Toward a New Agenda for America

All essays in this volume are written expressly for this
publication or are reprinted with permission of the authors
and/or copyright owners.
Future 500 Publishing
San Francisco, California
Copyright © 2012 by Bill Shireman
Printed in the United States of America
Future 500
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Cover Design by Glen M. Edelstein
Cover Photo © Gabriel Edelstein
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TABLE OF CONTENTS
Welcome & Introduction 1
UnConvention Sessions 3
Section One
TOWARD AN INNOVATION AGENDA
How to End the Left and Right’s Favorite Deficits
The Two Deficits
Why Conservatives and Progressives are Both Right
– Bill Shireman
7
An Agenda for the Future
Energy, Taxes, and Security for Our Great
Grandchildren
– George P. Shultz
31
An Economic Program for the Fall Campaign
and the Next Four Years
– Robert J. Shapiro
49
Make It, Take It
When No One Owns Their Environmental Impacts,
Everyone Loses
– Robert F. Kennedy, Jr.
53
End Taxes As We Know Them
Stop Taking Prosperity, Start Taking Responsibility
– Bill Shireman
57

Section Two
CRONY CAPITALISM
How to End Right and Left Dependence on
Big Government and Big Business
Crony Capitalism and the Crisis of the West
– Luigi Zingales
71
Three Easy Ways to End Cronyism
– Peter Schweizer
75
Paul Ryan’s Fairy-Tale Budget Plan
– David A. Stockman
79
Section Three
ENERGY SECURITY BLANKET
How to Outgrow Right and Left
Addiction to the Past
The Supply and Demand of Renewable Energy
– Dennis V. McGinn
85
Efficiency and Conservation Not Enough to Achieve
Energy Security
– Dave Kerner & Scott Thomas
89
To Drive or Not to Drive, That Is the Question
June 21 is Dump the Pump Day 2012
– Michael Marx
97

Section Four
DIGITAL FREEDOM
How the Right and Left Can Use Technology
to Advance Freedom and Sustainability
A Declaration of the Independence of Cyberspace
– John Perry Barlow
103
Telework
An Opportunity to Dramatically Improve the Nature
of Work as well as Reduce the U.S. Trade Deficit,
Congestion and the Production of CO2
– Joan Blades
107
Europe’s ACTA Freak Out
How Hollywood Holds Back the Trade Agenda
– Harold Feld
111
About Future 500 115

1

WELCOME & INTRODUCTION
Welcome to the UnConvention at the Commit! Forum.
With an election imminent, we thought it vital to bring
together independent leaders from the left to the right, to
work with business and civic leaders as we seek common
ground, no matter which candidates and parties hold
Congress and the White House next January.
We all know the nation’s dilemma. America’s two once-
great political parties are engaged in an angry divorce,
each demanding full custody of the nation they claim to
love, paralyzing it in the process.
The UnConvention is an intervention, not to force a
reconciliation neither side wants, but to fill the leadership
vacuum left by gridlock. Like it or not, it is time for
business and civic leaders from across the left and right to
step forward, together, and show what it means to lead.
On at least one point, the right and the left agree:
Something is wrong in America. After two centuries on the
rise, America’s purpose and power are being lost, and the
prosperity once enjoyed by middle class Americans is
dissipating at an alarming rate.
The UnConvention and these essays give us an
opportunity to help change the tenor of the debate, and
focus on what is best not just for us, but for the nation and
the world. We will share ideas with:
• Former Secretary of State George Shultz, who
challenges the two parties to come together and
support important tax, security, and energy reforms.

Toward a New Agenda for America
2

• David Stockman, who as President Reagan’s Budget
Director was the nation’s top spending cop, and who
now takes on an Achilles Heel of both major parties:
crony capitalism.
• Economist Luigi Zingales of the University of
Chicago, who some call the Tea Party’s favorite
economist, and who proposes changes to the tax code
that could meet interests on both the right and left – if
only they could overcome resistance in Washington.
• MoveOn co-founder Joan Blades, who describes how
she is uniting mothers from the left to the right to
advance a more civil and functional political process.
• Peter Schweizer of the Hoover Institution, who
proposes unconventional ways to reduce undue
special interest influence and crony capitalism in
politics.
These and other speakers and essays help provide points
along a path that can end America’s two deficits, and
restore sustainable growth and genuine prosperity through
innovation. They help support and inform major plenary
discussions at the UnConvention.
Please introduce yourself to me during the
UnConvention. We look forward to sharing ideas with
you.
Sincerely,
Bill Shireman
President, Future 500

3

UNCONVENTION SESSIONS
On the agenda for plenary and breakout discussions are
topics such as:
Crony Capitalism: Building Common Ground on
Maximizing the Potential of the Free Market While
Reducing Cronyism Favoring Privileged Industries,
Individuals, & Firms.
Free-market capitalism has done more to advance
human health, wealth, and well-being than almost
any other institution in history. Yet, the excesses of
the recent past have made many question the very
institutions – like banks, regulators, and capital
markets – that make the system work. They see a
system biased in favor of the very few at the expense
of the great many. How do we find common ground
and secure the blessings of the free market for us and
our posterity?
Dual Deficits: Overcoming Society’s Mounting Fiscal
& Sustainability Debts.
Was Thomas Malthus right? Will we eventually run
out of food, fuel, and the rest of life’s essentials as the
future becomes a bleak landscape of painful trade-
offs and harsh conservation? Or can we innovate and
grow our way out of these tough times to a brighter
future for our society?

4

Energy Security: Safe, Stable, & Reliable Energy
Sources to Fuel Our Economy.
Prosperity and energy are inexorably linked. America
– and Britain before it, and Rome before it – spends
vast sums securing access to energy supplies to fuel
the world economy. Without energy, growth stops.
Yet current policy – foreign and domestic – often
causes as many problems as it solves. How do we
secure our energy and economic future in the 21st
century?
Digital Freedom: Securing an Online World that
Generates Greater Innovation, Prosperity, & Freedom.
As more of our economic and civil society moves to a
digital world, new challenges arise to security and
personal freedom. For every Twitter-generated Tahrir
Square there are the long shadows of events like
Stuxnet raising the stakes with cyber warfare. As
ever, stability and security are the preconditions of
freedom, so now is the time for thinking people to
sort out how we will ensure the security that will
unleash the innovation, prosperity, and freedom of a
more digital world.

Section One
TOWARD AN INNOVATION AGENDA
How to End the Left and Right’s
Favorite Deficits

7

THE TWO DEFICITS
Why Conservatives and Progressives
Are Both Right
by Bill Shireman
Conservatives are right: as a nation, we are out of money
and deep in debt. Progressives are also right: we can’t pay
off our debt by extracting it from the poor, the middle
class, or the environment.
But many right and left leaders are wrong about the
solution.
To reduce the outflow of wealth, some on the right
would radically cut government spending now. To
increase the inflow of wealth, many would drill baby drill
the nation’s resources, as fast as we can.
To reduce the concentration of wealth, some on the left
would tax prosperity, or simply redistribute it, now. To
increase the inflow of wealth, many would spend baby spend
– and pay off our debts by printing more money, as fast as
we can.
The right and left often overlook a simple fact: there is a
difference between spending money and earning money.
Yes, it is time to reduce the concentration of money and
power. Too much is wielded by overgrown government
bureaucracies, corporate crony capitalists, and value-
consuming financiers. Rather than feeding at the troughs
where money happens to flow, they need to add value
commensurate with their take.
But to just cut spending, tax prosperity, or deplete our
economic or ecological resources would bankrupt us.

8

These are false panaceas. One spends down our economic
prosperity. The other spends down our energy and
ecological prosperity.
The real solution to our problem is not to consume value
– it is to create it, by tapping the power of people to
innovate.
Economist Bruce Bartlett, a senior policy advisor to the
Reagan and George H. W. Bush administrations, has
grown weary of the false debate. In his book, “The Benefit
and the Burden: Tax Reform – Why We Need It and What
It Will Take,” he describes the futility of massive cuts in
federal spending, and proposes a better alternative.
The national debt, Bartlett says, is like a bank loan – it
must be paid off in installments, out of current income. It is
a part of our government debt, but only a small part.
The vast majority comes in the form of political
commitments we have made to important constituencies:
future benefits to retired federal employees, veterans, and
Social Security and Medicare beneficiaries.
These must be paid only when they come due, so they
don’t show up in the federal budget, and aren’t usually
counted when we measure the government debt. That is
because the government does its accounting on a cash
basis, not an accrual basis, the way corporations do.
That way, they don’t have to book the full cost of their
programs annually. Instead, the government publishes a
separate, obscure financial statement, now called the
Financial Report of the United States Government.
The Obama administration published the fiscal 2011
version on December 23, two days before Christmas, while
reporters were too busy preparing for the holidays to read
a complex 254-page financial document.
Neither The New York Times nor Fox News seemed to
notice it. But Bartlett did. Altogether, he found, the

Future 500 – The UnConvention 2012
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Treasury reported the government’s total indebtedness at
$51.3 trillion. The national debt made up a fifth of this -
$10.2 trillion. Veterans and federal employees were owed
$5.8 trillion. Social Security’s unfunded liability – promised
benefits over expected Social Security revenues – was $9.2
trillion over the next 75 years. And Medicare’s unfunded
liability was $24.6 trillion.
It would be impossible to cut spending enough for a
single generation of Americans to pay off this debt – it
totals nearly the entire net worth of American households.
Unless our productivity and output grows, the Treasury
projects that within a generation the federal debt will rise
to 100 percent of G.D.P., as our future commitments come
due, and suddenly become part of the nation’s
acknowledged debt.
This would be financing devastating to the nation.
Balancing the federal budget would not be nearly enough,
as Bartlett and other economists document. The federal
government would need to run a surplus continuously for
75 years to prevent the debt/G.D.P. ratio from rising.
If we can’t cut spending enough to erase the deficit, what
can we do? The right’s first instinct has been to do what
worked during our last period of continuous growth:
consume more fossil fuel energy.
But that path is well worn. It has been about 40 years
since the first global energy crisis in 1973. Since that time,
rather than innovating beyond our dependence on fossil
fuels, the right has focused on building our military power,
enabling us to intervene, to prevent any supply
disruptions. We have, as a consequence, sacrificed $7
trillion in domestic growth, to fund our foreign oil habit.
We have transferred over $1.2 trillion to nations that are
either unstable or antithetical to our interests. Those dollars
financed the Baathist terrorists under Saddam Hussein in
Iraq, the radical Mullahs under the Ayatollah in Iran, and

10

of course Al Qaeda, with its roots in Saudi Arabia. In Saudi
Arabia, the first Al Qaeda terrorists were so infuriated by
the presence of U.S. military on Saudi soil, that they
focused their oil-financed operation on throwing the
infidels off their soil. Then, failing that, they came to our
soil. They used a few of their oil dollars to buy airline
tickets in 2001, and took out the World Trade Center, and
along with it 3,000 lives.
The other panacea of some on the right is to drill our way
out of debt. In this view, the U.S. can simply embark on
massive and permanently increasing extraction of fossil
fuels, all from within our borders. To intellectually clear
the way, advocates of this path simply define political,
military and environmental realities out of existence.
Unfortunately, physical resources are as limited as
economic ones, and as unequally distributed. Of the trillion
barrels of estimated oil reserves, 6% are in North America,
9% in Central and Latin America, 2% in Europe, 4% in Asia
Pacific, 7% in Africa, 6% in the Former Soviet Union.
Today, 66% of global oil reserves are in the hands of
Middle Eastern regimes: Saudi Arabia (25%), Iraq (11%),
Iran (8%), UAE (9%), Kuwait (9%), and Libya (2%).
Because reserves in non-Middle East countries are being
depleted more rapidly than those of Middle East
producers, many of the largest producers in 2002, such as
Russia, Mexico, U.S., Norway, China and Brazil, will cease
to be relevant players in the oil market in less than two
decades. At that point, the Middle East will be the only
major reservoir of abundant crude oil. In fact, Middle
Eastern producers will have a much bigger piece of the pie
than ever before.
The U.S. may not be rich in oil, but it does have vast
holdings of gas – enough to largely replace our highly
polluting stocks of coal, which are being depleted more
quickly than once thought. But gas is no permanent

11

panacea either. Natural gas producers need to be held to
high standards of performance, to protect water and the
environment. With these in place, natural gas can help
build a bridge to move toward the next energy economy –
one where whole new sources of low-carbon energy can
emerge.
A low-carbon, low-pollution economy is important. But
strident true-believers on the right and left advance
simplistic solutions. On the right, some expect Americans
to swallow the idea that transferring billions of tons of
carbon from the earth to the atmosphere has zero impact
on the environment. But even scientists who are skeptical
about the severity of global warming conclude that it is a
real threat. On the left, some expect Americans to believe
that only government ownership and control of the energy
sector can prevent climate calamity. Neither of these
ideological extremes advance genuine solutions.
The fiction that dependence on finite physical resources
has no cost worth worrying about has undermined the
very interests the right holds most important: the nation’s
prosperity, security, and freedom.
The fiction that massive government spending and
power is a solution places the left’s most cherished
objectives at risk: economic fairness, social justice, and
individual freedom.
Much as the right might hope, we can’t cut or drill
enough to pay our debt. Our politicians, in order to serve
federal employees, veterans, retirees, and other interest
groups, have leveraged the whole economy, placing us at
the mercy of some of the world’s most threatening nations.
Most future spending won’t be for programs, but for
interest on debt. The costs won’t just be economic.
Much as the left might hope, we can’t just print more
money and erase the paper debt as it comes due. Flooding
the world economy with dollars that have not been earned

12

creates no real value. It doesn’t actually put food on the
table or a roof over our heads. Instead, it spurs more
spending, both economic and environmental. Genuine
prosperity would dissipate, either through inflation, new
debt, or ecological exploitation.
The reality that neither the left nor right want to face is
this: we can’t spend our way to prosperity. We can’t live
off subsidies forever. Eventually, someone has to create
real value. But who? And how?
What’s Exceptional About America?
America used to be exceptional, but it is becoming less
so. This is both good and bad. It is good, because the
principles that made America exceptional – freedom,
justice, democracy – are becoming more widely embraced.
Nearly a billion people now live in nations that have
grown prosperous and powerful in large part by
championing principles like these.
But America is also growing lax. We consider freedom
and prosperity our birthrights. We have grown more
comfortable spending our riches than growing them. For
three generations, America has been spending down our
wealth and power, transferring our assets to dictators in
the Middle East and totalitarians in China, in trade for
fossil fuels and cheap labor.
Nations have every right to trade their resources. But
let’s face it – the nations of the Middle East are controlled
by a handful of super-rich families who maintain their
political power by paying off their people and supporting
religious extremists, who use their wealth to foment fear
and terror.
This is not particularly healthy – for them or us.
And China’s government remains totalitarian – its
people, while they enjoy increasing economic freedom,

13

can’t legally trade their own labor. That right is held by
their government. When we grow dependent on these
nations for both our labor and our resources, we discover
the true cost of debt.
The finance sector now accounts for fully 32 percent of
U.S. economic output. We make much of our money by
counting and processing the money of the world, taking a
small portion along the way. Too much of this wealth ends
up in the hands of those lucky or cunning enough to be
standing astride the river of money as it flows by.
Too few of those individuals add enough value to the
flow to earn the wealth they accumulate. Many in the
sector are aware that a significant portion of their wealth is
unearned and undeserved. Occupy Wall Street was right.
But the solution is not to redistribute wealth – it is to
create prosperity.
That is one of America’s true gifts. America is exceptional
not because of its people or its geography. It is exceptional
because of the principles that define it: freedom, justice,
democracy. The way our predecessors embraced and
codified these principles brought us unprecedented
prosperity and power in the past. They can do so again.
American Prosperity and the
First Productivity Revolution
America’s political paralysis follows closely on one of
our greatest historic triumphs: unprecedented material
prosperity. Before World War II, in all prior civilizations
and social orders, “the vast bulk of humanity had been
preoccupied with responding to basic material needs,”
Brink Lindsey wrote, in How Prosperity Made Us More
Libertarian (Cato Institute, 2007).
According to Lindsey, “Postwar America, however, was
different. An extensive and highly complex division of

14

labor unleashed enormous productive powers far beyond
anything in prior human experience. As a result, the age-
old bonds of scarcity were broken. Concern with physical
survival and security was now banished to the periphery
of social life.”
America’s triumph was built on the radical increase in
labor productivity brought about by industrialization.
Between 1890 and 1990, U.S. labor productivity exploded
40-fold – workers generated 40 times more value per hour
at the end than the beginning of the 20th century.
In the years following World War II, our extensive
division of labor unleashed enormous productive powers
far beyond anything in prior human experience.
That explosive growth was enabled by three primary
drivers.
First, it came from the genius of machines – their capacity
to take a prototype design, and replicate it over and over,
enabling a huge middle class to enjoy benefits once
available only to the rich.
Second, it came from the methods of scientific
management which broke processes down into simple,
replicable tasks that could be carried out across assembly
lines by almost anyone with basic skills.
Third, it came from huge increases in material
consumption. We saved human labor, but we substituted
fossil fuels and raw materials.
The first factor, machines, is a source of value that can be
sustained over the long run. Machines multiply not just
muscle, but also mind. They take a powerful prototype,
something conceived by human creativity, and replicate it,
shaping raw materials into functional designs that deliver
real value.

15

The second factor, simplified work tasks, is also
sustainable, but at a certain cost. It takes a complex human
being, with extraordinary creative capacities, and turns
him or her into a machine part, performing rote functions
over and over. The benefit is a big paycheck at work and
cheap goods at home.
The cost is the alienation of the worker from the purpose
they are serving. They become a very small part, in a very
big whole.
The third factor, increased physical consumption, is not
by itself sustainable. Material resources are intrinsically
limited. We cannot increase consumption indefinitely.
Big Government and Big Corporations:
The Rise of Dependence
The cost of material prosperity has been two forms of
dependence. The first is the reduced power of the
American worker.
In return for prosperity, workers willingly became small
parts in large production processes. They sacrificed
sovereignty over their own workdays and their individual
creative capacities in order to follow rules established for
the good of big institutions: big corporations, labor unions,
and government. Their reward was big paychecks,
generous benefits, and long-term health and financial
security.
To insure that the tradeoff was worthwhile, the
Democratic Party championed a political and economic
New Deal, which sought to guarantee Americans a
succession of material rights: high wages, generous
benefits, safety protections, retirement security, and now
universal health care.

16

The problem is, the nation no longer has the power to
deliver on these promises in the ways we conceived in the
1940s. Because of globalization, combined with the rising
costs of entitlement programs, the money to do so is no
longer there. The left’s “solution” is often to deny that
fiscal limits really exist, and simply print more money:
spend baby spend.
The Root of the Conflict:
Two Worldviews
The left’s bias to spend economic resources, and the
right’s to spend energy and environmental resources, come
from two distinctly different worldviews – two differing
views on the root source of wealth.
To the conservative mind, nature is a source of limits
while a free market economy is a source of opportunities.
Life in a state of nature is nasty, brutish, and short.
People, in order to survive, must focus primarily on
protecting their own self-interest, and that of their family
and local community. This can be achieved through a
combination of moral and market forces.
Moral standards, often codified by religious institutions,
motivate them to think of others, especially their families.
Market forces, put into play by free trade, motivate them
to serve others, aligning self-interest with public interest.
To the liberal mind, nature is a source of abundance,
while a free market exploits that abundance for selfish,
short-term gain. Life in a state of nature offers us all we
need.
People, in the face of this abundance, will behave
selflessly if liberated from all constraints, even trading
away some of their own self-interest to support others, so
that they too can selflessly give to the whole. Moral

17

standards constrain them from simply being themselves,
and serving others with their distinctive gifts. Market
forces compel them to withhold from others, become
increasingly selfish, and demand individual material gain
that consumes the prosperity of others. These forces
undermine our humanity, disrupt nature’s balance, and
threaten to destroy the complex systems that sustain us.
Both the right and left hold part of the truth. Nature is a
source of limits and opportunities. People are both selfish
and selfless. Moral standards are sometimes humane and
sometimes not. Markets both create value and exploit. A
system that idealizes one or the other cannot function for
long. Both the right and left need to accept the limits of
their ideologies.
The right is correct, in sensing the extraordinary capacity
of free markets to create value. They know that the
economy is a complex living system; it creates value
through the dynamic interplay of people, organizations,
and resources, that self-organize in ways that can’t be
predicted or controlled.
They are aghast at how readily the left leaps at the
opportunity to regulate the economy. They know that
when you dam it, plug it up and seek to control it
excessively, you can destroy its creative capacity.
The left is correct, in sensing the extraordinary capacity
of nature to create value. They know that nature is a
complex living system; it creates value through the
dynamic interplay of organisms, communities, and
resources that self-organize into innovative new forms in a
process of evolutionary development that can’t be
predicted or controlled.
They are aghast at how readily the right leaps at the
opportunity to “drill baby drill” through the heart of this

18

vital system. They know that when you dam it, plug it up,
and seek to control it excessively, you can destroy its
creative capacity.
In reality, they both revere parts of the same whole
system – the system of feedback-and-adaptation that
creates all value and sustains all life. And they both want
to sustain this system.
The right sees its economic form.
The left sees its ecological form.
The right reminds us that, from a fiscal perspective, we
are out of money and deep in debt. The left reminds us
that, ecologically, we can’t grow the economy by depleting
the earth, that “drill baby drill” or “cut baby cut” is just
another form of exploitive deficit spending.
These two movements hold very different worldviews.
They appreciate different aspects of value creation. But as
they come to recognize the interdependency of nature and
the economy, they will discover that the same policies
which cultivate innovation in the economy can also
support a complex and creative natural environment.
Three Forces of Change
We live in a time of change. Three forces are
transforming our world: the decline of industrialism as the
driving force of the global economy, the rise of information
and telecommunications as the new chief catalyst for
growth, and the spread of globalization, connecting every
nation, community, and individual to every other – and
linking together their fates as well.
If trends continue, this century could see 1,000 times the
technological change of the last, according to futurist John
Peterson of the Arlington Institute. Think about that. Last
century began with horse buggies and a national post

19

office and ended with the Internet and email. Everything
was transformed in the process, from factories and farms
to families and communities.
Already, the rigid powers of the past are being
overthrown. Gone are the most unbending governments of
the industrial age – the Soviet Union and the Maoists of
China. Destroyed, battered, or transformed are the generic
industrial giants of the last century: General Motors,
Standard Brands, General Electric, Standard Oil. And
waiting in line, to either adapt or die, are their political
supporters: the Republicans, the Democrats, the federal
government, and even the United States itself.
How will the century ahead end? If the pace of change is
70 times as fast, how different will our lives be in the year
2100? Discontinuous change is almost a certainty.
Our lives could be radically different by the next turning.
That change will be for the better – and for the worse.
It will create risk and opportunity. It will change the
context and content of morality.
The net effect – whether we move forward or back
overall – depends on how skillfully we adapt to
unpredictable, uncontrollable, unprecedented change.
The Innovation Solution and the
Second Productivity Revolution
As globalization and technology draw the world
together, they create opportunities for innovation that are
as great as any in the past three centuries. They create the
potential for a second revolution in productivity – but one
in which we no longer need to trade ecological assets for
economic ones.
In February 2011, the respected McKinsey Global
Institute (MGI) issued a stark report, Growth and Renewal in

20

the United States: Retooling America’s Economic Engine. Their
machine-age metaphor may have been misplaced, but their
conclusion was right on target. If the U.S. cannot
significantly boost productivity growth rates by a third, the
consequences will be painful and far more damaging to
U.S. prosperity than a double-dip into a deeper recession.
“More than ever, the United States needs productivity
gains to drive growth and competitiveness,” the McKinsey
team wrote. “This acceleration needs to come both from
efficiency gains – reducing inputs for given output – and
from increasing the volume and value of outputs for any
given input.” Labor productivity gains alone are not
enough, MGI wrote. It is important that the United States
return to the “broadly-based productivity growth of the
1990s when strong demand and a shift to products with a
higher value per unit helped to create jobs even as
productivity was growing.”
If we fail, America might face a resurgence in problems
we thought we had overcome in the 20th century: genuine
shortages of food to eat, water to drink, and energy to heat
our homes and power our machines.
The world, after all, is growing more crowded, with
people whose affluence is approaching or even exceeding
ours. In the next 20 years, today’s 1.8 billion middle class
consumers will nearly triple, to as many as 4.8 billion,
McKinsey projected in a second study.
That could pit Americans against consumers in other
nations, in a competition for food and resources. Last
century, real global prices for these dropped by almost
half, McKinsey reports, benefiting both rich and poor. But
in the first decade of the 21st century, the prices doubled,
erasing 100 years of declines. For Americans and the
world’s rising middle class, this is difficult. For the three

21

billion on the planet earning under $3 a day, and the one
billion surviving on a dollar or less, it can be life or death.
The Opportunity:
People and Technology Can Drive an
Energy Productivity Revolution
McKinsey offers good news as well. “There is an
opportunity to achieve a resource productivity revolution
comparable with the progress made on labor productivity
during the 20th century,” its team wrote in their
November, 2011 study, Resource Revolution.
Creative people, and the ideas and technologies they
invent, can birth a second revolution in productivity in
which we no longer need to trade ecological assets for
economic ones. The combination of the microchip,
computers, the Internet, advanced materials, advanced
recycling, renewable energy, clean technologies and other
innovations on the horizon can increase the amount of
wealth we create per unit of energy by more than tenfold
by the end of this century.
What we need are simple incentives – feedback systems
to drive up prosperity and environmental sustainability,
and drive down the consumption and cost of fossil fuel
dependence.
Sometimes, establishing those systems requires
mandates. But mandates often have unintended
consequences and create bad incentives.
Sometimes they can be established by voluntary actions,
such as by harnessing the buying power of people and
companies in the free market. But reliance on voluntary
actions often allows free riders to benefit without paying
their share.

22

The Energy Productivity Explosion
Year The Innovation Productivity
Gain
What It Enabled What It
Disabled
1960
PACKET-SWITCHING
in data transmission
1000% Arpanet
Circuit-
switching and
PBX for data;
and later, voice
1969
ARPANET,
predecessor of the
Internet
300%
Routers, LANs,
faster and better
university research
1974 ETHERNET 100,000% Internet
1974
INTEL 8080
MICROPROCESSOR
10,000% Personal Computer
Mainframe
Computer
1975
ALTAIR PERSONAL
COMPUTER
100,000% Apple II
1977 APPLE II 100%
Internet; and later,
VOIP
IBM
1980s INTERNET Immeasurable World Wide Web
Experts and
Reference
Desks
1993 WWW Immeasurable Email Post Office
1993 AOL EMAIL Immeasurable Commerce
Brick-and-
Mortar
1995 AMAZON AND E-BAY Major Social Media Print Media
2000s SKYPE AND VOIP Major
Free Long
Distance and
Video Calls
International
Long Distance
2000s
BLOGS, FACEBOOK,
TWITTER
Major
Transparency and
People Power
Privacy and
Institutional
Power

23

However, there is a third option: common sense
incentives that hold consumers and businesses accountable
for the full costs of resources they use and pollution they
impose, and give them reasons to invest in improvements
in resource and energy productivity.
The key is shifting from an industrial economy that
grows mostly by consumption, to a more information-
based one that grows by design. Consider the difference
between the two. If I give you a hardcopy version of this
book, then you have it, and I don’t. But if I send you a
virtual copy over the Internet, then we both have it.
Furthermore, we can send it to 100 of our best friends, or
1,000, or more, with almost zero added time or cost.
Of course, we can’t feed, clothe, or house ourselves with
information alone. But by injecting more knowledge into
older industrial process, we can drive efficiency,
innovation, and new value creation. We can create a lot
more wealth, with a lot less waste.
The Energy Productivity Explosion table shows how
information and communications technology has already
driven leapfrog gains in productivity, from 1960 to today.
The U.S. needs to begin to replicate last century’s 40-fold
leap in productivity. But this time, productivity gains must
be more than labor alone. Even more important is a gain in
other productivity factors, especially energy.
If we are smart, our dominant source of future energy
will not be the energy we consume. It will be the energy we
create, through innovation. Digital energy isn’t just energy
efficiency from better-designed products and processes. It
is emergent energy – it comes from innovation. And it is
potentially transformative.
One way to measure digital energy is as energy
productivity. As information and communications

24

technology becomes embedded in products and processes,
it enables leapfrog gains in productivity.
That is why digital can be, by far, the cheapest energy of
all. If the past fifty years of economic and energy data hold,
we can replace fossil fuels at a rate of 3-5% a year, possibly
more. At a 3% pace, it would drive down carbon intensity
75% by 2060; at a 5% pace, it could readily drive down
overall U.S. carbon emissions to the levels many climate
scientists say is needed.
That likely understates its potential, by a wide margin.
Think about what has already happened to energy
productivity in the information and communications
technology sector so far. Energy productivity gains for
specific activities – some 1000% or more – led to overall
gains in economic productivity.
But more interesting than the quantitative gains are the
qualitative impacts they had. Each major innovation
created powerful new tools that could be used, or abused,
by people and institutions.
While governments and corporations had new power,
people tended to have even more. The capacity of
individuals and small groups to disrupt or even destroy
centralized institutions gradually grew.
The real potential lies in the shift from an industrial
economy refined by information, as exemplified by
Amazon, toward a truly new economy founded on it – a
place where the consumerism phase of industry is simply
part of a new system that transcends it, just as agriculture
is part of the industrial world today.
This is what sets the Internet apart from past systems of
communication – this extraordinary flow of information-
on-information, extending not in linear form but through a
web, not in one direction but in all directions, not with

25

static content and reruns, but with dynamic, living content
that changes as it’s used.
“For those of you keeping score, the dotcom era has
ended,” says Henry Jenkins, founder and director of the
Comparative Media Studies Program at MIT. “The age of
social networks and mobile media has emerged... We are
no longer talking about a digital revolution, which
envisioned new media displacing the old. We are now
talking about media convergence, where old and new
media interact in ever more complex ways. We are no
longer talking about interactive media technologies; we are
talking about participatory culture.”
That culture is being created in real time, by individuals
– Tea Partiers and Progressives, gamers and bloggers,
Indian villagers and high school hackers, consumers and
employees, government leaders and corporate executives.
As Jenkins says, “We are discovering new ways to pool
our knowledge and work collaboratively to solve puzzles
and master complex tasks. What we are learning as
consumers has the potential to change how we think as
citizens. And these new social skills and cultural
competencies have implications as well for the future of
education.”
In his classic 1998 essay, Michael Vlahos, Professor of
Strategy at the United States Naval War College, called this
emergent system “the fusion of all the world’s
communications networks, databases and sources of
information into a vast, intertwined and heterogeneous
tapestry of electronic interchange.”
People will join it, he predicted, because, while it feels
artificial and foreign at first, “it offers tremendous
advantages. It gives people the ability to meet and access
information anywhere, all the time. And people can meet

26

in groups, share information and make agreements, just
like they do in situ. The difference is that they are not site-
bound. Eventually, as the environment becomes more
familiar, it will become less alien.” Once drawn in, people
become part of something new – a whole new social
ecosystem.
Vlahos’s prescient 1998 vision is today’s emergent reality.
Google gave almost everyone access to the world’s
information. Facebook linked us to each other. New
networks and digital concepts are sprouting daily – new
Googles and Facebooks have already been born.
The breakthroughs in Telepresence driven by companies
like Intel, AT&T, and Cisco, enable an advanced form of
immersive videoconferencing, which is becoming, as the
jingle said, “the next best thing to being there.”
These and coming innovations take us a step into a world
where we can engage fully, and creatively with others –
not just as a tool to our industrial lifestyle, but as our
primary means of interacting.
Efficiency, by itself, doesn’t automatically drive
environmental sustainability. That is in part because it
happens inside a culture driven by the embedded
subsidies that support the industrial-era dream – a dream
that equates physical consumption with personal
fulfillment. So every efficiency gain gives us even more
capacity to consume, and obsessively, we do.
But our culture is changing, and our dreams are too. In
the industrial world, it made sense to drive consumption,
to overcome poverty. In a world where the fundamental
resource – information – is both renewable and
regenerative, where each information transaction results in
more on both sides of the equation, we may come to value
what makes us each different, not what makes us the same.

27

We may well find that our purposes are better served not
by competing to have the most stuff outside ourselves, but
by collaborating to draw the most from inside ourselves,
and give it to the world. In ways that no one yet fully
knows.
How to Restore Prosperity:
Two Systems That Drive Innovation
Politicians love programs, because programs win
elections. If people are hungry, programs give them food.
If they are poor, programs give them money. If an enemy
attacks, programs exact revenge. If people are out of work,
programs give them jobs.
Programs enable politicians to deliver specific results to
constituents they want to serve. Programs are proof points
they use to convince voters and contributors they are doing
their jobs.
Republicans, whose worldview suggests that people will
be selfish unless disciplined, like programs that discipline
people. They spend tax dollars on police to fight crime, on
the military to fight wars, and on border patrols to keep
out poor illegal immigrants desperate for a better life in a
better system.
Democrats, believing that people will be selfless if
liberated from all constraints, like programs that support
people. They spend tax dollars on public schools to teach
children, on jobs programs when people are out of work,
on social security and welfare when they need more
money, on Medicare when they need better health, and on
open-border immigration regardless of the strains that may
be placed on existing resources and infrastructure.
These programs may be necessary, at least temporarily.
But the assumptions underlying them are not always

28

correct. People are a mix of selfish and selfless. Our
programs and systems need to reflect that.
Programs cost money, and sometimes there is not
enough money to pay for all the programs we might like,
especially as they accumulate over the years.
Systems are needed that drive prosperity by empowering
and rewarding people to create it.
Systems are different from programs in three important
ways:
First, systems are wholes. Programs are parts.
Second, systems create value. Programs consume it.
Third, systems always pay for programs.
Every system has qualities that are absent in its parts.
These qualities are sources of new net value.
When atoms and molecules join together in a cell, new
value emerges: life. When cells join together in a human
body, new value emerges: thought, consciousness, and
everything that follows.
In society, when people come together to meet their
collective needs, new value emerges: families,
communities, businesses, economies, nations, civilizations.
Each part in these systems imposes net costs.
Those costs can only be sustained because, together, the
emergent qualities make the whole system sustainable.
Parts can’t pay for themselves – ever. They lack the
emergent qualities, the net value creation. Programs can
only be paid for if they are part of larger systems which
generate the net revenues.
A tax program can’t be paid for unless it is part of an
economic system which generates wealth.
A health program can’t be paid for unless it is part of a
system which cultivates health.

29

An education program can’t be paid for, unless it is part
of a system that fosters knowledge and learning. Programs
are often necessary – they meet essential needs. Often, they
are essential parts of larger systems. But they cannot be
paid for without systems.
The two systems that pay for all programs – in fact, the
two systems that pay for everything – are the economy and
the ecosystem.
These two are the root source of all prosperity. We don’t
need to drill-baby-drill or spend-baby-spend until their
sustenance is dry. We can harness their capacity to create
value, by design.
But our economy suffers from two major breaks in the
flow of feedback that drives innovation and creates value.
These two massive subsidies, enshrined by government
and supported by vested economic interests, retard
genuine growth by concealing key costs of doing business.
They artificially repress the feedback signal that drives
innovation.
The economic subsidies come in the form of massive
government spending, championed by the left, and
supported by demonizers and deniers who pretend that
economic limits don’t actually exist.
The ecological subsidies come in the form of massive
environmental exploitation that takes the form of
pollution, depletion, terrorism, insecurity, and war.
These subsidies are championed by the right and
supported by demonizers and deniers who pretend that
ecological limits don’t actually exist.
Through this massive double-dose of deficit spending,
America is burying its children in both economic and
ecological debt. It is time to stop spending down our
prosperity, and learn again to replenish it.

30

Living within our means will not be so difficult as we
imagine. In fact, it is the surest way to increase our
prosperity. Every good parent knows this and cultivates it
in their children. The benefits will be beyond anything we
can yet fully conceive, because they will be delivered by an
invisible hand with a green thumb.
Fundamentally, the answer is not to start with expensive
new programs or tough new regulations, commands, and
controls. Before we consider any of that, we need to make
sure the overarching system is designed to create
sustainable value. Here are some ways we might start.
Bill Shireman is the President and CEO of Future 500, and the
author of the forthcoming book, “Bridging the Politics of Hate:
Confessions of a Right-Left Deal Maker: How to Forge Impossible
Coalitions between Conservatives, Liberals, Capitalists, and
Activists.” www.Future500.org

31

AN AGENDA FOR THE FUTURE
Energy, Taxes, and Security
For Our Great Grandchildren
Former Secretary of State George P. Shultz
Interviewed by Bill Shireman
BILL: It’s such a pleasure to be with you today and to talk
about energy and security and other issues. You have had
an extraordinary career, an understatement to say that.
You began that career 70 years ago when you joined the
Marines to fight in the Pacific. You left MIT after just being
accepted there. You went back, got your PhD. You taught
there. You were Dean at University of Chicago School of
Business. You have since led Bechtel, you served as the
first Director of the Office of Management and Budget. You
have served as Secretary of Labor, of Treasury, of State. An
extraordinary career.
SHULTZ: How do you remember all of this?
BILL: I know. It’s harder for me to remember, certainly.
But you were one of those very few who helped to
navigate the country through to the end of the Cold War
and beyond. And since that time all has not been peaceful
for the nation at all times. Is America more secure today
than it was during the Cold War?
SHULTZ: It’s more secure in the sense that we don’t have a
huge enemy with an ideology being promoted that is at
odds completely with our ideology and supported by a
huge military force. So, the end of the Cold War did away
with a lot of tensions. Probably the tension over the

32

possibility of a major nuclear exchange. On the other hand,
in some respects now, it’s more difficult, in some ways
more dangerous, because in an odd way the Soviet Cold
War presence was a unifying event. And it’s harder to hold
things together now and there are a lot of terrorist
problems around that were not present then. And we all
worry that some terrorist outfit will get a hold of a nuclear
weapon or the fissile material they need to build one and
that can be a major problem.
Now let me mention something with the Cold War.
Because energy played a part in bringing it to an end.
BILL: How is that?
SHULTZ: The world lives on oil, as a basic source of
energy. And during the Cold War, beginning around the
mid-80s, the Saudis pumped a lot of oil. And there was
quite a long period of time there where the price of oil I
think was below the cost of producing it in the Soviet
Union. So they had no foreign exchange.
I remember one rather poignant exchange between
President Reagan and General Secretary Gorbachev. When
President Reagan says, “How come you’re not buying any
wheat?” That was the deal for them, to buy wheat. And
Gorbachev said, “We don’t have any money.” So energy as
a strategic resource is very important.
BILL: So in some ways the abundance of energy, of oil in
Saudi Arabia, was a major driver in the collapse of the
Soviet Union.
SHULTZ: Well that’s an overstatement. But it helped.
BILL: It was a contributing factor.
SHULTZ: Yes.

33

BILL: Now I remember the Arab oil embargo. And I
remember President Nixon in the face of that calling for
energy independence by the United States. And I
remember President Ford following suit with that, and
President Carter after that. And President Reagan and
President Bush and President Clinton and the second
President Bush and now President Obama. Is dependence
on foreign oil simply the problem that America can’t
overcome?
SHULTZ: No, we can overcome the problem. But let me go
back in that history. For some reason when I was Secretary
of Labor, President Nixon asked me to chair a Cabinet Task
Force on the Oil Import Program. It was a quota system in
effect. We couldn’t import more than 20% of the oil we
used. The United States was a big producer in those days.
Still is, but bigger then. And President Eisenhower had put
it there, because he had reasonable credentials in the
National Security field, so he thought that if we imported
more than 20% of the oil we used, we were asking for
trouble in national security terms.
So by 1972, I’m Secretary of the Treasury, and by 1973, as
you noted, came the Arab Oil Embargo: Deny us oil to
make us change our policies. I said to myself, “You know
President Eisenhower had a point.”
And furthermore, the price of oil skyrocketed and messed
up our economy. And people came running around saying
let’s think of alternatives. And I remember looking at these
things and shaking my head. These people are talking pie
in the sky, they don’t have anything to offer. So I’ve been
worried about the issue ever since. And now, we finally
have ourselves in a position where we can get control of
this situation if we work at it well.

34

BILL: How can we do that?
SHULTZ: Well there are two ways. First of all there is a
new technology for exploiting gas and oil in shale
formations called fracking. And it has changed the
landscape dramatically. Not only in the United States but
elsewhere as well. There are problems connected with
using it. And I think it’s really important that we
understand these problems well and we deal with them
effectively. As I have understood it, the problems are
solvable, but you have to confront them and deal with
them. If we can do that, we’ve already seen that we now
have huge natural gas supplies. The price of natural gas
has plummeted. It’s more stable and it will be used for all
sorts of purposes, maybe even including transportation at
some point. And also there is a bit of an oil boom going on
in the United States. In North Dakota and Southern Texas
this technique is being used and for the first time in a long
while the production of crude oil in the United States has
risen a little.
BILL: We’re beginning to see increases in the domestic…
SHULTZ: We’re beginning to do that, and I think between
what’s produced in Canada, Mexico, Brazil, and Argentina,
I don’t think there’s any doubt that our hemisphere can
produce all of the oil and gas that we need. Now that
doesn’t mean the prices aren’t world prices, so the prices
can go up and down. But we’ll still control supply.
There’s a second thing, however. And that is always,
before I mentioned the first Arab Oil Embargo, prices go
up, people get excited, then what happens? Prices go back
down, and everything stops. We’ve been through that
cycle about 3 times now. And this time we have much
more going on in research and development about energy.

35

It’s going on at Stanford. It’s going on at MIT. It’s going on
at Georgia Tech, Cal Tech, all over the country. Very gifted
scientists and engineers are working on this and they’re
getting somewhere. So, let’s say that what I said earlier
about oil and gas turns out to happen. We can’t let that
shut off this R&D again the way it has before. We have to
keep going and do the research necessary to really make
solar and wind energy very competitive. To learn how to
produce energy where you use it to a much greater extent.
The military’s very interested in this. So there are all kinds
of things that are going on now and we need to keep the
pressure on to have those continue.
BILL: So this is our one additional opportunity that we
have historically to make a transition? It sounds like it’s
not necessarily a time to simply exploit the resource, but to
use the resource to help transition us to …
SHULTZ: Build. Absolutely. And we’re working on that
here at the Hoover Institution and at Stanford and we hope
we’re going to make a dent.
BILL: Yeah. Now you’ve talked about a tax shift as an idea
that contributes to this. Tell us about that.
SHULTZ: Well, you would want to have all forms of
energy compete on a level playing field with each other.
Which means that they have to cost their full costs,
whatever they are. Much of the costs, more in some forms
of energy than in others, is right there in the production
process. But in some, a lot of it, it’s not there. Particularly
anything that pollutes the atmosphere badly, so that your
health is threatened.
Or you contribute to the problems of global warming. And
so we think that the cost of those things should be priced
into that form of energy. And there’s lots of different ways

36

of doing it. Most of us around here think the right way is a
revenue neutral carbon tax. That is, the carbon is what is
polluting. So you charge for that and that has to become
part of the price for that form of energy. And you make it
revenue neutral, so the tax is not a drag, fiscal drag on the
economy. And people can’t say you’re just another way of
getting some money for the government to spend in one
way or another.
BILL: Smarter taxes?
SHULTZ: Well, what we are researching out is one of the
ways in which you can impose the tax most effectively.
Probably the answer to that is fairly near the source, rather
than the use. And how can you distribute it in such a way
that it really is revenue neutral. And my own inclination is
to distribute it in a visible way to people.
There’s an interesting case study right now in British
Columbia where they’ve imposed a revenue neutral carbon
tax. It’s fascinating to see what they’ve done. So we’re
trying to study that one really carefully. But the way that
they make it revenue neutral is to distribute the money to
you personally as your carbon dividend. You get a check.
You get a deduction from your tax. And you do it yourself.
BILL: So you can see it.
SHULTZ: So you feel it. So you say hey, this carbon tax is a
good thing. I get a dividend out of it.
BILL: Yeah. Terrific. Now there’s some that say carbon isn’t
a pollutant. So we shouldn’t be taxing carbon. Is carbon a
pollutant? What do you think?
SHULTZ: Yes, it is.
BILL: Yeah?

37

SHULTZ: I mean where have they been? I’ll tell you
something you should do if you feel otherwise. Go to
China. Spend a little time in Beijing. You almost don’t dare
go outdoors. Because the pollution is so heavy. And people
can’t live with that.
BILL: You’re here at Stanford and Stanford is in the heart
of Silicon Valley. If Saudi Arabia is the world’s capital for
energy, Silicon Valley is certainly the world’s capital for
information and communications technology. We’ve talked
about the importance of solar and wind power. In addition
to that, you have companies here like Cisco, Intel, HP,
Google, Facebook, who are really leading the charge on
information-based and telecommunications technologies.
Is there a role for them? Are they part of the solution to our
dependence on oil and foreign oil?
SHULTZ: Well certainly the use of these powerful
computing techniques is something that can help in a
variety of ways in developing our energy sources. And
interestingly there are some people over at the Livermore
National Laboratories, where they have the world’s most
powerful computer or one of the world’s most powerful
computers, and one of the things they’re doing is using
that power of computing to help sort out possible ways of
using as well as obtaining energy. You know what the
biggest source of energy is?
BILL: What?
SHULTZ: More efficient use.
BILL: So efficiency itself is a source of energy?
SHULTZ: Huge. Because if you can do the same thing with
a lot less energy. There you are.

38

BILL: I was speaking with a leader on the East Coast who
you know well yesterday, who was saying that what we
really need to do is set a national goal. And his goal was
3%. He said we should be improving our energy
productivity 3% every year. We should be using that to cut
our dependence on foreign oil 3% a year. That 3% would
be a challenge to our technology sector to come into the
economy and improve our productivity every year. And
that would create the kind of oil glut at the global level that
would give us more control over pricing. Does that sound
like a reasonable formulation?
SHULTZ: I don’t have any feel for whether 3% is the right
number. But I do think it helps often to set a goal, that’s
realistic. Because if you set a goal and really mean it, then
what does that cause you to do? It says we’ve got to figure
out how we’re going to get to that goal. What are the
different things we need to do. And you’re thinking more
explicitly about those things and you’re working harder to
get them to happen. I’ll give you an example. It has become
clear that there are ways to make existing buildings, let
alone new buildings, much more efficient in their use of
energy. And in many ways now, you can show that it pays
dividends for a company who owns a building to make it
more energy efficient. Pays dividends in the sense that in
the cost of doing it they get their money back quickly. So in
effect they get a good rate of return on that investment. But
it isn’t happening anywhere near as fast as a lot of us think
it could and should. So we’ve got to stimulate that process.
That’s just one example of how you can use energy more
efficiently.
BILL: Now, we are in a situation nationally where there is a
tremendous amount of adversarialism in politics and
gridlock at the Congressional level and at the Executive

39

Branch. I remember you telling stories of President Reagan
in a situation where there was a great deal of division
between right and left, but at the same time he would get
together with House Speaker Tip O’Neill and talk about
this. What’s the difference between that time period and
what the two parties are engaging in today?
SHULTZ: Well, I’m not there. I haven’t been in Washington
for a couple of decades, so I can’t really…a lot of what I
read and occasionally go there and feel is strange to me.
When President Reagan was asked if Tip O’Neill was his
adversary he said, “Not after 5 o’clock.” That’s when they
cut their deals. And we had a problem-solving atmosphere
in those days. I was complimented. On the day before I left
office, the Senate of the United States had a luncheon for
me, and it was organized by Dick Lugar, a Republican, and
Ted Kennedy, a Democrat. And George Mitchell, the
Democratic leader, and Bob Dole, the Republican leader,
sort of chaired the event. And I told them how much I
appreciated all the advice and they told me how much they
appreciated all the consultation. They gave me a little
award which is sitting over there. And it was a nice
occasion. But it was a way of kind of symbolizing that
those were days when we confronted problems that we
faced, and then we said okay, what’s the best way to deal
with them, and then we got in a lot of arguments about
what’s the best way, but still we were all trying to solve a
problem that we know we had.
So I think what is needed in Washington and what is
needed in Sacramento and other places is a problem-
solving approach. I’ll give you an example. I was in
Colorado recently. In Vail. There was an energy conference
there. The Governor was there. And we’d talked earlier
about the fracking technology. And he said, well we know

40

that we have a lot of good shale deposits in our state. And
we know that there are problems. So he said, I got the
company that’s going to exploit a lot of these, Haliburton
Company, a drilling company, and the Environmental
Defense Fund, who know a lot about the problems
together, and said okay, let’s put all the problems on the
table and then let’s see how you can solve them and let’s
get the company to abide by these regulations in effect, and
go to work. So that’s what happened. He didn’t just say ‘let
things happen, we’ll see what happens.’ He got together
with people and solved problems. And that’s what we
need.
BILL: That’s been a signature of your career, at Labor, at
Treasury, at State. I remember, we all of course remember
that President Reagan was not one who would shrink from
calling it as he saw it. And he called the Soviet Union the
“evil empire.” He said its leaders couldn’t take any action
SHULTZ: I remember. When he said that “evil empire”
people were wildly shocked. And Paul Nitze, who I had
the pleasure of working with, was testifying before a
Senate Committee. And he had been around a long time.
He’d worked for a Democrat and Republican
administration, a wonderful man. And all of the Senators,
particularly the Democrats, were belaboring about him,
about the President’s statement. And one, at the end, said
to him “Paul, how can you work for an administration
where the President says the Soviet Union is an evil
empire?” And Paul said to him, “Senator, have you
considered the possibility that the statement might be
accurate?” Ended the hearing.
BILL: Now it’s interesting. We have evil empires certainly
still around the world. You advised President Reagan to

41

establish an informal, personal relationship with Secretary
Gorbachev. And that has been credited with opening the
way that led to landmark agreements for the Soviet Union,
including the intermediate nuclear test agreement in 1987.
What was it about an informal relationship that you
thought might be useful to bringing about change?
SHULTZ: Well, what it was, was a relationship where each
of them came to respect the other. They’re very different
personalities. I got to know, of course, President Reagan
very well, and Gorbachev quite well. He’s still a friend. But
underneath it was a lot of substantive work that was done
by people in both governments. And all sorts of interesting
things that were part of that process.
But I remember the first meeting between the two
Presidents was in Geneva in 1985. And it was, the first
meeting, was in our quarters. It was a protocol point, you
would meet this back and forth and we were the hosts the
first day. And we had by common agreement agreed that
the first thing that would happen was the two leaders
would meet by themselves. And we thought maybe 10 or
15 minutes. So they go into this little room that we had set
up with a fire going and they sit and the meeting goes on
10 minutes, 15 minutes, half an hour, three quarters of an
hour.
There’s always a guy in these things whose job it is to go in
and stand and make it clear that the time is up. So this guy
comes around to me and he says, gee, I’d better go in and
keep this thing on schedule. I said, “Are you out of your
mind? The whole point of this is to have these two people
get together by themselves. The longer they spend the
better it is. So if you go anywhere near that door I’m going
to knock your head off.”

42

BILL: Now that’s an attitude that I think isn’t always
shared domestically politically, or internationally
politically. I was speaking with a Congressman a few
weeks ago who said that he was having a conversation
with a member from the other party at the elevator at the
office building and it was an extended conversation. And
his party leader saw him engaged in this apparently
positive conversation and took him aside later and said,
“No, no, no, this is not the way we do business here. This
kind of fraternization across party boundaries is not the
way to do business here.” And he was quite taken aback by
that. We also hear of folks who say that we should not be
engaging with what some would consider today’s evil
empires: Iran and other nations. How do you make a
decision? When is it a positive thing or a negative thing to
engage with those who you perceive, in reality or not, to be
your enemies? Diabolical enemies?
SHULTZ: Well, you engage. But you engage when you can
engage in your own terms. Not their terms. So we need to
construct a situation where we’re in the driver’s seat.
That’s when you engage. If you go to a negotiation with no
power on your side, you’re going to get your head handed
to you. So don’t do it that way.
BILL: Ah, now historically probably the pinnacle of that
example is Reykjavik where the President and Gorbachev
reached a stunning agreement, or nearly so. That really
changed the path of history. Describe a little of that.
SHULTZ: Well here we are in Reykjavik. The site was
chosen because Iceland is an island away and isolated, so it
wouldn’t have a lot of intrusions. And Hofdi House was
picked by the security people on both sides because it was
off by itself on the shore. Desolate. A little house. So we go

43

in and there’s a small room that’s not very large, and a
table. At one end sits President Reagan, at the other end
sits Gorbachev. I’m sitting beside President Reagan. My
counterpart, Eduard Shevardnadze, is seated alongside
Gorbachev. There are note-takers and interpreters of
course in the room, but basically it’s four people in the
room. And we were there for two days.
Basically what came out of it was agreement on what
became the INF, the Intermediate Nuclear Forces
agreement. That was all basically done. The strategic arms
agreement was basically laid out there. Reductions by half
to equal levels. The Satisfactory Bomber Counting rule,
that was all done there. For the first time, there was a
formal agreement from them that human rights would be a
legitimate regular item on our agenda, which was really
very important. Then, of course, they agreed that it would
be a good thing if we could get rid of nuclear weapons
altogether. Get rid of ballistic missiles altogether. But all
that was never, it wasn’t consolidated there because of a
difference of opinion over the desirability of pursuing an
ability to defend against ballistic missiles. But once things
are on the table, you can’t get them off the table. They’ve
been put there. So these things gradually came into being.
And a bunch of us here now are working hard to see if we
can’t move the world to get free of nuclear weapons. So the
idea is still there.
BILL: That’s terrific. Well the reason for this interview, and
a big portion of the interview that will be shown, will be
shown for the first time at an event on October 2 and 3
called the UnConvention. And this is an event by Commit!
and Future 500 that draws together folks from across the
spectrum. From the right to the left. We’ll have folks like
David Stockman there, we’ll have folks like Bobby

44

Kennedy there. We’ll have leaders from business, about
500 senior corporate executives from Fortune 500
companies and we’ll have folks from the advocacy
community, human rights, environment and so on. What
would you offer as your welcome to those folks as they
come together to discuss issues from a right to a left
perspective and try to come forth with solutions that could
be handed to whichever administration enters the White
House on January 20th of next year?
SHULTZ: I would have some very clear advice for them.
Step 1: Identify what the problems are that you think need
attention. Then, start talking about what you can do to
solve those problems. Simple.
BILL: Yeah. When it comes to energy, is there anything that
comes to mind that you would challenge the business
leaders that are there, who have all come with the
understanding that their role there is to make
commitments to the future? What would you ask senior
corporate executives to do in the area of making
commitments around energy?
SHULTZ: Well, some are not involved in producing
energy, but all are involved in using it. So I would say to
them, in your own interests, from the standpoint of your
stockholders, learn how to use energy more efficiently. Be
willing to pay attention to the subject and invest in the
subject.
It’s always amazing to me what happens when a subject
that hasn’t been on your mind suddenly is on your mind
and you see all kinds of things you can do that you didn’t
think of before. For instance, we had a man here who was a
commander in the Navy. He was a pilot. And he said, I’ve
flown a lot of missions in Afghanistan. Every pilot knows

45

you can go down. So if I go down, he pulls this, he carries
it all the time, he pulls this out of his pocket, so if I go
down, I pull this out of my pocket, I turn it on, and my
friends know where I am. Only problem is, it only lasts 48
hours. So then he pulls another little gadget out of his
pocket. It’s little solar reflectors. He says, I can pull these
out and I can recharge this thing. It’s called creating energy
where you use it.
So, necessity causes him to think of things like that, and the
Pentagon to think of things like that. But there are all kinds
of things you can do. I once had an office in a building in
San Francisco. And we had a big electricity crisis in
California. I don’t know, 5, 6, 7, years ago now, I don’t
remember when.
So everybody wanted to save electricity. So we turned the
lightness, the brilliance of the lights in the corridors down
a little – perfectly okay, you could see okay. Then be sure
that when somebody wasn’t using an office that the lights
were turned off. So don’t come in every morning and turn
all lights on routinely. If the office isn’t being used don’t
turn the lights on. If somebody leaves, turn ‘em off. We
saved 13% of the electricity we used. And nobody was
inconvenienced. All it took was thinking about the subject.
So the people who aren’t energy producers can think about
this subject and save and then efficiency is a form of
energy.
And then I think the ones who are in the energy business
can be sure if they are producers of oil and gas to do it
responsibly, so that we don’t have any blow ups. We don’t
need any more Deep Water Horizon type problems. So be
careful and do it right. And in the long run that will pay off
for people. And for the people who are critics all the time,

46

well, state what your problems are and let’s get them
solved, so we can go ahead and proceed and do what we
need to do.
BILL: Yeah. We’ve talked to a number of companies about
your ideas of a tax shift, and a lot of them like the idea at
least on a personal level, and on an unofficial corporate
level with support. But they tell us as far as it being a
priority in Congress, their government affairs folks tell
them, don’t use our chits on something like that because
we’ve got high priorities specific to our company and we
need to use our chits on those. What would you tell those
companies about using some of their chits for a tax shift
with other energy policy that’s necessary for the nation?
SHULTZ: Well you’ve got to make it clear to their
stockholders that they have a stake in having solutions to
these problems. I worked hard on a campaign here in
California recently on this issue. And one of the ads that
we had was cut by a woman who was the head of the
American Lung Association. And she looked like your
mother and she said be careful about the air you breathe.
And it was very effective. Because if my mother tells me to
be careful about the air, I say, “well okay, mom.” I’ve got
to do something about it.
BILL: You still maintain a very active professional life and
social life. And you’re working on a few issues that you
want to advance. What would be the most satisfying policy
or program victory that you could see in the years ahead?
What do you want to accomplish in the years immediately
ahead?
SHULTZ: Well in my office I have a lot of pictures of my
great-grandchildren, who are babies right now. So I live in
the future. What I’m doing is all about them. I think you

47

have to cause yourself to look at things strategically. And
yes, there are all kinds of things day to day that people
have to worry about, but unless you have a strategic focus,
you’re not going to really do right by your great-
grandchildren. So, in everything I do I try to keep them in
mind.
BILL: That’s terrific. Well, it’s been a pleasure and an honor
to spend this time with you. I’m sure you’re told that a lot.
But you have an inspiring effect on the people that you
speak with and it’s one of the great, I think, privileges to be
in the position like you are, to be able to affect people in
the ways you do. And you clearly understand and relish
that. So thank you for the work that you do and for the
work that you are continuing to do and for the effect that
you are having on your grandchildren and our
grandchildren.
SHULTZ: Thank you. But remember one thing. The name
of the game is to solve problems, not create them.
George P. Shultz was Secretary of State during the Reagan
Administration from 1982 to 1989, a Professor of International
Economics at Stanford University Graduate School of Business, and
is a distinguished fellow at the Hoover Institution.

49

AN ECONOMIC PROGRAM
FOR THE FALL CAMPAIGN
AND THE NEXT FOUR YEARS
by Robert J. Shapiro
With the presidential election turning on the economy, the
debate has focused on what’s right or wrong with the
current recovery, and who’s responsible. They agree that
growth is too slow and deficits are too high; and
unsurprisingly, President Obama blames the GOP for both
while Mr. Romney blames the President. The President’s
arguments are stronger, especially given Romney’s risible
claim that he can balance the budget and cut taxes another
$5 trillion at the same time. The larger point is that the high
deficits and tepid expansion are legacies of the financial
meltdown, and resolving them would only allow economic
policy to finally move past 2008-2009. The next stage of the
economic debate, then, should focus on the two critical
issues that have bedeviled middle-class Americans for
more than a decade – namely, historically-slow jobs
growth, and stagnating incomes.
A presidential campaign can accommodate only a
handful of big ideas. Here, then, are three new policy
initiatives to help reignite job creation and income gains:
(1) reduce the cost of creating new jobs by reforming
payroll taxes; (2) restore the foundation for middle-class
wealth by stabilizing the housing market; and (3) enable
everyone to become more productive by providing

50

universal, low-cost access to college education and worker
training.
Tax reforms offer the best way to reduce the cost of
creating new employment and keeping those already
employed in their jobs. The focus of such reforms is not the
tax on corporate profits. Yes, the corporate tax is an
inefficient mess, but reforming it will do little for those
looking for work. The right target for job creation is the
payroll tax, because it directly increases the labor costs of
every employer. The idea here is to stimulate job creation
and employee retention by cutting the employer side of the
payroll in half, and on a permanent basis. And we can
replace the revenues lost to Social Security with a carbon-
based pollution tax.
The second idea could help address slow job creation and
the slow expansion, as well as widening inequality.
Employers have been creating relatively few new jobs not
only because of the cost of doing so. Employers also are not
confident about when Americans will begin to spend again
like they used to, creating the demand for the goods and
services which additional workers could produce. The
simplest way to boost demand is more budget stimulus –
and good luck with that. A more efficient way, however, is
to remove any factors holding back normal consumer
spending. It’s not unemployment, with the jobless rate
already down from 9.8 percent to 8.2 percent. Rather, what
continues to hold back tens of millions of consumers is the
hard fact that the housing bust has left them substantially
poorer.
So far, the bust has cost most homeowners one-third of
the value of their homes. This is a big deal economically,
because home equity is the main form of wealth or saving
held by most of the middle class. Consider the following:

51

The bottom 80 percent of Americans, measured by income,
own just 7 percent of the value of the country’s financial
assets – but they also hold 40 percent of the value of all
residential real estate. The sharp drop in housing values,
therefore, wiped out most or all of the home equity built
up by tens of millions of Americans. Before most people
begin spending again at the rate required to boost business
investment and hiring, housing prices have to stabilize and
begin to move up.
Washington spent more than $1 trillion to stabilize the
financial markets, which generate most of the wealth of the
top 1 percent to 20 percent of Americans. For much less,
we can stabilize the housing markets which generate the
wealth of everybody else. The most direct way to do this is
to keep people in their homes by bringing down the
current abnormally-high foreclosure rates. Fannie Mae,
which taxpayers now own, could extend low-cost, two-
year loans to millions of homeowners facing foreclosure.
The funds could be used only for mortgages held by
Fannie Mae. And to control the moral hazard lurking in
such relief, 20 percent of any capital gain earned from
eventually selling those homes would go back to
taxpayers.
The third initiative would ensure that everyone can build
the skills needed to earn a rising income by providing low-
cost access to college education and worker training. First,
we could replace student loans with an expanded and
upgraded form of national service: Two years of service in
the military or the Peace Corps, or three to four years
service in Americorps, would earn any young person in-
state tuition at a public college or university for four years.
Young people considering college would be asked to give
something of themselves back in service to the country,

52

and would no longer have to face huge debts that can take
decades to work off. In addition, every working American
should have access to additional training in the
information technologies integral to virtually all industries
and jobs. The plan here is one that Mr. Obama supported
when he was in the Senate – provide grants to community
colleges to keep their computer labs open and staffed in the
evenings and on weekends, so any adult can walk in and
receive free instruction.
This agenda is forward-looking rather than present-
oriented, so it does not address the deficit. In truth,
everyone knows perfectly well what to do about it.
Simpson Bowles, Domenici-Rivlin, the Senate Gang of Six
all rely on the same formula: Raise new revenues, reform
Medicare and Medicaid, cap discretionary spending, and
reduce defense spending. This approach, which President
Obama supports, broke the deficit logjams in the 1980s
under Ronald Reagan and the 1990s under Bill Clinton.
The only thing standing in its way today is the
intransigence of extreme conservatives who would rather
see the U.S. default on its sovereign debt than consider
raising taxes. We can only hope that the public will
continue to rally around this balanced approach and
convince House Speaker John Boehner and Senate GOP
leader Mitch McConnell. Once that is done, we can turn to
the real business of restoring jobs and income gains.
Robert J. Shapiro is the Chair of NDN's Globalization Initiative,
since its inception in early 2005. He was the Under Secretary of
Commerce in the Clinton administration and economic advisor to
the Clinton, Gore and Kerry presidential campaigns. He is also the
chairman of Sonecon, a private economic policy consulting firm.
Published June 4, 2012 – www.ndn.org

53

MAKE IT, TAKE IT
When No One Owns Their
Environmental Impacts, Everyone Loses
by Robert F. Kennedy Jr.
When I decided to dedicate my life to protecting the
environment through groups like Riverkeeper, NRDC and
the Waterkeeper Alliance, I considered recycling a small
and slightly boring part of the solution. But the products
and packages we consume cause 44% of America’s
greenhouse gas emissions, according to EPA data analyzed
by the Product Policy Institute. And the potential to adopt
a rational, free market based solution may provide the
lowest cost bulwark against global warming with the
highest potential for jobs generation and for quickly jump-
starting American prosperity.
You see, America’s waste issues are rooted mainly in
America’s irrational and rather un-American practice of
subsidizing waste disposal. Riding happily on this gravy
train of corporate socialism, most of the nation’s top
consumer product giants have so far refused to
acknowledge their responsibility or expressed any
willingness to pony up. They gleefully accept taxpayer
willingness to fund the disposal of their waste and
contribute lavishly to politicians who endorse this “free
ride for polluters.” They want to privatize the profits of
waste, but socialize the costs.

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When we subsidize waste, we penalize recycling and
damage the environment. That is why America’s recycling
rate is often half of those of Europe and Canada. Today,
most Americans want to recycle – yet well over 65% of our
packaging materials still end up in taxpayer funded
landfills and incinerators. This system is costly – adding to
our governmental fiscal crisis. Subsidized waste disposal
diminishes quality of life and is, frankly, un-American.
Meantime, we throw away enormously valuable material –
estimated at nearly $11 billion per year by As You Sow.
When we throw away recyclables, we throw away jobs.
Recycling creates 20 times the jobs that simple disposal
does. If this country recycled 75 percent of its packaging
waste by 2030, we could create 1.5 million new jobs,
according to a report recently issued by the Blue-Green
Alliance, a coalition of environmental and labor groups.
American manufacturers – from paper mills to metals
plants to plastic makers – urgently need more recyclable
materials. Some have even closed plants, taking good jobs
with them to foreign countries, because they can’t find
affordable feedstock here. Their customers frequently shift
to undemocratic nations with abysmal environmental and
labor records.
The nations that lead the world in recycling have
embraced a simple concept: Extended Producer
Responsibility, or EPR. Under EPR systems, brand owners
are responsible for the end-use costs of packaging, instead
of taxpayers and ratepayers. The brand owners then
internalize the cost of recycling in their products and
packages. Brands that reduce their packaging footprint
save money. Those that don’t are penalized. Materials are
almost always collected at a lower per unit cost, as the
producer-run organizations achieve efficiencies.

55

EPR rewards the smartest entrepreneurs, inventors and
designers. Smart companies make more money while
serving the public interest. That’s the way free market
capitalism is supposed to work. And with public budgets
shrinking in this country, the time for EPR has come.
To mobilize support for EPR, my colleagues and I have
formed a new organization, Recycling Reinvented. Our
simple objective is to ensure that America adopts EPR –
that process begins when America’s top brand-name
companies take responsibility for their waste.
There are manufacturers who support our aims. But
only a few responsible companies have stepped forward
publicly. They include some of our nation’s most
prominent companies, including Nestle Waters North
America, the continent’s leading bottled water
producer. Nestle is leading the charge with visionary and
courageous leadership for industry-wide reform. And a
handful of other companies, including Coca-Cola, have
also worked to advance EPR. But nearly all the other top 25
brands have steadfastly refused.
Despite this resistance, the EPR train is gaining
momentum and will not be stopped. We are optimistic that
soon there will be simply too many CEO’s who refuse to
put their short term profits and shortsighted strategy over
their duty to our country and our children.
Robert F. Kennedy, Jr., is the Founder and President of
Waterkeeper Alliance, and is a Professor at Pace University.

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END TAXES AS WE KNOW THEM
Stop Taking Prosperity
Start Taking Responsibility
by Bill Shireman
None of America’s major parties, not even the Tea Party,
seems ready to step this far. But soon, America needs to
look seriously at much more fundamental tax reform than
the right or left have yet acknowledged.
We need to wind down all taxes that drive down
innovation and prosperity: taxes on income, payroll,
profits, and savings.
We can’t end all taxes. Critical programs need to be paid
for. But many can be, with a wiser set of tax alternatives.
We also can’t ignore the nation’s $50 trillion in short-term
and long-term debt. Like it or not, defaulting on that debt
would impose pain and suffering on billions of people. We
need to pay our debts, and taxes are part of the way – but
not our grandparents’ taxes.
Today’s U.S. taxes are built on a faulty 19th and 20th
century foundation. We tax well-being. Anything we tax,
we get less of. That’s one reason conservatives object to
high taxes.
Economists once thought of these taxes as relatively
neutral. They were less distortive because they applied to
almost everyone across-the-board, creating a level playing
field. But when you tax prosperity, then use the proceeds
to pay for the negative externalities imposed by businesses

58

and individuals, you promote a system that privatizes
profits while socializing costs. You undermine corporate
and individual responsibility. You penalize cost-cutting,
efficiency, and innovation.
Free market advocates propose alternatives that might
work better: Establishing new kinds of property, with
associated rights and responsibilities, for example. Taxing
externalities, like pollution and waste. Assigning
ownership to costs as well as benefits, so taxpayers and
consumers, as a whole, aren’t forced to pick up the tab for
someone else’s actions.
Today’s tax programs take money out of our pockets,
and give it to the government, which takes a hefty portion,
and returns what’s left to us, only with strings attached.
Traditionally, these taxes are imposed on things we want
– on income, jobs, profits, and savings. But these levies
have a major distorting effect: they tax prosperity. They
discourage work, thrift, and investment. They tax things
we want, not things we don’t want.
Today, some economists favor a national sales tax, called
a Value-Added Tax, or VAT. They argue that a VAT taxes
consumption. But in reality, a VAT tax just perpetuates the
problem, by taxing value directly.
A smarter tax would target the actual consumption of
energy and resources, through a broad economy-wide tax
shift to the pollution content of energy.
The purpose of this tax reform would be not just to raise
revenue, but to directly drive innovation, create jobs,
promote growth, and reduce pollution.
The result would not be higher taxes, but gradually
lower ones. Everything we tax, we get less of. So as we tax
pollution, we reduce it.

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Of course, politicians could still raise taxes – but the
political odds would finally be stacked against that. Today,
taxes rise automatically, in two ways. Inflation and
prosperity combine to push people into higher and higher
tax brackets, increasing government’s share of total
income. If we tax “bads” instead, the reverse would be
true. Politicians would be required to vote on any tax
increases, again and again – and incur the political risk of
doing so.
Here are five key components of a pro-innovation tax
and energy system, built not on the cycle of tax-and-spend,
but on smart tax reform that would raise revenues while it
solves problems.
First, Set a National Innovation Goal: to increase the
productivity of energy and carbon by 3-5%, every year, for
50 years.
Second, Stop Taxing Jobs and Prosperity. Cut payroll
and income tax rates for individuals and corporations.
Third, Develop the Next Energy Economy. Rather than
simply depleting our energy savings, we need to develop
and increase them. Our abundant stores of natural gas
must be harnessed, in environmentally safe ways, to
provide a bridge to more advanced technologies. Our
dependence on polluting coal and imported oil need to be
systematically reduced. Above all, our most abundant
source, Digital Energy, must be increasingly tapped.
Fourth, Tax Pollution, Not Prosperity. Put a price on
fossil fuel pollution, set at the rate that will drive the 3-5%
annual productivity gain.
Fifth, Use Border Adjustments to Cut Taxes More.
Apply the pollution tax to imported goods – including oil
imports – so we don’t inadvertently subsidize China,

60

Venezuela, or Iran. Use 100% of the proceeds to cut other
taxes.
That simple pro-innovation system will create wealth
and jobs, increase payrolls, reduce pollution, promote
technology development, and finally begin to wean the
nation off our addiction to foreign oil. It requires zero net
tax increases. It starts out revenue neutral, and as pollution
declines over time, it drives a gentle but continuous
reduction in taxes overall.
The pro-innovation system will also eliminate the need
for federal regulation of carbon emissions, and reduce the
need for regulating other pollutants. Pollution taxes can
outperform any rule EPA can enforce. It can provide a
framework where every form of energy – from coal to gas
to solar – can compete on a level playing field, with
environmental costs already internalized.
The pro-innovation system will reduce consumption,
without requiring that we sacrifice well-being. It will drive
technology change and help restore our manufacturing
sector by improving efficiency and productivity. It will
harness what America does best – innovation – and help
strengthen our economy for our coming race with China.
It will cut the flow of dollars to Middle East and
Venezuelan dictators, and reduce the chances of conflict. It
will protect our sons and daughters from the perils of war.
The pro-innovation system could readily be broadened to
include many opportunities for the left and right to join
forces.
Health Care Systems that empower, enable, and reward
people to stay healthy, and channel part of the gain from
that to support programs to help those who face
potentially catastrophic health challenges. Systems that
outperform standardization and consolidation, by

61

encouraging specialization and integration, in smaller local
enterprises that continuously improve and master their
specialties, so they can deliver the best results at the lowest
cost.
Public Education Systems, with robust, adaptive public
schools available to all, that foster knowledge and learning,
through small enterprises focused on developing their
specialties, within a robust integrated market, so they can
deliver the best results at the lowest cost. Systems that can
compete with big, consolidated programs, to provide the
impetus for continuous improvement that can make our
public schools the best anywhere.
National Security Systems, that cultivate freedom and
prosperity here and invite it abroad, building peace
through mutual interdependence, and enabling us to keep
our soldiers safely at home, preserving our military
resources for when war is truly necessary.
A Right-to-Left Alliance for the 21st Century
The Republican and Democratic Parties symbolically
represent the two idealized roles of American parents. The
Republicans position themselves as the nation’s father
figure. The Democrats play the nation’s mother figure.
In a healthy union, these two work together to provide
what the family needs. The feminine represents purpose –
the “why” – while the masculine represents power – the
“how.” In the real world, mothers and fathers each play
both masculine and feminine roles. But the mother tends to
be the connective force, representing the higher purpose of
the family as a single unit that shares love and support for
one another. The father, on the other hand, represents the
power that is exerted to advance that purpose. The
masculine serves the feminine; power serves purpose.

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For generations, we have chosen between the policies of
the right and left. This has left us paralyzed, frozen in
place, even in the face of potentially disastrous economic
and ecological consequences.
Before we can move forward, we must look to the left
and to the right. To understand the purpose of our
representative democracy, look to the left. To understand
our power, and how to use it to advance our purpose, look
to the right.
The blue states and the red – the political left and the
right – can be reconciled, if we accept that both serve a
function. The left can be, in part, the mother figure, the
connective force that binds us together as a whole people, a
national family. It represents our purpose. The right can be,
in part, the father figure, the disciplining force that focuses
on the use of power to advance the interests of the whole.
It represents our power.
But these two forces – purpose and power – are only
functional when exercised together. The right and left may
prefer one role, but each must also embrace the other.
Power without purpose is abusive. Purpose without power
is impotent.
National leaders who exercise one of these without the
other fail to advance our interests. George W. Bush focused
on the use of power, but was blurry about what purpose he
was trying to advance. Barack Obama has been fairly clear
about his purpose, but not skilled in the use of power.
Of course, the right and left are each a combination of
power and purpose. But their true believers impulsively
use their passion for their purpose to guide the exercise of
their power. They believe, without thinking, that what they
feel is what they should do – that the quickest path to their
purpose is to use their power to force it into existence now

63

– whether that means taking people’s money or choosing
their mates.
That is dangerous. It is the source of their pathologies.
It is why each falls too quickly for big government or big
corporate non-solutions, and stands ready to sacrifice
freedom and justice to save them.
Concentrated Corporate Power,
Concentrated Government Power,
Or Neither?
In 1980, Republicans argued that government had too
much power – we needed to shift it from government to
individuals. The major result: power shifted from
government to entrenched business interests.
In 2008, Democrats argued that corporations had too
much power – we needed to shift it from corporations to
individuals. The major result: power shifted from
corporations to government. Both parties claimed to be
returning power to individuals. Both instead passed it
along to their favored institutions, and justified it by
claiming that their institution better represented the
interests of individuals.
Liberals fear big corporations. Conservatives fear big
government. Neither appreciates how similar, and co-
dependent, those institutions are. By each focusing on just
one, they shift power back-and-forth between them. In the
end, they empower both government and corporations,
and take power away from people.
Big government and big corporate interests feed off one
another. They grow big together. The more functions
liberals give government to do, the more functions
corporate interests end up controlling, through their power
to influence and lobby. And the more functions

Toward a New Agenda for America

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