Kevin Phillips

p.MsoNormal, li.MsoNormal, div.MsoNormal { margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: "Times New Roman"; }span.Italic { font-style: italic; }div.Section1 { page: Section1; } As the U.S. economy fails to recover, there is a growing fear that the United States has entered a phase of long-term decline. Conservatives blame “big government” for throttling entrepreneurship; liberals tend to take aim at Wall Street.

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As the U.S. economy fails to recover, there is a growing fear that the United States has entered a phase of long-term decline. Conservatives blame “big government” for throttling entrepreneurship; liberals tend to take aim at Wall Street. Rolling Stone writer Matt Taibbi memorably described Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Among less inventive critics, the term in vogue is “financialization.” According to author Kevin Phillips, who popularized this notion, financialization is “a process whereby financial services, broadly construed, take over the dominant economic, cultural and political role in a national economy.”Elements of this thesis can be found in scores of books, articles, and blog posts on the state of the U.S. economy. Phillips blames financialization not just for the “Great Recession,” but for “excessive debt, great disparity between rich and poor, and unfolding economic decline.” In their book, 13 Bankers, former International Monetary Fund (IMF) chief economist Simon Johnson and James Kwak blame financial factors for the “anemic growth” in the overall economy prior to the crash. And, in an influential essay—titled “WHAT GOOD IS WALL STREET?”—The New Yorker economics writer John Cassidy pointedly contrasts the period when regulators restrained the growth of the finance sector (when wages, investment, and productivity grew, lifting “tens of millions of working Americans into the middle class”) with the period of growth experienced by the finance sector since the early ’80s (when “financial blowups have proliferated and living standards have stagnated”). One thing is clear: Financialization, in some form, has taken place. In 1947, manufacturing accounted for 25.6 percent of GDP, while finance (including insurance and real estate) made up only 10.4 percent. By 2009, manufacturing accounted for 11.2 percent and finance had risen to 21.5 percent—an almost exact reversal, which was reflected in a rise in financial-sector employment and a drop in manufacturing jobs. It is also clear that high-risk speculation and fraud in the financial sector contributed to the depth of the Great Recession. But Phillips, Johnson, and the others go one step further: They claim that financialization is the overriding cause of the recent slump and a deeper economic decline. This notion is as oversimplified, and almost as misleading, as the conservative attack on the evils of big government.

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Conservatism Is Dead

An intellectual autopsy of the movement.

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Monday, October 9 Dear Damon, On your blog, which you've recently shut down, you posted links to two diametrically opposed reviews of your new book, The Theocons: Secular America Under Siege. One, by Adrian Wooldridge in The New York Times, calls your tone "admirably restrained, dispassionate and scholarly when it could so easily have been rank and recriminatory." The other, by Commonweal Editor Paul Baumann, accuses you of being "exaggerated and alarmist," not to mention "tendentious" and "frequently cartoonish" in your portrait of your former compatriots on the religious right.

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Idiot Time

Wealth and Democracy: A Political History of the American Rich by Kevin Phillips (Broadway Books, 432 pp., $29.95) Stupid White Men ... and Other Sorry Excuses for the State of the Nation! by Michael Moore (ReganBooks, 304 pp., $24.95) I. As Lord Bryce noted in 1888 in The American Commonwealth, the American way of choosing presidents rarely produces politicians of quality. Subsequent events vindicated his point: in the half-century after his book appeared, Americans elected to the presidency such undistinguished men as William McKinley, William Howard Taft, Warren G.

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The Southern Coup

When the new Republican Congress was sworn in last January, the South finally conquered Washington. The defeated Democratic leadership had been almost exclusively from the Northeast, the Midwest and the Pacific Northwest, with Speaker Tom Foley of Washington, Majority Leader Dick Gephardt of Missouri and Majority Whip David Bonior of Michigan in the House, and, on the Senate side, Majority Leader George Mitchell from Maine. The only Southerner in the Democratic congressional leadership was Senate Majority Whip Wendell Ford of Kentucky.

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Earthquake

President Clinton isn't the only drag on Democrats in the midterm election on November 8. There's something worse: partisan realignment. The same trends that have given Republicans an advantage in electing presidents for more than two decades--an advantage George Bush frittered away in 1992--are now at work in races for the House of Representatives. What gop pollster Richard Wirthlin once called a "rolling realignment" is rolling again.

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Black and Right

Frederick Douglass remarked that “the Republican Party is the deck, all else is the sea.” It was the Republican Party, after all, that had been organized in 1854 to prevent the extension of slavery. It was Abraham Lincoln, a Republican president, who issued the Emancipation Proclamation. And it was the Radical Republicans during Reconstruction who issued the Thirteenth, Fourteenth, and Fifteenth Amendments, outlawing slavery and granting citizenship and voting rights to blacks.

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