In Wealth and Democracy, famed commentator and analyst Kevin Phillips provides a political history of American economic life with a specific focus on the wealthy. He interweaves the development of American technology with the rise and fall of economic fortunes into a compelling tale with significant implications for the formulation of public policy and the laws that implement such policy.
This review begins by examining the major sources of economic inequality and how they have increased the gap between rich and poor in America. The wealth of historical data in the book is considered with particular attention to the past quarter of a century. During this period, after all, economic inequality in the United States grew beyond all previous measures. Some of the key themes developed in this section include: (1) the corrupting effect of concentrated economic power on the political process, (2) the impact of vast wealth on the formulation of public policy, and (3) the increasingly precarious financial situation of middle-class families.
The review then explores the role that legal regimes can play in addressing economic inequality and how Phillips systematically understated their importance - specifically, taxation, health care, and Social Security. With respect to taxation, the review analyzes three major provisions of the 2001 Tax Act: repeal of the estate tax, augmented contributions to tax-favored retirement accounts, and creation of tax-exempt college savings plans. Regarding health care, the review examines first the increasing phenomenon of workers without health insurance and then the largely invisible but painfully significant problem of long-term care. Finally, this section analyzes how Social Security consciously ameliorates economic inequality and how this feature will be discarded under most privatization proposals.
The review concludes that Kevin Phillips has written an important book that should give serious pause to lawmakers involved in a wide range of critical issues facing America today. The increasing economic inequality of recent decades poses a significant challenge to the U.S. legal system and its democratic processes. As Phillips contends, the status quo is unsustainable and plutocracy is where we are headed, if we are not already there.
Law and Economics
Date of this Version
Richard L. Kaplan, "Economic Inequality and the Role of Law" (February 2004). University of Illinois Law and Economics Working Papers. Working Paper 11.