[CP-List] Paul Kennedy on Kevin Phillips

Jeffrey St. Clair sitka@attbi.com
Mon, 20 May 2002 08:46:23 -0700


SUNDAY BOOK REVIEW The Power Elite

By PAUL KENNEDY

WEALTH AND DEMOCRACY A Political History of the American
Rich By Kevin Phillips Broadway Books: 474 pp. $29.95

It is a truth universally acknowledged that as individuals
become more successful, more established and older, they
generally become more attached to a socio-economic order
that rewards success. It is unusual and extraordinary,
therefore, for an individual, while living comfortably, to
grow increasingly critical of the existing order.

Such is the case with Kevin Phillips, who has been one of
the most distinguished and thought-provoking commentators on
the American political scene for more than 30 years. With
roots firmly anchored in the Republican Party, Phillips
became a young chief political analyst during the 1968
presidential campaign, which culminated in Richard Nixon's
victory. In light of that campaign, he wrote his first major
work, "The Emerging Republican Majority" in 1969, a daring
book that peered through the tumults of radical protest, the
women's movement, human-rights campaigns and antiwar
feelings to see that the Democratic party was losing much of
its traditional base and that the South and West could fall
increasingly into the Republicans' lap.

Twenty-one years and four books later, a different sort of
Phillips emerged in the form of "The Politics of Rich and
Poor." The title itself was a giveaway: In some Republican
circles, the mere mention of "the poor" is bad form, but
here was Phillips discussing the socioeconomic clefts that
had emerged by the end of the Reagan era and raising the
issue of fairness. This did not cause the already rich and
successful to pause, nor did those who frantically
endeavored to emulate them during the Wall Street boom of
the 1990s lose their eagerness to become rich. It did,
however, make Phillips something of a maverick and a
doomsayer. One critic called him a Nostradamus. Cassandra
might have been better.

If that book made the defenders of great riches and low
taxes irritable, "Wealth and Democracy" will give them
apoplexy. Phillips' new book is subtitled "A Political
History of the American Rich," and so it ranges back to the
late 18th century, chronicling the growth of the great
family fortunes, like those of the Vanderbilts, the Astors,
the Rockefellers and the Morgans through the hurly-burly of
gaining and spending wealth in the last century. The reading
is wide but not exhaustive, and the narrative is complex
because it is more thematic than chronological. There are
lively chapters on political influence, corruption and
speculative bubbles, others on the role of technology and
the sources of wealth. But this is no mere social history of
the wealthy in America. It comes with a punch.

At one level, what Phillips says is predictable. It follows
"The Politics of Rich and Poor" but with even more power and
more statistics, drawing upon census figures and other data
that point to the ever-increasing unevenness of American
incomes as the 1990s unfolded. The broad trends are well
known, though they are presented in withering detail here.

Top executives, who in general were content with earning
around 40 times their workers' average pay a quarter-century
ago, were in many cases pocketing more than 200 times by the
end of the last decade. Successful company leaders were
awarded, by grateful boards, annual compensations that
leaped ever higher. In an amazing chart titled "Up, Up and
Away," Phillips shows that while the highest-earning
executive in 1981 made a then-mind-boggling $5.7 million,
his equivalent in 1988 received $40 million, and his
successor to that title in 2000--John Reed of
Citigroup--accepted $290 million in compensation. Tax breaks
and special concessions for special interests--agriculture,
oil and gas--were negotiated with an obliging Congress.
Welfare mothers, by contrast, lost out, as did virtually all
other vulnerable elements of our society. Tens of millions
of Americans live under the poverty line, without the basic
welfare net that is commonplace in Canada and Europe. Though
this imbalance of wealth does not exist in any other Western
society, it is commonplace in corrupt regimes in the
developing world, like Indonesia.

Within a short while, free-market economists and
conservative professors will be wheeled out in droves to
attempt to pick holes in Phillips' statistics and to
demolish his arguments. But such a reaction to prove
Phillips wrong may miss two important aspects of "Wealth and
Democracy."

The current celebration of wealth in this country is nothing
less than an abdication of the philosophies of some of the
greatest Republican leaders, Abraham Lincoln and Teddy
Roosevelt, who were the most unrestrained in their
condemnation of excessive concentrations of wealth, of its
capacity to corrupt true democracy and of the need to rein
in its excesses and to pay more attention to the country's
social fabric. In his preface, Phillips quotes from a
stunning Nov. 21, 1864, private letter from Lincoln in which
the president sounds eerily like George McGovern or Ralph
Nader when he confesses his worry and trembling that "as a
result of the war, corporations have been enthroned, and an
era of corruption in high places will follow, and the money
power of the country will endeavor to prolong its reign by
working upon the prejudices of the people...."

Phillips has a similar field day in quoting statement after
statement from Roosevelt reiterating the opinion that labor
is more deserving of support than capital and that too much
wealth in the hands of a small minority is not only
offensive to the American sense of fairness, it is dangerous
to the republic itself. Excess money, in this view,
purchases special privileges, corrupts low-paid officials
and distorts the electoral will. In a narrower sense, it is
also dangerous to the Republican Party, which brings us back
to where Phillips started off his long career.

In one of the niftier sections of "Wealth and Democracy," we
are reminded that Nixon was in favor of higher taxation of
unearned income, as opposed to earned income, and increased
subsidies for the poor. Such embarrassing details are
assembled not by someone who has drifted into the ranks of
the Democratic party but by a Republican who thinks his own
party has lost its roots and its decency.

Phillips then goes on to argue that such excesses of wealth
and greed and inequity have helped bring down--or may even
have been the chief cause in bringing down--virtually all
flourishing great powers in the past and that the United
States will be no exception. More than in any previous work,
the author has scoured the history of other countries (Rome,
the Dutch republic, the British empire) to prove his point,
and his examples are convincing. For all the claims of
American exceptionalism and for all the evidence around us
of this country's preeminence in the fields of military,
economic and technological power, Phillips assembles too
many troubling historical analogies for the reader to shrug
off his point. The Dutch in their golden age of the early
18th century, and the staggeringly rich landowners and
bankers of late Victorian Britain were, though they did not
know it, not far from their slow demise.

This is, then, a call to action. The political analyst of 30
years ago has become the soothsayer, social critic and
economic reformer of the early 21st century. Predictions
nearly a half century ago about the spreading grip of the
Republican Party have been replaced by stern warnings that
this very party is treading on dangerous waters and harming
the American democracy.

"Wealth and Democracy" is a brave book. It will be
interesting to see how it fares as this year's election
campaigning develops. But my guess is that it will outlast
most of the cant that passes as political discourse today,
and we will be better for it.

* * *

Paul Kennedy is the author of numerous books, including "The
Rise and Fall of Great Powers: Economic Change and Military
Conflict From 1500 to 2000." He is a history professor at
Yale University.