The Shock Doctrine (2009) Script

[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]