The Shock Doctrine

00:28:32,480 --> 00:28:37,370 But when it came to domestic economic policy in the US 360 00:28:37,570 --> 00:28:40,370 where Nixon had to worry of being reelected. 361 00:28:40,580 --> 00:28:42,370 it was a very, very different story. 362 00:28:50,510 --> 00:28:53,680 Friedman enjoyed a friendly relationship with Nixon. 363 00:28:53,880 --> 00:28:56,620 Several of his Chicago school colleagues and disciples 364 00:28:56,650 --> 00:28:58,650 were recruited to work for the government. 365 00:29:00,840 --> 00:29:03,810 Donald Rumsfeld was one of them. 366 00:29:07,510 --> 00:29:10,700 But in 1971, with the economy in a slump 367 00:29:11,000 --> 00:29:13,470 Nixon turned his back on Friedman's ideas 368 00:29:13,670 --> 00:29:16,600 and imposed the wage and price control policy. 369 00:29:16,800 --> 00:29:19,930 He put Rumsfeld in charge. 370 00:29:21,660 --> 00:29:25,350 I have, for long, being opposed to the wage and price control, 371 00:29:25,380 --> 00:29:26,870 I believe it involves 372 00:29:26,900 --> 00:29:29,050 government intervention with the freedom of individuals, 373 00:29:29,080 --> 00:29:30,440 and I think it's intolerable 374 00:29:32,110 --> 00:29:34,090 The Keynesian policy was a success 375 00:29:34,490 --> 00:29:37,990 and Nixon won a second term with a landslide majority. 376 00:29:38,810 --> 00:29:41,530 It was a blow for Friedman. 377 00:29:43,560 --> 00:29:47,710 Then in 1979, Margaret Thatcher was elected Prime Minister of Britain. 378 00:29:49,140 --> 00:29:52,650 Her intellectual guru was Friedman's old mentor 379 00:29:52,850 --> 00:29:54,870 Friederich von Hayek. 380 00:29:55,340 --> 00:29:58,140 And just over a year later, Ronald Reagan 381 00:29:58,340 --> 00:30:01,020 was elected President of the US. 382 00:30:05,410 --> 00:30:10,080 Both Britain and America were now ruled by unabashed Friedmanites. 383 00:30:12,540 --> 00:30:15,602 <i>Margaret Thatcher's program, when she came in, 384 00:30:15,656 --> 00:30:18,028 <i>had four planks: 385 00:30:18,554 --> 00:30:21,234 <i>cut government spending, cut tax rates, 386 00:30:21,380 --> 00:30:23,896 <i>reduce government ownership and operation of industries 387 00:30:23,908 --> 00:30:25,364 or regulation of industry 388 00:30:25,580 --> 00:30:29,540 <i>and have a moderate and stable monetary policy 389 00:30:29,568 --> 00:30:31,368 <i>to bring down inflation. 390 00:30:31,740 --> 00:30:33,860 Within the first 3 years in office 391 00:30:34,060 --> 00:30:36,738 unemployment doubled in post of the economy, 392 00:30:36,749 --> 00:30:38,659 leading to waves of strikes. 393 00:30:39,060 --> 00:30:42,940 Thatchers personal approval ratings swamped to 25% 394 00:30:45,840 --> 00:30:48,550 There were riots in Britain's major cities 395 00:30:50,350 --> 00:30:53,370 Even Margaret Thatcher's admirers had their doubts. 396 00:30:56,850 --> 00:30:59,989 <i>The economic performance through the Thatcher's government has been mixed 397 00:31:05,830 --> 00:31:08,070 To those waiting with bated breath 398 00:31:08,270 --> 00:31:12,010 for that favorite media catch phrase, "the U turn" 399 00:31:12,310 --> 00:31:14,720 I have only one thing to say: 400 00:31:15,270 --> 00:31:17,800 you turn if you want to 401 00:31:20,650 --> 00:31:23,770 "The Lady" is not for turning. 402 00:31:26,660 --> 00:31:28,595 Friederich von Hayek urged Thatcher 403 00:31:28,614 --> 00:31:31,900 to copy Pinochet's economic shock therapy policies 404 00:31:33,475 --> 00:31:34,715 Thatcher replied: 405 00:31:34,915 --> 00:31:37,905 "In Britain we got democratic institutions, 406 00:31:37,933 --> 00:31:40,070 and we do need for a high degree of consent: 407 00:31:40,162 --> 00:31:43,742 some of the measures adopted in Chile are quite unacceptable." 408 00:31:47,480 --> 00:31:49,380 Thatcher's profound unpopularity 409 00:31:49,580 --> 00:31:51,760 seemed to be proving once again, 410 00:31:52,460 --> 00:31:55,840 that free market fundamentalism was simply too unpopular, 411 00:31:56,040 --> 00:31:58,899 too directly harmful to too many people 412 00:31:58,922 --> 00:32:01,412 to survive in a democratic state 413 00:32:01,443 --> 00:32:05,210 where governing requires getting the consent of the governed, 414 00:32:05,410 --> 00:32:07,680 unlike a military dictatorship. 415 00:32:08,180 --> 00:32:13,080 What pulled Thatcher back from the abyss and ultimately saved the project 416 00:32:13,280 --> 00:32:14,647 was a crisis. 417 00:32:14,727 --> 00:32:16,677 Indeed it was the ultimate crisis. 418 00:32:16,886 --> 00:32:18,286 It was a war. 419 00:32:18,540 --> 00:32:22,080 <i>We are here because for the first time for many years 420 00:32:22,280 --> 00:32:26,390 <i>British sovereign territory has been invaded by a foreign power. 421 00:32:26,690 --> 00:32:31,090 <i>