Curdled populism.

Wealth and Democracy Kevin Phillips Broadway Books, $29.95, 472 pp.

People yearning for a return to the economic dispensations of Louis XIV may not be scandalized by the present degree of financial inequality in the United States. Most of the rest of us will find it shocking.

During the 1990s, every class of society outside of the upper fifth of American households--that is, the poor, the lower middle classes, the middle classes, and the upper middle classes--saw their share of the national income pie shrink. All four income quintiles, or 80 percent of American households, now receive a lower share of national income than at any time in the past thirty-five years, with the decline especially rapid since about 1980.

Households are not actually poorer. The trickle-down theory does work, although "trickle" is the right word for the phenomenon. Over the past two decades, people in the poorest stratum of society increased their incomes by only about 10 percent after inflation, while the middle classes improved theirs by about 13 percent. Over the same time, however, the top quintile of households showed an increase in income of a whopping 45 percent--with 90 percent of it going to just the top 1 percent. Put another way, the top 1 percent of households grabbed about 40 percent of two decades' worth of income improvement for themselves.

Those are the kind of numbers that feed revolutions. Kevin Phillips, who burst into the limelight with his prescient The Emerging Republican Majority (1969) is a master at charting social trends, and in his new Wealth and Democracy warns of a "Middle American Radicalism" that has been popping up since the days of George Wallace in the 1960s.

Phillips argues that Middle American Radicals are equally distrustful of the government and the rich, believing each is corrupt and feeds off the other. The uneasy alliance between the pro-business Republicans around George W. Bush and Middle American Radicals, Phillips suggests, was an artifact of the booming prosperity of the late 1990s, and has been badly frayed by recession. "In the seventies and eighties, each time Middle American Radicals had demobilized as economic horizons brightened, they returned, glummer and angrier, when the business cycle turned down again."

That is the kind of analysis that Phillips excels at, but one wishes there were more of it in Wealth and Democracy. In between his warnings of a new radicalism, and a deft opening sketch of economic inequality, there is a vast, disorganized, goulash of a book that seems to argue that the corruptions of wealth and power have doomed the United States, just as they did the British and Dutch before them, and that the Asians are taking over.

   [T]he Asian-based threat to the Dutch-British-American chain of economic
   and technological hegemony dating back some four hundred years is obvious,
   even if the time frame of any leadership transferal is problematic. In
   2000, Asia was already about to pass the United States in the number of
   Internet users. ... and one China watcher noted that were China to grow at
   7 percent a year, it would surpass a U.S. economy growing at 3 percent
   sometime between 2020 and 2030. What some scholar may not document until
   2025 or 2040 is [sic] the broader perspective, far-sighted planning, and
   unexpected early twenty-first-century success stories dug from ministry and
   corporate files and technical libraries in Delhi, Bangalore, Hyderabad,
   Singapore, Kuala Lumpur, Taipei, Tokyo, Hong Kong, Shanghai, and Beijing.

In a book that argues that the recent tech boom was a meaningless bubble engineered by an economic elite, and that government/business alliances are mostly productive of looting and corruption, the quoted paragraph is simply incoherent. Does our future depend on beating back a high-tech threat from a new Yellow Peril or not? Are cartels good for the country or not?

The organization of the book is as sloppy as the argument. Successive chapters recount the connections between wealth and power, wealth and corruption, wealth and speculative manias, wealth and subversions of democracy, and so on, drawing on examples from the last four hundred years of economic history. Unfortunately, the same stories are told over and over again--the nineteenth-century railroad boom, the market craze of the 1930s, the Internet mania. The collapse of Jay Cooke's railroad bonds is recounted at least four times, as is the story of the Dutch paper money fiasco at the end of the eighteenth century. At the fourth or fifth retelling, we begin to lose track of the point. Paper money seems to be the root of all evil. Phillips sees straight-line causality between a speculative financial climate in Great Britain in the 1920s and 1930s, and that country's subsequent decline after the 1940s. Well maybe, but World War II may have had something to do with it too.

Phillips is a terrific writer, and there are sparkling mots on almost every page: "The `invisible hand' beloved of market theologians periodically sprains its theoretical wrist in speculative collapses, gluts of oversupply, or private monopolistic distortions." Or: "If only history books could chuckle. The middle class has often been pulled into the `money class,' but frequently to be relieved of some of its savings."

We have a right to expect more from Phillips than just clever phrase making. He is one of our sharpest analysts of social trends, and Wealth and Democracy arrives at the moment when Enron revelations and the grotesque imbalance in executive/worker pay may be fueling a major populist backlash. Aside from a brief mention of higher taxes on the wealthy at the very end of the book, however, I could not find a single policy recommendation. Instead we get historical pastiche wrapped with Buchananite rant. A great disappointment.

Charles R. Morris is the author of American Catholic and Money, Greed, and Risk, among other books.