Phillips wrote this book in 1990.This allows a reader to compare it with later books that dealt with the same problem ,such as " Boiling Point " in 1993 and " Arrogant Capital " in 1994.The first point that Phillips demonstrates overwhelmingly was that the Reagan tax cuts were primarily aimed at increasing the wealth and political power of the Wall Street speculators and investment banks like Bear Stearns,Merrill Lynch,Goldman Sachs, Morgan Stanley,Lehman Brothers,J.P. Morgan,Credit Suisse,Deutsche Bank,etc. This was possible because Reagan was not able to differentiate between Wall Street speculators ,on the one hand ,and entrepreneurship and enterprise ,on the other hand. For instance,ALL of the supply side economists(Laffer,Wannsiki,etc.)and most of the University of Chicago economists advising President Reagan were tied in to the Wall Street crowd ,either directly or indirectly.Phillips covers this in chapter 3.It is here that he makes two serious mistakes in less than one half of a sentence that costs him one-half of a star.He states :" Most of the conservative theorists acknowledged their restatement of Adam Smith..."(Phillips,1990,p.65).First,none of the supply siders or University of Chicago economists are conservative in the sense that Adam Smith was .They are Libertarians.This is a major confusion that is ubiquitous in America.Second,NONE of the policies recommended by these supply side and Chicago advisors follows from Smith.First ,Smith favored (a) an overall, progressive tax system,not a flat or proportional system (Smith,1776,Modern Library(Cannan) edition,p.794),(b)retaliatory and revenue tariffs(Smith,pp.434-439),and (c)direct government intervention into the economy through the provision of universal religious instruction and education,provided for free by the government to all individuals who could not afford to pay,in order to counteract the massive undepletable ,negative externalities/spillover effects arising from the workings of the Invisible Hand of the Market(self interest plus the specialization and division of labor[Smith,pp.716-768,pp.734-741);Phillips does better on p.69 in recognizing Smith's opposition to the interactions of monopolies and government and their negative impact on the political sphere of life.]
A major plus of Phillips exposition is not only the massive statistical support that he presents in this book about the increasing inequality of income between different income classes but a very clear cut example that can be understood by any reader : " Under Reagan,as under Coolidge,the clear evidence is that the net tax burden on rich Americans as a percentage of their total income shrank substantially because of the sweeping tax cuts.The surge in actual tax payments was the result of higher upper-bracket incomes.To measure the benefits,imagine a businessman who had made $333,000 in salary,dividends and capital gains in 1980,and paid $120,000 in federal income taxes.As prosperity returned in 1983,his income climbed to $ 500,000.Yet with the typical tax rates reduced,he might well have paid,say,$150,000 in taxes,more actual payment,of course,but less relative burden."(Phillips,1990,p.82;It is unfortunate that Phillips did not explicitly tie this example in to his Table 2 analysis on p.58 that showed the higher incomes going to providers of " financial services ",a.k.a.,Wall Street speculators).
Phillips loses another one half of a star due to his failure to explicitly deal in this book with the negative impact of the rise of the Wall Street speculators under Reagan ,and their support from the Federal Reserve System under Volcker and/or Greenspan,as well as the support given to them by the Securities and Exchange Commission(SEC),the regulatory agency which is supposed to protect middle class American from the ravages of speculators and projectors. The topic " Speculation " is not included in the subject index at the back of the book wheras it figures prominently in the later books ,such as " Boiling Point" and " Arrogant Capital ".Phillips's Table 2 on pp.56-58 is a brilliant historical summary of the negative impact of speculation on the economy;however,he needed to explicitly discuss this problem in the same way that Adam Smith did in The Wealth of Nations on pp.260-340,especially on pp.339-340,where Smith pinpointed,as did the Scholastic philosopher -theologians of the medieval Catholic Church in the 13th century,the dangers of speculation,especially where bankers and financial interests are involved.
This leads us to the end of the book and Phillips' discussion of the political ramifications of this process of allowing more and more income to be siphoned off to the " financial services" sector of the economy,i.e.,securitization/speculation and the generation of imcome without production by attempting to manipulate the income, balance, and cash flow accounts of American corporations and financial institutions.
Phillips correctly identifies what the Wall Street crowd,which controls both political parties,more(Republican) or less(Democrat),regards as their biggest future challenge :" Our biggest fear is that the Democrats surface with a leader who is able to capitalize on the theme of economic populism".(Quotation from GOP Pollster V.Breglio;Phillips,1990,p.210).One need only look at the reliance of the Clinton's,Kerry's,and Obama's on Wall Street money to recognize that such a leader does nor exist.