The White Stuff
The New York Times
April 12, 2002
By PAUL KRUGMAN
I don't know if anyone has done a
calculation, but it's obvious that the
Bush administration has appointed a
record number of corporate executives
to high-level positions, often
regulating or doing business with
their former employers.
The administration clearly doesn't
worry about conflicts of interest, but
you don't have to posit outright
corruption to wonder. For example:
The secretaries of the Navy and Air Force are both lifelong defense-contractor
executives. Won't they tend in the nature of things to believe that what's good for
General Dynamics is good for America? Indeed, defense stocks have soared, partly
because Wall Street analysts predict that profit margins on future contracts will be
far higher than was considered appropriate in the past.
But there's a further question. Many of the business executives recently appointed
to government positions first entered the private sector after prior careers in the
Reagan and Bush I administrations. As Sebastian Mallaby put it in The
Washington Post, they are "political types dressed up in corporate clothing: people
who got hired by business because they knew government, then hired by
government on the theory that they knew business." (Dick Cheney is the
quintessential example.) So are they really good businessmen, or are they just
crony capitalists, men who have lived by their connections?
Consider the case of Thomas White, secretary of the Army, a former general who
became a top Enron executive in 1990. His behavior in office has raised eyebrows.
He did not follow the rules about disposing of stock options; he and his wife are
alleged to have taken a military jet to Aspen on personal business; and he sold $12
million of Enron stock shortly before the company's implosion, though he says that
no inside information was conveyed in the 70-plus phone conversations he had
with his former colleagues. But this stuff - which would have led to multiple
investigations had he been a Clinton appointee - is actually secondary.
The really important information about Mr. White is that the enterprise he ran,
Enron Energy Services, was a fraud - a money-losing operation dressed up to
appear highly profitable through deceptive accounting. It is possible though
implausible that Mr. White was duped by his subordinates, that he honestly
thought that he was doing a great job. But that only makes him a fool rather than
a knave.
Stories about Mr. White's questionable behavior at his current job have emerged
only recently, but it has been apparent for months that he was a Potemkin
executive: all facade, with nothing behind it. Given that he was hired for his
supposed business skills, this means that he is like a surgeon general who turns
out never to have finished medical school.
So why does this administration, which is waving the flag so hard its arms must
hurt, leave the Army - the Army! - in the hands of a man who is, at best, a
poseur?
One theory I've heard is that Mr. White can't be fired: that there are facts about the
administration's relationship with Enron that it doesn't want to come out, and that
Mr. White knows where the bodies are buried.
My preferred explanation, however, is that Mr. White has been protected by the
administration's infallibility complex. In case you haven't noticed, this
administration never, ever admits making a mistake; even when it makes a policy
U-turn, it tries to rewrite history to pretend that everything is still going according
to plan. One recent example involved foreign aid. First the administration came out
with a miserly proposal; faced with outrage from the rest of the world, it doubled its
offer. But it claimed, to an incredulous press corps, that there had been no change
in plan, that the proposal had simply been badly presented.
If Mr. White is forced to leave, however, it would be hard to deny that in hiring him
for his supposed business skills the administration was suckered, in much the
same way that Enron's investors were suckered. And so he remains.
It's not hard to see why the administration hired Mr. White: on paper, his
qualifications looked pretty good. But the fact that he is still in place is very bad
news. Maybe there are some dark secrets here; or maybe it's just arrogance and
lack of moral courage. Either way, this is no way to run an army - or the country.
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