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Home » Opinion » Book review
Behind America's ravenous rush to the precipice
By Wan Lixin |
April 4, 2009, Saturday
|
Print Edition
Print Edition
MANY are the books today dedicated to the unfolding economic crisis, but Kevin Phillips' new work is notable in its attempt to explicate the hidden intentions and motives.
By comparison most politicians and economists prefer to take refuge in obtuse figures and technicalities that are always abundantly available in hindsight.
Thus, Phillips' "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism" is very accessible to the general readership.
The book focuses on the disproportionate role of finance and oil dependence in the US economy, and concludes that America's political establishment is ill-equipped to meet the challenges of this crisis and beyond.
Although the work was published last year just before the American presidential election, the author looks beyond the immediate storm and seeks parallels in past empires.
"The most worrisome thing about the vulnerability of the US economy circa [September] 2008 is the extent of official understatement and misstatement - the preference for minimizing how many problems there are and how interconnected they are," Phillips observes.
The causes for this are the growing dominance of finance in the US economy, its deficit and its indebtedness. The financial sector equals more than a fifth of the US GDP, while manufacturing is only a bit more than a tenth.
The government is unwilling to confront the facts because the financial sector and the politicians are mutually supportive.
"Adam Smith would have been amazed at the new financial services sector and its close interconnection with government, politics and power," Phillips claims.
The bottom line for both parties is fundraising, or money - this transcends bipartisan differences.
Thus, both parties are aggressively currying favor with powerful financial interests.
This also explains why the much-anticipated and hyped American bailouts of banks and financial institutions just provide another excuse for playing the old game of transferring money from those at the bottom to those at top, what Joseph Stiglitz calls "trickle-up economics."
The US dependence on oil is also a grave problem.
During the last century, abundant domestic oil sustained the lavish American way of life, but now it is dangerously dependent on oil produced and controlled by increasingly "hostile" entities.
Its greed for oil has been the major driver of US Middle East policies.
"Some opinion leaders in oil-producing nations believed that the invasion of Iraq mirrored a US blueprint to pump and market large quantities of Iraqi oil ... to break OPEC and drive down petroleum prices," Phillips observes with great penetration.
He goes on to add that denying this motive is often wise, and sometimes necessary.
But it is unfair to say that President George W. Bush had committed an atrocity.
Great Britain invaded the neighborhood of Iraq in World War I and in 1941. The US stirred up a coup in Iraq in 1959.
The political alignment with strong vested interests and American appetite for oil means that real reforms are out of the question.
As oil reserves are being depleted, and its production may have already peaked in 2005, the US is teetering on the brink of disaster. Before that, the struggle for oil will intensify.
Of course, these hidden motives can always be whitewashed or camouflaged by citing economic or religious principles.
"Looking back a decade ... a perverse incarnation of millennial utopianism crested in ... 'market triumphalism' - the belief that history was 'ending' because near perfection has been achieved through the enthronement of English-speaking democratic capitalism," it says.
A higher form of vindication manifests itself in the "prosperity gospel," which preached to its eager, often uneducated, blue-collar congregants that god wanted them to be rich, and would answer their prayers with prosperity.
Given these insights, the rescue the author recommends sound less convincing.
Phillips strikes an optimistic note by proposing that a re-emphasis on wealth creation through manufacturing, education and political reform may allow the US to step back from the brink of decline and recover.
Unless the US conducts a soul-searching examination of its ravenous lifestyle, and reform, any remedy is makeshift and simplistic.
By comparison most politicians and economists prefer to take refuge in obtuse figures and technicalities that are always abundantly available in hindsight.
Thus, Phillips' "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism" is very accessible to the general readership.
The book focuses on the disproportionate role of finance and oil dependence in the US economy, and concludes that America's political establishment is ill-equipped to meet the challenges of this crisis and beyond.
Although the work was published last year just before the American presidential election, the author looks beyond the immediate storm and seeks parallels in past empires.
"The most worrisome thing about the vulnerability of the US economy circa [September] 2008 is the extent of official understatement and misstatement - the preference for minimizing how many problems there are and how interconnected they are," Phillips observes.
The causes for this are the growing dominance of finance in the US economy, its deficit and its indebtedness. The financial sector equals more than a fifth of the US GDP, while manufacturing is only a bit more than a tenth.
The government is unwilling to confront the facts because the financial sector and the politicians are mutually supportive.
"Adam Smith would have been amazed at the new financial services sector and its close interconnection with government, politics and power," Phillips claims.
The bottom line for both parties is fundraising, or money - this transcends bipartisan differences.
Thus, both parties are aggressively currying favor with powerful financial interests.
This also explains why the much-anticipated and hyped American bailouts of banks and financial institutions just provide another excuse for playing the old game of transferring money from those at the bottom to those at top, what Joseph Stiglitz calls "trickle-up economics."
The US dependence on oil is also a grave problem.
During the last century, abundant domestic oil sustained the lavish American way of life, but now it is dangerously dependent on oil produced and controlled by increasingly "hostile" entities.
Its greed for oil has been the major driver of US Middle East policies.
"Some opinion leaders in oil-producing nations believed that the invasion of Iraq mirrored a US blueprint to pump and market large quantities of Iraqi oil ... to break OPEC and drive down petroleum prices," Phillips observes with great penetration.
He goes on to add that denying this motive is often wise, and sometimes necessary.
But it is unfair to say that President George W. Bush had committed an atrocity.
Great Britain invaded the neighborhood of Iraq in World War I and in 1941. The US stirred up a coup in Iraq in 1959.
The political alignment with strong vested interests and American appetite for oil means that real reforms are out of the question.
As oil reserves are being depleted, and its production may have already peaked in 2005, the US is teetering on the brink of disaster. Before that, the struggle for oil will intensify.
Of course, these hidden motives can always be whitewashed or camouflaged by citing economic or religious principles.
"Looking back a decade ... a perverse incarnation of millennial utopianism crested in ... 'market triumphalism' - the belief that history was 'ending' because near perfection has been achieved through the enthronement of English-speaking democratic capitalism," it says.
A higher form of vindication manifests itself in the "prosperity gospel," which preached to its eager, often uneducated, blue-collar congregants that god wanted them to be rich, and would answer their prayers with prosperity.
Given these insights, the rescue the author recommends sound less convincing.
Phillips strikes an optimistic note by proposing that a re-emphasis on wealth creation through manufacturing, education and political reform may allow the US to step back from the brink of decline and recover.
Unless the US conducts a soul-searching examination of its ravenous lifestyle, and reform, any remedy is makeshift and simplistic.
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