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A History of Disaster Capitalism

Profitting off natural disasters from the San Francisco earthquake to superstorm Sandy.

| Thu Apr. 4, 2013 5:41 PM EDT
Long Beach, N.Y., one month after Hurricane Sandy.

This story first appeared on the TomDispatch website.

In 2007, a financial firestorm ravaged Wall Street and the rest of the country. In 2012, Hurricane Sandy obliterated a substantial chunk of the Atlantic seaboard. We think of the first as a man-made calamity, the second as the malignant innocence of nature. But neither the notion of a man-made nor natural disaster quite captures how the power of a few and the vulnerability of the many determine what is really going on at ground level. Causes and consequences, who gets blamed and who leaves the scene permanently scarred, who goes down and who emerges better positioned than before: these are matters often predetermined by the structures of power and wealth, racial and ethnic hierarchies, and despised and favored forms of work, as well as moral and social prejudices in place before disaster strikes.

When it comes to our recent financial implosion, this is easy enough to see, although great efforts have been expended trying to deny the self-evident. 'Man' did not bring the system to its knees; the country's dominant financial institutions and a complicit government did that. They've recovered, the rest of us haven't.

Sandy seems a more ambiguous case. On the one hand, it's obvious enough that an economy resting on fossil fuels played a catalytic role in intensifying the storm. Those corporate interests profiting from that form of energy production and doing all they can to defend it are certainly culpable, not the rest of mankind which has no other choice but to depend on the energy system we're given.

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On the other hand, rich and poor, big businesses and neighborhood shops suffered; some, however, more than others. Among them were working class communities; public-housing residents; outer borough homeowners; communities in Long Island, along the New Jersey shore, and inland as well; workers denied unemployment compensation; and the old, the sick, and the injured abandoned for days or weeks in dark and dangerous high-rises without medical help or access to fresh food or water. Help, when it came to these 'disadvantaged' worlds, often arrived late, or last, or not at all.

Cleaning up and rebuilding New York City and other places hit by the storm will provide a further road map of who gets served and whose ox gets gored. It's ominous, if hardly shocking, that Mayor Bloomberg has already appointed Mark Ricks of Goldman Sachs to the business-dominated team planning the city's future. Where would this billionaire mayor turn other than to his fraternity brothers, especially in this era when, against all the odds, we still worship at the altar of the deal-makers, no matter their malfeasances and fatal ineptitudes?

Still, it is early days and the verdict is not in on the post-Sandy future. However, an incisive analysis by sociologists Kevin Fox Gotham and Miriam Greenberg of what happened after the 9/11 attacks in New York and in New Orleans after Hurricane Katrina offers some concrete forebodings. Everyone knows that, as soon as Katrina made landfall, the racial divisions of New Orleans became the scandal of the month when it came to which communities were drowned and which got helped, who got arrested (and shot), and who left town forever. To be poor in New Orleans during and after Katrina was a curse. To be poor and black amounted to excommunication.

Gotham and Greenberg prove that, post-9/11 and post-Katrina, reconstruction and rehabilitation was also skewed heavily in favor of the business community and the wealthier. In both cities, big business controlled the redevelopment process—and so where the money landed and where it didn't.

Tax breaks and private sector subsidies became channels for federal aid. 'Public benefit' standards, which once accompanied federal grants and tax exemptions to insure that projects served some public purpose, especially to 'benefit persons of low and moderate income,' were eliminated, leaving poorer people out in the cold, while exacerbating existing inequalities. Governments scurried around inventing ways to auction off reconstruction projects to private interests by issuing tax exempt 'Private Activity Bonds.' These were soon gloriously renamed 'Liberty Bonds,' though the unasked question was: Whose liberty?

The lion's share of grants and exemptions went, of course, to the biggest corporations. In New York, more than 40% of all bonds, or $2.4 billion, went to a single developer, Larry Silverstein. Second to Silverstein was—don't be shocked—Goldman Sachs. Yet these institutions and their inhabitants represented at best a mere 15% of those affected, most of whom were low-wage workers who, in some cases, ended up getting evicted from their homes thanks to those business-oriented tax breaks. Federal aid, hypothetically tied to building affordable housing and the creation of living-wage jobs ended up as just that: hypothetical.

Naturally, these mechanisms proved lucrative. More than that they are the means by which elites use disasters as opportunities to turn wrecked cities or regions into money-making centers and playlands for what in the nineteenth century was called 'the upper tendom' and what we now call 'the 1%.'

Indeed, the original 'upper tendom' faced its own 'natural' disasters during the Gilded Age. Then, too, such catastrophes exposed the class and racial anatomy of America to public view. Then, too, one man's disaster was another's main chance. Whether you focus on the cause of the calamity, the way people reacted to it, or the means and purposes that drove the reclamation afterwards, disasters and capitalism metabolized together long before 'disaster capitalism' became the nom de jour.

Fire

Mrs. O'Leary's infamously rambunctious cow did not kick a lantern into a batch of hay and start the Chicago fire of 1871. To this day, however, many probably still believe the story, even though the journalist who first reported it admitted a mere 20 years later that he'd made it up.

It was a story that stuck because it meshed with the ethnic and social fears and prejudices of bourgeois Chicago. Irish and German immigrants then filled up the congested warrens of that Midwestern center of industry and commerce. Their customs, religions, languages, political beliefs, and proletarian status were alien and alarming—especially because that was the year of the Paris Commune, when proletarians took over the French national capital for two months. It was an event that scared the daylights out of the 'upper tendom' and broad stretches of the middle classes as well in cities and towns throughout the US.

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