Free To Choose Network | Turmoil & Triumph: The George Shultz Years
Turmoil & Triumph: The George Shultz Years
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Transpartisan proposals for the 21st Century

George Shultz is rare. He has gained respect and a virtually untarnished reputation on both sides of the political aisle. This is amazing considering he is a Republican, steeped in the Chicago economics tradition, who has held cabinet positions under two Republican presidents (Nixon and Reagan). Currently he is a distinguished fellow at the center-right Hoover Institution. If one only knew him by his resume, one might draw incorrect conclusions about many of his policy positions.

But when we get beyond partisan labels, we find George Shultz is a pragmatist. He is level-headed, reasonable and firm when necessary. He has the unique ability to see beyond rhetoric to the heart of an issue. Due to this ability, his policy prescriptions often cross partisan boundaries. He has therefore gained the reputation of one who is guided by rationality and who eschews political rancor.

Consider the following positions, which Shultz has set out since the end of his tenure as Secretary of State:

  1. The Drug War – George Shultz is known for applying economic thinking to current issues. Sometimes that means looking at supply and demand along with right and wrong. The Wall Street Journal quoted Shultz on the issue of drug interdiction (prohibition) in a October 2009 article:

    “These days that means taking seriously the problem of drug-trafficking violence on the Mexican border. ‘It's gotten to the point that … you've got to be worried about what's happening to Mexico, and you've got to realize that the money that's financing all that comes from the United States in terms of the profits from the illegal drugs. It's not healthy for us, let alone Mexico, to have this violence taking place.’

    Mr. Shultz carries weight on this issue, in part because he has been thinking about it critically for decades and listening to our neighbors' viewpoints. He has long harbored skepticism about interdiction as a solution to drug abuse in the U.S. Those doubts were prescient.”

    Shultz understands that violent gangs and drug cartels exist to protect profits created by riskier trade created by the drug war. How? Drug prohibition restricts the supply of drugs, which drives up prices and profits for a few cartels and distributors (gangs). These gangs engage in violence to protect those profits as well as the associated territories and trafficking routes. Many economists, like Shultz, believe that decriminalization of drugs (just as with the repeal of alcohol prohibition) will reduce the influence and violence of drug cartels.

  2. Nuclear Proliferation – Many people don’t know this, but President Ronald Reagan had a vision for zero nuclear weapons worldwide. In fact his Strategic Defense Initiative (SDI) was, for better or worse, designed to be a way out of the morbid calculation of mutually assured destruction (MAD). In many respects, Secretary George Shultz shared his president’s vision of a nuclear-free world. Shultz is joined here by Henry Kissinger, William Perry and Sam Nunn as they lay out their concerns about nuclear proliferation—including how to reduce such weapons without sacrificing security or effective deterrence:

    “The four of us have come together, now joined by many others, to support a global effort to reduce reliance on nuclear weapons, to prevent their spread into potentially dangerous hands, and ultimately to end them as a threat to the world. We do so in recognition of a clear and threatening development.

    The accelerating spread of nuclear weapons, nuclear know-how, and nuclear material has brought us to a tipping point. We face a very real possibility that the deadliest weapons ever invented could fall into dangerous hands.

    But as we work to reduce nuclear weaponry and to realize the vision of a world without nuclear weapons, we recognize the necessity to maintain the safety, security and reliability of our own weapons. They need to be safe so they do not detonate unintentionally; secure so they cannot be used by an unauthorized party; and reliable so they can continue to provide the deterrent we need so long as other countries have these weapons. This is a solemn responsibility, given the extreme consequences of potential failure on any one of these counts.”

  3. Carbon Tax – Many people, including George Shultz, believe that carbon dioxide emissions from cars, power plants and factories causes a “greenhouse effect” that heats the planet – resulting in climate change. As an economist, Shultz understands that some economic activity results in so-called “externalities,” that is, a cost that cannot be internalized by the producer and is displaced onto others. Shultz reasons that if carbon is one such externality, one way to internalize that cost would be to tax it. Shultz prefers direct carbon taxes to a cap and trade system because he believes it will be more straightforward and less vulnerable to corruption. In this Washington Post op-ed he writes:

    “The use of economic incentives (caps and trading rights, and carbon taxes) is essential to avoid disastrously high costs of control. The cap-and-trade system has been highly successful in reducing sulfur dioxide emissions by electricity utilities in the United States. That system relies on a scientifically valid and accepted emission-measurement system used by a clearly identified and homogeneous set of utilities. Fortunately, such a careful system of measurement exists for a viable greenhouse gas regimen. The product of collaboration between the World Resources Institute and the World Business Council for Sustainable Development, these standards for accounting and reporting greenhouse gases should be duly understood and adopted. Even with clear units of account, however, large problems arise as the coverage and heterogeneity of the system grow. And for trading across borders, the system needs to be accepted among the trading partners. Scams are easy to imagine. No nation should be allowed to trade without a verifiable, transparent system of measuring and monitoring of reductions, and holding emitters accountable. In many respects, a straight-out carbon tax is simpler and likelier to produce the desired result. If the tax were offset by cuts elsewhere to make it revenue-neutral, acceptability would be enhanced.”

These are just three examples in which George Shultz eludes partisan caricatures. Indeed, if we can say nothing else about a man who has done so much in his life, we can say that he new how to deal “across ideologies” – both at home and abroad.

See more of Shultz’s trans-partisan work on affirmative action, entitlement reform and the doctrine of preemptive war.