Saving democracy: the number of millionaires and billionaires doesn't move in tandem with democratic politics. Indeed, the two are often at loggerheads. . - Perspectives: Politics - book review

Chief Executive, The, May, 2002 by Kevin P. Phillips

Two hundred years ago, the American Republic began amidst disagreements between democrats allied with Thomas Jefferson and pro-wealth forces led by Alexander Hamilton. Recent events like the Enron scandal and the furor over campaign finance are evidence that not much has changed and that politics and wealth inevitably interact and often conflict. In his forthcoming book, Wealth and Democracy: A Political History of the American Rich (Broadway Publishing, May 2002), Kevin Phillips argues that the pendulum, which favored wealth in the 1980s and 1990s, may be about to swing. The following is adapted from his book.

The history of American wealth -- and more specifically, the rise of millionaires and billionaires -- is a fascinating context for national politics and culture. Too rarely is wealth examined through a political and governmental lens (or vice versa). But the storied increase in U.S. millionaire ranks from just one man in 1785 to 4 million in 2000 reflected changing politics and ideologies as well as changing economics, securities markets, and technologies. Too much wealth hasn't helped democracy and too much democracy hasn't helped wealth.

As the number of millionaires jumped from a dozen in 1800 to 300 in 1860, 4,500 in 1902, 30,000 in 1929, 5,000 in 1932, 100,000 in 1966, and 4 million in 2000, the dominant forces in wealth creation can be identified as war, inflation, politics, government, land-holding, technology, and the stock market. The principal commercial circumstances underpinning millionaire creation have ranged from maritime privateering (during the Revolution) through real estate (in the 1830s and 1840s), railroads and steel (in the late 19th century), oil and automobiles (in the early 20th century), and high technology (in the late 20th and early 21st centuries).

If politics has not always been favorable to wealth -- the Jeffersonian, Jacksonian, Progressive, and New Deal periods stand out -- biases toward wealth have undercut democratic politics in the Hamiltonian period, the Gilded Age, and arguably over the last two decades.

But in contrast to Theodore Roosevelt's day, we can no longer consider the interplay of U.S. wealth and politics in a purely national context. The United States, as the leading world economic power, can now be viewed as being at or past its zenith, especially against the warning back-drop and decline symptoms of its two most recent predecessors -- Holland and Britain. Unfortunately, the millennial juxtaposition of shrinking prospects for U.S. manufacturing workers and the lower middle class with the golden zenith of a small elite in finance, investments, and international commerce follows the late-stage Dutch and British patterns all too well and raises troubling questions about the longevity of America's current wealth concentration.

Kevin Phillips has been called "America's national political prophet," having accurately predicted major political trends for more than 30 years. His bestselling books, including Politics of Rich and Poor, The Emerging Republican Majority, Boiling Point, and Arrogant Capital: Washington, Wall Street and the Frustration of American Politics, were benchmarks of the latest political shifts. He can be reached at kp@leighadvisory.com.