First Short Quiz - Suggested Answers

[johnkarls]

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SUGGESTED ANSWERS – FIRST SHORT QUIZ

Question 1

Is Naomi Klein, the author of our former NY Times Bestseller (“The Shock Doctrine: The Rise of Disaster Capitalism”) an economist?

Suggested Answer 1

No.

Question 2

Is Joseph Stiglitz (the author of the NY Times book review of “The Shock Doctrine” which is posted on our bulletin board = www.ReadingLiberally-SaltLake.org) an economist?

Suggested Answer 2

Yes – Nobel Laureate (2001) and an economics professor at various prestigious universities except from 1995-97 when he chaired President Clinton’s Council of Economic Advisers and 1997-2000 when he served as Chief Economist of the World Bank.

Question 3

What did Arianna Huffington (Huffington Post) and Seymour Hersh (former NY Times investigative reporter who won a Pulitzer Prize for exposing the Vietnam My Lai Massacre, prolific book author, and since 1993, a regular writer for the New Yorker in which he exposed the Abu Graib scandal) say about “The Shock Doctrine”?

Suggested Answer 3

Arianna Huffington – “Pulls the curtain back on free-market myths and exposes the forces that are really driving our economy…Klein’s book is powerful and prophetic…A brilliant dissection.”

Seymour Hersh – “Naomi Klein is one of the most important new voices in American journalism today.”

Question 4

What did John le Carré and Arundhati Roy say about it?

Suggested Answer 4

John le Carré (prolific author of spy thrillers, many of which were made into movies based on the character George Smiley of Britain’s MI-6 (their C.I.A.) played by Alec Guinness of Obe Wan Kenobi fame) –

“Impassioned, hugely informative, wonderfully controversial, and scary as hell.”

Arundhati Roy (famous author from India who writes in English and concentrates on social justice and economic inequality) –

“A brilliant, brave, and terrifying book. It’s nothing less than the secret history of what we call the ‘free market.’ It should be compulsory reading.”

Question 5

What “school” of economists does our author, Naomi Klein, target for her criticism?

Suggested Answer 5

The U/Chicago school and, in particular, its championing of “free markets.”

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Editorial Note Re Questions 6-8: The U/Chicago “school” of economic thought is, among other things, famed for championing “monetary policy” (vs. “fiscal policy” aka Keynesian economics) – but Questions 6-8 are directed at another famous economic theory of the “Chicago school.”
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Question 6

What is the greatest strength of the so-called U/Chicago “school” of economic thought pioneered by Nobel laureate, Milton Friedman? (A “red herring” to throw you off the scent = Friedman is probably most famous for coining the phrase “there is no free lunch.”)

Suggested Answer 6

The “free markets” school of economic thought is based on the belief that “you can’t fight Mother Nature”!!! Either various types of investment and various types of labor are paid what they’re worth – and both are given free rein – or the consequences are horrendous.

Three historical examples.

Joe Stalin during the 1930’s tried to force Russian peasants onto collective farms on which their efforts would bear little relationship to the economic compensation they received. After killing 50 million Russian peasants in his Gulags, Stalin was finally forced to move 15 million non-farmers at gun-point to Kazakhstan to farm a previously virtually-uninhabited area to halt starvation in Russian cities.

Chairman Mao was a bit more successful in divorcing compensation for farmers from the economic value they created. But following the death of Mao, the Chinese Central Committee introduced its showcase “capitalist reform” = permitting each Chinese farmer to keep 50% of whatever s/he produced (the economic equivalent of pure capitalism with a 50% tax rate). Chinese agricultural production took off!!!

Following World War II, Britain nationalized most of its major industries. However, Britain discovered to its chagrin that its labor unions were not more reasonable simply because their employers were now owned by the government (socialism is state ownership of the means of production, while economic communism is state ownership plus “from each according to her/his ability and to each according to her/his need”). Accordingly, the British nationalized industries constantly ran unbelievably-large losses which had to be subsidized by the government with the subsidies financed by unbelievably-large taxation of the small portion of the British economy that had not been nationalized. Finally, the British public revolted and Margaret Thatcher became Prime Minister on a platform of de-nationalizing British industry and forcing it to “sink or swim.”

Editorial Observation –

The only way to divorce compensation from the value produced is to “brainwash” the workers and investors into working/investing just as hard/adroitly for something whose value bears no relationship to what is produced. For example, imagine an Orwellian society in which everyone is forced to wear uniforms and the color of the uniforms is like the old Caste System in India – for example, say, blue is the most prestigious uniform class, green is the second most prestigious all the way to grey which is the most despised. Since the cost of the various dyes for the uniforms are equal, the brain washees in our Orwellian society can be expected to exert tremendous efforts to be permitted to wear the blue uniforms and avoid the grey.

Question 7

What is the greatest weakness of the so-called U/Chicago “school” of economic thought?

Suggested Answer 7

It is oblivious to the human suffering created by an economic system that is truly described as “survival of the fittest.”

Question 8

Does this contrast make much difference for a primarily-agrarian society? For a third-world country rich in natural resources? For an economically-developed country like the United States?

Suggested Answer 8

For a primarily-agrarian society, the contrast probably doesn’t make much difference because peasants are usually quite crafty (which is why Joe Stalin killed so many of them).

For a third-world country rich in natural resources, it is usually a disaster because the political system is usually characterized by a dictatorship with the group in power living lavishly while the general population lives in poverty.

For an economically-developed country such as the United States or the countries of Europe, each tries to balance its national conscience against the extent to which it believes the “golden geese” can be “milked” (an intentional mixed metaphor to grab your attention). The U/Chicago “free markets” school taken to an extreme is in fact a zero conscience.

Question 9

What does Naomi mean by “shock” in her title and what are the two reasons why she is so critical of Milton Friedman and the “Chicago school”?

Suggested Answer 9

One might assume that she means the reader will be “shocked” by what she describes.

However, she is really describing real-life catastrophes such as earthquakes, tsunamis, famine, etc. (though they can be man-made) which, like a forest fire, create devastation in their wake from which there will be re-growth. But unlike a forest fire following which the new growth comprises younger plants of the same kind, an earthquake, tsunami, famine, etc., usually results in new growth radically different from what existed previously. The fishing villages destroyed by the tsunami are replaced by luxury resorts, the small farmers that starved during the famine are replaced by large-scale mechanized farming, etc.

Question 10

Does Naomi Klein believe in a giant conspiracy behind “Disaster Capitalism”?

Suggested Answer 10

No – though the NY Times reviewer observes that most of her readers probably will.