Kevin Phillips on Money Politics
posted by Frank Pasquale
What explains the simultaneously record-low approval ratings of a President and the very-low approval ratings of a Congress controlled by his political enemies? One simple answer is that a party without 60 votes in the Senate does not actually control Congress, as this Lithwick piece on the filibuster of the Lilly Ledbetter Fair Pay Act makes clear. But Kevin Phillips’s new book Bad Money suggests a darker possibility:
Most office holders on both sides seem to rest easier if everyone stays away from uncomfortable themes, even ones in the headlines, like costly U.S. overreach in the Middle East; the reckless expansion of private debt, as well as the federal budget deficit variety; the new economic (and political) dominance of the financial sector; and the mounting probability that the nation will have to choose between desirable energy supplies and global warming measures. . . .
Washington, D.C., Ottawa, and Canberra. . . have become shorthand in their respective electorates for (1) metropolitan areas with strikingly high (and recession-resistant) per capita incomes; and (2) hothouses of seething interest-group concentration where elected representatives, shedding whatever grassroots fealty they may once have possessed, often train to retire after ten or twelve years to triple or even quintuple their salaries by becoming lobbyists. . . .
[T]he United States has progressed to a new kind of interest-group influence: the simultaneous
entrenchment in Washington of the used-up, don’t-want-to-go-back-to-Peoria elites of both major parties. This electoral duopoly is in turn protected by various state and federal election and campaign-finance laws that make it hard for new parties to take hold or flourish. It’s not that there aren’t differences between the parties; it’s just that they are limited differences and ones often reflecting cultural polarization.
So what’s next, in Phillips’s view? Here’s a summation drawn from a positive review of Bad Money:
“My summation,” Phillips writes, “is that American financial capitalism, at a pivotal period in the nation’s history, cavalierly ventured a multiple gamble: first, financializing a hitherto more diversified U.S. economy; second, using massive quantities of debt and leverage to do so; third, following up a stock market bubble with an even larger housing and mortgage credit bubble; fourth, roughly quadrupling U.S. credit-market debt between 1987 and 2007, a scale of excess that historically unwinds; and fifth, consummating these events with a mixed fireworks of dishonesty, incompetence and quantitative negligence.”
Phillips bases those worries on, among other things, the fact that over “three decades, financial services have expanded from 11% of America’s gross domestic product to a record 21%, while manufacturing has declined from 25% to 13%.” I look forward to reading the book to seeing how he critiques these comparative numbers (a theorist like Richard Rosencrance would likely see a rise in financialization as a good thing). But given the current crises in food, oil, and even some water supplies, and the extraordinary unemployment greater globalization could bring to the US, a more autarkic economy may have to be “on the table” for serious policy analysts.
April 29, 2008 at 9:03 am
Posted in: Current Events
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