Bad timing is only one of several problems afflicting George W. Bush's Waco Economic Summit. The economy is just not cooperating with his upbeat message.
A second major industry, airlines, is now joining the telecommunications collapse as evidence that the economy faces more than a crisis of investor confidence. The Federal Reserve has been keeping the economy afloat with interest rate cuts, but despite economic weakness, it declined yesterday to cut rates further. Last week, the Commerce Department quietly and sheepishly released revised statistics showing that the recession of 2001 was more serious and prolonged than originally thought.
The Waco event needs to be understood mainly as theater. The same cynical producers who recruited African-American tokens to integrate the 2000 Republican National Convention unearthed a handful of ''ordinary'' Americans to come to Waco mainly for their value as props. But, for the most part, Bush's summiteers are the usual suspects who have brought the economy to its current pass. Serious critics of corporate corruption were not welcome.
Imagine a genuine economic summit, with a wide range of dissenting views. It might ask: How do we restore honesty and transparency to the governance of corporations? The legislation that Bush recently signed (after it became clear that it was unstoppable) is only the beginning.
For example, a Wall Street Journal investigation recently reported that insiders in the telecom industry sold about $18 billion of stock in companies that they were touting to the public, just as these companies were about to tank. This was all perfectly legal. The options game, also entirely legal, is likewise rigged in favor of insiders and is a virtual invitation for corporate executives to manipulate share prices. Aren't there enough ordinary incentives for successful entrepreneurs to get rich without gimmicks to cheat investors? If Bush were serious, he would appoint a blue ribbon group of critics to devise fundamental reforms.
A true summit on the economy also might explore just where deregulation went so badly awry. The now disgraced accounting profession, the nearly bankrupt telecom industry, and the sputtering airlines have one thing in common. All were deregulated in the name of the holy free market.
In the case of accountants (who contributed tens of millions of dollars to both parties), the deregulation was implicit. Whenever SEC chairman Arthur Levitt tried to crack down on accounting abuses, leading legislators of both parties simply threatened the SEC's budget.
In the case of phone companies and airlines, the deregulation was explicit bipartisan policy. But the experiment failed. For these are industries where one airline seat or one dial tone is pretty much like another, and true competition turns ruinous. Too many companies invest in too much capacity, and then nobody can turn a profit.
The airlines and phone companies compensate for the lost revenue by gouging consumers whenever the opportunity arises. But evidently the gouging is not sufficient to keep them profitable. US Airways, with choice monopoly routes and dominance of several key hubs, still could not make a living. The third scandal-ridden industry, electric power, is another case where deregulation invited abuses and only raised prices. Hard as it is to grasp, regulation of such industries is necessary to protect both consumers and shareholders.
A real economic summit might look closely at another sector that profoundly affects real people -- health care -- where both parties are pursuing only the most partial of reforms. Inadequate prescription drug covers for seniors-only and a watered down patients' rights bill are subjects fierce of partisan debate while the big issue -- universal coverage -- is simply off the table.
What is the connection between these ignored issues and the faltering economy? The connection is wasted resources. The telecom bubble attracted $2 trillion of investment capital that went to no useful purpose. The corporate abuses, options scams, needless mergers and acquisitions all enriched insiders, but added little economic value. The economy cannot afford this waste.
HMOs spend a small fortune trying to avoid insuring patients who might get sick, while hospitals and doctors spend billions trying to collect money owed them by HMOs. A universal system would waste less money, which could be redirected to patient care. Bush's Economic Summit is a political version of Tom Stoppard's play, ''Rosencrantz and Guildenstern are Dead,'' where trivial characters and issues usurp the audience's attention, while the important themes are tantalizingly offstage.
For a day, the summit may provide some diversion and entertainment. But the real problems affecting the real economy lie beyond the ingenuity of creative theater.
