Anyone who has ever followed the stock market knows that there
are certain people who are "stopped clocks." They predict market crashes
year after year after year. But like the clock that is right twice a day, if
they keep at it long enough, eventually they are right. However, anyone who
followed their advice consistently would lose money 99.99 percent of the
In politics, too, there are stopped clocks. One is Kevin
Phillips. For more than 20 years, he has been writing books making the same
tired argument about how the rich are running everything, getting richer by
the day off the sweat of the working man's brow, and that they will soon be
brought down by a populist revolt. Republicans are the handmaidens of the
rich in Phillips' various diatribes, and will reap the whirlwind unless they
become Democrats, he repeatedly asserts.
Since the editors at New York publishers are overwhelming
liberal, they are happy to publish Phillips' Republican-bashing whenever
there is a Republican in the White House. True to form, Random House has
just published a new screed by him, "Wealth and Democracy." As in his
previous efforts, it is long on overheated rhetoric and meaningless facts,
and short on analysis and understanding of complex social, historical and
Phillips gets off on the wrong foot literally on the first page,
when he quotes Abraham Lincoln as saying, "As a result of the war,
corporations have been enthroned, and an era of corruption in high places
will follow, and the money power of the country will endeavor to prolong its
reign by working upon the prejudices of the people until all wealth is
aggregated in a few hands and the Republic is destroyed."
The only problem with this quote, which perfectly encapsulates
Phillips' worldview, is that Lincoln never said it. It is a bogus quote that
exists nowhere in Lincoln's speeches and writings. Professional historians
know this. But of course, Phillips is not a professional historian.
Nor is Phillips an economist. This is readily apparent in his
extensive discussion of inflation and deflation, which just happen for no
apparent reason in his book. He alludes to the Federal Reserve's role in
prolonging the Great Depression by causing the money supply to collapse, but
Phillips never links this to the deflation that followed. Nor does he
mention, even in passing, the critical role of the Smoot-Hawley Tariff in
triggering the stock market crash and ensuing economic downturn. To
Phillips, it was all due to "over-consumption" or some other nonsense.
Phillips makes a big deal out of the ups and downs in prices
over the last two centuries, and he even prints a helpful price index all
the way back to 1790 in an appendix. But he almost never converts monetary
values from the past into current dollars. Nor does he put figures into
context, because it would reduce their shock value if he did.
An example of Phillips' misuse of economic data is his
discussion of corporate taxes. He reports that they have fallen from 26.5
percent of federal receipts in 1950 to just 10.2 percent in 2000. The clear
implication is that big businesses are getting away without paying their
fair share. An honest discussion, however, would have pointed out that
corporate profits fell from 12 percent of GDP to 8.4 percent over this
period, explaining almost all the decline in taxes.
Much of the book is taken up with page after page of rich people
and how rich they are or were, as if this has some meaning. Yet Phillips
never notes the heavy turnover on his lists, because it undermines his
thesis that America has become a plutocracy. But as Alexis de Tocqueville
observed 150 years ago, "The rich are constantly becoming poor," and, "the
rich daily rise out of the crowd and constantly return thither." Just look
at all the Internet fortunes that have gone up in smoke lately.
A careful reading of Phillips' sources shows that many are to
openly Marxist historians like Gabriel Kolko and Eric Hobsbawm, and ultra
leftist magazines like The Nation, for whom Phillips now writes. Indeed, the
following quote from Marx could serve as a summary of his book,
"Accumulation of wealth at one pole is ... at the same time accumulation of
misery ... at the opposite pole."
Contrary to Phillips, Lincoln celebrated wealth and the right to
be rich. This is what he really said on the subject: "I take it that it is
best for all to leave each man free to acquire property as fast as he can.
Some will get wealthy. I don't believe in a law to prevent a man from
getting rich; it would do more harm than good."
I think most Americans share Lincoln's philosophy, not the
whining envy of crackpots like Kevin Phillips.
Note: The last Lincoln quote may be found in Roy P. Basler, ed.,
"The Collected Works Of Abraham Lincoln" (Rutgers University Press, 1953),
vol. 4, p. 24. The phoniness of the first Lincoln quote is discussed in
Matthew Pinsker, "The Bogus Quote Kevin Phillips Fell For," available at