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Unformatted text preview: awling disaster-capitalism complex. Today, global instability does not just benefit a small group of arms dealers; it generates huge profits for the high-tech-homeland-security sector, for heavy construction, for private health-care companies, for the oil and gas sectors-and, of course, for defense contractors. E 56 HARPER'S MAGAZINE / OCTOBER 2007 The scale of the revenues at stake is certainly enough to fuel an economic boom. Lockheed Martin, whose former vice president chaired the Committee for the Liberation of Iraq, which loudly agitated for the invasion, received $25 billion in U.S. government contracts in 2005 alone. Democratic Congressman Henry Waxman noted that the sum "exceeded the gross domestic product of 103 countries, including Iceland, Jordan, and Costa Rica ... [and] was also larger than the combined budgets of the Department of Commerce, the Department of the Interior, the Small Business Administration, and the entire legislative branch of government." Lockheed itself deserved to be characterized as an emerging market. Companies like Lockheed (whose stock price tripled between 2000 and 2005) are a large part of the reason why the U.S. stock market was saved from a prolonged crash following September 11. While conventional stocks have underperformed, the Spade Defense Index, "a benchmark for defense, homeland security and aerospace stocks," went up 76 percent between 2001 and 2006-while Standard & Poor's 500 average dropped 5 percent in that same period. The Davos Dilemma is being fueled further by the intensely profitable model of privatized reconstruction that was forged in Iraq. Share prices of heavyconstruction companies, which include the big engineering firms that land juicy no-bid contracts after wars and natural disasters, went up 300 percent between 2001 and July 2007. Reconstruction is now such big business that investors greet each new disaster with the excitement of hot initial public stock offerings: $30 billion for Iraq reconstruction, $ 13 billion for tsunami reconstruction, $110 billion for New Orleans and the Gulf Coast, $7.6 billion for Lebanon. Terrorist attacks, which used to send the stock market spiraling downward, now receive a similarly upbeat market reception. After September 11, 2001, the Dow Jones plummeted 685 points as soon as markets reopened. In sharp contrast, on July 7, 2005, the day four bombs ripped through London's public transportation system, killing dozens and injuring hundreds, the U.S. stock market closed higher than it had the day before, with the Nasdaq up 7 points. A year later, on the day British law-enforcement agencies arrested twenty-four suspects who had allegedly planned to blow up jetliners headed to the United States, the Nasdaq closed 11.5 points higher, largely thanks to soaring homeland-security stocks. Then there are the outrageous fortunes of the oil sector-a $40 billion profit in 2006 for ExxonMobil alone, the largest profit ever recorded, and its colleagues at rival companies like Chevron were not far behind. Like the fortunes of corporations linked to defense, heavy construction, and homeland security, those of the oil sector improve with every war, terrorist attack, and Category 5 hurricane. In addition to reaping the short-term benefits of high prices linked to uncertainty in key oil-producing regions, the oil industry has consistently m...
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This note was uploaded on 04/19/2011 for the course AMST 150 taught by Professor Perkinson during the Fall '10 term at University of Hawaii, Manoa.
- Fall '10