People who never wondered about the “relevance” of the Whitewater story now claim to be puzzled by journalistic interest in Arbusto Oil, Spectrum 7, Harken Energy, the Texas Rangers and other curious artifacts of George W. Bush’s business career. These same people, who once obsessed over the details of an obscure Arkansas land development from the 1970′s, ask why anyone should care today how the President made money 10 or 15 years ago. (Actually, the sale of the Rangers to a powerful Texas investor-which made Mr. Bush a multimillionaire-occurred just four years ago.)
Let’s assume, perhaps naïvely, that these peevish questions are sincere. And let’s try to answer them by starting with a few general observations.
This country has not one but two economic systems: free enterprise for the many, and crony capitalism for the few. This is hardly a new discovery; crooked and connected insiders have always fattened their wallets at public expense, as Kevin Phillips illustrates in great detail in Wealth and Democracy.
But the decay of the crony system is suddenly strangling free enterprise and endangering the nation’s future. The sanctions that were expected to discourage excessive indebtedness, management self-dealing and fraudulent accounting have failed; the insiders sidestepped the risks and assigned them to the rest of us. That’s what ordinary investors are learning every day when they glance up from their horrifying mutual-fund statements to read how much the white-collar looters took when they absconded.
For those burned small investors, and for their fellow citizens whose jobs are at risk and whose wages are again declining, the salient issue is how government can regain a measure of authority to reform this forked economy. The authority needed is not only legal and administrative, but also moral. In these critical circumstances, the President must not only act to restore credibility and growth. He must also believe in what he is doing and be believed when he explains why.
Unfortunately, Mr. Bush and his insider-infested administration meet none of these criteria. He is a lifelong beneficiary of crony capitalism, as were his father and grandfather before him. He has no quarrel with that system and is blind to its defects. He cannot raise his hand against what Teddy Roosevelt called the “malefactors of great wealth,” because they’re his backers, his colleagues, his friends and his family.
Two years ago, I wrote approximately 10,000 words about Mr. Bush’s charmed life in Harper’s Magazine , and have since learned how much more still remains to be revealed.
Briefly, it is a tale that opens with a series of tax-sheltered limited-partnership investments in Arbusto by political friends and family members from Park Avenue and Greenwich to K Street and Houston, all eager to help young Dubya make his way in the Texas oil fields. It concludes almost two decades later when Governor George W. Bush and his partners sell their baseball team to a man who had been awarded control over billions of public dollars by the governor’s appointees.
The Harken affair occurs midway through this financial epic. Having twice unloaded his dry-hole enterprises on his father’s friends and would-be friends, Mr. Bush shows up as a director of Harken Energy, a peculiar Dallas operation that counts Harvard Management, the Soros interests and a mysterious Saudi tycoon as its largest stockholders. As George Soros explained recently to David Corn of The Nation magazine, the eldest son of George Herbert Walker Bush was brought on board as a lavishly compensated director and “consultant” to facilitate ties with the Gulf sheikdoms.
Eventually Harken did achieve a lucrative connection with the sheiks of Bahrain, who gave the tiny, ill-managed company an astonishing exclusive contract to explore its offshore fields. Despite Harken’s continual insolvency, the Bahrain deal drove up its stock price long enough for Mr. Bush to offload 212,140 shares on an unidentified buyer.
And as The Washington Post’s Mike Allen demonstrated, in an article strangely buried on page A7, Mr. Bush had plenty of inside information that indicated the value of Harken’s stock would soon plunge. He may also have gleaned, in the spring of 1990, that Saddam Hussein planned to invade Kuwait and badly disrupt the oil “bidness” in the Gulf. That event proved disastrous for Harken’s shares.
For reasons that Mr. Bush has had great difficulty explaining, he neglected to file the required notification of his Harken trade with the Securities and Exchange Commission until March 1991. That happens to have been just after his father’s famous victory over the Iraqi dictator, which helped Harken to rise again (however briefly). The S.E.C., under the purview of his father’s loyal appointees, saw nothing amiss in Dubya’s dealings.
Mr. Bush is surely a lucky man. But he has been just a bit too lucky to inspire trust in his promises to clean up cronyism so that free enterprise can breathe again.