THE PAULA GORDON SHOW
Money, Empire & Collapse

Kevin Phillips

     ... political & economic analyst, and author. Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism joins Mr. Phillips’ other bestsellers: American Theocracy, American Dynasty, The Politics of Rich and Poor, Wealth and Democracy, and The Cousins Wars. A former Republican strategist, he first became known for The Emerging Republican Majority in the late ‘60s, and has subsequently written more than a dozen highly regarded books. Mr. Phillips writes for the Los Angeles Times, Harper’s Magazine and Time.

The United States’ whole economy is now dominated by finance and that is a huge mistake, says Kevin Phillips. He’s one of the nation’s premier economic and political analysts, who bases his deep concern for the country’s future on his careful study of failed empires. While the financial sector has quietly taken over the economy, he says, the American electorate has tolerated politicians who have no sense of what America's changing role must be.

“Finance is the biggest thing in the (American) economy, while we pretend there’s another real economy. Finance has 20 to 21% of gross domestic product (GDP). Manufacturing is down to 12%. There is no historic example of a great power that has let itself financialize, where manufacturing has been subordinated, that has come back from it.

“Now America has taken a huge black eye in the financial world, on top of the very well deserved black eye in Iraq which basically wound up quintupling the price of oil. We've got housing prices collapsing, we've got debt building up like never before. We've got oil going over the moon, and the dollar committing currency suicide. The crisis cannot be addressed without understanding how big finance has become.

“Essentially finance has run amok. We have to worry because you can’t have 20 to 21 percent of the GDP implode without paying a huge price. Manufacturing was something that spread prosperity. It took a large part of the American work force and made them blue collar and middle class. Very few people make a better living out of finance. (Wall Street) is really the group that’s profiting. Enormously.”

Mr. Phillips outlines many of the ingredients that have allowed finance’s rise. In addition to credit cards, crazy financial instruments, exotic mortgages, he blames bad numbers.

“Economic statistics are misleading Americans. Those statistics are starting NOT to mislead people overseas who are selling the dollar because they can't believe American statistics. We may actually have negative GDP growth. The Bush Administration (reportedly) cooked the unemployment numbers. The Consumer Price Index (CPI) was redefined in the late seventies and early eighties. We probably have 6 to 9 percent inflation. (Suppressed statistics) made a good part of the housing bubble possible, the bubble for which we’re now paying such a huge price. And some say the Social Security of a person who retired back in the 80's might actually be about 50% higher now if there had been legit, fully straightforward numbers.”

He points fingers at Democrats and Republicans alike, as well as the American people.

“The Republicans were in power during the ‘80s when you had the first wave of financial bailouts. (The Democrats) were involved in three or four bailouts. Bill Clinton and financial Democrats were very much involved in deregulation, doing away with Glass-Stegall and credit card regulation. Then the Republicans came back with George W. Bush and it was more of the same. Right at the heart of it, politicians don't want to make any decisions, much less the hard ones.

“There's no record of politicians being able to grapple with this and turn it around. I guess I've reached the point where I think all you can do is try to mitigate it and hope that the transition process is perhaps less painful than usual. And that when we come out at the end of the non-imperial tunnel, things are better.”

 

[This Program was recorded April 22, 2008, in Atlanta, Georgia, US.]

Acknowledgements

  

Bad Money is a vital addition to Mr. Phillips’ series of critically important books, a clearly-articulated indictment of greed, avarice and predation.

  

As always, he is admirable in presenting hard cold facts, grounded in good old-fashioned data. The information and interpretation he has provided is twice appreciated – both for the essential information he provides and for filling in the holes left by an irresponsible mainstream media more interested in profit than service.

  

 As individuals and as citizens, we applaud Mr. Phillips’ diligence and his courage. We hope the day is near when he can turn his attention back to less pressing issues.

  

Prior to the current crisis, the financial sector of America's economy accounted for more that 20% of GDP and 40% of profits ... an historical prescription for decline and disaster.

Related Links:

  

Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism is published by Viking, a Member of Penguin Group (USA).

  

Our three earlier programs with Mr. Phillips:  Dynasty & Crony Capitalists, American Trinity: Religion/Oil/Debt and Who's Winning the Revolutions?

  

Robert A.G. Monks provides a clear analysis of and straightforward prescription for what ails the American economy in Corpocracy:  How CEOs and the Business Roundtable Hijacked the World's Greatest Wealth Machine -- And How to Get It Back.

  

In a series of books, John Dean has provided detailed insight into the role of the Republican Party and Republican administrations in undermining political processes in America and, specifically, effective economic oversight and regulation.

  

Tim Weiner documents the CIA's intelligence failures and political meddlings which have contributed to America's current dilemma.

  

Edward J. Larson clearly demonstrates the continuing role of the "high federalists" in American politics in A Magnificant Catastrophe.

  

Issues surrounding the parallel roles of energy policy (and its absence) and enviromental policy (and its absence) as they relate to global climate change have been addressed by a number of our guests, including:  Paul Hawken, Richard Leakey, Edward O. Wilson, Amory Lovins, William Calvin, Riki Ott, and Mike Tidwell.

  

Frank Partnoy describes the dangers of allowing the interests of economic elites and businesses to supersede public interests.

  

... and, here's a little background information on Paula Gordon and Bill Russell, the Program co-hosts.
 

For years Kevin Phillips has suffered the fate of a truthful witness roundly ignored. His references for the consequences of America's imperial aspirations are former imperial powers: Britain, Holland, Spain and Rome and the economic collapse of each. Politicians, he has concluded, will not save us.

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