Thanks To Climate Change & COVID, Disaster Capitalism Is Thriving

In February, a historic winter storm and ensuing mass blackouts killed 111 people in Texas. Extreme weather events are becoming more frequent due to the climate crisis, but the tragedy was worsened by a system set up to profit when disaster strikes.

For days, the price of electricity in many parts of the state remained around $9,000 per megawatt-hour, because the rate changes based on demand. Texans were faced with electric bills in the thousands of dollars, with one man reporting a bill of over $16,000. Natural gas prices soared, and The Wall Street Journal reports that two Texas energy companies profited upwards of $200 million during the storm. Big banks like Goldman Sachs and Bank of America that have investments in fossil fuels were also reported to have made over $200 million in paper profits. During a call with investors, Roland Burns, chief financial officer of natural gas producer Comstock Resources, said, "Obviously, this week is like hitting the jackpot."

It's a classic case of "disaster capitalism" — a term coined by Naomi Klein in her 2007 book The Shock Doctrine: The Rise of Disaster Capitalism — in which politicians and the private sector exploit disaster to grow richer from it.

"It's such a perfect self-contained example because, back in the '90s, when George W. Bush was governor of Texas, he pushed for the privatization of the energy grid there — deregulation and this free-market approach to the grid," says Amy Westervelt, an environmental journalist who hosts and produces a podcast called Drilled that investigates the fossil fuel industry's crimes in the climate crisis. “In the absence of government oversight of those utilities, they didn't have to have the kind of emergency power storage that public utilities do. No one was checking to see if they were winterizing appropriately — which they clearly were not. They straight-up caused that problem, and then profited from it."

Disaster capitalism isn't just about any business that makes money during a disaster. It’s more intentional and far-reaching than that. The basic premise of the "shock doctrine" Klein describes in her book is that it's easier to enact drastic political change after a big shock — whether it’s war, a coup, a natural disaster, a pandemic — than attempting a series of incremental changes.

The numbing effect of shock and the urgency of repairing destruction provides a pretext to impose radical policies that might otherwise be rejected by the populace and legislators. The ultimate goal is to use disaster to push through a free-market utopia of deregulation and privatization. In her book, Klein calls disaster capitalism "orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities."

Such privatization efforts have altered large parts of the U.S. public sphere by now, including disaster response. In the past few decades, the government has become less and less a provider of services and more a contractor of them from private firms. "With resource scarcity and climate change providing a steadily increasing flow of new disasters," Klein writes, "responding to emergencies is simply too hot an emerging market to be left to the nonprofits — why should UNICEF rebuild schools when it can be done by Bechtel, one of the largest engineering firms in the U.S.? Why put displaced people from Mississippi in subsidized empty apartments when they can be housed on Carnival cruise ships?"

By the time Hurricane Katrina made landfall in August 2005, the Bush administration had thoroughly restructured the Federal Emergency Management Agency (FEMA), and combined with budget cuts, it was clear that it could not manage the disaster on its own — so it outsourced much of the recovery effort to big corporations, which was not well-organized or cost-effective at all, despite common conservative talking points about the efficiency of the private sector. The Bush administration also rapidly waived a number of laws purportedly in the service of speeding up post-Katrina recovery. Environmental standards for fuel were relaxed to bolster supply and head off a spike in gas prices, among several other environmental regulations. A federal law requiring workers on public projects to be paid at least the prevailing wage of that area was also quickly suspended since that would make the reconstruction cheaper and "incentivize" companies to take on the contracts. The result was that many undocumented migrant workers took on clean-up and rebuilding jobs. After an onslaught of regulatory rollbacks, tax incentives, and extremely profitable contracts for the private sector, there was austerity for public programs, with a $40 billion cut to the federal budget that was packaged as necessary to pay for the cost of Katrina.

Klein argues in another book, The Battle For Paradise: Puerto Rico Takes on the Disaster Capitalists, that a similar strategy was accelerated during another disaster — an economic one — more recently in Puerto Rico. In 2016, Congress established an "oversight board" to restructure the island's government debt and take control of its financial decisions. A major facet of the board’s recovery strategy has been to sharply cut the budget for public programs, like pensions. Not long after Hurricane Maria, which led to widespread, months-long blackouts, then-governor Ricardo Rosselló announced that Puerto Rico's public power company would be sold off and privatized.

It shows how disaster capitalism's mission to keep expanding and enriching the private sector doesn't just take advantage of crises, but can actually intensify their severity. It continuously shrinks the size and power of the public sphere, whether it's infrastructure or healthcare, thus stymieing its ability to withstand crises. Then, this failure to adapt is used as another reason why public resources, instead of being invested in and improved upon, should be entirely turned over to the private sector for management.

Given that it was mostly fossil fuel companies and investors that profited from the winter storm in Texas, politicians immediately pointing the finger at green energy wasn’t just randomly grasping at straws. It's the obvious move from the disaster capitalism playbook: using this moment of shock to continue empowering the profitability of disaster. "The fact that they mentioned the Green New Deal in particular was very clever," says Westervelt. "It's like, 'Let's immediately talk about something that has been branded as socialist, so people won't think about how this is a clear failure of capitalism.'"

In the early days of the pandemic, there were theories about whether lockdowns would heal nature, with the implication being that humans are the "real" virus. Leaving aside the problematic nature of denying the value of human lives, did the pandemic really help us avert the climate crisis? "Not at all," says Westervelt, who is not a fan of the narrative that the coronavirus disaster was a salve for the environment. "We've already hurtled past whatever emissions reductions there had been from the pandemic — and we're not even back to full steam, at all." A recent estimate showed that fossil fuel emissions were 2% higher in December 2020 than in December 2019. The National Oceanic and Atmospheric Association (NOAA) also reported that there was a "significant jump" in levels of methane, a greenhouse gas that traps heat exponentially better than carbon dioxide. According to the NOAA, 2020 saw the "largest annual increase [of methane] recorded since systematic measurements began in 1983."

As was the case after Katrina, over the course of the coronavirus pandemic the Trump administration also rolled back environmental regulations, using the crisis as an excuse. "The reason methane emissions went up is actually because there weren't regulators out checking on them, and refineries were just flaring methane up into the air whenever they needed to," says Westervelt. "And because of those environmental rollbacks, they could do that without fearing any kind of fine." The pandemic also led to suspensions on single-use plastic bans or reduction policies, in part influenced by right-wing think tanks promoting the idea that reusable items were more dangerous during COVID.

"A few of the rollbacks that happened towards the end of the Trump administration are maybe more straightforward to undo, but the rest of them have to be litigated," Westervelt continues. In addition to these deregulatory moves, COVID relief measures continued to give money to the fossil fuel industry.

Clearly, this isn't really a would-you-rather game between two disasters — climate change or a pandemic. Instead, it’s about how to rein in corporate greed and accountability. In Westervelt's view, the climate crisis and the coronavirus crisis are two inter-related consequences of late-stage capitalism, where profit supersedes public interest. In such a system, the desire to maximize the bottom line is seen as obviously rational, while prioritizing the public good requires more justification. "Of course people need to be able to profit from it," says Westervelt. "What other incentive could there possibly be?" That's why it's frustrating for her when people cling to the myth that the fossil fuel industry can be a part of the climate crisis solution. "Even a lot of people who think we should act on climate and who think there should be climate policy still have this idea in their head that, somehow, oil companies are going to be involved in some good-faith way," she says. 

The heated national debates over coronavirus lockdown measures that hurt corporate profits, contrasted with the moral panic over giving too much aid to struggling workers, is an example of a fundamental conflict of interest between private interests and public good. While e-commerce retailers like Amazon made record profits during the pandemic, its workers’ wages rose only about 7%, with COVID-19 hazard pay being suspended in May 2020. It continued to face accusations of awful working conditions during COVID and more recently fought hard to bust a historic unionization drive organized by Amazon warehouse workers in Alabama.

Amazon's COVID wins didn't just come in the form of huge profits, but also in selling the perception that it's basically providing a public service, essential to surviving the disaster. It delivers everything to your doorstep quickly, reliably, often more cheaply than anyone else — and the convenience it offers hopes to make itself indispensable to you. Meanwhile, the USPS faced another resurgence of privatization calls during the pandemic, its financial complications used as an example of textbook government mismanagement instead of the result of a controversial 2006 reform that forced the USPS to pre-fund medical benefits for employees, combined with continuously falling revenue.

Often the framing pushed by proponents of privatization and deregulation is that the private sector can serve public interest better than the public sector. But one of the most egregious examples of pandemic disaster capitalism, and how this can't be true, has been the refusal to make the vaccine more accessible worldwide — a public interest if there ever was one. The Pfizer and Moderna vaccine developments were in large part made possible by tax-funded research and government grants, yet the pharma companies are on track to generate immense profits, in the billions of dollars. What's more, in order to protect future corporate profits, the wealthiest nations of the World Trade Organization — including the U.S. — have voted to block the waiving of certain patents that would enable countries with fewer resources to dramatically ramp up vaccine manufacturing. The message seems to be that the right of corporations and their shareholders to generate profit is more important than preventing further illness and death.

In the months and years to come, it's possible that government austerity, deregulation, and privatization will once again be advanced as a necessity to healing from disaster. But it's also possible that this strategy is becoming too predictable by now, used so often that more of us are growing wiser to the machinations of disaster capitalism, and corporate greed more generally. "I do think there's a higher level of awareness," says Westervelt. "For example, I think that young people are so much more impervious to the kinds of things that the [fossil fuel] industry has been doing for a long time than people of previous generations were. The industry is being caught flat-footed by the youth climate movement. They're shitting their pants about them."

"They're like, 'What do we do? How do we position ourselves so that we're seen as part of the solution, how do we come off as authentic online?'" Westervelt continues. "Yeah, that's not gonna happen. For the first time in a long time, I really feel like their social license has been pretty dramatically eroded."

"I look at how the conversation has progressed around the Green New Deal in the last few years. When that was first announced, a lot of people criticized it on the right, of course, but on the left too, people were like, 'Oh, this is just biting off more than we can chew' and 'why would you make people think about wealth inequality?'" she recalls. Those objections and questions from the left aren't happening as much anymore. "Now it would be weird for a Democrat, in particular, to come out with a climate policy that doesn't have some kind of environmental justice component to it."

The time is now to take brazen steps to address climate change, not timid ones. Maybe, if the shock of disaster has historically served as such a handy pretense for ramming through major changes benefiting corporate interests, it can also be used in the opposite direction  — to pursue radical climate and economic justice.