Wednesday, August 19, 2009

Bad Money, by Kevin Phillips

Kevin Phillips has been intimately studying the American economy in a series of fascinating books over the last decade. His overall thesis is that all countries that became arrogantly imperial rose to power and then fell away in much the same way. They all rode some new found energy source to get them ahead, and once they got going, they married their booming economies to arrogant religious ideas. I probably haven’t explained it very well, but in nutshell I think that explains Phillips’ overall argument.

For example, the Dutch used and exploited wind and water as forms of energy in the 18th century and ran a formidable imperium; then the British discovered coal and created the steam engine in the 19th century, helping them create the British Empire; and finally, the Americans discovered oil, which gave them enormous power.

The interesting thing for all these societies was that once they became powerful they developed an arrogant religion that explained their success in divine terms. God loved them so much he made them rich. Look at U.S. fundamentalist religion today, and its evangelical prosperity theology.

Alas, all these powerful countries were eventually overtaken by some new, smart, energetic nation on the make. Phillips thinks we will see this next nation emerge in Asia.

I’ve read Phillips’ previous two books, American Theocracy and American Dynasty. This one is pretty much an update on the subject matter of those books. For those who don’t know by now, the US has far too much debt and its dependence on foreign oil is a huge problem. Worse still, the oil is coming from unstable regimes like Saudi Arabia. Phillips is pretty pessimistic that the democratic process can save America. The electorate simply can’t concentrate on the complex problems at hand.

Phillips has a dry wit and I agree with much of what he says (or what I understand of what he says, as I know zilch about economics). His historical analysis is fascinating, as he refuses to be convinced of the current day optimism of everything working out well in the end. Like Shakespeare, when Phillips looks to the past, at the history of Holland and the British Empire, all he sees are analogies to the current day situation, prompting him to the conclusion that, indeed, ‘the past is prologue’.

This is not a cheerful book. But you must read Kevin Phillips!

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