What the economy needs

Chief Executive, The, May, 2004 by Roy Serpa

Although informative, the opinions of the CEOs interviewed about the domestic U.S. economy in your April cover story ("A Fragilc Recovery") focused on factors considered beyond their control. It would be interesting to learn what they are doing to foster a more robust economy with the resources they do control. Given that interest rates are expected to rise before year's end--combined with the lack of tax rebates, high consumer debt and low savings rates--the consumer can't be expected to continue to "spend, spend, spend."

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Here are two overdue actions that CEOs can take to invigorate the economy. First, put more money in consumers' hands by increasing dividends. Second, support innovation rather than undertaking ill-advised and all-too-common merger and acquisition strategies. Studies show that during the 1990s M & A efforts actually reduced shareholder value, as more than 60 percent of them failed.

Roy Serpa

Retired CEO

Permian Research Corp.

Houston, Tex.