Disaster capitalism

A year on from Hurricane Katrina, a few honest words from George W. Bush fly in the face of corporate profiteering from reconstruction efforts.

HURRICANE Ernesto shied off from the Florida coast on Hurricane Katrina's first anniversary. People in Florida braced for another disaster, but it did not come. President George W. Bush took time out of his vacation to tour Louisiana and Mississippi, and to tell his nation that the country was better prepared. If Ernesto struck, Katrina's effects would not be replicated.

At a high school in New Orleans, the President told the crowd that his administration was "addressing what went wrong". He praised the citizens who courageously rescued their fellows, but then offered some sombre images for consideration. "The hurricane also brought terrible scenes we never thought we'd see in America. Citizens drowned in their attics. Desperate mothers crying out on national TV for food and water. A breakdown of law and order and a government, at all levels, that fell short of its responsibilities. When the rain stopped, our television screens showed faces worn down by poverty and despair. And for most of you, the storms were only the beginning of our difficulties."

Such honesty is rare for the Bush administration. It prides itself on being positive and on ignoring any bad news. Katrina dented the self-confidence of the government. Iraq and Afghanistan are thousands of miles away, and the failure of the Bush project in both regions seems remote. When the Bush team could not protect the American people from the storm surge, its incompetence rattled the nation. Bluster and bold words seemed shallow compared to the images of disaster and despair. The decline in Bush's popularity stems more from his callousness in the aftermath of the storm than from the fiasco in Iraq. In early August, an Associated Press poll found that 67 per cent of Americans disapproved of the way Bush handled the Katrina affair.

The President's confirmation that there is poverty in America came as the U.S. Census Bureau released a report on distress. Since 2000, when the U.S. Congress passed the first of a slew of tax cuts for the richest Americans, 5.4 million more people are now in poverty, 6.7 million more Americans live without health insurance and the median household income slipped by $1,500.

Joan Entmacher, vice-president of Family Economic Security at the National Women's Law Centre, linked these numbers to Katrina. "We've done far too little in the past year to help the victims of Hurricane Katrina, and even less over the past five years to help the millions of poor Americans living on the brink. It's time for lawmakers to stop thinking about ways to pass even more tax breaks for multi-millionaires and start focussing on those in need." These are wise but wishful words. There is no motivation to improve the lot of the large under-class (now 37 million) set aside by the demands of the administration's jobless-growth economic policy.

Storms are devastating, and their wrath can only be lessened, not stopped. But in the immediate aftermath of Katrina, it was obvious that the U.S. government had done far too little to shore up the levees that would have prevented the storm surge, and to evacuate the population who had no access to transport ("America's Shame", Frontline, October 7, 2005).

A year later, the slow pace of reconstruction is as astounding as the level of corruption in the recovery effort. Like Baghdad, only half of New Orleans has electricity, and violent crime is a serious problem. Less than half the population has returned; many of the worst hit - belonging to the black working class - are unable to find their way back to a city whose culture they anchored. Insurance companies balk at paying back what they promised, and the Florida State schemes are mediocre. The city has no master-plan for reconstruction. But the casinos are already in full swing.

Money has been spent, but not for the good of the multitude. A new report from CorpWatch, a non-profit think-tank in Oakland, California, reveals the extent of disaster profiteering in the Gulf Coast. Investigative reporter Rita J. King, who authored Big, Easy Money, summed up her findings: "The devastation of the Gulf Coast is tragic enough, but the scope of the corporate greed that followed, facilitated by government incompetence and complicity, is downright criminal. Well-connected corporations are growing rich off no-bid contracts while the subcontractors, the people who actually perform the work, often do so for peanuts, if they get paid at all."

The U.S. Congress appropriated $85 billion towards reconstruction. Some of the money has trickled into recovery, but, as King writes, "the Gulf continues to stagger along, wounded, with mattresses still in trees, no reliable electricity, boats on the shoulders of highways, crushed houses slumped and moldering where they fell, and public school instruction still being held in portable classrooms or tents, if at all, while some hospitals remain understaffed and others are too damaged to ever reopen." Millions of dollars has left the U.S. Treasury for recovery, even if the region is a wreck. Where has this money gone?

King and CorpWatch, as well as the U.S. government's own Accounting Office, point out that the money has gone to well-known corporations who are now fixtures on the global disaster recovery scene. These firms rushed into Afghanistan and Iraq, as well as Louisiana and Mississippi, with no-bid contracts from the U.S. government to provide services for fabulous fees. Bechtel, the Shaw Group, Halliburton-KBR, Blackwater and DynCorp are some of the familiar names.

On September 7, 2005, Bush suspended the law that forces firms to pay the federal minimum wage for government contracts. The large corporations took advantage of this to hire workers at sub-par wages to do the clean-up and reconstruction. Forced to reinstate the provision two months later, the government did not make it retroactive. The main companies, which quickly seized the contracts, retained the right to hire workers for embarrassingly low wages.

"The aftermath of Hurricane Katrina demonstrated the tragic consequences of having an administration where cronyism trumps competence," said Congresswoman Barbara Lee. "The fact that the President would cut wages for impacted workers while handling out millions in no-bid contracts to well-connected firms is a perfect snapshot of this administration's priorities."

The companies that won the contracts rarely did any work. CorpWatch highlights the example of AshBritt, run by the former head of the Army Corps of Engineers, which won a $500-million contract for debris removal. AshBritt would earn $23 for every cubic yard of debris removed. The company hired C&B Enterprises to do the work for $9 a cubic yard, which in turn hired Amlee Transportation at $8 a cubic yard. Amlee devolved the work to Chris Hessler, Inc. for $7 a cubic yard, and this firm hired Lee Nirdlinger to do the work for $3 a cubic yard, less than the cost of doing the work. King calls this the "contracting pyramid". It enabled the large corporations to make money simply because they got the contract, and then to delegate the work to others who could only make money on the backs of an underpaid workforce.

Victoria Cintra of the Mississippi Immigrant Rights Alliance told King that the workforce is largely comprised of undocumented migrants from Mexico and Central America who earn a meagre amount and must live in rickety trailers "not fit for rats". Rosana Cruz, the Gulf Coast field coordinator for the National Immigration Law Centre, concurred with this description. "The level of assault against workers feels like war. There's vulnerability in each successive layer of subcontracting."

Rita King chokes at Bush's comment about "addressing what went wrong". It neglects, she points out, the fact that the administration gutted both the Army Corps of Engineers and the Federal Emergency Management Agency (FEMA). The Army Corps wanted to shore up the levees and FEMA would have been able to handle the evacuation and the rehabilitation. Neither was able to do its job. The Iraq war sucked up the funds and the personnel. Now, King rues, "the American public has to deal with the doubly expensive and ultimately wasteful bureaucracy not only within the government, but in the corporations that have manipulated the system to favour their single-minded objective: profit". The failures to rebuild Afghanistan and Iraq are related to the failure in Louisiana and Mississippi. In the Persian Gulf and on the Gulf of Mexico, the large corporations gouge the exchequer.

As Bush stepped out of Betsy's Pancake House in New Orleans on August 29, a waitress, Joyce Labruzzo, accosted him: "Mr. President, are you going to turn your back on me?" "No ma'am, not again," said Bush. The levity did not sit well with Kim Gandy, President of the National Organisation of Women. For Gandy, there was no "mismanagement" of the recovery. Bush, she wrote, "accomplished longstanding political goals while benefiting his political allies." New Orleans, a largely black city, is now destined to be a playground for white elites. Bush's allies, the major corporations, have turned this disaster into a profitable enterprise. Such disaster capitalism might be the most profitable way for big business to make money, as the American economy turns sour.