Cusack: So apart from getting obscenely rich, what are these private security and other contractor companies doing with this tsunami of public money that is being thrown at them?

Klein: Well, unlike the government, which has allowed the public infrastructure to erode so that we now have collapsing bridges and levees, these guys are making serious and sturdy capital investments. Theyâe(TM)re planning for the future, building infrastructure âe” in Blackwaterâe(TM)s case, paramilitary infrastructure. Founded in 1996, the company has used the steady stream of contracts during the Bush years to build up a private army of twenty thousand on-call mercenary soldiers and a massive military base in North Carolina worth between $40 and $50 million. They have armored vehicles, helicopter gunships, manmade lakes, a Boeing 767, a Zeppelin.

Cusack: Like the Hindenburg âe” Eric Prince has a lot of toys. The Zeppelin âe” that one had to be the fulfillment of a boyhood dream.

Klein: You hear people complain about how Hezbollah is a âeoestate-within-a-stateâe in Lebanon âe” what about Blackwater in the USA? And thatâe(TM)s just one company of hundreds, and a relatively small player compared to Lockheed and GE and Booz Allen. But once again, we canâe(TM)t keep being surprised by this shadow world âe” it is an inevitable consequence of Rumsfeldâe(TM)s vision of an outsourced and contracted-out state. A right-wing journal in the U.S. called Blackwater âeoeal-Qaeda for the good guysâe and itâe(TM)s a striking analogy. Wherever the disaster capitalism complex has landed, it has produced a proliferation of armed groupings outside the state. No surprise, really âe” when countries are rebuilt by people who donâe(TM)t believe in government, the states they build are invariably weak, creating a market for alternative security forces, whether Hezbollah, Blackwater, the Mahdi Army or the gang down the street in New Orleans.

Cusack: Youâe(TM)ve written a lot about what you call âeoethe moveable green zoneâe , which has extended the reach of these companies way beyond the war…

Klein: Well the first place where we all saw this happen was in New Orleans after the flood. Within weeks, the Gulf Coast became a domestic laboratory for the same kind of government-run-by-contractors that was pioneered in Iraq. And the whole Green Zone gang was there: Halliburton, Blackwater, Parsons, Fluor, Shaw, Bechtel, CH2M Hill.

But again, this is way more than just a story about shoddy work by contractors. These private companies were actually taking over state functions instead of rebuilding the public sphere. And in New Orleans, the supreme irony was that it was the very frail public sphere that caused the disaster in the first place when the levees broke and the public transit system couldnâe(TM)t handle the evacuation and FEMA was nowhere to be found.

This is the opposite of the New Deal, when public works created good jobs and strengthened society. In todayâe(TM)s disasters, public money floods into corporate coffers and those corporations replace the public sphere. Look at New Orleans today: public schools have been converted into charter schools, public housing remains boarded up as condo developers circle, the levee system remains inadequate, and the cityâe(TM)s largest public hospital âe” Charity Hospital âe” is still closed. Meanwhile, contractors are driving down wages and working conditions, with African-Americans virtually locked out of reconstruction jobs, and migrant Latino workers locked in, telling horror stories of modern day indentured servitude. This is what I mean when I say that disasters are dress rehearsals for a sci-fi vision of corporate rule âe” itâe(TM)s not just that disaster response is being privatized, itâe(TM)s that in places like Baghdad and New Orleans, the public sphere is disappearing completely and there is no plan to bring it back. This is the warfare state you send up so brilliantly in War Inc âe” with the same company selling the bombs and the prosthetic limbs for the victims of those bombs. Itâe(TM)s crazy, but we are really not that far off from your twisted imagination!

Cusack: Some things are so vicious, you have to look at them through a different lens or you could never get out of bed. Itâe(TM)s hard, even in absurdist satire, to stay one step ahead of this crew. Of course, the business will keep coming for these companies. Even if a momentary peace breaks out, natural disasters will ensure that the market will expand for the Disaster Capitalism Complex as a whole. Theyâe(TM)ll just diversify. A perfect flexibility built into the design.

Klein: Put it this way: after the recent earthquake in Peru, a private U.S. company called Aramark got a contract to manage evacuee camps and they had mini-McDonaldâe(TM)s franchises in them.

That was a first âe” McRelief.

Cusack: It fills one with pride.

Klein: Itâe(TM)s time to face the fact that climate change has created a major new market. And Iâe(TM)m not talking about a new market for sustainable energy, which would be positive, but a market to profit from the disasters caused in large part by our fossil fuel addiction. Responding to the increasing numbers of emergencies is seen as simply too hot an emerging market to be left to the non-profits âe” why should UNICEF rebuild schools when Bechtel can do it? Why put displaced people from Mississippi in subsidized empty apartments when they can be housed on Carnival cruise ships? Why deploy a major international peacekeeping force to Darfur when Blackwater has been lobbying for months to go in and get the job done? Why let the CIA read our email when there are hundreds of security âeoestart upsâe that want the gig?

This is a transformation of profound consequence. Eisenhower warned of the military-industrial complex, but it was economically insignificant compared to todayâe(TM)s disaster capitalism complex. Before 2001, wars and disasters only provided opportunities for a narrow sector of the economy âe” the makers of fighter jets, for instance, or the construction companies that rebuilt bombed-out bridges. The primary economic role of wars was as a means to open new markets that had been sealed off and to generate postwar peacetime booms. Now wars and disaster responses are so fully privatized that they are themselves the new market; there is no need to wait until after the war for the boom âe” the medium is the message.

And the scariest part of it is the disappearance of any line whatsoever between these private players and the government, as we discussed earlier.

Cusack: Right, you have a quote in the book: “Itâe(TM)s impossible to tell where the government ends and Lockheed begins.” And the most unbelievable thing about it besides the carnage and the hubris and the insanity of it all is how blatantly they lie about their dedication to strict economic Darwinist rules. Itâe(TM)s the mother of all con jobs âe” free market rhetoric is being used as the cover story for crony capitalism… They are the biggest welfare freaks on the planet.

On Democracy Now recently, you recited Alan Greenspanâe(TM)s definition of crony capitalism to his face and asked him if the U.S. fits the bill: “When a governmentâe(TM)s leaders or businesses routinely seek out private-sector individuals or businesses, and, in exchange for political support, bestow favors on them, the society is said to be in the grip of âe~crony capitalismâe(TM). The favours generally take the form of monopoly access to certain markets, preferred access to sales of government assets, and special access to those in power.âe

He dodged the question, of course, but that seems to be a precise description of the Bush administration and its relationship to its favorite corporations. Not exactly the free-market propaganda theyâe(TM)ve been selling around the world, is it?

Klein: No, and itâe(TM)s most outrageous in Iraq. When I was in Baghdad, it was clear that this was one of the things that most enraged Iraqis âe” watching the non-stop conveyor belt of corporate welfare going to western companies while having to listen to patronizing lectures about the free market. My favourite was from Michael Fleischer âe” former White House press secretary Ari Fleischerâe(TM)s brother. In the kind of nepotism rampant in the Green Zone, Michael was put in charge of Iraqâe(TM)s âeoeprivate sector developmentâe during the first year of the occupation. At one point he told a group of Iraqi business leaders that they would have to lose all their subsidies and trade protections because âeoeprotected businesses never, never become competitive.âe

Cusack: He said this with a straight face?

Klein: Yes âe” he seemed entirely unconcerned by the irony that Halliburton, Bechtel, Parsons, KPMG, Blackwater et al were in Iraq, madly gorging off this vast protectionist racket in which the U.S. government had created their markets with war, barred their competitors from even entering the race (remember, French companies werenâe(TM)t invited), then paid them to do the work on âeoecost-plusâe contracts, which guaranteed them profits âe” all at taxpayer expense.

In fact, the Disaster Capitalism industry has been built almost exclusively with public resources: 90 percent of Blackwaterâe(TM)s revenues come from state contracts and virtually its entire staff is made up of former soldiers, which means that the training also came at public expense. Yet this vast infrastructure is all privately owned and controlled. The citizens who have funded it have absolutely no claim to this shadow state or its resources.

So I’ve become quite cynical about the claim that the architects of this new system are free-market ideologues. They are in fact corporate supremacists. The proof is that they will betray their supposed libertarian beliefs at the slightest opportunity if that betrayal will turn a profit for a crony company. You see the hypocrisy most shamelessly in the mega-contracts handed out so private companies can help the Bush administration read our emails and data-mine our lives. Itâe(TM)s a kind of triple whammy of hypocrisy: these are people who purportedly believe in restrained government spending, individual liberties, and getting government off our backs, yet without hesitation they will expand the reach of the state, gobble up public money, and violate individual privacy, so long as there is profit in it. Calling the Bush gang âeoeideologuesâe gives them way too much credit.

Cusack: Youâe(TM)ve said that in the future the ultimate luxury will be your own survival…do you really think this is where weâe(TM)re headed?

Klein: Well, the disaster bubble is going to burst, like all bubbles do. And when it does, firms like Bechtel, Fluor and Blackwater are going to lose much of their primary revenue stream. They will still have all the high-tech gear and equipment bought at taxpayer expense, but they will need to find a new business model, a new way to cover their high costs. The next phase of the disaster capitalism complex is staring us in the face: with the state in decay, the parallel corporate state will rent back its disaster infrastructure to whoever can afford it, at whatever price the market will bear.

So imagine that after the next hurricane, Blackwater might not just be working for FEMA, as it was after Katrina âe” it could sell its security and evacuation capacity to other corporations, or directly to the public, the very same public that funded its entire start-up phase. Want a helicopter ride off a roof? A bed in a shelter? Bottled water? Weâe(TM)ll bill you later. Meanwhile, everyone who canâe(TM)t pay will be out of luck, since evacuation is no longer a âeoecore competencyâe of the state, and besides, the state shouldnâe(TM)t interfere with the free market. The people who canâe(TM)t pay will either be abandoned âe” like the people left on their roofs in New Orleans âe” or sucked into the privatized prison surveillance apparatus, to be profited from in another way.

Companies like Blackwater and Halliburton are already roaming the world looking for new markets in other frail states âe” new governments to guard, new war zones to privatize.

Cusack: Hereâe(TM)s what Iâe(TM)m thinking. If these people want to create their own privatized countries, they should practice what they preach, and âeoetake their chances on the open market.âe Secede from the union and stop bankrolling the whole thing with our tax dollars. Iâe(TM)d love to hear someone make a legal argument that the constitution allows for corporations to build private armies at taxpayer expense. I mean, publicly funded mercenaries are totally outside the boundaries of any conceivably acceptable legal version of the constitutional checks and balances we all learned in civics class. But Blackwater is a symptom of a larger problem which is also more terrifying: basically what the Bush administration has done is use its time in office to fund and create a dangerous counter-power to the very government it is leading.

Klein: Thatâe(TM)s exactly right. And once you understand this âe” that a parallel, privatized state has been built for the elites with public money âe” it makes Bushâe(TM)s so-called bungling look a lot more sinister. Maybe the construction of this parallel state, and the starving of the public one, is the real âeoemission accomplished.âe When the Blackwaters and the Halliburtons and the Lockheeds are looked at as a whole, what you see is a fully articulated state-within-a-state that is as muscular and capable as the actual state is frail and feeble. And of course, as creatures of the new economy, these companies are weightless and stateless. If Blackwater wanted to make like Halliburton and move to Dubai, there would be nothing to stop it.

We need to understand that what we glimpse in these contractor scandals goes well beyond corruption. Itâe(TM)s another model of government. War and disasters are being used to advance a radical agenda of corporate rule where the idea of universally accessible public services goes extinct. Thatâe(TM)s why I wrote The Shock Doctrine âe” this thing is way bigger than Bush. Bush isnâe(TM)t an aberration, heâe(TM)s the natural culmination of a 25-year campaign to hollow out and privatize the state. He is the perfect mascot of this movement: if government is unnecessary as anything other than an ATM, who better than Bush to lead it? What is more fitting than having a hollow president to head a hollowed-out state?

âe¦And we really donâe(TM)t need any more shocks to wake us up. In Iraq, New Orleans and the other disaster zones, we are getting a crystal clear vision of the world that will be created if they continue to get their way. Itâe(TM)s a world of cowboys and robber barons. They showed their hand with Blackwater, now itâe(TM)s time for the rest of us to put forward a different vision of the world âe” and we can’t do it timidly or apologetically.

Read part I of this conversation here.