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  • 1. 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
  • 2. “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)
  • 3. Issues on My Mind
  • 4. ISSUES ONMY MINDStrategies for the FutureGEORGE P. SHULTZhoover institution pressStanford University | Stanford, CaliforniaForeword by Henry A. Kissinger
  • 5. The Hoover Institution on War, Revolution and Peace, foundedat Stanford University in 1919 by Herbert Hoover, who wenton to become the thirty-first president of the United States,is an interdisciplinary research center for advanced study ondomestic and international affairs. The views expressed inits publications are entirely those of the authors and do notnecessarily reflect the views of the staff, officers, or Board of Overseers ofthe Hoover Institution.www.hoover.orgHoover Institution Press Publication No. 636Hoover Institution at Leland Stanford Junior University,Stanford, California 94305-6010Copyright © 2013 by the Board of Trustees of theLeland Stanford Junior UniversityAll rights reserved. No part of this publication may be reproduced,stored in a retrieval system, or transmitted in any form or by any means,electronic, mechanical, photocopying, recording, or otherwise, withoutwritten permission of the publisher and copyright holders.For permission to reuse material from Issues on My Mind: Strategies forthe Future, ISBN 978-0-8179-1624-4, please access www.copyright.comor contact the Copyright Clearance Center, Inc. (CCC), 222 RosewoodDrive, Danvers, MA 01923, 978-750-8400. CCC is a not-for-profitorganization that provides licenses and registration for a variety of uses.Efforts have been made to locate the original sources, determine thecurrent rights holders, and, if needed, obtain reproduction permissions.On verification of any such claims to rights in the articles reproducedin this book, any required corrections or clarifications will be made insubsequent printings/editions.Photo credits appear on page 397.Hoover Institution Press assumes no responsibility for the persistence oraccuracy of URLs for external or third-party Internet websites referredto in this publication, and does not guarantee that any content on suchwebsites is, or will remain, accurate or appropriate.First printing 201319 18 17 16 15 14 13 7 6 5 4 3 2 1Manufactured in the United States of AmericaThe paper used in this publication meets the minimum Requirements ofthe American National Standard for Information Sciences—Permanenceof Paper for Printed Library Materials, ANSI/NISO Z39.48-1992. oCataloging-in-Publication Data is available from the Library of Congress.ISBN: 978-0-8179-1624-4 (cloth. : alk. paper)ISBN: 978-0-8179-1626-8 (e-book)
  • 6. For Charlotte&The Future:My five children, eleven grandchildren,and four great-grandchildren
  • 7. 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
  • 8. 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
  • 9. 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
  • 10. 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
  • 11. 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
  • 12. 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.”
  • 13. 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
  • 14. 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
  • 15. 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.
  • 16. 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
  • 17. 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
  • 18. 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
  • 19. 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-
  • 20. 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
  • 21. 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.
  • 22. 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.
  • 23. 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-tiationscame 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.
  • 24. 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.
  • 25. 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
  • 26. 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.
  • 27. IndexABM (Anti-Ballistic Missile Treaty),324, 326, 327, 328, 330accountability, leadership and, 18Adams, John Quincy, 225AEC (Atomic Energy Commission), 361Affordable Care Act, 184, 188Afghanistan, 73, 74, 78, 80, 98, 216, 262resistance forces in, 226, 251Soviet invasion of, 229, 236, 244, 250,281, 282, 288, 295, 300, 348AFL-CIO, 69Africa, 224, 230, 233, 251, 255North, 3–4, 46South, 88, 226, 234, 252–53, 262, 295,296, 312, 316, 317Agnew, Spiro, 130, 133Al Qaeda, 361Albright, Madeleine, 342Algeria, 303Allen, James, 118Allen, Richard V., 342“America and the Struggle for Free-dom,” 226–30American tradition, 226–27Brezhnev doctrine challenge, 66–67,228–32, 236–37, 238, 298Central America, 230–31, 233, 236,238–40, 252, 288, 295democracy, 226, 227–28American Academy in Berlin, 79, 107,108, 116, 299–300American exceptionalism, 101–4Andreasen, Steven, 360Andropov, Yuri, 293Angkor Wat, 250Angola, 226, 230, 244, 281Annan, Kofi, 305Anti-Ballistic Missile (ABM) Treaty,324, 326, 330apartheid, 253Arab Awakening, 4, 80, 81, 101Arab oil boycott, 42, 46, 47, 114Arctic region, 48Areeda, Phillip, 45Argentina, 228, 251, 316, 317Arias Sánchez, Óscar, 352arms control, 78, 222–24, 243, 246,291–94, 326, 329See also “Nuclear Weapons, ArmsControl, and the Future ofDeterrence”ASEAN (Association of South EastAsian Nations), 249, 250, 288Asia, 233, 249, 250, 286Assad, Bashar, 82Association of South East AsianNations (ASEAN), 249, 250, 288asymmetries, 73–76, 257–58Atlantic Alliance, 116Atlantic Charter, 227Atlantic community, 248, 260atom, peaceful benefits of, 318–19atomic bomb, 87, 90, 91, 323Atomic Energy Commission (AEC), 361
  • 28. 378 index“Atoms for Peace” speech (Eisenhower),312, 337Austrian State Treaty, 297B-52, 362, 365–66Bahrain, 82bailouts, 177, 180, 185Baker, James A. III, 342Ban Ki-moon, 352Bankruptcy Not Bailout (Scott andTaylor), 38banks, Federal Reserve’s financing of,194Barber, Tony, 30, 109Barco, Virgilio, 55Bechtel Group, 108, 375Becker, Gary, 56–57, 60, 61, 186Beckett, Margaret, 341Beirut, 218, 263, 270Berger, Samuel R., 342Berlin, 299, 348Berlin Airlift, 301Berlin Wall, 299–305, 348biological threats, 349Bolivar, Simon, 227, 251Bolivia, 228, 251Borobudur, 250Boskin, Michael, 179, 193Brandenburg Gate, 299Brazil, 61, 228, 251, 316, 317Brezhnev doctrine challenge, 66–67,228–32, 236–37, 238, 298British Broadcasting Corporation,301“Broken Arrow” accidents, 365Brown, Gordon, 352Brown v. Board of Education, 6, 129Brzezinski, Zbigniew, 342budgetbalanced, 158, 183, 188, 189changes in, 186–89deficit, 181, 186, 193, 194for economic strategy, 168–70federal, 163–64, 168–70Budget Act of 1974, 170Bulgaria, 266Bureau of Consumer Finance Protec-tion, 184Burns, Arthur, 37, 38, 115Burns Task Force, 173cabinet departments and agencies,10–11Cabinet Task Force on Oil ImportControl, 45–47Calderón Hinojosa, Felipe, 352Cambodia, 226, 229, 236, 244, 250, 251,262Camp David agreements, 222Canada, 40, 46, 49, 84, 109, 115, 152, 191,248carbon cap-and-trade system, 202–3carbon tax, revenue neutral, 51, 202,203–6Caribbean, 228, 251, 272Caribbean Basin Initiative, 224Carlucci, Frank, 342Carnegie Endowment study, 311Carrington, Lord Peter, 248Carter, Jimmy, 78, 88, 300, 314Casey, Bill, 63Castro, Fidel, 118, 238Caucasus, 79, 343Central Americacommunists in, 230, 239, 240, 265,272
  • 29. index 379freedom struggle in, 230–31, 238–40,252, 288, 295Soviets and, 233, 236Central Europe, 294chemical weapons, 294, 349Cheney, Dick, 29Chernenko, Konstantin, 289, 353Chernobyl, 362Chicago Sun-Times Forum, 321Chile, 85, 226China, xiii, 2, 85, 91, 98, 203, 233, 309,316, 372, 374demography of, 3as world power, 79, 110, 242, 247See also People’s Republic of ChinaChristopher, Warren, 342Clinton, Bill, 202CO2, 202–6, 365Cogan, John, 179, 193Cohen, William, 342Cold War, 77, 88, 123, 339containment, 2, 282–84, 300, 303détente, 236, 282–84, 300deterrence, 113, 336–37, 343, 347–51,362, 363lessons of, 76–80, 85linkage, 78, 79, 300NATO during, 79, 299, 301–2nuclear weapons during, 336Reagan, Ronald and, 77, 78, 79, 279with Soviet Union, 76–79stability during, 348turning point in, 102–3, 115, 301–2Colombia, 55, 56, 57, 61, 151, 266Commonwealth Club of NorthernCalifornia speech, 66–68, 226–40communications revolution, 3–4,17–18, 256communism, 66, 124, 228, 232, 251, 261communistsin Central America, 265in China, 151Compaore, Blaise, 352Comprehensive Test Ban Treaty(CTBT), 339, 344Conference on Security and Coopera-tion in Europe (CSCE), 290, 292Congressional Budget Office, 181, 188,189Connally, John, 109“Constitution Doesn’t Mention Czars,The,” 139–42appointment process, 140–42centralized management, 140governance, 139Consumer Financial Protection Bureau,194Contadora Group, 238, 239containment, 2, 77–78, 79, 282–84, 300,303Cooperative Threat Reductionprogram, 338Coordinating Committee on EconomicPolicy, 31, 166Costa Rica, 228, 235Council of Economic Advisers, 174Council on International EconomicPolicy, 162Crocker, Chester, 295CSCE (Conference on Security andCooperation in Europe), 290,292CTBT (Comprehensive Test BanTreaty), 339, 344Cuba, 118, 228, 230, 231, 238, 239, 252,266, 295
  • 30. 380 indexcyber warfare, 343, 349Czechoslovakia, 66, 227, 228, 348Dam, Ken, 297deficitof federal budget, 181, 193, 194Federal Reserve’s financing of, 194reduction of, 186democracy, 226, 227–28terrorism as threat to, 264–66US as champion of, 102, 251–52demography, 3–4, 41desegregation, 6détente, 78, 282–84, 298, 300deterrence, 93, 96, 113, 145, 246, 325,336, 343, 347–51, 362, 363Cold War, 248, 336–37of nuclear proliferation, 347–51of terrorism, 273–74See also “Nuclear Weapons, ArmsControl, and the Future ofDeterrence”“Deterrence in the Age of NuclearProliferation,” 347–51diplomacyin foreign policy, 63–86, 304nuclear, 363dissidents, in Soviet Union, 226Dobrynin, Anatoly, 353Drell, Sid, 93, 96, 359, 360Drug Policy Alliance, 61drugsAmerican policy on, 57Colombia, 55, 56, 57cost of, 56–57, 59, 209decriminalization of, 58–59, 60–61,210French connection, 53Guatemala, 60HIV/AIDS, 58, 61legalization of, 210Mexico, 56–57, 60, 61, 209New Zealand, 57Portugal, 59, 60, 61prison population and, 58–59Prohibition and, 59–60terrorism and, 257, 266treatment of, 58Wall Street Journal, 54war on, 53–62, 209–10Dulles, John Foster, 39Eagleburger, Lawrence, 342East Asia and Pacific, 249, 250, 319, 325Eastern Europe, 226, 249, 343East-West competition, 292East-West economic relations, 287–88East-West military balance, 288, 291East-West trade, 287, 296economic and security commons, 1–3,106economic crisisdebt, 193–95deficit, 193–94financial institution bailouts, 177, 180,185, 194health-care system in, 177–78, 181,183intervention, 35–38mortgages in, 176–77regulations and, 180, 181Social Security and, 177, 183economic expansion, xii, 158, 162, 186,187economic revivalbailouts and, 181
  • 31. index 381federal government spending and, 181Federal Reserve with, 180, 182, 185,194principles for, 64–65, 179–85stimulus and, 181, 183, 187, 189tax rate in, 179“Economic Strategy for the ReaganAdministration,” 166–75Economist, The, 268economycrisis intervention, 35–38demographic changes with, 41education with, 39–40external debt, in foreign policy,219fairness, 34–35free market, 158, 165global, 2, 4, 162, 254inflation, 29, 33, 157, 158, 164, 168, 185,186, 188, 195, 218monetary policy, 172–73, 185price functioning understanding, 34reasonable predictability, 33time horizon and, 27–28wage and price controls, 28, 29, 32,178World War II and, 27See also “Education Is the Key to aHealthy Economy”Ecuador, 228, 251EDF (Environmental Defense Fund), 49education, 6, 34, 39–40, 190–92“Education Is the Key to a HealthyEconomy,” 39, 190–92competition, 191income disparity relating to, 191K–12 school system, 190–92US growth rate and, 190Egypt, 81Eighteenth Amendment, 59Einstein, Albert, 85, 241, 242Eisenhower, Dwight D., 20, 39, 47, 79,87, 90–91, 111, 124, 139, 299“Atoms for Peace” address, 312, 337nonproliferation policy of, 312–13,352oil dependence and, 47Eisenhower in War and Peace (Smith),90El Salvador, 228, 237, 238, 239, 251electricity, nuclear generation of, 313Emerson, Ralph Waldo, 116energyalternate sources of, 50CO2, 202–6efficiency of, 50future of, 45–52regulation of, 171–72research and development, 206strategy for, 50–52, 171–72Entebbe, 272Environmental Defense Fund (EDF),49Erdoğan, Recep Tayyip, 352Ethiopia, 226, 230, 244, 251, 281Eureka College, 327Europe, 242, 255, 372Eastern, 226, 229, 249, 343Western, 227, 247, 248, 265, 325, 333European Atomic Energy Community,315European Community, 2, 248European Union, xiiifair engagement, 65Fannie Mae, 180, 181, 184
  • 32. 382 indexfederal budget, 163–64deficit of, 181, 193percentage of GDP, 182Federal Bureau of Investigation, 142federal government spending, 181,186–89Federal Register, 45, 195federal regulatory agencies, 195Federal Reserve, 28, 33, 42, 105, 172–73,176, 180, 181, 185banks financed by, 194Consumer Financial ProtectionBureau financed by, 194deficit financed by, 194interest rates of, 180, 185, 194, 218interventions of, 196Operation Twist of, 194Fermi, Enrico, 322, 323financial crises, xivfinancial institution bailouts, 177, 180,185, 194Fiscal Year 1971, 163Fiscal Year 1972, 163Fiscal Year 1981 budget, 168, 169Fiscal Year 1982 budget, 168, 169Fischer, Heinz, 352Fletcher, Arthur, 35Ford, Gerald, 110, 114foreign policy, xiii, 213–25allies, 247–52challenges, 257–59change dynamic, 252–57changing international system,241–43Cold War lessons, 76–80, 85diplomacy applied to, 63–86, 304external debt in, 219freedom agenda, 66–68, 259–62global thinking and implementation,68–70government market interference in,219in Middle East, 80–84peace and, 259–62protectionist trade policies in, 219of Reagan, Ronald, 214–15reality of, 215–17, 224records importance, 70–71strength in, 217–20superpower relations, 243–47terrorism and asymmetries, 73–76,257–58foreign policy, Soviet relations inchallenge of, 279, 280–82containment and detente, 282–84military strength in, 281negotiations and dialogue, 279,289–97prospects for, 297–98Soviet model in, 281, 283strength-increasing programs,284–89Third World relating to, 281treaty infractions in, 282US-Soviet agenda, 289–97Formosa Strait crisis, 91Forrestal, James, 12Four Freedoms, 227fracking, 48–49, 50France, 227Freddie Mac, 180, 181, 184free market economy, 158, 165free trade, 148–49freedom, 66–68, 118, 149–52, 215American exceptionalism and,101–4
  • 33. index 383in foreign policy, 259–62of religion, 265as terrorism target, 265See also “America and the Strugglefor Freedom”Freedom House, 101French connection, 53Friedman, Milton, 30, 33, 180, 210Friedman, Tom, 81–82Fukuda, Takeo, 30, 109Fukushima, 361, 362, 364, 365, 366,368“Future of American Foreign Policy,The,” 86, 241–62“Future of Nuclear Deterrence, The,”93G7 summit, 109G8 Global Partnership Against theSpread of Weapons and Materialsof Mass Destruction, 363G8 statement, 356, 357Gandhi, Indira, 227Gandhi, Rajiv, 228, 337, 352Garment, Len, 6, 130, 134Gates, Robert, 367GATT (General Agreement on Tariffsand Trade), 2, 152, 219GDP. See gross domestic productGeneral Agreement on Tariffs andTrade (GATT), 2, 152, 219Geneva Conventions, 74Geneva Summit, 323George P. Shultz National ForeignAffairs Training Center, 69Germany, 94, 102, 108–9, 266, 286, 338,365Giscard d’Estaing, Valéry, 30, 109Global Commission on Drug Policy, 61,209, 210global economic and security com-mons, 1–3, 5, 6, 106Global Issues and Reagan-Gorbachev Summits Galleries, 107global security threats, 349Global Threat Reduction Initiative, 338global warming, 48, 304Global Zero initiatives, 357–59Global Zero Summit, 95GNP (Gross National Product), 158,164, 255Golden, Clint, 161Gorbachev, Mikhail, 94, 153, 236, 299,323nuclear weapon policy of, 337, 341Reagan, Ronald with, 91, 302, 359at Reykjavik, 91–92, 110, 321, 328–30,331, 337, 338, 353, 368Gordon, John Steele, 197governance, 9–25, 139appointment process, 140–42cabinet departments and agencies,10–11cabinet positions, 1, 45, 46, 87, 108,129–36constitutional process of, 10–11, 139Great Depression, 27, 180greenhouse gas problem, 201Greenwald, Glen, 57, 60–61Grenada, 123, 228, 233, 251, 272Gromyko, Andrei, 77, 78, 85, 88, 244,300, 301, 316gross domestic product (GDP)federal spending and, 181, 182, 186,188–89, 190, 191national debt relative to, 194–95
  • 34. 384 indexgross national product (GNP), 158, 164,255Guatemala, 60, 251Halbouty Task Force, 171Hamas, 75–76Hamilton, Alexander, 193, 197Hammarskjold, Dag, 213Hanushek, Eric, 39, 190Harlow, Bryce, 21, 37, 134Hartman, Arthur, 295Hatoyama, Yukio, 352health-care system, 177–78, 181, 183Affordable Care Act, 184, 188reform of, 188Helsinki accords, 249Helsinki Final Act, 281, 282, 291Helsinki Watch Committee, 220, 290Henry A. Kissinger Award Ceremony,107Kissinger’s comments at, 112–16Schmidt’s comments at, 108–11Hezbollah, 75, 82Hillel, Rabbi, 277Hiroshima, 87, 99, 361Hitler, Adolf, 90, 108–9HIV/AIDS, 58, 61Hobbes, Thomas, 267Hodgson, Jim, 22, 23Honduras, 228, 235, 251Hoover Institution, xv, 39, 93, 94, 96,342, 349, 359, 360, 375House budget plan for 2011 (HR1),187–89“How to Gain a Climate Consensus,”201–3Hu Jintao, 352human rights, 290–91Hungary, 348Hurricane Katrina, 366hydraulic fracturing, 48–49, 50IAEA (International Atomic EnergyAgency), 75, 114, 223, 312–13, 316,317, 318–19, 339, 344, 345, 357, 367ICBMs (intercontinental ballistic mis-siles), 282, 285IDA (International DevelopmentAssociation), 289IEA (International Energy Agency), 288Ike’s Bluff (Thomas), 91IMF (International Monetary Fund), 2,219, 289immigration, 118–20income tax system, 193–94India, xi, 82, 85, 86, 97, 98, 203, 228, 309,313, 363INF (intermediate-range nuclearforces), 92, 110, 222, 292, 293, 327,328–29inflation, 29, 33, 157, 158, 164, 168, 185,186, 188, 195, 218information revolution, 143–54, 255communications revolution and,3–4, 17–18Institute of Nuclear Power Operations(INPO), 367–68intelligence capabilities, with terrorism,274, 275intercontinental ballistic missiles(ICBMs), 282, 285intermediate-range nuclear forces(INF), 92, 110, 286, 292, 293, 327,328–29Internal Revenue Service, 51, 115, 142,205
  • 35. index 385International Atomic Energy Agency(IAEA), 75, 114, 223, 312–13, 316,317, 318–19, 339, 343, 357, 367International Bank for Reconstructionand Development, 2International Development Associa-tion, 289International Energy Agency (IEA), 114,288International House of Chicago, 321International Labor Organization, 290,300International Monetary Fund (IMF), 2,30, 219, 289Internet, xii–xiiiIRA, 266, 270Iran, 46, 47, 75, 82, 83, 88, 97, 98, 123,141, 172, 231, 234, 254, 256, 265, 371nuclear program of, 336, 338, 339, 372proliferation threats from, 354, 357Iran-Contra, 141Iraq, 80, 98Irish Republican Army, 266, 270Iron curtain, 119, 348Islamic extremists, 303Israel, 47, 75, 76, 81, 97, 113, 152, 221, 265,286terrorism and, 266, 271–73Israeli-Palestinian situation, 83–84, 129,135, 221, 222, 254“Issues and Opportunities in theNuclear Enterprise,” 360–69Jackson, Henry “Scoop,” 269Japan, 3, 90, 102, 115, 260, 338, 347democracy in, 227, 228, 233, 242Hiroshima in, 87, 361Nagasaki in, 87, 361nuclear power and, 315, 361, 362, 364,365, 366, 367as world power, 247, 248, 249, 287,333Javits, Jacob, 23Jefferson, Thomas, 15, 131, 277Johnson, Lyndon, 36Joint Data Exchange Center, 343Joint Nuclear Enterprise, 98, 351, 357Jonathan Institute, 272Jordan, 84“Just Say No” campaign, 55K–12 school system, 34, 40, 42, 190–92Kampelman, Max, 97, 290–91, 359Kampuchea, 288, 295Kennan, George, 111Kennedy, John F., 111, 227, 309, 323, 337,352Kennedy, Ted, 35Keynes, John Maynard, 254Khmer Rouge, 229Khomeini, Ayatollah, 256, 266Kissinger, Henry A., 93, 95, 107, 111, 304articles by, 341, 347, 355, 357, 359, 368,370commission of, 252at Henry A. Kissinger AwardCeremony, 112–16Kohl, Helmut, 302Kollek, Teddy, 135Korea, 250, 287, 348North, 97, 336, 338, 354, 357, 368, 370,372Republic of, 226, 234, 249Korean 747 airliner, 78, 245, 301Kundera, Milan, 229Kyoto Protocol, 201, 202, 304
  • 36. 386 indexLaird, Melvin, 342Lake, Anthony, 342L’Aquila Statement on Non-Proliferation, 357Latin America, 228, 250–51, 255, 265,319Lavrov, Sergey, 353Law of the Sea Treaty, 48, 103“lawfare,” 74Lawrence Livermore National Labora-tory, 355leadership, 18–25Lebanon, 75, 218, 254, 263, 266, 286Lee Kuan Yew, 110Levi, Edward, 45Library Group, 109, 114Libya, 71, 81, 231, 265, 317Light, Paul, 17Limited Test Ban Treaty (LTBT), 361linkage, 78, 79, 300Loftus, Joe, 21London Suppliers’ Group, 313longer range, land-based INF missiles(LRINF), 293longshoremen’s strike, 36Los Alamos National Laboratory, 355LRINF (longer range, land-based INFmissiles), 293LTBT (Limited Test Ban Treaty), 361Lugar, Senator Richard, 241MAD (Mutual Assured Destruction),90, 343, 347, 371“Magnitude of the Mess We’re In, The,”193–97Mansfield, Mike, 107, 117at Medal of Freedom Award Cer-emony, 120–21Marines, 1, 87, 108, 218Marshall, George, 111, 299Marshall Plan, 109, 249, 301Marxist-Leninist ideology, 103, 230,236–37, 251, 254, 261, 270, 280Masaryk, Jan, 227Massachusetts Institute of Technology,87MBFR (mutual and balanced forcereductions), 292, 294McCain, John, 94, 353McCracken Task Force, 172McFarlane, Robert, 342McNamara, Robert, 342Meany, George, 69Medal of Freedom Award Ceremony, 13Mansfield’s remarks at, 120–21Reagan’s remarks at, 117–20, 121,122Shultz’s remarks at, 121–22Medicaid, 184, 196Medicare, 184, 195, 196Medvedev, Dmitry, 352, 353, 354Meltzer, Allan, 179, 193Mesić, Stjepan, 352Mexico, 49, 56–57, 60, 61, 84, 115, 248Middle East, 253–54, 312, 315, 325, 343Arab Awakening in, 4, 80, 81, 101Bahrain, 82demographics of, 3–4Egypt, 81, 84foreign policy in, 80–84Hezbollah in, 75, 82Iran, 82, 83, 88, 98Israel, 76, 81Israeli-Palestinian situation in,83–84, 254Jordan, 84
  • 37. index 387Muslim Brotherhood in, 82peace in, 113, 217, 221–22, 270Reagan, Ronald and, 222Saudi Arabia, 82Shiites in, 80, 81, 82Soviet military presence in, 288,296Sunnis in, 80, 81, 82Syria, 80, 82, 83terrorism in, 265, 270–71transformation in, 80US Central Command in, 286militarybalance of, 282, 285–88collective defense of, 286conventional capabilities and, 286modernization of, 285strength of, 64, 217, 281MIRVs (multiple independently-targetable reentry vehicles), 324Mitchell, John, 130–31monetary policy, 172–73, 185Montreal Protocol, 201–2, 203, 304–5Moore, Jeff, 22Morgan, Ed, 6, 130Morocco, 81Moscow Olympics, 78, 300Moscow Summit, 2002, 343Moscow Treaty on Strategic OffensiveReductions, 342Moynihan, Daniel Patrick, 6, 53–54, 70,130, 134Mozambique, 253Mukasey, Michael, 74multiple independently-targetable reen-try vehicles (MIRVs), 324Museveni, Yoweri Kaguta, 352Muslim Brotherhood, 81, 82mutual and balanced force reductions(MBFR), 292, 294Mutual Assured Destruction (MAD),90, 96, 113, 246, 337, 343, 347, 348,351, 369, 371MX missiles, 244Nadelmann, Ethan, 61NAFTA, 115Nagasaki, 87, 361Namibia, 224, 230, 253, 288, 295National Bipartisan Commission onCentral America, 252National Center for Policy Analysis, 16National Endowment for Democracy,234, 251National Institutes of Health, 195National Security Act, 139National Security Council (NSC), 90,91, 139, 174National Union for the Total Indepen-dence of Angola (UNITA), 230NATO, 2, 216, 248, 287, 296, 333, 344allies of, 350during Cold War, 79, 299, 301–2forces of, 222, 286, 332Soviets and, 243Warsaw Pact and, 294Natural Gas Policy Act of 1978, 172negotiations, 65, 279, 289–97for peace, 113, 217, 221–22in superpower relations, 245Negroponte, John, 202New Deal, The, 27New START Treaty, 349, 354, 370, 372New Zealand, 57“Next Steps in Reducing Nuclear Risks,”370–74
  • 38. 388 indexNicaragua, 226, 231–32, 234, 236, 237,238–40, 251, 252, 262, 266Nitze, Paul, 12, 142Nixon, Richard, 36, 37, 338cabinet positions under, 45, 46, 87,129–36desegregation under, 129–36meeting with, 6Watergate and, 115nonproliferation policy, 88, 89bilateral consultations on, 316of Eisenhower, 312–13, 352evolution of, 312–14nuclear testing and, 294Non-Proliferation Treaty (NPT), 99,313, 314, 317, 319, 338, 344, 353, 354,356, 372North Africa demographics, 3–4North Anna nuclear power plant, 366North Atlantic Council, 286, 334North Korea, 97nuclear capabilities of, 336, 338, 339,357, 371, 372–73proliferation threats from, 354Norway, 94, 345NPT (Non-Proliferation Treaty), 99,313, 314, 317, 319, 338, 344, 353, 354,356, 372NRC (Nuclear Regulatory Commis-sion), 367NSC (National Security Council), 90,91, 139, 174NTI (Nuclear Threat Initiative), 94nuclear arms control. See “NuclearWeapons, Arms Control, and theFuture of Deterrence”nuclear enterprise, 96, 360–69accidents with, 344, 362, 365, 366deterrence policy relating to, 362–63Hiroshima and Nagasaki, 361independent peer review of, 367–68Joint Nuclear Enterprise, 98, 373,374nuclear diplomacy, 363nuclear radiation, 363regulation of, 367risks of, 361, 364–66, 369safety and security of, 362, 366nuclear freeze protest of 1983, 301nuclear materials securement, 343, 345,356, 361, 362, 363, 371–72nuclear power, 316–17, 358, 362nuclear fuel cycle, 345radiation from, 363Reagan, Ronald, policies of, 310,314–19, 337, 352support of, 314–15nuclear program, of Iran, 336, 338, 372nuclear proliferation, deterrence of,347–51Nuclear Regulatory Commission(NRC), 367nuclear risks reduction, 370–74Additional Protocols, 338Comprehensive Test Ban Treaty, 339,344Cooperative Threat ReductionProgram, 338Global Threat Reduction Initiative,338New START Treaty, 354, 370, 372Non-Proliferation Treaty (NPT), 99,313, 314, 317, 319, 338, 344, 353, 354,356, 372nuclear materials securement, 95, 99,343, 345, 356, 361, 362, 363, 371–72
  • 39. index 389nuclear terrorism prevention,371–72Proliferation Security Initiative,338verification initiative, 373Nuclear Security Summits, 363, 370,371, 372, 373Nuclear Suppliers Group, 339nuclear technologies, 310, 317nuclear test, of North Korea, 336nuclear testing and nonproliferation,294, 361Nuclear Threat Initiative (NTI), 94nuclear weaponsaccelerating spread of, 341acquisition of, 312, 350ballistic missiles, 324during Cold War, 336consolidation of, 344dangers of, 336for defense, 322destructiveness of, 323deterrence and, 93, 96, 113, 145, 246,325, 336, 347–51, 362, 363Gorbachev’s policy of, 337, 341international safeguards with, 318monitoring of, 344nonproliferation, 256, 309–20Obama’s policy of, 94–95, 352, 354,355, 356, 363Reagan, Ronald concerns with, 310,314–19reduction in, 222, 247, 322–23risks of, 314, 336, 349, 364, 368security of, 350Soviet Union and, 322, 323, 324, 325,330–31SS-20 nuclear warheads, 329superpower relations and, 244, 247,256testing, 361verification, of, 94, 373world without, 87–100, 247, 336–40,345, 346, 352–59“Nuclear Weapons, Arms Control,and the Future of Deterrence,”321–35evolution of thinking about, 323–25Reykjavik, 113, 328–30Soviets and, 330–31nuclear-free world, 87–100, 247,336–40, 341–46, 352–59, 373international consensus for, 345steps toward, 342–44, 349Nudel, Ida, 85Nunn, Sam, 93, 94, 95, 304, 341, 347, 355,357, 368, 370Nunn-Lugar program, 343, 363OAS (Organization of AmericanStates), 231, 236, 239Obama, BarackGDP and, 182, 195nuclear weapon policy of, 94–95, 352,353, 354, 355, 356, 363, 372OECD (Organization for EconomicCooperation and Development),39–40, 190, 191, 287, 288Office of Management and Budget(OMB) director, 1, 28, 37, 113, 117,157, 169O’Grady, Mary Anastasia, 61oilboycott of, 47dependence on, 201import control program of, 45–47
  • 40. 390 indexOMB, 1, 28, 37, 113, 117, 157Operation Twist, 194Orange County, California, bankruptcy,37–38Organization for Economic Coopera-tion and Development (OECD),39–40, 190, 191, 287, 288Organization of American States(OAS), 231, 236, 239Oslo conference, 94ozone layer depletion, 201, 304Packard, David, 37Paderewski, Ignacy, 227Pakistan, 82, 85, 97, 98, 229, 235, 315, 363Palestinian Liberation Organization(PLO), 129, 231, 265, 266Palestinians, 83–84, 113, 129, 135, 221,222, 254, 271See also Israeli-Palestinian situationPanama, 228, 251peacein foreign policy, 259–62in Middle East, 113, 217, 221–22, 270negotiations for, 113, 217, 221–22Peacekeeper ICBM program, 285Penn Central Company, 36–37, 38People’s Republic of China, 249–50, 316Percy, Charles, 290Perez de Cuellar, Javier, 213Perry, William, 93, 95, 304, 341, 347, 355,357, 368, 370Pershing II missiles, 79, 286, 301Peru, 228, 251Philadelphia Plan, 35Philippines, 85, 226, 234PISA (Programme for InternationalStudent Assessment), 39, 40, 191PLO (Palestinian Liberation Organiza-tion), 129, 231, 265, 266Poland, 216, 226, 227, 262, 282, 295Pope Paul VI, 42–43Portugal, 59, 60, 61Potsdam conference, 90Powell, Colin, 342Prescott, Edward, 179“Prescription for Economic Policy:Steady As You Go,” 157–65balanced budget, 158competition and, 162economic expansion, 158, 162federal budget, 163–64free market economy and, 158,165inflation and, 157, 158, 164instability and, 158power, of corporations and labor,158, 161steel industry and, 161stock market and, 164strikes and, 162trade and, 162Presidential Medal of Freedom, 107,117, 122“Preventing the Proliferation of NuclearWeapons,” 309–20Prince, Charles, 177“Principles for Economic Revival,”179–85Programme for International StudentAssessment (PISA) rankings, 39,40, 191Prohibition, 59–60, 209, 210Proliferation Security Initiative, 338protectionist trade policies, 219Provisional IRA, 270
  • 41. index 391Qadhafi, Muammar, 254, 266, 270Radio Free Europe, 301Radio Liberty, 301Rambouillet Summit, 114Ravitch, Richard, 16Reagan, Nancy, 55–56, 107, 122Reagan, Ronald, 13, 19, 81, 85, 107, 233,234, 253, 260, 262in Berlin, 79, 299–300Central America and, 240Cold War and, 77, 78, 79, 278, 279,289, 294, 300economic policy of, 218Eureka College, 327foreign policy of, 214–15, 298Gorbachev with, 91, 302, 304, 323Iran-Contra scandal, 141at Japanese Diet, 93at Medal of Freedom Award Cer-emony, 107, 117–20, 121, 122Middle East and, 222military modernized by, 285Montreal Protocol and, 202nuclear power policies of, 310,314–19, 337, 345, 352nuclear weapons policies of, 89, 93,256, 293, 310, 312, 322presidency of, 29, 31, 33, 85, 105, 110at Reykjavik, 91–92, 110, 113, 304, 321,328–30, 331, 334, 337, 338, 353, 368,370, 372secretary of state under, 30, 35, 88, 89,113, 115, 117, 285, 312Shultz’s tribute to, 123–25stability policies of, 327–28“Real Debate about Drug Policy A,” 62,209–10records, importance of, 70–71Red Army Faction, 266Red Brigades, 266regulationwith economic strategy, 170–71, 180,181moratorium on, 184of nuclear enterprise, 367“Representation: A Lesson from MyDays with Nixon,” 129–36Reykjavik, 93, 304, 359Gorbachev, at, 91–92, 110, 321,328–30, 331, 337, 338, 353, 370Reagan, Ronald at, 91–92, 110, 113, 321,328–30, 331, 334, 337, 338, 353, 370Richardson, Elliot, 20Ronald Reagan Presidential Foundationand Library, 107Roosevelt, Franklin, 12, 27, 111, 227Rumsfeld, Donald, 29Russia, xi, xii, 2, 3, 18, 79, 89, 94, 98, 110,298, 342, 343, 344, 345, 349, 350, 352,353, 354, 356, 370, 371, 372, 374Sadat, Anwar, 271Sakharov, Andrei, 261SALT, 282, 284, 324, 326Sandburg, Carl, 125, 223Sandia National Laboratory, 355Sandinistas, 231–32, 236, 238, 239Sarkozy, Nicolas, 352Saudi Arabia, 82Scanlon, Joe, 161Schmidt, Helmut, 30, 78, 107, 113, 114,300, 304at Henry A. Kissinger AwardCeremony, 108–11Schwarzenegger, Arnold, 344
  • 42. 392 indexScott, Hugh, 35Scott, Kenneth E., 38Scowcroft Commission, 292SDI, 145, 246, 327, 328, 330, 331secretary of labor, 1, 15, 35, 36, 45, 69,112, 114, 117secretary of state, 108address by, 64, 213–25global diplomacy as, 68, 69under Reagan, R., 30, 35, 88, 113, 115,117, 141, 285, 312record-keeping of, 70, 71secretary of the treasury, 1, 113, 114, 115,117securityand economic commons, 1–3global security threats, 349of nuclear enterprise, 366nuclear weapons and, 311, 350Sen, Amartya, 82Senate Committee on Foreign Rela-tions, 85Shamir, Yitzhak, 6, 129, 130, 131, 133, 135“Shape, Scope, and Consequences ofthe Age of Information, The,” 18,24, 143–54Shevardnadze, Eduard, 85, 331Shiites, 80, 81, 82Shultz, George P., 341, 347, 352, 355, 357,368, 370at Medal of Freedom Award Cer-emony, 121–22Reagan, Ronald tribute by, 123–25Simon, William, 29Smith, Adam, 35, 254Smith, Jean Edward, 90Social Security, 41, 51, 105, 177, 183, 188,195, 196, 205Sofaer, Abe, 98Somoza, Anastasio, 231South Africa, 226, 234, 252–53, 262,295, 296, 316, 317South Korea, 85, 95Southwest Asia, 286, 315Soviet model, 281, 283Soviet Union, 2, 102, 115, 216, 233, 254,259Afghanistan invaded by, 229, 236,244, 250, 288, 295, 300, 348Brezhnev doctrine of, 66–67, 228–32,236–37, 238Cold War with, 76–79dialogue with, 63, 115, 242, 243–47,279, 289–97dissidents in, 226nuclear weapons and, 88, 294, 322,323, 324, 325, 330–31strategic instability sources and,326–27terrorism and, 265, 266See also foreign policy, Soviet rela-tions inSpanish International Network,149SS-20 nuclear warheads, 329, 333Stagg Field, 92, 335Stanford conferences, 143, 361, 364, 365,368START (Strategic Arms ReductionTalks), 292State Budget Crisis Task Force, 16“Steady As You Go” speech, 28, 31, 157,165steel industry, 161Stevens, Christopher, 71, 81Stimson, Henry, 90
  • 43. 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
  • 44. 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
  • 45. 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
  • 46. Photo CreditsGeorge P. Shultz: 1 (top and bottom), 2, 3 (top and bottom), 5, 6 (top),7 (top and bottom), 8 (top and center), 9 (bottom), 10 (top left and right),11 (all), 12 (top and center), 13 (bottom) concept and execution by NancyCarroll, 14 (top), 16 (top and bottom)United States Department of Labor: 4 (top)Associated Press (AP Photo): 4 (bottom)The Ronald Reagan Presidential Foundation and Library: 6 (bottom),9 (top), 12 (bottom), 14 (bottom), 15The Richard Nixon Presidential Library and Museum: 8 (bottom)Conrad Estate: 10 (bottom), reprinted with permission.J. R. Garappolo and C. G. Pease: 13 (top) © 2013, Light at 11B.