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Saturday, April 08, 2006

American Theocracy

As Kevin Phillips explains in the preface to his new book, American Theocracy, he has been at the forefront of the transformation of American politics over the last 40 years. In the mid-1960s he wrote The Emerging Republican Majority, the blueprint for Richard Nixon's Southern Strategy that he helped implement successfully in 1968 and spectacularly in 1972. Phillips, however, now feels himself to be a kind of Dr. Frankenstein. He is appalled by the transformation of the party he helped return to, and keep in, power, and he obviously believes that the United States is headed for catastrophe. His criticisms of various aspects of Administration policy run very deep, and he is not afraid to make accusations the major media avoids, such as the role of oil (huge, in his view) in the decision to invade Iraq. Phillips is a serious amateur historian who, unlike 95% of my professional peers, likes to think big, and he has put everything he has into this long and challenging book. While some parts of it impressed me more than others, on the whole I think he has performed a very important service, and the book should be widely read.

The book focuses on three separate developments: the crunch in world oil supply and its impact; the rise of the Evangelical religious right within the Republican Party; and the transformation of the American economy and our frightening, escalating levels of debt. They are all interconnected to a surprising degree, and none of them portends anything good for the United States. Oddly, Phillips does not seem to be familiar with William Strauss and Neil Howe at all, and he would benefit from reading The Fourth Turning. He has provided the best blueprint yet for exactly how a disastrous crisis is likely to hit the United States. Unfortunately he has not managed to offer much hope as to how we might get out of it.

Phillips, to begin with, squarely confronts the issue of oil and how it has affected our foreign policy and threatens to affect our economic future. He makes a plausible case, first, that the entire industrialized world is threatened by the exhaustion of Saudi oil reserves, and that the United States is particularly affected because of its longstanding ties to the Saudis and because our own production has been falling. For years I have read that Europe and Japan depend more on the Middle East for oil than we do, but Phillips informs us that we have now caught up with the Europeans (and our South American sources are threatened by political problems in Venezuela.) Iraq, he claims, may have the world's largest remaining reserves--reserves that have never been fully exploited, largely for political reasons. That, he thinks--although data is scarce--made Iraq a prime neoconservative target during the 1990s. Iraqi oil could only begin to flow after sanctions were lifted, but that would have primarily benefited the French, Russians, and Chinese, who were poised to exploit new fields. In addition, he confirms that Saddam was starting to price his oil in Euros. All this, he thinks--and here I suspect he goes too far--made Iraq a prime target even before 9/11. The fate of Iraqi oil, he suggests, was behind French, Russian and Chinese opposition to the invasion. And of course, so far, the impact of the war on the world's oil supply has been anything but good, since Iraqi production has not even reached prewar levels, much less produced the hoped-for bonanza. $2.50 gas, he warns again and again, may be only the beginning. Meanwhile, he suggests that the deployments of US forces all over Central Asia are also energy-related, an idea that I am in no position either to confirm or deny.

Phillips' chapters on religion are very disturbing indeed. They argue, essentially, that well-to-do blue staters like myself have no idea what Protestantism means in today's America. The mainline denominations to which elites belonged or which Jews and Catholics are most likely to think of--Episcopalians, Methodists, Presbyterians and even northern Baptists--have been losing relative and absolute membership since the founding of the Republic, and the fastest growing congregations now are Southern Baptists, various Pentecostals, and Mormons. Again and again he repeats that 30-40% of the Republican party believes in the inerrancy of scripture, the coming of the End Times (many of them, indeed, feel that the antichrist is already on earth), and the impending rapture, as described in the Left Behind series of novels by Timothy La Haye that have sold tens of millions of copies. And indeed, in one of his most telling points, he suggests that much of the Republican base supported the Iraqi war because of the essential appeal of an ideological conflict in the Middle East--indeed, against the "new Babylon" led by Saddam--because it foretold Armageddon and Christ's return to earth. Against that background, specific issues of Iraqi WMD or links to Al Queda were not very important. And indeed, although Phillips is too discreet to come out and say it, he gives the distinct impression that he believes President Bush might feel that way too. Certainly he shows how the President has used the language of calling, mission and redemption to rally his troops while leading the nation into war.

As I noted in a post on Social Darwinism exactly a year ago, a nineteenth century thinker named Godwin Smith noted an ongoing struggle between religion and reason going back at least to the time of the Roman Empire and marked by turning points such as the rise of Christianity, the Renaissance, the Reformation and Counterreformation, and the growth of rationalism in the eighteenth century. Phillips refers in the same spirit to the threatened "Disenlightenment" of the United States under pressure from the religious right, which is already costing us any chance of leading various kinds of scientific research (led by stem cells) and threatens to leave American education behind. He also suggests that evangelical religion distracts believers from their earthly fate, and specifically from questions of economic redistribution. And he is concerned, to paraphrase Ronald Reagan, that we haven't seen anything yet. "Christian Reconstructionism" wants to re-establish Evangelical churches and rewrite the Constitution to eliminate the separation of Church and State, and its preferred constitutional amendments and laws have already been introduced. Interestingly enough, Phillips refers his readers to the web site of the Christian Coalition to find out more about them, but when I visited it, I found the names of some of these amendments and pleas for their support, but not the actual text. Looking further, I found the text of the Houses of Worship Free Speech Restoration Act, which would protect churches' tax exemptions even if pastors specifically told their congregation whom to vote for, the Unborn Child Pain Awareness Act, which requires physicians to make a long statement regarding the pain that an abortion might cause the fetus and to offer anesthetic for it, and many others.

In Phillips's last chapter he suggests that social issues and the unpopular war in Iraq are quite likely to cost the Republicans the next two elections. (He is skeptical, by the way, as I am, that John McCain can win the Republican nomination in 2008, although he proposes a nightmare scenario of a ticket composed of the 72-year old McCain and Jeb Bush, who presumably would inherit the throne after one term.) The Republican majority, he notes, is both uniquely extreme in American history, embodying as it does the first national religious party we have ever had, and extremely narrow (although the number of key states in play, in the next election as in the last one, will surely be counted on just one hand.) But it is not clear that that will save the nation from catastrophe, since Democrats as well as Republicans have collaborated in the transformation of the American economy which is his third theme.

Here I must admit I learned a great deal from Phillips that I should have already known. I knew, of course, that the United States has been de-industrializing, and I recently found statistics showing that that process, like so many others, has accelerated rapidly under George W. Bush. But I did not know that financial services, real estate and insurance, have become the single largest sector of the economy and the most profitable. That simple fact explains an enormous number of developments over the last twenty years. Phillips himself doesn't say so, but we have reached a stage of finance capitalism that even Lenin never dreamed of. The American economy, and especially its upper reaches, consists of number crunchers and paper shufflers who depend, as he shows, on an ever-expanding pyramid of debt, new financial instruments, and reinvestment of dollars by foreign central banks. Our current account deficit, our national debt, and our individual consumer debt are growing by leaps and bounds, and no one is doing anything about it. The Federal Reserve Board under Greenspan not only facilitated this process but came to the rescue of risky investors again and again--even a gigantic hedge fund. Credit card debt has become easier to accumulate during the last ten years--although the new bankruptcy act passed last year will make it much harder to get rid of. Low interest rates and the refinancing of homes (frequently, now, without giving the occupant any equity at all) have fueled our recovery over the last few years. It seems very likely that the real purpose of Bush's Social Security privatization is to find a new source of investment capital to keep the stock market going. No one really knows whether the whole structure is, at bottom, any sounder than Enron or Worldcom. History suggests that it is not.

Phillips uses historical examples to sound the alarm, focusing on 16th century Spain, 18th-century Holland, and 20th-century Britain. None of them, though, as he has to admit, has all that much in common with the United States. While Britain lost its industrial pre-eminence to Germany and the US by 1900, it never de-industrialized to the extent that we have. Indeed, Phillips notes that the major European nations--whose economies are constantly derided in our economic press in terms reminiscent of Donald Rumsfeld--have not only maintained robust industries but still run major export surpluses. Their currency has appreciated about 40% relative to ours under Bush--an indication that the world's bankers know we cannot go on as we have.

I do not know whether Phillips is right. Certainly he will make any reader who has managed to work against current trends by driving a high-mileage car, maintaining a strong equity position in his house, and putting a good deal of any available cash or retirement funds into foreign equities better, and avoiding long-term consumer debt a lot better, but his statistics suggest that such Americans are a depressingly small minority. We face the strong possibility of a crash, and no clear way out of it.

In retrospect, however badly it turns out abroad (a subject to which I shall return shortly), the war in Iraq may have done more harm by distracting the media and the American people from what is happening at home. In the end, however, it may also make the crash worse. If our economy falls apart, we will need the world's help. They will, of course, have some interest in keeping American consumer demand alive (although the richer Indians and Chinese might fill some of that gap), but we are continuing to forfeit a great deal of international goodwill, as Phillips notes, by opposing birth control, effective AIDS prevention, or any effective steps against global warming, as well as by renouncing the principles of the western alliance since 1945. When Germany and Japan went off the track in the 1930s the cavalry eventually came to the rescue. It isn't clear if we will be as lucky, and a Democratic Administration, if one is elected, should put a high priority on restoring a real alliance of the major powers. We will need it.

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