The Great Depression of the early 1930’s is in the past, but in the early 1990’s the United States again faces depression aplenty. In late 1990, for example, Saddam Hussein’s invasion of Kuwait and the United States’ Operation Desert Shield meant a long-term American presence in the Middle East while oil prices soared. The American economy was headed for recession in the midst of a savings and loan fiasco, the costs of which may never be fully known, and a protracted federal budget debacle. The latter fiscal mess resulted from the equally problematic leadership of a Democrat-controlled Congress and a Republican-controlled White House. George Bush’s sarcastic “Read my hips” is the sequel to his “Read my lips: no new taxes.” That vow’s hollow promise buried American heads in economic sand while budget deficits climbed higher than Middle Eastern crude.
Events happen faster than books can be written about them. The Politics of Rich and Poor; Kevin Phillips’ brilliant critique of American life in the 1980’s, appeared before some of the aforementioned events took place. Yet none could have surprised him completely. They continue the saga of what Phillips’ subtitle calls “wealth and the American electorate in the Reagan aftermath.”
Irony riddles that story. The world seemed to be going America’s way. The Berlin Wall came down. Much of Eastern Europe rejected communism, embraced democracy, and invested hope in capitalism. The Soviet Union became more friend than foe. Self-congratulation, however, was premature. Enthralled by international developments that appeared to vindicate the United States, the nation’s leaders underestimated socioeconomic distress at home, and it threatened to turn the American Dream nightmarish.
By the end of the 1980’s, homeownership, long a basic ingredient in the American Dream, was becoming only a dream for more and more Americans—especially those in their twenties and thirties. That example is one of many that Phillips had in mind when he began his first chapter—“The Best of Times, the Worst of Times: The Critical Duality of the Reagan Years”—with an apt quotation from The Wall Street Journal of March 31, 1989: “Statistical evidence already suggests that the American dream is fading.” Not everyone, of course, felt so gloomy. For many Americans, the Reagan years and even their immediate aftermath would be the best of times—or so they were led to believe.
Whatever the beliefs, Phillips’ revisionist appraisal shows that the Reagan era produced an immense redistribution of wealth. In that redistribution the poor and working middle class lost ground and the rich—especially the richest of the rich—gained it. If Ronald Reagan’s appeal subdued that intention at first, Phillips further shows how it eventually became dominant.
Very late in the day, Phillips contends, the nation is starting to face the economic devastation that comprises the Reagan aftermath. A 1980’s sea change took the United States from being the world’s largest creditor to being the world’s leading debtor. During the decade, the national debt tripled to more than $3.1 trillion. The “Great Communicator” will be remembered for many things, but few of his accomplishments will be more important than the toll taken by Reaganomics. Phillips’ tally is that it will sap the nation’s strength and standard of living for years to come.
Contrary to the conventional wisdom of Reagan’s most trusted economic gurus—George Gilder, Arthur Laffer, and Milton Friedman, to name a few of these capitalist theologians, as Phillips dubs them—debts and deficits mattered mightily and would not disappear, as their theories predicted. No chorus of hosannas to laissez-faire could change that, nor could the tax cuts and tight monetary policies that were hailed as tickets to prosperity. Some tickets to prosperity there were, but most went to a favored few. Charitably, Phillips thinks philosophy and policy, more than greed, dictated that outcome. Nevertheless, he says, “the American dream was beginning to crumble not just in inner-city ghettos and farm townships but in blue-collar centers and even middle-class suburbs.” That realization portends political upheaval. Most Americans do not resent wealth per se, but they do resent its accumulation through favoritism.
Phillips’ credentials make his deep concern about these results all the more telling. No Marxist or socialist, he is not even a Democrat. This keen observer and astute journalist was the chief political analyst for the 1968 Republican presidential campaign. His conservative identity is as solid as it is long- standing. Appraising the Reagan-Bush 1980’s, Phillips’ voice is that of the responsible critic-from- within.
While focusing on contemporary American politics, The Politics of Rich and Poor has added interest because it includes three important historical dimensions. First, stressing what even American political parties often overlook, Phillips sees conflict over the distribution of wealth at the heart of the American political process. “[Tihe genius of American politics,” he says, “has been to manage through ballot...