Praise for Issues on My Mind“For over three decades, I have relied on George Shultz as a loyal friendand gifted mentor to not only identify our most diﬃcult foreign policyand national security dilemmas but to oﬀer sound solutions. Once again,he has risen to that challenge superbly.”—Richard G. Lugar, US senator (R-IN), 1977–2013, former chairman ofthe Senate Committee on Foreign Relations“George Shultz draws from his remarkable life and incredible depth ofexperience to examine some of today’s most intractable issues. His timein the Oﬃce of Management and Budget and the Treasury Departmentinforms his positions on banking reform, while his days as Secretary ofState are clear in his thoughts on diplomacy and nuclear weapons. Asalways, George doesn’t shy away from controversy, arguing for a carbontax and decriminalization of illegal drugs. This volume articulates les-sons from one of our most esteemed statesmen, lessons that both partiesshould be willing to examine.”—Dianne Feinstein, US senator (D-CA), chairperson of the SenateSelect Committee on Intelligence“No one has the wisdom and personal memories that George Shultzbrings to the wide range of domestic and global issues that we face today.The lessons of his remarkable career and of his personal experience arehere to read—ﬁrst summarized eloquently and then in a collection of hisessays and speeches.”—Martin Feldstein, The George F. Baker Professor of Economics atHarvard University and president emeritus of the National Bureau ofEconomic Research
“George Shultz writes about a ‘world awash in change,’ a world withenormous potential that is also dangerously unsettled. He holds that theUnited States still has an indispensable role to play in rebuilding a globalframework for peace and prosperity. Yet we ﬁnd ourselves divided politi-cally and ideologically, hamstrung by our own unprecedented ﬁscal andeconomic challenges.“Drawing on his decades of experience in academic, governmental,and business life, Shultz writes clearly and forcefully about how to breakthrough the impasse.“Get hold of Issues on My Mind. Read it right now. And let’s apply thewisdom of a thoughtful man who has demonstrated again and again hiscapacity to ﬁnd sensible common ground.”—Paul Volcker, former chairman of the Federal Reserve Board andchairman of the President’s Economic Recovery Advisory Board,2009–11“This volume collects some of George Shultz’s most compelling analyseson topics ranging across the ﬁelds of economics, foreign policy, demogra-phy, the challenge of terrorism, and nuclear security. It is a unique recordof decades of national and international service and a worthy guide forthe era now unfolding. America has been fortunate to have spawnedGeorge Shultz.”—Henry A. Kissinger, former secretary of state (1973–77) and formernational security adviser (1969–75)
For Charlotte&The Future:My ﬁve children, eleven grandchildren,and four great-grandchildren
ContentsForeword by Henry A. Kissinger xiAcknowledgments xv1 Our ChallengesThe world is awash in change. 12 Better GovernanceWhat’s wrong with governance today andhow can we ﬁx this essential process? 93 Return to a Vibrant EconomyOur economy has lost its drive. The reasons—and the solutions—are clear. Here’s how we canhave a vibrant economy once again. 274 A Better Energy FutureHow can we take advantage of new opportunities? 455 Drugs: The War with No WinnerForty years of the failed war on drugs shouldbe enough to stimulate debate on alternativeapproaches to this serious problem. 536 Effective Diplomacy Applied to Issues of Foreign PolicyProven ideas for eﬀective diplomacy shouldbe applied with a strategic overview that givesdirection to the tactics of the day. 63
contents vii7 Toward a World Without Nuclear WeaponsWe must get better control of nuclear weaponsand identify the steps needed to achieve the goalof their eventual elimination. 878 Final Reflections 101Epilogue 107Comments by Helmut Schmidt2012 Henry A. Kissinger Award Ceremony,Berlin, Germany, May 24, 2012 108Comments by Henry A. Kissinger2012 Henry A. Kissinger Award Ceremony,Berlin, Germany, May 24, 2012 112Remarks by President Reagan, George P. Shultz,and Mike MansﬁeldMedal of Freedom Award Ceremony,Washington, DC, January 19, 1989 117Tribute to Ronald ReaganGeorge P. Shultz, June 9, 2004 123Appendix1 Our Challenges“Representation: A Lesson from My Days with Nixon”George P. Shultz, Turmoil and Triumph: My Years asSecretary of State, New York: Charles Scribner’s Sons, 1993 1292 Better Governance“The Constitution Doesn’t Mention Czars”George P. Shultz, The Wall Street Journal, April 11, 2011 139“The Shape, Scope, and Consequences of theAge of Information”George P. Shultz, Address before Stanford UniversityAlumni Association’s International Conference,Paris, France, March 21, 1986 143
viii contents3 Return to a Vibrant Economy“Prescription for Economic Policy: ‘Steady as You Go’”George P. Shultz, Address before the EconomicClub of Chicago, Chicago, IL, April 22, 1971 157“Economic Strategy for the Reagan Administration”A Report to President-elect Ronald Reagan fromHis Coordinating Committee on Economic Policy,November 16, 1980 166“‘Think Long’ to Solve the Crisis”George P. Shultz, The Wall Street Journal,January 30, 2009 176“Principles for Economic Revival”George P. Shultz, Michael J. Boskin, John F. Cogan,Allan H. Meltzer, and John B. Taylor,The Wall Street Journal, September 16, 2010 179“Time for a Budget Game-Changer”Gary S. Becker, George P. Shultz, and John B. Taylor,The Wall Street Journal, April 4, 2011 186“Education Is the Key to a Healthy Economy”George P. Shultz and Eric A. Hanushek,The Wall Street Journal, April 30, 2012 190“The Magnitude of the Mess We’re In”George P. Shultz, Michael J. Boskin, John F. Cogan,Allan H. Meltzer, and John B. Taylor,The Wall Street Journal, September 16, 2012 1934 A Better Energy Future“How to Gain a Climate Consensus”George P. Shultz, The Washington Post, September 5, 2007 201“Why We Support a Revenue-Neutral Carbon Tax”George P. Shultz and Gary S. Becker,The Wall Street Journal, April 7, 2013 204
contents ix5 Drugs: The War with No Winner“A Real Debate About Drug Policy”George P. Shultz and Paul Volcker,The Wall Street Journal, June 11, 2011 2096 Effective Diplomacy Applied to Issues of Foreign Policy“US Foreign Policy: Realism and Progress”George P. Shultz, Address before the 37th UN GeneralAssembly, New York, NY, September 30, 1982 213“America and the Struggle for Freedom”George P. Shultz, Address before the Commonwealth Clubof California, San Francisco, CA, February 22, 1985 226“The Future of American Foreign Policy:New Realities and New Ways of Thinking”George P. Shultz, Statement before the Senate ForeignRelations Committee, Washington, DC, January 31, 1985 241“Terrorism and the Modern World”George P. Shultz, Address before the Park Avenue Synagogue,New York, NY, October 25, 1984 263“US-Soviet Relations in the Context of US Foreign Policy”George P. Shultz, Statement before the Senate ForeignRelations Committee, Washington, DC, June 15, 1983 278“‘Tear Down This Wall,’ Twenty Years Later”George P. Shultz, Address before the American Academyin Berlin, Berlin, Germany, June 5, 2007 2997 Toward a World Without Nuclear Weapons“Preventing the Proliferation of Nuclear Weapons”George P. Shultz, Address before the United NationsAssociation of the USA,New York, NY, November 1, 1984 309
x contents“Nuclear Weapons, Arms Control,and the Future of Deterrence”George P. Shultz, Address before the International House ofChicago and the Chicago Sun-Times Forum at the Universityof Chicago, Chicago, IL, November 17, 1986 321“A World Free of Nuclear Weapons”George P. Shultz, William J. Perry, Henry A. Kissinger,and Sam Nunn, The Wall Street Journal, January 4, 2007 336“Toward a Nuclear-Free World”George P. Shultz, William J. Perry, Henry A. Kissinger,and Sam Nunn, The Wall Street Journal, January 15, 2008 341“Deterrence in the Age of Nuclear Proliferation”George P. Shultz, William J. Perry, Henry A. Kissinger,and Sam Nunn, The Wall Street Journal, March 7, 2011 347“A World Free of Nuclear Weapons, An IdeaWhose Time Has Come: Where We Are andWhere We Need to Go”George P. Shultz, Address before the Global ZeroWorld Summit, Paris, France, February 2, 2010 352“Issues and Opportunities in the Nuclear Enterprise”Sidney D. Drell, George P. Shultz, and Steven P. Andreasen,The Nuclear Enterprise: High Consequence Accidents—How to Enhance Safety and Minimize Risks in NuclearWeapons and Reactors, Hoover Institution Press, 2012 360“Next Steps in Reducing Nuclear Risks”George P. Shultz, William J. Perry, Henry A. Kissinger,and Sam Nunn, The Wall Street Journal, March 5, 2013 370About the Author 375Index 377Photo Section after page 126
ForewordHenry A. KissingerWhen I studied international relations, the nation was the basic unit ofinternational politics. Its sovereignty deﬁned the permissible rangeof foreign policy. The state was presumed to have the power to regulateits internal aﬀairs and was therefore treated as an interlocutor capable ofundertaking binding commitments. Aggression was deﬁned as the use offorce projected across national boundaries.This world order is in a state of upheaval. The nation-state in Europehas recognized its limitations and is forming a European Union. But theEuropean Union has not yet achieved the commitment of its citizens thathad been characteristic of the nation-state. In other regions, the politi-cal units, even when they call themselves nations, are often composedof diﬀering, occasionally clashing, ethnic groups thrown together by adiﬀerent historical evolution than Europe’s, as, for example, India andChina. Or, as in Africa, they were forged by the desire of imperial powersto generate ethnic rivalries in their colonial possessions to prevent theemergence of the European-style nation-state.These political units are seized by an internal challenge to state pow-ers. In many regions of the world, the state faces ethnic and ideologicalchallenges. The Islamic world is rent by ideological conﬂicts comparableto those of Europe in the seventeenth century. Russia is reinventing itsdomestic politics and its ties with the former Soviet world, while inits relations with the West it is torn between its historic patterns andits contemporary necessities. Two of the world’s main classical civiliza-tions, China and India, are emerging as modern great powers. With this,the center of gravity of international aﬀairs is shifting from the Atlanticto the Paciﬁc and Indian oceans. It is, as George Shultz writes in thesepages, “a world awash in change.”
xii forewordFor the ﬁrst time in history, the various continents are linked by con-temporaneous experience and they can be observed in real time simulta-neously. Thus, two major new trends dominate the present world: ﬁrst, theshift from a focus on foreign dangers to the risks produced by the inter-national system itself; and second, the challenge this poses for domesticgovernance. For the generation following the Second World War, securitywas the dominant problem. With hostile armies facing each other acrossa divided continent, international order was identiﬁed in large part withmilitary deployments and the security guarantees of the United States.The challenges of our world are more ambiguous. The internationaleconomic system has become global, but the political structure hasremained essentially national. The global economic structure is predi-cated on removing obstacles to the ﬂow of goods and capital. Theinternational political system is still largely based on the nation-state.Globalization facilitates and encourages decisions based on comparativeadvantage; in its essence, it ignores national frontiers. Both systems have aplausible claim to represent the popular will, one on a global and theother on a national level. The losers tend to seek their remedies within anational political system by solutions which negate, or at least obstruct,the functioning of the global system.This dynamic has produced decades of sustained economic growthalternating with periodic ﬁnancial crises of seemingly escalating inten-sity: in Latin America in the 1980s; in Asia in 1997; in Russia in 1998; inthe United States in 2001, and then again starting in 2007; in Europe inthe current period.While each of those crises has had a diﬀerent cause, their commonfeature has been systemic underappreciation of risk. Aided by the Inter-net, the role of speculative capital has magniﬁed. With nimbleness as itsessential attribute, it has often turned upswings into bubbles and down-ward cycles into crises, in part by the invention of ﬁnancial instrumentsthat obscure the nature of ﬁnancial transactions. Lenders have found itdiﬃcult to estimate the extent of their commitments, and the borrowersto understand the implications of their indebtedness.The global international system thus faces a paradox: its prosperityis dependent on the success of globalization, but the process produces
foreword xiiia political dialectic that often works counter to its aspirations. Theeconomic managers of globalization have few occasions to manage itspolitical processes. The managers of the political processes have fewincentives to risk their domestic support on anticipating economic orﬁnancial problems whose complexity eludes the understanding of all butthe expertly trained. When the crisis occurs, it is often too late to closethis gap.The Internet is a neutral technology: it can help mobilize militantnationalists or religious extremists just as eﬀectively as it brings togetherliberal democrats for peaceful protests. Which of these paths is followedwill depend on factors which are themselves in ﬂux across the develop-ing and developed worlds, factors which George Shultz examines in thisbook: demography, economic vitality, and evolving forms of social andpolitical organization.In these conditions, the challenge becomes governance itself. Govern-ments are subjected to pressures seeking to tip the process of global-ization in the direction of national advantage or mercantilism. Or theyface escalating demands on behalf of maximalist political or religiousagendas, advanced by individuals or groups whose mobilizing power isvastly increased but who have no responsibility for the outcome.In the West, the issues of globalization thus merge with a challenge tothe nature of democracy. Many problems are better understood than exe-cuted because governments are reluctant to challenge the interest groupsthreatened by their insights. For the issues are technically extremelycomplex, thus tempting politicization and complicating serious debate.Thus the deepest challenge, especially for Western societies, is toachieve perspective on the issues that obtrude themselves, to deﬁne theirnature, and to devise solutions which the bureaucracy can execute andwhich the public can understand.At the same time, the scope of the challenges impedes the capacityto deal with them with a common strategy—the ability to relate eventsto each other by means of a unifying perception. America has been for-tunate to have spawned George Shultz. Equally at home in academia,business, and government, he has provided perspective and vision toeach. Our age is awash in information, but it has not yet mastered the
xiv forewordjourney from information to conceptual knowledge, which relates tacticalinsights to strategic insights. Highly unusual in the American experience,George Shultz has held four cabinet posts. He has been the conﬁdant ofpresidents of both political parties.George Shultz has been able to perform this service because he hasalways concentrated on the big picture. In his chapter on diplomacy, herelates how, in 1985, he described before the Senate Foreign RelationsCommittee some of the emerging shifts in international order:. . . we are not just observers; we are participants, and we are engaged.America is again in a position to have a major inﬂuence over the trendof events—and America’s traditional goals and values have not changed.Our duty must be to help shape the evolving trends in accordance with ourideals and interests; to help build a new structure of international stabilitythat will ensure peace, prosperity, and freedom for coming generations.This is the real challenge of our foreign policy over the coming years.At every stage of his career, George Shultz has reﬁned our understand-ing of the world—reading and traveling extensively and convening studygroups and policy dialogues to analyze evolving domestic and interna-tional trends. He has applied to the changing world the best tradition ofwhat he describes in this book as “strategic thinking—of continuouslyreminding ourselves of our broad objectives and of what we want toachieve in the long run.” He has charted long-term objectives, from thepragmatic to the visionary, and advocates them with eloquence. A fullerappreciation of his role has been included in my laudation when Shultzwas honored by the American Academy in Berlin, the text of which canbe found in the epilogue of this book.This volume collects some of George Shultz’s most compelling analyseson topics ranging across the ﬁelds of economics, foreign policy, demogra-phy, the challenge of terrorism, and nuclear security. It is a unique recordof decades of national and international service and a worthy guide forthe era now unfolding.
AcknowledgmentsThis volume consists of ideas on how to address six key problem areasof current relevance: governance, economic policy, energy, drug policy,diplomacy, and nuclear weapons.If we can handle each of these subjects correctly, then we in the UnitedStates and people in the rest of the world will have the prospect of abetter future. Exceptional diplomacy will be essential and will be amplyrewarded. Our economic prospects will improve, poverty will decline,and the threat of violence—particularly from the devastation posed bynuclear weapons—will diminish.As I look back on an active life spent in association with many stimu-lating people in government, business, and universities, I ﬁnd myselfcontinually inspired to look forward, particularly because I now haveeleven grandchildren and four great-grandchildren. Are there lessonsto be culled from my past experiences that are relevant to their future?What kind of a country—what kind of a world—will these young peopleinhabit? These are the questions that spurred me to write this book.Not long ago, four generations of my family gathered for the wed-ding of one of my grandsons. As guests assembled, another grandsonprovided music by playing lively tunes on his guitar. A granddaughterappeared as part of the wedding party pulling a small, red wagon hold-ing two great-grandchildren. So ﬁrst, I want to acknowledge the motiva-tion and orientation to the future that my exciting grandchildren andgreat-grandchildren give to me.My wife Charlotte is a constant source of inspiration and encourage-ment. My colleagues at Stanford University’s Hoover Institution providecontinuing challenges and ideas across a wide range of subjects. I am par-ticularly grateful to Fouad Ajami, Michael Boskin, John Cogan, Sid Drell,Jim Goodby, Charlie Hill, Jim Hoagland, Gary Roughead, Abe Sofaer,Tom Stephenson, and John Taylor for their assistance in conceptualizing
xvi acknowledgmentsthis book and their many helpful editorial and content suggestions. AdeleHayutin helped me understand the evolving demography of the world.Grace Hawes used her ﬁnely honed archival expertise to identify my paststatements on key topics and to suggest photographs to accompany thetext. Susan Southworth has worked tirelessly with me on this project. Ithank all these friends for their encouragement and help.George P. Shultz
chapter oneOur ChallengesMy days of public service, after two and a half years as a US Marine inthe Paciﬁc during World War II, span three administrations—those ofEisenhower, Nixon, and Reagan—and include four cabinet positions:secretary of labor, director of the Oﬃce of Management and Budget,secretary of the treasury, and secretary of state. Throughout my yearsin government, and continuing through my careers in business and aca-demia, a number of vital issues have been persistently on my mind.This book contains my thoughts about six of these central issues,including comments I have made about them in speeches and publica-tions over the past half century.The result is basically a how-to book. It oﬀers thoughts on how to: do abetter job of governance; get our economy back on track; take full advan-tage of current prospects for twin revolutions in the ﬁeld of energy; takeon the debilitating problems associated with addictive drugs; conduct anenergetic, professional, and tough-minded diplomacy; and confront thesecurity issues posed by nuclear weapons.We now face these diﬃcult issues at a particularly challenging time.We have moved from a period when we in the United States took the leadrole in the construction of a global economic and security commons toa world that is awash in change. We must identify constructive ways toinﬂuence the changing world for the well-being of the United States aswell as for the beneﬁt of all.An Economic and Security CommonsAs World War II was drawing to a close, a group of gifted and creativepeople from the United States, Great Britain, and other Allied countriesgathered to plan for the future. They reﬂected on the events of the ﬁrstpart of the twentieth century: two world wars, the ﬁrst ended with avindictive treaty and both with immense casualties (around 70 million
2 issues on my mindpeople, civilian and military, in World War II alone), the Holocaust, andthe Great Depression with the accompanying explosion of protectionismand competitive currency devaluations. Seeing this, and recognizing thatthe Soviet Union was an aggressive and dangerous adversary, this grouprealized the urgent need to construct a diﬀerent kind of world.It was in this environment that there emerged the concept of con-tainment, the establishment of NATO, and the creation of the GeneralAgreement on Tariﬀs and Trade (GATT) with its rounds of agreementslowering barriers to trade. In addition, the International Monetary Fund(IMF) was established to deal with currency issues and the InternationalBank for Reconstruction and Development (now the World Bank) wasfounded to deal with the development needs of devastated countries and,subsequently, the needs of countries with low per-capita incomes. Thisera also led to the formation of the United Nations to help preserve thepeace and support the emergence of the European Community.These developments resulted in what could be called a global eco-nomic and security commons in which the United States took the leadand its allies—and, eventually, its reconstructed adversaries—playedstrong roles. The creative contributions to these eﬀorts by the Trumanand Eisenhower administrations extended, with a few dips and valleys,through the end of the Cold War in the 1990s, at which time Russiabegan to take part in the global economy. China and Russia have nowbecome members of the World Trade Organization. I was proud to playa part in this process as a cabinet member in the Nixon and Reaganadministrations.The establishment and strengthening of the global economic and secu-rity commons has been beneﬁcial for the United States. These decadeshave also seen unprecedented improvement in the human condition on aglobal scale. Poverty has been reduced and many people enjoy better healthand longer lives, due in some considerable part to breathtaking biologicalresearch and the development of pharmaceutical products and innovativemedical procedures, many of them emanating from the United States.But now we are once again living in an age of remarkable changes ofenormous proportions that aﬀect every part of the globe. This age callsfor a renewed eﬀort to understand these developments and to recre-
our challenges 3ate a global economic and security commons that will beneﬁt us as wellas the rest of the world. The changes we face are real and the risks ofa chaotic world are high. Serious progress must be made in address-ing each of the issues discussed in the chapters that follow. The UnitedStates must once again demonstrate its capability and willingness to takethe lead.A World Awash in ChangePrimaryamongthesedramaticchangesisdemography,whichhasrecentlyundergone stunning shifts. In almost every developed country, fertilityis far below the replacement level, longevity is rising, and the labor forceis shrinking in proportion to the total population. These developmentsinevitably aﬀect outlook and capability. In many countries, such as Ger-many and Japan, populations are declining. Russia has a demographiccatastrophe on its hands, with low fertility, longevity for men at aroundsixty years, and a declining population. South Korea, Japan, and otherrelatively developed countries in Asia exhibit demographics similar tothose of many European nations. Of these countries, Japan now has themost rapidly aging population.In some ways, China has the most interesting demography. With itsone-child policy, fertility began falling rapidly about thirty years ago, sofor a quarter century China had a growing labor pool and a decreasingnumber of people that labor pool had to support—call it a demographicdividend. But soon that picture will shift abruptly, almost like ﬂippinga switch. The labor pool will start to decline and the number of olderpeople whom the labor force must support will start rising rapidly.The situation is quite diﬀerent in other parts of the world such as theMiddle East and North Africa, where fertility has declined moderatelybut is still relatively high, so the growing populations are primarily young.In all too many cases, however, these societies are organized in such away that many of their youth have little or nothing to do.Added to this demographic picture is the deep and still underappre-ciated impact of the information and communications revolution thatallows people in nearly every corner of the world to be informed, to com-municate, and to organize. This development profoundly changes the
4 issues on my mindmanner of governance because it sharply reduces the distance betweenthose in power and those being governed. This shift may cause coun-tries with representative-style governments to struggle, but these leadersare accustomed to listening to their citizens. Autocratic governmentsthat have been in place for decades, however, will become increasinglyvulnerable.In much of the Middle East and North Africa, there is now a toxicmix: many young people are without work and, because of the infor-mation and communications revolution, they are becoming ever moreaware of their plight in comparison to the lives of their counterpartsin other areas of the world. Remember that the movement we mightcall the Arab Awakening was sparked by one entrepreneur in Tunisiawho simply wanted to create a business selling fruits and vegetables. Asthe regime’s corrupt police oﬃcers to whom he refused to pay bribessquashed him, he asked, “How do you expect me to make a living?”Afundamental lesson from this incident is that the future stability of thesesocieties will depend more on economies that can put people to workthan on the barrel of a gun, because work links people to reality andcan provide them with positive incentives, conﬁdence in the future, andthe dignity that comes from knowing they have earned what they havebeen paid.Our world today is also plagued by the unpredictable violence that wecall terrorism, much of it emanating from some strain of radical Islam.The United States and many other countries are paying a heavy price intheir eﬀorts to counter this phenomenon. They must identify less costlyand more eﬀective methods of addressing this serious threat.Changes in the nature of the state system present another challenge.Ideally, we think of the world as being composed of states, each able toexert sovereign power within its domain and interact constructively onthe world stage. These days, however, there are large areas of the worldwhere lines have been drawn on a map and a name placed inside the lines,but where no real sovereign authority exists.1. Bob Simon, “How a slap sparked Tunisia’s revolution,” CBS News, Febru-ary 20, 2011.
our challenges 5Sovereign capacity is severely limited in many other countries. Thenthere are the individual nation-states of Europe, which are also part ofa community with headquarters in Brussels. Most are also members ofthe eurozone with headquarters in Frankfurt. This dispersion of author-ity diminishes each state’s sovereign power and sense of responsibility,and is one of the reasons that nations of the eurozone, in particular, arestruggling with severe ﬁnancial crises.Added to these sources of change are the economic and ﬁnancialproblems so evident in Europe and the United States. The impact of theseproblems goes beyond their economic eﬀects and leads to doubts aboutcompetence and the applicability of the Western model of free marketsand open politics. The United States must get its house in order. Then itcan reestablish leadership as it helps to reinvigorate the global economicand security commons that has eﬀectively served the United States andcountries throughout the world over the past half century.How can this be done? Leadership is the ﬁrst requirement. TheUnited States has historically played this role. Its leadership involvesworking constructively with other nations, and such work can best bedone when the United States is strong, prosperous, and conﬁdent. Onsuch a foundation, we will be able to confront problems and conduct aneﬀective, strategically based diplomacy. Today, important opportuni-ties are ripe for development in the ﬁeld of energy. The United Statescan also do much better in handling the devastating issues involvingaddictive drugs: ﬁghting their use more proﬁciently, relieving burdenson our criminal justice system, and improving the lives of citizens in ourhemisphere.Creative diplomacy will be an essential ingredient in making our wayto a safer world. And priority must be given to addressing the globalthreat posed by nuclear weapons. Progress has been made but muchneeds to be done.The chapters and the appended speeches and publications that fol-low highlight six pressing issues with a how-to objective in mind. If wesuccessfully address each of these issues, we will be able to ensure thatfuture generations of Americans—and future generations around theglobe—will have a more secure and prosperous world in which to live.
6 issues on my mindThe ﬁnal reﬂections in this book contain observations on opportuni-ties and problems ahead, while the epilogue emphasizes the importanceof freedom.The points that I make in the following chapters are based largelyon my personal experiences, many of which are put in story form. Forexample, one of the most compelling and instructive experiences in nego-tiationscame in the form of a domestic issue, a battle to bring greaterfairness to education. Its critical lesson, which is widely applicable in anysetting, is that successful diplomacy requires strong, credible, legitimaterepresentation on all sides to work eﬀectively on sensitive problems.With strong representation, arguments are brought forward in a clearand straightforward way so that solutions will be accepted with the beliefthat the interests involved were fairly defended and will thereby receivethe support needed for implementation.President Nixon gave me the assignment, beginning in March 1970,of chairing the process of desegregating the schools in seven Southernstates. There we were, a decade and a half after the Brown v. Board ofEducation decision, with these schools still segregated by race. Withstrong support from Presidential Counselor Pat Moynihan, SpecialCounsel Len Garment, and Ed Morgan, a savvy former advance man forthe president, I formed biracial committees in each of the seven states.We determined, with the president’s agreement, that politics should havenothing to do with the selection of the people for these committees. Wewanted equal numbers of blacks and whites who were truly representa-tive of their constituencies. And so, with great care, we chose strong,respected leaders from each of these states.We brought each of these committees to the White House for intensediscussions designed to engage them constructively in this sensitive andpotentially explosive issue. At the end of a day of substantive exchanges ofideas on implementation, I brought them to the Oval Oﬃce for a meetingwith President Nixon. The president spoke to them with great convictionand considerable emotion. Looking around the room, he said, in essence:2. I included this story, reprinted more fully in the appendix, in a discussion aboutPalestinian representation with Israeli Prime Minister Yitzhak Shamir.
our challenges 7Here we are in the Oval Oﬃce of the White House. Think of the decisionsthat have been made here that have aﬀected the health and the security ofour country. But remember, too, that we live in a great democracy whereauthority and responsibility are shared. Just as decisions are made herein this oﬃce, decisions are made throughout the states and communi-ties of our country. You are leaders in those communities, and this is atime when we all have to step up to our responsibilities. I will make mydecisions, and I count on you to make yours. We must make this work.By the time the president ﬁnished and committee members were readyto leave, they were charged up to put their energy into making sure theschool openings and subsequent operations of the schools proceeded assmoothly and constructively as possible.The school openings in September 1970 were peaceful, much to theamazement of almost everyone. The community leaders had done a ﬁnejob by fulﬁlling their responsibilities. Strong people were the key to suc-cess in negotiating this diﬃcult and sensitive situation.Each of the following chapters highlights an issue of critical importancethat has been on my mind for many years. I hope that my observationson how to approach these concerns—based on the insights I have gainedthough personal experiences—may be useful.
About the AuthorGeorge P. Shultz, a native of New York City, attended Princeton Uni-versity, served in the US Marine Corps, and earned a PhD in industrialeconomics from the Massachusetts Institute of Technology (MIT) in1949. From 1948 to 1957 he taught at MIT. In 1955 he served as a seniorstaﬀ economist on President Eisenhower’s Council of Economic Advisers.In 1957 Shultz joined the faculty of the University of Chicago’s Gradu-ate School of Business as a professor of industrial relations, becom-ing dean in 1962. From 1968 to 1969 he was a fellow at the Center forAdvanced Study in the Behavioral Sciences at Stanford University.He was appointed secretary of labor by President Nixon in 1969. In1970 he became director of the Oﬃce of Management and Budget; in1972 he was named secretary of the treasury. In 1974 he became presidentof Bechtel Group and joined the faculty of Stanford University. Shultzwas chairman of President Reagan’s Economic Policy Advisory Boardfrom 1981 to 1982 and secretary of state from 1982 to 1989.Shultz’s publications include Ideas & Action, Featuring 10 Command-ments for Negotiations (2010); Ending Government Bailouts as We KnowThem, coedited with Kenneth E. Scott and John B. Taylor (2010); PuttingOur House in Order: A Citizen’s Guide to Social Security and Health CareReform, with John B. Shoven (2008); Turmoil and Triumph: My Years asSecretary of State (1993); Economic Policy Beyond the Headlines, withKenneth Dam (1977); Workers and Wages in the Urban Labor Market,with Albert Rees (1970); Guidelines, Informal Controls, and the Mar-ketplace, with Robert Aliber (1966); Strategies for the Displaced Worker:Confronting Economic Change, with Arnold Weber (1966); ManagementOrganization and the Computer, with Thomas Whisler (Eds.) (1960);Labor Problems: Cases and Readings, with John Coleman (1959); TheDynamics of a Labor Market, with Charles Myers (1951); Pressures onWage Decisions (1951); Causes of Industrial Peace Under Collective
376 about the authorBargaining, Case Study No. 10, with Robert P. Crisara (1951); and Causesof Industrial Peace Under Collective Bargaining, Case Study No. 7, withCharles A. Myers (1950).Shultz is the Thomas W. and Susan B. Ford Distinguished Fellow at theHoover Institution, Stanford University. He is honorary chairman of theStanford Institute for Economic Policy Research, Advisory Council chairof the Precourt Institute for Energy Eﬃciency at Stanford University,chair of the MIT Energy Initiative External Advisory Board, and chair ofthe Hoover Institution Task Force on Energy Policy.
index 393Strategic Arms Limitations Talks(SALT) agreements, 282, 284, 324,326Strategic Arms Reduction Talks(START), 292Strategic Arms Reduction Treaty of1991, 342, 354, 356Strategic Defense Initiative (SDI), 145,246, 327, 328, 330, 331strategyfor economic change, 186for energy, 50–52in superpower relations, 245–46See also “Economic Strategy for theReagan Administration”strength, 64–65of America, 218, 284–89consensus building, 285in foreign policy, 217–20of free world, 217military balance redressing, 285–87in military forces, 217, 281security implications in, 287–88Third World peace and stability,288–89strikes, 36, 162Sunnis, 80, 81, 82Supreme Court, 27, 36Synthetic Fuels Corporation, 172Syria, 75, 80, 82, 83Taft-Hartley Act, 36Taking on Iran (Sofaer), 98Taliban, 73taxcarbon, 204–6Earned Income Tax Credit, 205income, 193–94increase of, 182policy of, 170, 254rate of, 32, 179Taylor, John B., 38, 179, 186, 193Taylor rule, 185Teach For America, 23“Tear Down This Wall” speech, 79,299–305“‘Tear Down This Wall,’ Twenty YearsLater,” 299–305terrorism, 4, 71–73, 257–58, 274,275–76, 303asymmetries and, 73–76counterinsurgency and, 76democracy as target of, 265deterrence of, 273–76drugs and, 266freedom as target of, 265intelligence capabilities and, 274,275international eﬀort against, 276–77international links with, 265Israel and, 266, 272–73in Latin America, 265in Middle East, 265, 270–71modern world and, 263–77moral confusion with, 268–71preemption of, 72–73, 76response to, 271–73Soviet role in, 266strategy for, 267, 273–77as threat to democracy, 264–67in Western Europe, 265“Terrorism and the Modern World,”71–72, 263–77terrorists, 303, 336, 371Thailand, 235, 250Thatcher, Margaret, 91, 263
394 indexTheory of the Consumption Function, A(Friedman), 33“‘Think Long’ to Solve the Crisis,”176–78Third World, 179, 242, 261, 281, 288–89Thomas, Evan, 91Three Mile Island accident, 366“Time for a Budget Game-Changer,”186–89Tocqueville, Alexis de, 102, 214“Toward a Nuclear-Free World,” 341–46Treaty of Tlatelolco, 317Triet, Nguyen Minh, 352Truman, Harry, 79, 111, 227, 283, 299Tunisia, 4, 81Turkey, 82–83UN Committee on Disarmament, 292UN General Assembly, 68, 88, 266, 337UN Human Rights Commission, 290UN Secretary General, 295UN Security Council, 75, 95, 99, 222,338UN Security Council Resolution 242,222UN Security Council Resolution 435, 230UN Security Council Resolution 1540,343UN Security Council Resolution 1887,95, 352, 354UN Security Council Summit Meeting(2009), 352UNITA (National Union for the TotalIndependence of Angola), 230United Kingdom, 270, 302United States (US), 5, 65–66, 101–6,247, 333as champion of democracy, 251–52in superpower relations, 243Universal Declaration of Human Rights,227University of Chicago, 45, 92, 164, 321,322Uruguay, 228, 251US Department of Energy, 172US Department of State, 289“US Foreign Policy: Realism and Pro-gress,” 213–25Usery, Bill, 22, 23US-Russia Strategic Oﬀensive Reduc-tions Treaty, 345US-Soviet relations, 76–79, 243–47“US-Soviet Relations in the Context ofUS Foreign Policy,” 278–97Vietnam, 36, 91, 228, 229, 236, 250, 285,288, 348Voice of America, 301Volcker, Paul, 16, 30, 33, 62, 209wage and price controls, 28, 29, 32, 178Walesa, Lech, 214Walker Task Force, 170Wall Street Journal, 10, 17, 39, 54, 61,62, 93, 94, 97, 139, 176, 179, 186,190, 193, 209, 336, 341, 347, 355,357, 368, 370WANO (World Association of NuclearOperators), 368war, on drugs, 53–62, 209–10warfare, cyber, 343, 349Warsaw Pact, 222, 294, 302, 333Washington, George, 260Watergate, 115Weber, Arnold, 22, 23Weichmann, Herbert, 111
index 395Weidenbaum Task Force, 170Weinberger Task Force, 169West Germany, 227Western Europe, 227, 247, 248, 261, 265,325, 333“Why We Support a Revenue-NeutralCarbon Tax,” 204–6Williamsburg summit, 286, 287, 288,293Wilson, Pete, 37Wilson, Woodrow, 102, 227World Association of Nuclear Opera-tors (WANO), 368World Bank, 2, 30World Business Council for SustainableDevelopment, 203“World Free of Nuclear Weapons, A,”352–59World Resources Institute, 203World Trade Organization, 2World War I, 102World War II, 27, 102, 104, 108–9,361Wriston, Walter, 145, 153–54, 255Yalta conference, 235Yesin, Viktor Ivanovich, 89Yom Kippur War, 47