST HAVE SOME

WILLPOWER SEEDS IN ME!

[LAUGHS]

IT IS VERY, VERY HARD TO FIGHT

A GOVERNMENT.

PEOPLE WOULD TELL ME, "JANINE,

YOU DON'T FIGHT A GOVERNMENT.

WHAT'S THE MATTER WITH YOU?

THEY'RE TOO BIG."

BUT I HAD FAITH THAT

WE WOULD WIN.

[TYPEWRITER CLACKING...]

[♪...]

>> Narrator: IT IS IN THE NATURE

OF UNREGULATED MARKETS

TO BE VOLATILE.

BUBBLES ARE ALLOWED TO INFLATE,

AND THEN INEVITABLY THEY BURST.

SINCE THE DEREGULATION OF THE

BIG BANG IN THE '80s, THERE HAVE

BEEN A NUMBER OF MARKET SHOCKS.

IN 1987, THERE WAS BLACK MONDAY.

MARKETS FELL SPECTACULARLY.

IT WAS THE LARGEST ONE‐DAY

PERCENTAGE DECLINE IN STOCK

MARKET HISTORY.

IN 1992, THERE WAS BLACK

WEDNESDAY, WHEN CURRENCY

SPECULATORS MADE FORTUNES

BETTING AGAINST THE POUND.

IN 1997, THERE WAS

THE ASIAN CONTAGION.

IN ONE YEAR, $600 BILLION

DISAPPEARED FROM THE STOCK

MARKETS OF ASIA.

AND THEN, IN SEPTEMBER 2008,

THE FINANCIAL MARKETS IMPLODED.

>> THE MARKET IS NOT

FUNCTIONING PROPERLY.

THERE'S BEEN A WIDESPREAD LOSS

OF CONFIDENCE.

[♪...]

[STOCK BELL RINGING]

>> Narrator: ON SEPTEMBER

THE 15th, LEHMAN BROTHERS FILED

FOR CHAPTER 11 BANKRUPTCY

PROTECTION.

YET ONLY ONE WEEK LATER, IT WAS

ANNOUNCED THAT WORKERS AT THEIR

NEW YORK OFFICE WOULD SHARE

TWO AND A HALF BILLION DOLLARS

IN BONUSES.

IT IS ESTIMATED THAT WALL STREET

FIRMS PAID $18.4 BILLION

IN BONUSES LAST YEAR, THE YEAR

OF THE CRASH.

[STOCK BELL RINGING]

>> DESPITE THE TORRENT OF

POPULIST RHETORIC ABOUT TAKING

ON THE FAT CATS AND STANDING UP

FOR THE LITTLE GUY AND SAVING

MAIN STREET, NOT WALL STREET,

WE ARE WITNESSING A TRANSFER

OF WEALTH OF UNFATHOMABLE SIZE.

IT IS A TRANSFER OF WEALTH FROM

PUBLIC HANDS, FROM THE HANDS OF

GOVERNMENT, COLLECTED FROM

REGULAR PEOPLE IN THE FORM OF

TAXES, INTO THE HANDS OF THE

WEALTHIEST CORPORATIONS AND

INDIVIDUALS IN THE WORLD,

NEEDLESS TO SAY, THE VERY

INDIVIDUALS AND CORPORATIONS

THAT CREATED THIS CRISIS.

[♪...]

>> Man: WE ARE IN THE MIDST

OF A ONCE‐IN‐A‐CENTURY

CREDIT TSUNAMI.

I'VE FOUND A FLAW.

I DON'T KNOW HOW SIGNIFICANT OR

PERMANENT IT IS, BUT I'VE BEEN

VERY DISTRESSED BY THAT FACT.

[CROWD CHEERING...]

>> Narrator: IN THE UNITED

STATES, IT WAS THE FINANCIAL

CRISIS THAT SECURED OBAMA'S

VICTORY.

AMERICANS WANTED TO

CHANGE COURSE.

>> Obama: HELLO, CHICAGO!

>> THIS CRISIS IS CLEARLY

UNDERSTOOD BY ALMOST EVERYONE

AS BEING THE DIRECT RESULT OF

THIS PARTICULAR IDEOLOGY OF

DEREGULATION AND PRIVATIZATION.

>> Narrator: THE SCALE OF

THE CRISIS OFFERS THE HOPE

OF CHANGE.

[CROWD CHANTING]

>> Klein: THE SHOCK DOCTRINE

AS A STRATEGY RELIES ON US NOT

KNOWING ABOUT IT FOR IT TO WORK,

AND WHAT I FIND MOST HOPEFUL

ABOUT THE CURRENT ECONOMIC

CRISIS IS THAT THIS TACTIC IS

GETTING TIRED, BECAUSE THAT

ELEMENT OF SURPRISE IS NO

LONGER THERE.

WE'RE ON TO THEM AND IT'S

NOT WORKING.

WE'RE BECOMING SHOCK‐RESISTANT.

>> Narrator: THE LAST TIME

THE WORLD SUFFERED A FINANCIAL

CRISIS AS SEVERE AS THIS, PEOPLE

TURNED TO THE KEYNESIAN POLICIES

OF THE NEW DEAL.

>> Roosevelt: LET ME ASSERT MY

FIRM BELIEF THAT THE ONLY THING

WE HAVE TO FEAR IS...

FEAR ITSELF.

>> Narrator: MORE THAN A MILLION

PEOPLE CAME TO WASHINGTON

TO HEAR OBAMA'S INAUGURATION

SPEECH.

MANY JOURNALISTS MADE

COMPARISONS WITH F. D. R.

[FIREWORKS, CHEERING]

>> NOW, THERE'S BEEN A LOT OF

TALK RECENTLY ABOUT COMPARING

OBAMA TO FRANKLIN DELANO

ROOSEVELT.

SO I WANT TO TALK A LITTLE BIT

ABOUT F. D. R., BECAUSE THERE'S A

GREAT F. D. R. STORY, AND IT COULD

BE AN APOCRYPHAL ONE, ABOUT WHEN

HE WOULD BE VISITED BY SOME

PROGRESSIVE ORGANIZATION

OR A UNION AND IT WOULD BE

PROPOSING SOME NEW PROGRESSIVE

POLICY THAT THEY WANTED TO BE

PART OF THE NEW DEAL, AND HE

WOULD HEAR THEM OUT AND HE WOULD

LISTEN TO THEM, AND THEN AT THE

END HE WOULD SAY, "NOW GO OUT

THERE AND MAKE ME DO IT."

AND THEY DID.

IN 1937, WHICH WAS A PIVOTAL

YEAR FOR THE NEW DEAL, DO YOU

KNOW HOW MANY STRIKES THERE

WERE IN THIS COUNTRY?

4,740 STRIKES LASTING

AN AVERAGE OF 20 DAYS.

[APPLAUSE]

DO YOU KNOW HOW MANY STRIKES

THERE WERE IN 2007?

>> Man in audience: TWO.

>> 21. [LIGHT LAUGHTER]

NOW, THE OTHER REASON TO

REMEMBER THIS HISTORY OF

STRUGGLE IS THAT IT TELLS US

SOMETHING VERY IMPORTANT,

SOMETHING THAT WE NEED TO

REMEMBER AT THIS MOMENT WHEN

SO MUCH IS AT STAKE.

IT TEACHES US THAT IF WE WANT

RESPONSES TO THIS ECONOMIC

CRISIS THAT LEAVE US WITH A

WORLD THAT IS HEALTHIER,

THAT IS MORE JUST, THAT IS

MORE PEACEFUL, WE ARE GONNA

HAVE TO GO OUT THERE AND MAKE

THEM DO IT.

THANK YOU.

[APPLAUSE]

[MEN CHANTING INDISTINCTLY...]

[RHYTHMIC CLAPPING...]

[PEOPLE CHANTING "REVOLUTION"]

[PEOPLE CHEERING, WHISTLING...]

[♪..., CHEERING...]

[PEOPLE CHANTING "REVOLUTION"]

[♪..., CHEERING...]

[MUSIC FADES]