TELLING STORIES, CHANGING THE CONVERSATION

Banking on tragedy: How foreign corporations make a profit from natural disasters

in Highlights/Hurricane Trifecta/Major Collaborative Project by

The privatization of services has become a lucrative outcome for disaster capitalism. In recent years, hurricanes were no exception.

In 2017, six companies in the New York Stock Exchange (NYSE) benefited from natural disasters. The list includes American conglomerates, Procter & Gamble, Home Depot and Lowe’s. From August to October of 2017, during the peak of Hurricane Harvey, Irma, and Maria, nearly all of their stocks experienced a dramatic surge and increased profits.

As of September 1, 2018, one year following the three disasters, this remains true.

San Juan, Puerto Rico – January 2108: Federal Emergency Management Agency contracted a Florida company to provide blue tarpaulin to Puerto Rico.

Another profiteer of last year’s hurricanes is Generac Holdings. The leading providers in standby and backup generators typically utilized during times of crisis, enjoys an increase in sales. Prior to the hurricane trifecta, Generac’s stock was down. During the hurricanes, Harvey and Irma, and days after, it shot up 34 points. This also occurred as Hurricane Maria tore into the Caribbean. For the past year, reports show an increase in Generac’s profits. In the second quarter, net sales increased by $100 million or 24.3 percent,   

A similar trend happened with Home Depot. Before the storms, their stock was also down, but soared during and right after the natural disasters.

Ironically, as Home Depot banks off of the hurricanes, the corporation’s co-founder, Bernie Marcus, through his non-profit, The Marcus Foundation, donated hundreds of thousands of dollars to organizations that denied the reality of climate change and thus the severity of its effects.

Whether it is Delta with $10,000 tickets for residents and tourists in Hawaii to leave the island before Hurricane Norman, or Uber’s price gouging during snowstorms, finding safety and shelter during crises has become a matter of deep pockets.

Storm bucks: Privatizing schools after hurricane devastation  

Debris had not been fully cleared from the roads and small towns in Puerto Rico. Nor had the island’s electricity been fully restored when the issue of privatization of schools emerged. The education department of Puerto Rico announced plans to gradually shut down its public schools then substitute them with charter schools.

The teachers and community, even though most have blue tarp or mold in their homes, fought back. Today, a grassroots campaign rages on the island to stop the privatization of schools. However, charter schools have already embedded themselves in the school district.

Although Puerto Rico’s public school system attempted to move towards privatization, it was after Hurricane Maria wiped out what Hurricane Irma did not, that plans for charter schools were implemented into a population vulnerable from devastating natural disasters and neglect from the Federal government emergency relief.

This has occurred before, after another major storm.

In the aftermath of Hurricane Katrina, New Orleans’ public education system was gutted during recovery. When reinstated, every school in the city changed to  charter schools.

Antony Loewenstein, a Jerusalem-based freelance journalist, writer and documentarian made the film, Disaster Capitalism, to address the direction of development in Haiti, Afghanistan and Papau New Guinea. For him, similar predatory choices in New Orleans after Katrina materialized in Puerto Rico following Hurricane Maria.

“After the devastating Hurricane Maria in 2017, there were moves to privatise the water, land and school system,” Loewenstein said. “The country was already financially on its knee, long troubled by a colonial relationship with Washington, but the natural disaster worsened these trends.”

Continues Loewenstein. “Charter schools are now being pushed on the nation without public consultation, akin to how authorities reacted after 2005’s Hurricane Katrina in New Orleans. In the US, the worst-off children were not helped by this policy.”

The Center for Research On Education Outcomes, revealed data in 2013 showing disparities between traditional public schools and charter schools New Orleans.

Out of 658,720 students, only 37,043 were enrolled in charter schools, 81% of whom were living in poverty. Across the board, Black charter school student and other Black charters had a total of 428 less days to learn math than Black students of traditional public schools who had 156 less days to learn math.

Charter schools, like other businesses that pop up after natural and social catastrophes bank on the misfortune of others, to simply make money, hence the term disaster capitalism. While private enterprise profits from natural disasters, the public ultimately suffers. In other words, death and destruction are big business.

A house is not a home, unless it comes with profits

Whereas privatizing government housing after Katrina was implemented, privatizing electricity is the agenda in Puerto Rico.

“Policy makers have clear choices when addressing the aftermath of a natural disaster; rebuild public services back better and more resilient to future disasters or abandon public works and solely engage the private sector. The effect of the latter is clear, making many services inaccessible for residents who can’t afford it,” Loewenstein said.

In New Orleans, a significant number of low wealth residents were not able to move back to their pre-Katrina neighborhoods because they could not afford it. The city had already privatized public housing. Following Katrina, landlords who were either wealthy individual owners or real estate firms repeatedly denied previous residents or hiked up prices making affordable housing scarce.

Though federal housing vouchers had been issued in New Orleans after Hurricane Katrina displaced thousands of poor families, in 2009, 75% of test cases that had been conducted by the Greater New Orleans Housing Center, revealed that landlords had refused to accept such vouchers.

Seven percent of test cases also revealed that landlords who accepted vouchers made provisions that made it impossible to rent units with housing vouchers alone.

Turn off the lights

A sputtering infrastructure and weak economy that included a failing utility system before the massive storms, propped private entities to recently purchase a significant part of the Puerto Rico’s power grid from Puerto Rico Electric Power Authority (PREPA).

“Long before the hurricane last year, Puerto Rico was devastated by the financial institutions… The country’s status as a ‘Commonwealth’ should have never allowed it to be placed within bankruptcy status,” explains Azikiwe. He continues, “This was done in order to create the conditions for further privatization, subservience to the banks, the breaking of the strong public sector unions and the depopulation of the island,”

“Some of the same players who engineered the Detroit bankruptcy five years ago are present in the Puerto Rico scenario. For example, retired Federal Judge Steven Rhodes, who presided over the largest municipal bankruptcy in United States history, has been working as a consultant in Puerto Rico. Jones Day law firm which took over the legal processes in Detroit during 2013 is also involved in the Puerto Rico bankruptcy.”

Azikiwe attributes this debt to predatory bond and lending practices, leading to the surge in private contractors. He also mentions the inadequacies of government in handling a natural disaster in Puerto Rico.

“The $9 billion in debt for PREPA is related to the predatory loans and bond issues which rendered the country incapable of carrying out proper maintenance in the energy sector. The government agencies responsible oftentimes are not effective in evacuations and relief. People are permanently dislocated as what happened in New Orleans and along the Gulf in the southern United States in 2005. Private contractors are given public money to conduct disaster relief and reconstruction.” Azikiwe said.

Privatizing basic human necessities makes disrupted regions like Puerto Rico more vulnerable.

“Most of the work never gets done,” commented Azikiwe. “We have seen many examples of this in other areas such as Haiti. [PREPA was] supposedly awarded a contract [by] Whitefish Energy from Montana for $300 million; which has, since last year, come under scrutiny. Another contract with Cobra Acquisitions to rebuild the power lines raised serious issues as well.”

Puerto Rico is in another hurricane season, and the electrical grid is still being rebuilt along with major repairs to housing and roads. As Hurricane Norma has positioned itself to pounce on Hawaii, investors have already positioned their stock.

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Jesse Shramenko covers current news. he story is part of the Ark Republic’s inaugural major collaborative project, the Hurricane Trifiecta: One Year Later.

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