Race, Poverty, and the Neoliberal Agenda in the United States: Lessons from Katrina and Rita


The global economic system has come to be dominated de facto by institutions subscribing to and enforcing the neoliberal agenda.  Since the end of World War II, these institutions have sought not only to regulate but, in a manner reminiscent of classical colonialism, to control global resources facilitated by the emergence of the neoliberal state.  Consequently, domestic democratic institutions have been negated and civil society movements have been marginalized.  Contrary to earlier assumptions about the erosion of state sovereignty in the wake of globalization, a strong state has, in fact, risen not to represent the people’s sovereign will but, rather, to fulfill and  pursue the corporate-driven neoliberal agenda.  Nowhere has this been more evident than in the southern part of the United States devastated by the twin hurricanes of Katrina and Rita in the last days of September and the early days of August 2005.  In this region of the country one finds exposed not so much the devastation wrought by these hurricanes but, rather, the bankruptcy of an ideology that has systematically stripped government of its social functions, transformed government into a conduit for the massive transfer of public funds into private hands, and legitimation of the use of the state’s coercive instruments for the security of the wealthy elite in society.

I. The Context: The State of the World, in Brief

Mainstream economic textbooks promote the idea that poor nations now at the bottom rung of the “development ladder” would eventually overcome their poverty if they embraced capitalist “free market principles.”  This means subscribing to the rules enforced by the World Trade Organization (WTO), including trade liberalization and privatization of both public assets and public services.  Further, it also means acceptance of the conditionalities imposed by the World Bank (WB) and the International Monetary Fund (IMF), primary of which are structural reforms in conformity with the specifications demanded by the structural adjustment programs.

Contrary to proponents’ claims, however, that capitalism has been the “greatest engine of production” that the world has ever known and raising the standard of living everywhere, capitalism has, in fact, failed miserably for the vast masses of citizens around the globe while benefiting only a few within each country (relative to its total population).  This has been recognized repeatedly by a succession of United Nations Human Development Reports (HDRs), impelling member states to develop and promulgate in the year 2000 the Millennium Declaration from which ensued the Millennium Development Goals (MDG), a set of ambitious objectives for the purpose of fostering economic development while at the same time reducing poverty significantly (by half) by the year 2015.  In the HDR 2005, entitled “International Cooperation at a Crossroads: Aid, Trade and Security in an Unequal World,” its authors wrote:

For most of the world’s poorest countries the past decade has continued a disheartening trend: not only have they failed to reduce poverty, but they are falling further behind rich countries.  Measured at the extremes, the gap between the average citizen in the richest and in the poorest countries is wide and getting wider.  In 1990 the average American was 38 times richer than the average Tanzanian.  Today, the average American is 61 times richer.  Purchasing power parity income in low-income countries as a group is one-thirteenth that in high-income countries.  (UNDP HDR 2005, 36-37)

Indeed even the WB recognizes the dire situation that the vast majority of global citizens find themselves in.  This is expressed by WB economist Branco Milanovic when he acknowledged that:

the richest 1 percent of people in the world get as much income as the poorest 57 percent.  The richest 5 percent had in 1993 an average income 114 times greater than that of the poorest 5 percent, rising 78 times in 1988.  The poorest 5 percent grew poorer, losing 25 percent of their real income, while the richest 20 percent saw their real incomes grow by 12 percent, more than twice as high as average world income.  World inequality grew because inequality grew between and within countries.  The rich nations grew richer and the poor nations grew poorer; the rich within each country grew richer at the expense of the poor.  (Milanovic)

The collateral impact of poverty on the exercise of fundamental freedoms — taken for granted in industrialized societies — is a matter of inevitability that one could hardly ignore.  The poor often have no voice in marbled halls where decisions are made, and themselves are often victimized by forces of repression when they seek redress of their legitimate grievances.  What ensues is a cycle wherein the poor become ever more vulnerable and desperate while the conditions that keep them in that state become ever more intractable and formidable.  Nora Lustig, Director of the WB’s World Development Report 2000/2001, offers a similar observation and, in recognition of the denial of these freedoms on account of poverty, has expressed eloquently the WB’s sentiments as follows:

Poor people live without the fundamental freedoms of action and choice that the better-off take for granted.  The voices of poor people bear eloquent testimony to the meaning of poverty.  To be poor is to go hungry and to be malnourished, to lack adequate shelter and clothing, to be sick and not cared for, to be illiterate and not schooled.  But for poor people, living in poverty is more than this.  Poor people are often exposed to ill-treatment by institutions of the state and society and are powerless to influence key decisions affecting their lives.  Poverty is lack of voice, power and representation.  And poor people face extreme vulnerability to adverse events outside of their control such as ill health, unemployment, natural disasters, and personal violence.  (Lustig, “Broadening the Poverty Reduction Agenda”)

From the WB’s own research, one could gain an appreciation of the dire straits that a substantial segment of the world’s 6 billion inhabitants find themselves in: 2.8 billion of them manage to eke out a daily income roughly equivalent to US$2 while another 1.2 billion of them manage to produce, again on a daily basis, an income equivalent to less than US$1.  Through regional snapshots, the WB offers the following picture:

  • For Africa, the prospects are described as “worrisome” due largely to the impact of the financial crisis of the late 1990s from which the continent is yet to fully recover.
  • For Latin America and the Caribbean, the picture drawn is one of “stagnation” characterized by increasing inequality between 1986 and 1989 but which has somewhat stabilized at least until 1995.
  • For Eastern Europe and Central Asia, the problem of chronic poverty has been observed to be pervasive complicated by the Russian economic crisis in the late 1990s.
  • For the Middle East and North Africa, a rather exceptional situation from the rest of the other regions has been noted in that this region has largely avoided sharp economic downturns during the late 1990s.  At the same time, the share of people living in poverty has been contained due in large part to economic growth.
  • For East Asia, while significant poverty reduction was observed prior to the financial crisis in the late 1990s, since this crisis, rate of poverty rose significantly and while there has been slight recovery, this recovery is ever so fragile.  And
  • For South Asia, the picture is somewhat mixed in that the region hovers between growth and stagnation. (“World Bank Warns . . . “)

Yet, despite the WB’s numerous and presumably well-intentioned programs at eradicating global poverty, there has been little or no discernible progress that would cause glee and celebration in Tanzania or in much of the poverty-stricken regions of the Third World.  One of the stark observations by the UNDP, in its HDR 2004, is the fact that “[a]n unprecedented number of countries saw development slide backwards in the 1990s” and that “[i]n 46 countries more people go hungry today than a decade ago.”

The HDR 2005, with its welcome analysis on the share of foreign aid and trade on global inequality, offers a more updated and detailed report on — albeit starker picture of — global poverty.  This report is unambiguous about the relationship between the corporate-led neoliberal globalization, on one hand, and global poverty and inequality, on the other.  It states: “Globalization has given rise to a protracted and sometimes heated debate over trends in global income distribution, their links with poverty and whether integration into global markets is leading to a convergence or a divergence of income between rich and poor countries.  The trends matter because the share of increases in global wealth captured by poor countries has a bearing on average income and so on prospects for poverty reduction.”  It goes on to affirm WB’s own observations cited above by stating, simply, that “[m]ost developing regions are falling behind, not catching up with, rich countries.”  In describing the grossly uneven global income distribution, it likens it to a champagne glass “with a large concentration of income at the top and a thin stem at the bottom”:

The gap between the top and the bottom is very large — far greater than that found in even the most unequal of countries.  In Brazil the ratio of the income of the poorest 10% of the population to the richest 10% is 1 to 94.  For the world as a whole it is 1 to 103.  Measured more systematically by the Gini coefficient, the most widely used yardstick for inequality, the overall pattern of distribution for the world is more unequal than for any country except Namibia.  On a scale where 0 is perfect equality and 100 is total inequality, the Gini coefficient for the world is 67.  (HDR 2005, 38)

While the report acknowledges that inequality on a global scale is “less visible” to global citizens, it admits that it is “no less damaging to public interest” and that, further, “[a] world economy in which 40% of the population live on incomes so low as to preclude fully participating in wealth creation is hardly good for shared prosperity and growth” (HDR 2005, Ibid.).

The matter concerning inequality within countries is given no less attention by the report.  This report makes an unambiguous statement that “there has been a clear trend over the past two decades towards rising inequality within countries.  Of the 73 countries for which data are available, 53 (with more than 80% of the world’s population) have seen inequality rise, while only 9 (with 4% of the population) have seen it narrow.  This holds true in both high- and low-growth situations (such as China in the first case and Bolivia in the second) and across all regions” (HDR 2005, 55).

As for the consequences of this widening income gap within countries, the report aptly attributes constraints to “opportunities for health, education, income and political influence” as significant contributors to this gap.  These constraints are particularly pronounced among women and rural residents as well as indigenous and other groups that have been traditionally disadvantaged.  If not overcome, these constraints would effectively prevent the poor from ever developing any capacity “to influence institutions controlled by elite groups.  More broadly, the disadvantage is perpetuated by inequalities in what can be thought of as the factors shaping the political capabilities of the poor: self-confidence, capacity to influence political process and recognition by the rest of society” (HDR 2005, 61).  In other words, diminished democracy.

II. Driving Home the Point: The Reality of Inequality in the United States

To illustrate this widening gap within countries, the case of the US is herein chosen to drive home the point that even ordinary citizens of highly industrialized societies are not immune from economic vicissitudes in the context of contemporary corporate globalization.  No one disputes the fact that the US has been enjoying for over a decade now what some economists refer to as the “Great Moderation,” a description used to characterize the twin trends of infrequency of recession, on one hand, and the moderation or the taming of inflation, on the other.  But, as Janet L. Yellen, President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, has observed in a speech in November 2006: “Given these two developments — more macro stability and more rapid productivity growth — it is tempting to conclude that most Americans are felling ‘better off.'”  She notes that various public opinion surveys, including one done by the Pew Charitable Trust, reveal a consistent pattern of dissatisfaction among respondents who feel that “they and their children will experience a diminished quality of life in coming years, and that, even today, working conditions are marked by more insecurity and stress than they were a generation ago” (Yellen, “Economic Inequality in the United States”).

With candor and courage, Yellen lends her credibility — not as a flaming radical but, rather, as a rational bank administrator with impeccable academic credentials — in validating what many other independent non-profit organizations as well as government agencies have been trying to educate the American public about for sometime, and that is that “over the past three decades, much of the gain from excellent macroeconomic performance has gone to just a small segment of the population — those already in the upper part of the distribution.  As a result, inequality has grown.”  This inequality, coupled with increased turbulence in family incomes associated with job displacement and restructuring, sheds substantial light on the sources of the disappointment and concern that show up in opinion polls” (Yellen, Ibid.; U.S. Census Bureau; Bernstein, “The Hierarchy of Income Inequality. . .”; Collins and Yeskel, Economic Apartheid in America; and Lui and Associates, The Color of Wealth).  Yellen goes on to explain that  the most logical place to go searching for evidence of income inequality is in the area of wages.  The figures that she shows indicate that, from 1973 to 2005, “real hourly wages of those in the 90th percentile — where most people have college or advanced degrees — rose by 30 percent or more. . . .  [A]mong this top 10 percent, the growth was heavily concentrated at the very tip of the top, that is, the top 1 percent.  This includes the very highest salaries in the U.S. economy, like sports and entertainment stars, investment bankers and venture capitalists, corporate attorneys, and CEOs.  In contrast, at the 50th percentile and below — where many people have at most a high school diploma — real wages rose by only 5 to 10 percent” (Yellen, Ibid.).

As to the conditions responsible for this inequality, Yellen points her finger at the globalization of labor markets in which the share of both imports and exports of the US gross domestic products (GDP) have significantly increased.  As to how this occurred, Yellen explains: “Since the U.S. tends to export goods that use skilled labor intensively and to import goods that use less-skilled labor intensively, increased trade has, on balance, raised the demand for skilled labor and reduced demand for less-skilled workers in this country.  In the 1980s, the impact of globalization was especially pronounced for previously well-paid manufacturing jobs available to U.S. workers possessing a high school degree or less” (Yellen, Op. cit.).  Consequently, job losses became a common feature of the economy compounded by an excess in the supply of low-skilled and low-paid positions that went largely to immigrant workers.

The fact of economic inequality in the US has likewise been noted by the social justice movement which not only has decried globalization’s impact on workers but has also noted both its racial and gender implications.  One of the leading organizations in this movement is the United for a Fair Economy (UFE), a national, independent, nonpartisan, and nonprofit organization dedicated to raising “awareness that concentrated wealth and power undermine the economy, corrupt democracy, deepen racial divide, and tear communities apart.”  In partaking in this movement, its founders aim to challenge “the dominant economic policies and propose policies that ensure shared prosperity” and hope to build this movement into a “countervailing force to the power of concentrated corporate influence and wealth.”  As part of its educational campaign, the UFE has thus far published (or helped publish) two important books addressing the income gap as well as the racial divide in the US, namely: Economic Apartheid in America; A Primer on Economic Inequality and Insecurity (2005), and The Color of Wealth; The Story Behind the U.S. Racial Wealth Divide (2006).  The former of these describes the impact of the economic divide on those who have been denied the benefits of economic growth, while the latter inquires into conscious governmental policies and actions that have had deleterious effects on various racial and ethnic groups in their ability to build their own respective assets.  As Chuck Collins and Felice Yeskel, principal authors of Economic Apartheid in America, note: “The pace of inequality has grown steadily over three decades, under both Republican and Democratic administrations and Congresses.  The Gini index, the global measure of inequality, grew as quickly under President Clinton as it has under President George W. Bush.  Widening disparities in the U.S. are the result of three decades of bi-partisan public policies that have tilted the rules of the economy to the benefit of major corporations and large asset owners at the expense of people whose security comes from a paycheck” (Collins and Yeskel, “Billionares R Us”).

III. In the Wake of Hurricanes Katrina and Rita:
The American South as Laboratory of Neoliberalism

The cumulative impact of these policies or, more precisely, neoliberal policies, is perhaps best assessed in the wake of the twin Category 5 Hurricanes Katrina and Rita which devastated four southern states and urban centers — most prominently the City of New Orleans — of the US and left at least 1,300 dead during the August-September hurricane season of 2005 (Knabb and Associates, “Tropical Cyclone Reports”).  Federal government policies and preparations prior to these hurricanes, evacuation and relief programs shortly before and after these hurricanes have hit land, and planning for the long-term recovery and rehabilitation especially for the most affected areas all consistently reflect a neoliberal mindset which has, with tragic results, gotten hold of the Bush Administration.  Within just a few days of the Hurricane Katrina’s wake and within a couple of weeks of Hurricane Rita’s visit, Eugene Robinson wrote in the September 9 edition of The Washington Post: “After seeing who escaped the flood and who remained behind, it’s impossible to ignore the shocking breadth of the gap between the rich and the poor.  It’s as if we don’t even see poor people in this country anymore, as if we don’t even try to imagine what their lives are like. . . .  To be poor in America was to be invisible, but not after this week”  (emphasis added, qtd. in Gault and Associates, “The Women of New Orleans and the Gulf Coast”).  In agreement, blogger Barbara O’Brien wrote: “In 2005 the winds and waters of Hurricane Katrina flushed the entrenched poverty of New Orleans into the open for all the world to see”  (O’Brien, “New Orleans: The Second Disaster”).  And writing nearly a year and half following the disaster, Reuters reporter Jeff Franks has noted that as the year 2007 came around, “large swaths” of New Orleans (which had up to 80 percent of its area underwater) were still “wrecked and abandoned” and “less than half of the pre-storm population of nearly half-a-million has returned” (O’Brien, Ibid.).

Trying to make sense of the relationship between conditions of poverty, on one hand, and the unavoidable revelations made in the wake of these hurricanes, on the other, has preoccupied many groups and individuals from around the country and, indeed, around the world.  Among the most vocal and ardent in their beliefs are those espousing their view that the tragedy was an “act of God.”  For example, Alan Lefemine, representing the Columbia Christians for Life, an antiabortion activist organization based in Columbia, South Carolina, emailed to his fellow activists: “In my belief, God judged New Orleans for the sin of shedding innocent blood through abortion.”  He went on: “Providence punishes national sins by national calamities” and that “Greater divine judgment is coming upon America unless we repent of the national sin of abortion” (Cooperman, “Where Most See a Weather System. . .”).  Across the globe, in Israel, Stan Goodenough, writing for a Jerusalem-based website, wrote: “Is this some sort of bizarre coincidence?  Not for those who believe in the God of the Bible. . . .  What America is about to experience is the lifting of God’s hand of protection; the implementation of His judgment on the nation most responsible for endangering the land and people of Israel” (Cooperman, “Where Most See a Weather System. . . ,” Ibid.).

Many scientifically-inclined observers, however, would not be so quick or willing to give credence to religious-based “explanations” for the disaster.  One such observer, Roger Kennedy, former Director of the US National Park Service, writing for Ogmius, organ of the Center for Science and Technology Research at the University of Colorado at Boulder, sought to distinguish between so-called “acts of God,” on one hand, and “natural disasters,” on the other.  He wrote:

The American Heritage Dictionary defines disaster as an event causing great distress — to people.  Storms in remote seas and deserts, or wildfires in forests where there are no people, are not disasters.  Furthermore, these events do their worst damage where nature has been man-handled; they become truly catastrophic where people have made landscapes un-natural.  It is dishonorable to lay off on the Almighty responsibility for the actions of people.  And stupid as well.  Only by recognizing the causes and consequences of past manhandling can remediation be done economically and effectively.  (Kennedy, “Katrina, Acts of God. . . .”)

To many progressive critics of the Bush administration, such a comment from a respected former government functionary would be welcome.  But an appropriate starting point for understanding would necessarily begin with a recognition of the neoliberal mindset as alluded to earlier.  For the tragedy had neoliberalism’s imprint all over its face.  This significant recognition goes beyond merely taking class or gender — while profoundly important in their own respective ways — as sole explanatory factors for the attitudes, policies, and actions manifested by this administration prior to, during, and after the tragedy.

One way to understand neoliberalism is to recall a quip from former British Prime Minister Margaret Thatcher who remarked in an interview with a women’s magazine in 1987 that “[t]here is no such thing [as society].  There are individual men and women and there are families and no government can do anything except through people and people look to themselves first. . . .  [T]here is no such thing as an entitlement unless someone has first met an obligation. . .” (Thatcher, “Interview for Woman’s Own“).  Another quip worth recalling in the context of the current discussion is one by Grover Norquist, President of Americans for Tax Reform and a Republican Party strategist, who, in an interview with National Public Radio host Mara Liasson on May 25, 2001, declared: “My goal is to cut government in half in twenty-five years to get it down to the size where we can drown it in the bathtub” (Hartmann, “Drowning Government”).

Both these quotes reflect underlying neoliberal assumptions towards government and its role in society and about human nature itself.  Thus, insofar as economic and social affairs are concerned, government should have as little involvement as possible and, instead, allow profit-driven private enterprises to take the lead in providing the services and functions that government might otherwise be expected to perform.  If government is to be useful, it should essentially be in assisting and promoting the private sector — both in maximizing profits and minimizing costs — but not in the business of doling out “entitlements” to members of society.  Individuals — not as members of a community or of society, as Thatcher insists — are essentially on their own and should not be dependent on the benevolence of others.

This consciousness seeped through and proved dominant in years of discussion and debate prior to 2005 surrounding the construction of the levees.  These levees were supposed to protect the City of New Orleans from hurricane-induced surges of water from the Gulf of Mexico.  But as one observer notes, in the end:

The storm exposed the consequences of neoliberalism’s lies and mystifications, in a single locale and all at once.  The levees on the 17th Street and London Avenue canals, as it turns out, failed because they were inadequately constructed.  In the words of the Independent Levee Investigation Team, “safety was exchanged for efficiency and reduced costs.”  This was largely the result of federal underfunding, partly the result of the Army Corps of Engineers’ skimping, partly state and local officials’ temporizing and lack of government oversight or, in neoliberal parlance, cutting government red tape.  (Reed, “New Orleans — Undone by Neoliberalism”)

While decision was made to construct the 350-mile levee system, the future of the city ultimately rested on the logic and outcome of the bidding process among private contractors to which the construction would eventually be outsourced.  So, for instance, in a competition between an inferior $10 million bid and a superior $50 million bid for the construction of the levees, the former was bound to prevail in any case.  Never mind that the losses incurred from the damages and destruction wrought by the twin hurricanes in the New Orleans area alone have been estimated to be in the vicinity of $100 billion, and that the $50 million bid would have proved to be a tremendous bargain!

On the issue of outsourcing of levee construction to private contractors, Raymond Seed, internationally famous civil engineer and head of a team of investigators for the University of California at Berkeley, in an interview with Betty Ann Bowser of the National Public Radio on October 20, 2005, offered his sobering assessment: “What you lose is consistency.  And the problem with the levee system is if you have a number of segments which all have to make a single unit, you don’t get credit for 99 of those segments being at extra high quality if one of them is somehow weaker or less capable.  And when you lose control and you do a lot of outside contracting with multiple firms you run the risk of losing consistency so the overall risk of the system is increased” (Public Broadcasting Service, “Army Corps Investigates”).  Further, as one observer affirms: “The payback of the bigger levee is immeasurably better, but under privatization, it will never be built.  This is the system being co-opted for the profit of a few at the expense of the many, exactly what is not supposed to do, much less be used for” (Demerjian, “New Orleans Catastrophe. . .”).

IV. Sacrificial Lambs at the Critical Juncture of Race, Class, and Gender

Of the “many” that had been effectively deemed as sacrificial lambs, a disproportionate number of them happened to be of African-American ancestry, a significant percentage of whom also had been at or below the federal poverty line.  As Census data show for the year 2004, 24.7 per cent of Black Americans lived in poverty, which is three times as much as the percentage for their white counterparts.  Further, the poor, especially poor women, are overrepresented in the New Orleans and the Gulf Coast region, the overall population of which has a median household income, lower than that of the national median of $44,684.  The Institute for Women’s Policy Research, in a 2005 report assessing the impact of the hurricanes on the Gulf coast region, describes the condition of women more precisely as follows:

Women of color are particularly disadvantaged in the southern states.  In the South Central Region overall, 27.1 percent of African American women and 24.0 percent of Hispanic women lived in poverty in 1999, compared with only 10.9 percent of white women.  Louisiana ranks worst in the region and in the nation for poverty among African American women, and Mississippi ranks next to last both regionally and nationally.  In Louisiana, more than 35 percent of all African American women aged 16 or older lived in poverty in 1999, compared with 12.6 percent of white women (based on 2000 Census data).  Mississippi’s figures are almost identical.  Texas ranks best in the region for the poverty of African American women, but still has 23.0 percent of African American women living in poverty (compared with 8.8 percent of white women).  (Gault and Associates, “The Women of New Orleans. . .”)

Yet, while it appears self-evident that these vulnerable sectors of the population — the poor, the women, and the minorities — should receive directly the most immediate and the most urgent attention from all levels of government, the Bush administration has set the tone about the nature, pace, and direction of reconstruction and rehabilitation programs by showing its predilection for the market as a vital arbiter.  Within a couple of weeks of Hurricane Katrina, the Bush Administration announced the suspension of certain provisions of the Davis-Bacon Act, otherwise known as Title 40 of the United States Code (The White House, “Proclamation by the President. . .”).  This Act requires government contractors for work with the Federal Government worth in excess of $2,000 to pay minimum wage to workers as determined by the Department of Labor.  The presumed rationale for the suspension of pertinent provisions of this Act, as explained by White House spokesperson Scott McClellan, was “to open up access to more business — small businesses, including women-owned and minority-owned businesses.”  Suspension of the Act, McClellan went on, eliminates red tape and “helps us move forward quickly to address the needs of the people in the region and to provide substantial savings” (Bernstein, “How Not to Rebuild. . .”).  However, retorts as Jared Bernstein, Director of the Living Standards Program of the Economic Policy Institute, a Washington-D.C. based non-profit Think Tank, “Here the research is very clear: when you suspend DB [ the Davis-Bacon Act], you cut workers wages, but you don’t cut the cost of the project.”  Refuting the savings claim made by McClellan, Bernstein argues: “Low-ball contractors generate higher cost overruns.  Better pay begets better quality work; suspend prevailing wages, and what you save in labor costs, you lose in less efficient production.”  Bernstein concludes by pointing out that the Bush Administration’s response to the catastrophe is not so much guided by rationality but, rather, by ideology: “Along with suspending prevailing wage rules, they’re dropping affirmative action reporting requirements, and implementing their school voucher agenda.  In other words, once the true dimensions of the Katrina crisis became evident, the Bush administration quickly shifted from ineptitude to harsh ideology” (Bernstein, “How Not to Rebuild. . . ,” Ibid.).

Before the end of 2005, the Bush Administration had pushed its legislative agenda and managed to get the Republican-dominated Congress to pass the Gulf Opportunity Zone Act.  And, in the month of September 2005 alone, Congress had also enacted a number of tax relief measures, most significantly the Katrina Emergency Tax Relief Act.  The need for government at the federal level to take urgent measures of some kind is widely recognized.  Residents of the affected areas need to be repatriated back, employment opportunities need to be created (particularly among Blacks and Hispanics whose pre-Katrina unemployment rate was up to 40 per cent), and local residents need to be involved in the rebuilding of their own respective communities.

However, as time passed, the true nature of much of these measures began to emerge, and, for many, hope has turned to despair and disappointment.  The much-vaunted Gulf Opportunity Zone — extending from Louisiana to western Florida — has become a mere disguise that fulfilled the conservative agenda of  providing a tax haven to business enterprises while serving to dismantle what remained of the New Deal social programs in pursuit of the “free-market, survival-of-the-fittest” type of economic system in the reconstruction and rehabilitation process.  For instance, funds allocated under this and other pieces of legislation — totaling $62 billion in emergency funding alone, not to mention future allocations — have been used practically to “subsidize all kinds of private projects including the building of a mall for Target and JC Penney [department stores] in Lafayette, expanding an auto dealership in Baton Rouge, converting a plantation in Livingston into a hotel.  This corporate plundering follows the path taken in the immediate days after Katrina when politically connected corporations were given hundreds of millions of no-bid contracts” (Epstein, “LinkBlog: hurricane+Katrina”).  The tax reliefs, on the other hand, turned figuratively into a Trojan Horse that allowed the very rich to keep their money through exemption of up to 100 per cent of their gross income if they made donations to charitable organizations (related or not to the hurricane disaster in the Gulf region).  And who, one might ask rhetorically, among the victims of the tragedy would want to donate their meager resources to charity just so they would qualify for 100 per cent tax deduction?  A lawyer and blogger, Christopher Brauchli, provides some insight by explaining: “The reason most of my readers do not give away all their income to charities is because they like to eat and food costs money.  So does housing.  Many of my readers use most, if not all, of their adjusted gross income, to survive.  The only people for whom adjusted gross income is nothing more than a trifle are the very rich.  Thus, it turns out that one of the most significant benefits of the Hurricane Relief Act of 2005 goes to Mr. Bush’s wealthy friends and their pet charities” (Brauchli, “Katrina and Tax Breaks. . .”).

V. Enter the Corporate Vultures

Another aspect of the Gulf region reconstruction program that has neither attracted much attention nor outrage in the corporate media is the process of awarding the lucrative contracts, the companies that received these contracts, and the links that these companies have with the Bush Administration.  Soon after the US Congress had approved the emergency funding, either no-bid or hastily-bid awards were given to pretty much the same corporations — at the expense of many smaller but more efficient and more economical companies based in the Gulf region — that have been awarded contracts for and have profited much from the supposed reconstruction of Iraq in the aftermath of the US invasion.  So similar were the roles that these Bush-friendly corporations played in Iraq and New Orleans that journalists Tom Engelhardt and Nick Turse have cleverly coined the term “New Oraq” in reference to the two places (Englehardt and Turse, “Corporations of the Whirlwind”).  Explaining this new term, Engelhardt and Turse write: “In the aftermath of Katrina, that global smallness has grown positively claustrophobic and particularly predatory.  Iraq and New Orleans now seem to be morphing into a single entity, New Oraq, to be devoured by the same limited set of corporations, let loose and overseen by the same small set of Bush administration officials.  In George Bush’s new world of globalization, first comes the destruction and only then does one sit down at the planetary table to sup” (Englehardt and Turse, “Corporations of the Whirlwind,” Ibid.).

Topping the list of corporations is Kellogg, Brown & Root (KBR), a subsidiary of  Houston, Texas-based Halliburton Company once headed by current US Vice President Dick Cheney, receiving well over $10 billion in no-bid contracts with the US military.  Much of these contracts were supposedly for damage assessment, the restoration of the civilian water infrastructure of New Orleans, and the repair of three naval facilities as well as the Stennis Space Center in Mississippi.  Next in the list is a San Francisco, California-based engineering company, Bechtel Corporation, whose former president, George Schultz, served as Secretary of State during the Reagan Administration, and whose current Chief Executive Officer (CEO), Riley Bechtel, served in the Bush Administration’s Export Council from 2003 to 2004, received  a contract worth over $500 million for the construction of emergency housing for evacuees.  Next is the Boh Brothers Construction Company, reputedly the largest engineering and construction firm in the Gulf region — in a series of contracts totaling over $250 million  with the Army Corps of Engineers for the repair of the broken levees in and around New Orleans, debris and obstruction removal in the New Orleans Harbor, and the repair of the “Twin Span” bridge over Lake Pontchartrain.  Both Robert H. and Robert S. Boh, along with top executives of their company, have been huge and frequent donors to the National Republican Campaign Committee (RNCC).  Final examples are the California-based Fluor Corporation, whose prominent board member Suzanne Woolsey is wife of former Director of the Central Intelligence Agency James Woolsey and a trustee of a Pentagon consulting firm, the Institute for Defense Analyses; the Louisiana-based Shaw Group, whose principal lobbyist is Joseph Allbaugh, former Director of the Federal Emergency Management Administration (FEMA), and a trusted Bush ally; and the Colorado-based CH2Mhill, whose Senior Vice President was Robert G. Card until he was appointed Undersecretary at the US Department of Energy — each receiving no less than $100 million worth of contracts for such jobs as the pumping of flood waters, housing construction, and electrical power restoration.

Particularly influential in the awarding of contracts to all these companies were three individuals: Marcus Peacock, Associate Director of the Office of Management and Budget (OMB) for Natural Resource Programs; John Woodley, Assistant Secretary of the Army for Civil Works; and Lieutenant General Robert Flowers, former Commander of the Army Corps of Engineers.  Collectively, these individuals, according to investigative journalist Pratap Chatterjee, played a “key role in presenting options to the White House and Congress.”  What was ironic, as Chaterjee notes, was that both Woodley and Peacock, as political appointees, were tasked, prior to Katrina, “with implementing the White House priorities of cutting budgets and regulations rather than supporting environmentalists or engineers” that might have minimized or reduced either the damage or the suffering, or both, from the kind of disaster that was wrought by Hurricanes Katrina and Rita.  Now their job has effectively evolved into seeking as much lucrative contracts as they could possibly get for their politically favored corporate constituents (Chatterjee, “Big, Easy Iraqi-Style Contracts. . .”).

The accomplishments of these individuals, however, would not have been possible without the role played by another key personality, Allbaugh, mentioned earlier, who provided, figuratively speaking, a foot in the door to the White House.  As part of the very tiny group of Texas cohorts whom Bush relied on for advice, Allbaugh managed Bush’s 2000 presidential campaign.  After the US Supreme Court had determined that Bush become the next president, Allbaugh was rewarded the position as head of FEMA which he condescendingly described, during his confirmation hearings, as “an overstuffed entitlement program,” thus setting the stage for the policy direction he would lead the agency towards.  Along these lines, he counseled states and cities not to rely so much on the federal government but, rather, on “faith-based organizations . . . like the Salvation Army and the Mennonite Disaster Service” when it came to dealing with disasters.  Upon Allbaugh’s appointment, he brought with him several managers (five out of eight) that had also worked in the presidential campaign but had “virtually no experience in handling disasters,” according to Spencer S. Hsu of The Washington Post.  In response to Bush’s so-called war on terror, Allbaugh and his cronies drained FEMA’s resources from disaster relief operations to security-related work under the guise of homeland security.  It has to be noted at this point that after the tragedy of September 11, 2001, the Department of Homeland Security (DHS) was created into which FEMA was incorporated.  FEMA, in turn, was tasked by a presidential directive with the establishment of the Office of National Preparedness (ONP) whose mission was defined as providing “leadership in the coordination and facilitation of all federal programs dealing with weapons of mass destruction consequence management within the Departments of Defense, Health and Human Services, Justice, and Energy, the Environmental Protection Agency, and other federal agencies” (Yim, “National Preparedness. . . ,” p. 11).  No doubt this burdened FEMA even more at the same time that it was asked to shift emphasis — wittingly or unwittingly — from an all-hazards response mode to a special anti-terrorist response mode.  This also came at around the time when the general state of federal preparedness to any kind of disaster was described — by Randall A. Yim, Managing Director of National Preparedness in his testimony before the US Congress in April 2002 — as being fragmented, lacking in cohesion, and devoid of any effective leadership (Yim, “National Preparedness. . . ,” p. 9).

When Allbaugh relinquished his position in March 2003 to another close personal friend and ally to Bush, Michael Brown, Yim’s assessment about FEMA’s lack of effective leadership seemed all too prophetic.  Brown, whose closest experience to disaster management was as president of the International Arabian Horse Association, was destined to preside over FEMA’s utter failure in dealing with the catastrophe that was to come.  Not only did FEMA lack effective leadership, it also suffered from an exodus of able and experienced disaster management experts.  In their stead, five new top agency officials that were brought in “came to their posts with virtually no experience in handling disasters,” reflecting what many observers have noted as the “downgrading [of] the importance of preparation for a response to natural disasters in the new department” (Kweit and Kweit, “A Tale of Two Disasters,” 378).  In understanding FEMA’s failure at this point, it is well to remember what FEMA’s own Office of Inspector General has found out about this agency during Allbaugh’s term of office, a condition that only worsened after his departure: simply that the agency did not have “an ability to measure state disaster risks and performance capability” (Yim, “National Preparedness. . . ,” 17).

What the public did not know much about Allbaugh following his stint at FEMA was his founding of three consulting firms, namely Blackwell Fairbanks, LLC, the Albaugh Company, and the New Bridge Strategies, LLC, all of which have represented, and continue to represent, such high-paying clients as Halliburton’s KBR and the Shaw Group, obviously capitalizing on his deep connections with the Bush Administration.  Despite this, he responds to his critics by denying that he has ever used his White House connections to win contracts for his corporate clients.  He said, at one point: “I don’t buy the ‘revolving door’ argument.  This is America.  We all have to make a living” (Englehardt and Turse, “Corporations of the Whirlwind”).  However, to many civil society watchdogs, Allbaugh’s denial — like those of his fellow lobbyists and their respective corporate clients — falls flat.  As Danielle Brian, Director of the Project on Government Oversight, notes, under current conditions, the public is likely to see “the equivalent of war profiteering — disaster profiteering” (Chatterjee, “Big, Easy Iraqi-Style” — please see also Klein, The Shock Doctrine).

VI. Creeping Militarism

One area in which Allbaugh’s clients and others benefited tremendously in the wake of the disaster from hurricanes Katrina and Rita was in the intertwining roles of military and civilian, public and private, forces.  President Bush himself appeared to be the advocate for both when he made repeated declarations — as though to mould and condition the public mind — first during his visit to New Orleans on September 15, 2005, and then again during a news briefing at the US Northern Command Headquarters in Colorado a few days later.  In his briefing at the latter, he asked the military leaders rhetorically, “Is there a natural disaster of a certain size that would then enable the Defense Department to become the lead agency in coordinating and leading the response effort?” (CNN.com, “Bush Eyes Bigger Military Role. . .”).  He then went on to state that this was “going to be a very important consideration for Congress to think about,” a position he reiterated in his State of the Nation address in January 2007 when he announced a “major new initiative” in responding to disasters in the US: the formation of a corps that “would function much like our military Reserve.  It would ease the burden on the armed forces by allowing us to hire civilians with critical skills. . . .” (Sebastian, “Privatizing the War. . . “).

In these public declarations, Bush was giving the impression as though the military was not already involved significantly in disaster relief.  And he was giving the impression as though private mercenary groups — prominent of which is Blackwater USA, having received contracts worth up to $33.3 million between September and December 2005 — had not already received huge contracts for the maintenance and enforcement of domestic “peace and order” operations in hurricane-ravaged New Orleans and elsewhere.  The fact of the matter is that these were already happening behind the back of the US public, and that US taxpayers’ funds had already been allocated to private coffers without much public debate.  In a messianic mode, Bush’s thinking left no doubt about his conflation of hurricanes with terrorist attacks: it was, he uttered, “as if the entire Gulf Coast were obliterated by the worst kind of weapon you can imagine. . . .  New Orleans is more devastated than New York was,” following the 9/11 terrorist attacks (Whitehurst, “How Bush Will Use Katrina,” 5).

To many discerning observers of US politics, Bush’s attempts to insinuate the role of the military in public discourse in the wake of hurricanes Katrina and Rita were meant to validate and justify the already-creeping militarization of civilian life in the US for many decades now, all in contravention to the letter and the spirit of the Reconstruction-era law — the Posse Comitatus Act of 1878 — which bans the use of federal troops in domestic law enforcement functions unless specifically authorized by Congress.  They were also meant to further consolidate claims for an even greater power for the executive branch which had already gained plenty since 9/11 by all accounts.  But more significantly, in the context of the domestic neoliberal agenda, his attempts provide a convenient cover for enhancing the role not only of private mercenary groups to engage in so-called peace-and-order activities but also of the corporate community at large as he presides in the privatization of goods and services that government has traditionally provided.

VII. Quo Vadis America?

The gravity of the problems attendant to contemporary neoliberal globalization may easily be brushed aside or ignored by those who tremendously profit from it.  However, for the vast majority of people on the globe, especially large or increasing segments of the populations in countries whose economic stability has been undermined, the problems highlighted in this essay are but the tip of an iceberg, so to speak.  The world has witnessed over the last two to three decades the widening income gaps between and within countries.  These are documented by reports from credible agencies like those of the UN and even the WB.  During the same period, the globe has also witnessed the deterioration of conditions in the workplace, the erosion of labor standards, the depression of workers’ wages, and the rise in migrant labor.  Threats to the natural environment as well as to the health of persons have grown bigger.  The dangers of global warming, however, still do not appear to be real in the eyes of some leaders in the industrialized world despite overwhelming consensus among scientists.  At the same time, the concerns over the health effects of genetically modified food products are being ignored and brushed aside.  And, even though much of the mammoth dam projects funded by the WB and the IMF have resulted in the disruption, destruction, or dislocation of villages, farms and cultural sites across the globe.

Neoliberal state institutions are clearly divorced from the real needs and aspirations of ordinary citizens who raise their voices in indignation to — and in desperation of — the policies these institutions adamantly uphold.  This could not become more obvious — as this essay has illustrated — than in the southern region of the US victimized not so much by Mother Nature but, rather, by the bankrupt policies and attitudes that were operational prior to and following the visits of Katrina and Rita.

Having actual stranglehold of governance institutions, most crucially at the federal level, the neoliberals have in practice sought to distinguish the uniqueness of their social position, on one hand, and that of grassroots citizens whom they pay lip service to, on the other.  As alluded to earlier, the neoliberals have been deep in their secrecy in their decision-making style in contrast to the openness with which they have disregarded the public service functions of government.  They have favored their friends over the welfare of the citizenry but have ironically used public resources to do so.  This has logically and necessarily translated into political influence and power among the already powerful, on one hand, and greater vulnerability and desperation among the weak and the voiceless, on the other.  The tendency towards militarization of American society is a phenomenon yet to be recognized in the mainstream media, but it has been all too real to residents of New Orleans who have had to endure the indignity of being faced down by heavily armed mercenary thugs masquerading as security guards.

It would seem obvious, therefore, that any serious and candid discussion of accountability in government would do well to begin with a realization that democracy may simply be a rhetorical device and that the actions and policies associated with neoliberalism have all but coopted democracy and turned its meaning on its head.  The lessons that Katrina and Rita brought in the wake of their visit should include not merely a recognition of the necessity and the ability to deal with similar “acts of God” in the future but, more especially, the urgency of safeguarding the institutions of democracy and the resources of the people at the grassroots level for their own needs and well-being.


General References

Bauzon, Kenneth E. (1992).  Development and Democratization in the Third World; Myths, Hopes, and Realities.  Washington, D.C.: Taylor & Francis/Crane Russak.

Bernstein, Jared (2003).  “The Hierarchy: Income Inequality in the United States” (An Interview).  Multinational Monitor, vol. 24, no. 5 (May).  

__________ (2005).  “How Not to Rebuild the Gulf Coast.”  TPM Café Blog.  (September 24).   

Brauchli, Christopher (2005).  “Katrina and Tax Breaks for the Very Rich.”  CounterPunch (November 4).  

CNN.com (2005).  “Bush Eyes Bigger Military Role in Disasters.” (September 26).  

Chaterjee, Pratap (2005).  “Big, Easy Iraqi-Style Contracts Flood New Orleans” (September 20).  CorpWatch.  Visited March 1, 2007.

Collins, Chuck and Felice Yeskel (2005).  Economic Apartheid in America; A Primer on Economic Inequality and Insecurity.  New York: The New Press.

__________ (2005).  “Billionaires R Us.”  AlterNet (October 24) .

Cooperman, Alan (2005).  “Where Most See a Weather System, Some See Divine Retribution.”  The Washington Post (September 4).

Demerjian, Charlie (2005).  “New Orleans Catastrophe Down to Privatization.”  The Inquirer (UK) (September 6).  

Dreyfuss, Robert (2001).  “Grover Norquist: ‘Field Marshall’ of the Bush Plan.”  The Nation (May 14). 

Engelhardt, Tom and Nick Turse (2005),  “Corporations of the Whirlwind; The Reconstruction of New Oraq.”  TomDispatch.com; A Regular Antidote to the Mainstream Media, A Project of the Nation Institute (September 13).  

Epstein, Boris (2006).  “LinkBlog: hurricane+Katrina.”  Boris Epstein’s Journal  (November 14).  

Fitzsimons, Patrick (2002).  “The Politics of Corruption in the 21st Century.”  Globalization v. 2. no. 1 (Winter).

Gault, Barbara and Associates (2005).  “The Women of New Orleans and the Gulf Coast: Multiple Disadvantages and Key Assets for Recovery. Part I. Poverty, Race, Gender and Class.”  Institute for Women’s Policy Research Briefing Paper # D464 (October).

Graham, Stephen (2005).  “Redesigning the U.S. Military.”  Z Magazine, 18, 9  (September): 39-42.

Hartmann, Thom (2005).  “Drowning Government.”  Information Clearing House.

Kennedy, Roger (2005).  “Katrina, Acts of God, and Acts of People.”  Ogmius, Newsletter of the Center for Science and Technology Policy Research, University of Colorado at Boulder, no. 13 (Fall).  

Klein, Naomi (2007).  The Shock Doctrine; The Rise of Disaster Capitalism.  New York: Metropolitan Books/Henry Holt and Co.  558 pp.

Knabb, Richard D., Jamie R. Rhome, and Daniel P. Brown (2005/2006).  “Tropical Cyclone Report: Hurricane Katrina” and “Tropical Cyclone Report: Hurricane Rita.”  National Hurricane Center, National Oceanic and Atmospheric Administration, US Department of Commerce.

Kweit, Mary Grisez and Robert W. Kweit (2006).  “A Tale of Two Disasters.”  Publius: The Journal of Federalism, vol. 36, no. 3 (May 5): 375-392.  

Lui, Meizhu and Associates (2006).  The Color of Wealth; The Story Behind the U.S. Racial Wealth Divide.  New York: The New Press.

Lustig, Nora (2000).  “Broadening the Poverty Reduction Agenda.”  Development Outreach (Summer).  World Bank Institute. 

Milanovic, Branco (2002).  “True World Income Distribution, 1988 and 1993: First Calculations Based on Household Surveys Alone.”  The Economic Journal, v. 112 (January): 51-92.

O’Brien, Barbara (2007).  “New Orleans: The Second Disaster.”  DMIBlog: Politics Policy, and the American Dream.

Palast, Greg (2001).  “The WTO’s Hidden Agenda.”  CorpWatch.

Phelan, James L. (2001).  “Renowned U.S. Economists Denounce Corporate-Led Globalization.”  Common Dreams News Center (November 21).

Public Broadcasting Service Online NewsHour (2005).  “Army Corps Investigates New Orleans Broken Levees” (October 20).

Reed, Jr., Adolph (2006).  “New Orleans — Undone by Neoliberalism.”  The Nation (September 18).  

Sebastian, L. Vincent (2007).  “Privatizing the War in Iraq” (February 6).  GDAEman.

Thatcher, Margaret (1987).  “Interview for Woman’s Own.”  Margaret Thatcher Foundation (October 31). Available at www.margaretthatcher.org/,

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United Nations Development Programme.  Human Development Report 2002: Deepening Democracy in a Fragmented World.

__________, Human Development Report 2004: Cultural Liberty in Today’s Diverse World.

__________, Human Development Report 2005: International Cooperation at a Crossroads: Aid, Trade and Security in an Unequal World.  

__________, Human Development Report 2006: Beyond Scarcity: Power, Poverty and the Global Water Crisis.  

United States Bureau of Census (2006).  “Income Climbs, Poverty Stabilizes, Uninsured Rate Increases” (August 29).

Wallach, Lori and Patrick Woodall (2003).  Whose Trade Organization? A Comprehensive Guide to the WTO.  (New York: The New Press).

The White House (2005).  “Proclamation by the President: To Suspend Subchapter IV of Chapter 31 of the Title 40, United States Code, Within a Limited Geographic Area in Response to the National Emergency Caused by Hurricane Katrina” (September 8).

Whitehurst, Teresa (2005).  “How Bush Will Use Katrina; A Sneak Preview of the Coming Damage-Control Campaign.”   BuzzFlash (September 6).

“World Bank Warns Global Poverty Fight Failing, Unveils Enhanced Poverty Strategy” (2000).  Available at go.worldbank.org/WFWXTJK4T0.

Yates, Michael (2004).  “Poverty and Inequality in the Global Economy.”  Monthly Review, v. 55, no. 9 (February). 

Yellen, Janet L. (2006).  “Economic Inequality in the United States.”  Speech to the Center for the Study of Democracy, 2006-2007 Economics of Governance Lecture, University of California, Irvine.  November 6.  Available at frbsf.org/news/speeches/2006/1106.html.

Yim, Randall A. (2002).  “National Preparedness: Integration of Federal, State, Local, and Private Sector Efforts is Critical to an Effective National Security Strategy for Homeland Security.”  Testimony before the Subcommittee on Economic Development, Public Buildings, and Emergency Management, Committee on Transportation and Infrastructure, House of Representatives.  United States General Accounting Office. Document no. GAO-020621T.  (April 11).  Available at www.gao.gov/new.items/d02621t.pdf.

Kenneth E. Bauzon, Ph.D., is currently Associate Professor of Political Science at Saint Joseph’s College – New York.  He may be contacted at KBauzon@sjcny.edu.

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