Published in the September 2002 issue of The Progressive



by David Barsamian


Kevin Phillips

Has anyone noticed the number of books on the bestseller lists that are of a progressive bent? Michael Moore, Barbara Ehrenreich, and Noam Chomsky are now joined by Kevin Phillips and his Wealth and Democ­racy (Broadway Books). Phillips has an interesting pedigree. He was a political analyst for the 1968 Nixon campaign. A year later, he wrote The Emerging Republican Majority, an influential and prescient assessment. But his politics have evolved over the ensuing decades. Today, he is indignant about the power and privilege of the upper class.

"I have no particular problem going on some talk show and conjoining the facts that I worked for Richard Nixon, I supported the impeachment of Bill Clinton, and I'm busy now attacking the rich and the laissez faire politics of the current Republican Party," he tells me in almost one breath.

The same kind of hubris that draws his wrath on domestic issues extends to foreign policy. "The whole notion of attacking Iraq is absolutely crazy," he says. "Compared to George W, his father looks like the second coming of Napoleon." And then he warns, "We court some of the problems the British got into when they became overextended."

He doesn't mince words when it comes to denouncing the "economic overclass" with its "mon­eyed control of politics." He adds, "As the twenty-­first century gets under way, the imbalance of wealth and democracy in the United States is unsustainable."

Phillips is far and away NPR`s most left‑of‑center commentator on economic issues, although lamentably this is not a great achievement. He has, alas, no competition.

I caught up with him when he was in Boulder in late June as part of his nationwide book tour. He wore a suit and was, as they say, all business. With vir­tually no prologue, we sat down and started the inter­view. I liked his straightforward no‑nonsense approach. And as you'll see, he anticipated the further decline of the stock market as more and more scan­dals have come to light.

Q:  When did you start doing commen­taries for National Public Radio, and how have your views changed since you began there?

Kevin Phillips: I've done them since 1984. In the beginning, NPR viewed me principally as someone whose roots were in conservative politics. And then I became disenchanted with the economic side of the Republican Party. So I was moving into a more middle‑of‑the‑road posture in the late '80s all the way up through the 1990s. But I could never stand Bill Clinton. And he sort of confirmed my doubts when he spent his last day in office pardoning a fugitive billionaire. Even Republican Presidents didn­’t do that.

Q: Ben Bagdikian, a Pulitzer Prize‑winning jour­nalist, wrote The Media Monopoly in 1983. In it, he identified fifty corporations that controlled the media in the United States. That number has now shrunk to six. Does this kind of concentration pose a problem for a democratic society?

Phillips: It clearly does. I can’t remember at any time in history when the media played such a large eco­nomic role. It's one thing to make sure the govern­ment doesn't interfere with the press when the press was just finding its footing as a private business. But now, when it's such a massive corporate enterprise, and when it's large enough to compel government to do what it wants ‑ as in the case with the giving away of all the airwaves to the broadcast industry ‑ that's a unique combination of power and leverage that we haven’t seen in a democracy before.

Q: In Wealth and Democracy, you talk about democratic values being weakened or eroded by huge gaps between rich and poor.

Phillips: When great wealth collects the way it has in the last two decades, it develops an arrogance, and you see it in financial gamesmanship and Ponzi schemes like we're seeing in the newspapers every day now. You see it in the corruption of politics. You see it in the development of a survival‑of‑the‑fittest phi­losophy, one that says markets are more important than democracy, one that says, basically, everything should be for sale when you get right down to it. And when you have one of these bubbles that gets too big, it does more than indict markets, it causes an awful lot of trouble for ordinary people. When we read about WorldCom and all of its staggering accounting games, what no one seems to want to mention is that 17,000 people were discharged as a result. Now peo­ple may say the markets cure themselves, but lots of people lose their livelihoods and lose their pensions. And the complicity of wealth in all of these things is substantial.

Q: Let me put you in the shoes of the high‑tech plutocrats who say, "Hey, we take the risks, we cre­ate the jobs, we create the wealth, we deserve whatever we make."

Phillips: First, I don't think they create that many jobs. There's no doubt that anybody who takes the total hirings of Microsoft, Cisco, and the others and adds them together will come up with a quarter of the number of people that General Motors alone hired during one of its peak periods during the 1960s and '70s. At the bottom of the high‑tech sector, there are a lot of employees working part‑time with very low wages and no benefits. And for the few at the top it's a gold mine. So it hasn't created enormous numbers of jobs, and it may have, in fact, created more in India and Taiwan and other places where they out­source a certain amount of their circuit boards and other components for production. Now in terms of new wealth, it's in the hands of a few people. But did they create all of this? Did they do this on their own hook? The answer is, no way. Because whether you take railroads that were built with large amounts of public aid and public land grants, or you take tech­nology, all of them relied on massive federal support and Defense Department funding. And in no sense did all these people pioneer this themselves, They piggybacked. And if you look at how long the Unit­ed States government supported the software and semiconductor industries, these people don’t have the wherewithal to go talk about how they did all this, and beat themselves on the chest saying, "Me great entrepreneur! Me do all this in garage!" That's a lot of garbage. They didn't do it in a garage. The federal government did it with a whole lot of contracts.

Q: And that's also true of the pharmaceutical industry where they got a lot of research and development done through the National Institutes of Health.

Phillips: The drug industry has been permitted through very favorable tax laws and regulatory treat­ment to sell drugs more cheaply overseas and then insist the high prices they charge here are justified by their research and development outlays.

Let me touch on another industry that has enjoyed massive federal support that doesn't get the attention it deserves ‑ the financial sector. Now this is a major problem for people who talk about market economies and free enterprise and don't want any help from the government. When is the last time you heard somebody in the finan­cial sector say, "I don't want any help from Alan Greenspan"? Or, "He should stay the hell out of my life"? They want help from Alan Greenspan and from the Treasury every year for every crisis you can imag­ine. Since the early 1980s, you've had the federal government bailing out the people who held Latin American debt, the banks in Texas and Continental Illinois, and the savings and loan bailout. Then we went into the 1990s with the peso bailout in Mexico and Long‑Term Capital Management. They have made finance the most subsidized, petted, and socialized industry in the United States. And this is the crowd that will tell you about the purity of markets and free enterprise. If you hadn't had this whole level of government activism in support of the financial industry you probably would never have had a Dow that got over 5,000. So obviously the role of govern­ment is cherished by much of the free market crowd.

I'd love to debate one of these clowns. Look, my background is Republican. I speak Republican. I know the language. These people arc balloons waiting for a lit cigarette to pop them.

Q: So in some sense, there's an ethic of socializing the costs and privatizing the profits?

Phillips: The grossness of all this begins to grab you. A lot of conservatives helped set up the mechanisms for Medicaid, where the aged, the disabled, and the poor have to basically strip themselves of their assets to qualify for federal assistance. These same conserva­tives then turn around and attempt to get rid of the inheritance tax so that people with a whole lot of money don't lose any of it.

Q: Enron, WorldCom, and many other companies caught in the current scandal were engaging in aggressive accounting. What is aggressive accounting?

Phillips: Aggressive accounting is lying with num­bers. This is part of what I see as the financialization of the United States. So much of what's created in this country is a numbers game now. The United States that was built around making things or moving things or growing things or manufacturing things has become an economy of manipulation.

Q: In the ‘'70s and '80s, Japan was held up as an economic model where workers would exert them­selves enormously. They were contrasted to Amer­ican workers, who were portrayed as lazy. Now Americans are working more in an average week than their counterparts in any industrial country. And they get the fewest number of vacation days, and they get the fewest benefits.

Phillips: It's a sickening transformation, when you look at the statistics and you cut through some thick underbrush. Not only have the American workers' hours gone up while others' hours have gone down, the others' wages have gone up and ours have fallen, and the others' benefits have gone up while ours have erod­ed. And the average working person in the United States right in the middle quintile would be better off in Norway, Holland, Switzerland, probably Germany, Sweden, and a few others.

Q: The Republican Party used to be the party of Lincoln. He had some pretty sharp comments to make about labor and capital.

Phillips: The Republicans with their current policies are going back on a huge portion of Republican his­tory. One of Lincoln’s most heartfelt views was that labor is more deserving of support and preference than capital. He supported the workers' right to strike in some very controversial situations. By 1864, he was making some fairly radical statements about new powers congealing in Washington that were trying to "do" the workers and the ordinary people out of their future.

William McKinley, oddly enough, was a man whose view of labor was quite akin to Lincoln's, and he had to keep it away from a lot of the Republican hierarchs. And in 1900, he picked as his Vice Presi­dent, who then succeeded him, Teddy Roosevelt. They had both been against corporations in some of their tax policies ‑ McKinley as governor of Ohio, Roosevelt as governor of New York. People don't real­ize this. And Roosevelt, when he became President, he despised the plutocrats with a special verve because he was old money. In a way that no liberal or social­ist could, he conveyed that they were dirt and they didn't respond to their social obligations, and he just took off after them. He left the Republican Party and he called them every name in the book.

And that's why I like John McCain. He said he wanted to be another Teddy Roosevelt. He said the Republican establishment was like the Death Star. He said the tax bill is just another ripoff, None of the Democrats had the guts to say that.

So there is a Roosevelt/Lincoln tradition in the Republican Party that this present crowd doesn’t honor.

Q: The whole issue of tax cuts is a political reli­gion in this country. People go to the altar and lit­erally worship at it. What explains its tremendous power over both parties?

Phillips: Conservatives worship at the altar of supply-­side tax management, which is tax cuts. They think tax cuts cure everything but warts. But liberals don’t have the same view of tax policy. Their idea is higher taxes are sometimes necessary to redistribute wealth. They've had to back off that, because the necessity of raising money from the people who have money in the United States has made a lot of liberals very leery. So they back off. They want to pretend that it's only a few individuals who are to blame because it's a lot eas­ier to raise money from your campaign contributors if you're saying, "Aw, this is just a few bad eggs, and most businessmen are upstanding, and so forth." Most may be upstanding, but the milieu has become sleazy. And in order to reinforce the upstandingness of the fair number of them you have to crack down on some of the bums. And you have to start seeing, even as George W. Bush and others have been saying, some real jail terms for these people. And we can start with George W.’s pals at Enron.

Q: Do you see any parallels between what's going on now and the period leading up to the Crash of '29 and the Great Depression?

Phillips: Yes, though what we've seen so far is a less painful version. Let's hope it stays that way. We haven't had the second‑stage economic problem. I think there will be one. You had a recession that was developing in 2001 that was actually aborted by 9/11 because of all the stimulus that was brought to bear. We'll probably have another recession sometime beginning in 2003 with a fairly short business cycle this time. That could take things down quite a bit more, and that could radicalize a lot more people. But the joke I make ‑ which isn’t a joke ‑ is that you're going to radicalize a lot of Republicans in suburbia if they start watching their 401(k)s, their retirement programs, become 201(k)s. Middle America could become furious at the financial and corporate circles. But all of this will abate if there is another terrorist attack, which may create a garrison‑state mentality that would allow politicians to shift attention away from what's happening to the people in the middle and the bottom economically.

Q: Are you concerned about the infringement of civil liberties in such a garrison state?

Phillips: You have to be concerned. But if you know history, you know that it's always been temporary. Lincoln suspended habeas corpus. There were all kinds of abuses during World War I. FDR interned Japanese Americans. So these violations happen, but they don't outlast the war. But the prospects of what could occur in a garrison‑state situation of indetermi­nate length that didn't end with any negotiated peace could stress us a good bit more.

Q: How do you change the culture of greed?

Phillips: The first thing is that CEO pay has to become a scandal. Back in the late 1960s and early 1970s, the ratio between CEO pay and pay of the aver­age worker would be somewhere between 25‑ and 40-­to‑1. By 2001, it was up to 460‑ and 470‑to‑1. It moved up steadily as CEOs basically became con­vinced the world was their feeding trough. They aggrandized and aggrandized and aggrandized. And often they got their stock price up by cutting people and by dumping middle‑aged executives whose pensions they didn’t want to pay. Business Week started tab­ulating back in the 1970s the total compensation of the highest paid executives in the United States. The ten highest in 1980 or 1981 averaged $3.1 million. By 1988, the ten highest averaged $22 million. By 2000, they averaged $155 million. So this is the buildup you’re getting, at the same time the average non-super­visory manufacturing worker's pay was going down, adjusted for inflation, and people in the middle were running in place. This is what happened in the upper echelons of corporate America. And these, frankly, are the bums who are now appearing in the news shows day after day after day as the frauds are revealed. I'm not saying that they all did this by a long shot. But everybody got used to CEOs grabbing. Even honest fellows got $10 million to $11 million a year because the sleazeballs were puffing up the process.

The second thing that has to happen is that you have to have the bottom fall out of portions of the stock market. Then the average person says, "These bums promised us nirvana and Shangri‑La, but it was just to feather their own nests, and now it's all com­ing undone."

And lastly, what has to happen is that all the peo­ple in the '80s and '90s who were held up as heroes - ­the entrepreneurs, the builders, the achievers ‑ must now be seen as the crooks, the Ponzi schemers, the ripoff artists, and the sleazeballs that they are. And even if that doesn't hold true across the board, and it doesn't, it's a reasonable turnabout.


David Barsamian, director of Alternative Radio in Boulder, Colorado, is the author of "The Decline and Fall of Public Broadcasting" (South End Press). His last inter­view for The Progressive was with Tariq Ali in January.



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