BOOK REVIEW
A new voice to Paine's cry of rebellion Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American
Capitalism by Kevin Phillips
Reviewed by Joe Costello
Phillips is one of the more interesting figures American politics has produced
in the past four decades. In 1969, he published The Emerging Republican Majority,
which showed how a coalition of the growing new Sunbelt combined with the old
white South, disaffected from the Democratic party because of Civil Rights,
would together create a long-term Republican majority. He was right.
Yet, a little over two decades into Republican majority rule, Phillips began to
become disenchanted. This disenchantment grew over the past two decades,
leading him to a full-scale
rebellion against not only the Republican party but the American establishment.
What has become clear about Phillips in the past 20 years is that he is part of
a vanishing breed in America, a true small "r" republican. Phillips is of a
bygone era, someone who understands the uniqueness of not only the American
republic but all republics in world history. He has a true republican mistrust
of concentrated power, be it political, economic, or cultural, and an
understanding of the necessity of citizen involvement for the proper
functioning of self-government.
Nietzsche
wrote that any true reformer was always much older than his times, Kevin
Phillip's new book proves the point. What is most interesting about Bad Money
is that it could have been written in 1768. In a frightening fashion, Phillip's
has revived the great nightmare shared by America's founding generation. A
nightmare in which far-off centralized power bankrupts the people with
unaccountable proliferate spending and entangles the nation in needless foreign
wars.
America in 2008, politically, looks regrettably similar to America in 1768.
However, and most unfortunately, it is missing an engaged citizenry and serious
thought on how to reform both the economy and government.
Yet, Bad Money reads as if it is ripped off the front page of this
morning's newspaper. It shows an American economy and government captured by
Wall Street, and a Wall Street so removed from hard economic reality that
Phillips uses Ponzi liberally to describe the last 20 years of great financial
machinations from America's center of capital.
Looking to the examples of 19th century Britain and the 18th century Dutch
republic, Phillips makes a strong case that the American economy has been
hollowed out by the siren of fast money.
He points out these following figures:
Without much publicity, the
financial services sector - banks, broker-dealers, consumer finance, insurance,
and mortgage finance - muscled past manufacturing in the 1990s to become the
largest sector of the US private economy. By 2004-6, financial services
represented 20 to 21 percent of gross domestic product, manufacturing just 12
to 13 percent.
Phillip's adds how this switch and the resulting
American "prosperity" was accomplished by creating a mountain of debt, which in
the past two decades has "quadrupled from nearly US$11 trillion to $48
trillion." It is two decades that saw the abdication of any financial
regulation from Washington DC - both parties are now substantially funded by
Wall Street, and Democrats now lead Republicans in contributions - and the
"financial innovations" (as praised by former Federal Reserve chairman Alan
Greenspan) of derivatives, hedge funds, and securitization, all leveraged to
absurdity. It's all great when it's going up, but when it starts going down ...
Beyond this double, double, toil and trouble financial brew, Phillips focuses
on the increasing inevitability that global peak oil production is sooner
rather than later. Phillips makes no bones about the matter that the American
occupation of Iraq is about oil and states the obvious, "the attempt to make US
energy policy from bomb bays and guided-missile cruisers misfired in 2003".
Finally, Bad Money paints the picture of an American political
establishment not simply complicit but culpable in creating many of the great
problems the republic faces. It is a system controlled by entrenched interests
legislating for their own profit and an American citizenry that has abdicated
their republican responsibilities. Together, they add up to a politics of
evasion, a politics that refuses to meet the actual challenges and problems
America faces. The great question Phillips asks is whether the American
citizenry can rise to the occasion and revitalize and reform their republic.
Going back to Phillips' first book, The Emerging Republican Majority, we
can ask what would an emerging reform majority look like? Phillips gives a
couple suggestions. First and foremost it would need to rein in big finance.
The American republic from Jefferson to Jackson and several times since has
struggled with this issue. Most interesting is Phillips' description of
America's great 19th century democratic mass movement, the Populists. He
writes:
Farm families, especially on the grain dependent Great Plains,
came to understand that they were fighting for their livelihoods. The leading
histories of agrarian populism describe giant meetings, sometimes literally
thousands of wagons gathered on the prairies, to discuss railroads, banks,
unbearably low grain prices, free coinage of silver, and the need in the famous
words of Kansan Mary Elizabeth Lease, 'to raise less corn and more hell.'
Economic pamphlets were passed from farm to farm, periodicals like the National
Economist had a hundred thousand subscribers, and William H 'Coin' Harvey
enjoyed the fruits of bestsellerdom with his book Coin's Financial School.
Compared to early-twenty-first-century torpor and lack of serious financial
debate, the nineteenth century agrarian civic engagement had an almost Fourth
of July quality.
And there is the rub. Not only has America
been expunged of any serious financial debate, everything bowing to the
Efficient Market Theory, but American civic engagement, indeed the very idea of
American citizenship is at the lowest level in the republic's history.
Americans are universally disenfranchised from politics. The old associations
that once allowed them to participate, such as parties, no longer exist,
replaced by television game-show elections that resemble American Idol more
than any functioning political process of self-government.
Yet one can see the basic elements in place for a serious reform majority
cutting across the established political categories of the past 40 years and
focusing on evolving both the economy and government. Twenty-first century
communication and organizational tools such as the Internet offer the American
people the levers to move the great inertia of DC and big finance. The question
is whether they will rise to the challenge and change their government,
economy, and energy infrastructure.
Change is coming to America. The only question is whether it continues the slow
deterioration of the last couple of decades or it reaches some climactic
tipping point. America's financial elite has leveraged and shorted America's
future. Our destiny increasingly is being removed from our hands and put into
the hands of those who hold our debt and those who hold the planet's remaining
oil reserves.
Phillips concludes: "The crisis is no longer in the future, but upon us." So
also cried Thomas Paine two centuries ago, and Americans rose to the challenge.
Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American
Capitalism by Kevin Phillips. Viking Adult (April 15, 2008) . ISBN-10:
0670019070. Price US$25.95, 256 pages.
Joe Costello is a communication and energy consultant. He served as
communications director for Jerry Brown's 1992 presidential campaign and senior
advisor on Howard Dean's 2004 campaign. joecostello@gmail.com
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Nietzsche
wrote that any true reformer was always much older than his times, Kevin
Phillip's new book proves the point. What is most interesting about Bad Money
is that it could have been written in 1768. In a frightening fashion, Phillip's
has revived the great nightmare shared by America's founding generation. A
nightmare in which far-off centralized power bankrupts the people with
unaccountable proliferate spending and entangles the nation in needless foreign
wars.
