Hon. George P. Shultz
A Former U.S. Secrtary of State speaks about the Bush administration’s response to the terrorist attacks, economics, b-schools, and the future
Damon Vangelis
Issue date: 10/1/01 Section: Features
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I also was interested to hear his perspectives on some broader political and economic issues given his vantage point as adviser to Presidents, cabinet secretary, business leader, educator, and diplomat. So I asked him about how the public’s views toward the role of government and markets in promoting welfare have evolved over his lifetime, and also how graduate business school education has changed in the three decades since he was Dean at the Graduate School of Business at the University of Chicago. He was more than willing to offer his thoughts.
What follows is a transcript of our meeting.
The Reporter: What is your take on the recent terrorist attacks against the United States and the US response?
GS: I feel very good that we have such a strong President and such a strong team around him. You never know when crises will arise. But when they arise, the people who are there are the people who are there. And if you are lucky, you have good people. In this case, we are fortunate to have experienced, tough-minded, and sensible people there. And the President in his speech last night to a joint session of Congress was certainly inspirational, as were his comments at the National Cathedral, which I found to be very thoughtful. And then the members of his team are really good people. I know them all.
The Reporter: Can the religious tensions in the Middle East be overcome? Can the United States respond to the terrorist attacks without inflaming tensions?
GS: The President was very careful last night to say that we are very respectful of the Islamic religion. We are quarreling with people who are extremists, who are using violence in the name of religion. Violence is not a legitimate expression of the teachings of the Koran. We need to be very careful to separate them from the mass of people, and continue to take that approach.
The Reporter: How has the terrorist threat changed from what you fought during your tenure as Secretary of State in the 1980s?
GS: The biggest difference is that these terrorists seem to be better organized, with a bigger network, and more thoroughly financed. So their attack was audacious. And, of course, it was an attack here. Back in the days when I was fighting terrorism, the fight was against terrorists who were targeting Americans abroad, not here. Now all of a sudden we see that we are vulnerable here. And we also see that the public is ready to rally to fight terrorism – to do something about it. So we first must look in the mirror, and do something about the terrorists who are here in our midst. We have seen that these people got training in US flight schools and so on. So we know we have a job to do here as well as getting other countries to help. There apparently are quite a few of these cells in Germany, and the German government from what I can understand has been very cooperative and working hard on it. So in other words, it is not only a problem in the Middle East, but it is a problem to work on at home as well.
The Reporter: In the days since the terrorist attacks in New York and Washington, many people have expressed shock that terrorists would strike inside America. Were you surprised?
GS: Quite a few people, including me, have been saying for some time now that we were vulnerable in this country, and that we were not taking the terrorist threat here seriously enough. So in that sense it wasn’t a surprise to me. The idea of using a commercial airplane that is fully gassed up because it is still early in its flight so that it could pile into a building was audacious. Although once they did it, you could say, well, ‘How obvious.’ I don’t know what they are doing back in Washington, but I hope one of things they are doing is getting a lot of kooky people who are science fiction writers, Tom Clancy, and people like that and putting them in a room somewhere and letting them think of every outrageous idea they have because I think you want to try hard not to be surprised. You want to think imaginatively.
The Reporter: There has been some speculation that the plane that crashed into the Pentagon was headed for the White House, but couldn’t see it because of the angle at which it approached Washington. The U.S. Treasury obscures the White House on one side and the Old Executive Office Building on the other.
GS: It is protected if the plane is coming that way. But if it is coming the other way, it is very visible. Vice-President Cheney said on “Meet The Press” that on that particular approach path, the plane could not see the White House. But if he approached it from a 90 degree angle, he would have seen it very clearly. But you would have to duck around the Washington Monument in the process.
The Reporter: Almost another protector.
GS: Well, you could see that the people who were flying those planes might not have been skilled pilots at taking off and landing, but as far as actually maneuvering the plane in the air – you saw that plane bank into the World Trade Center. That was certainly done with quite a lot of skill.
The Reporter: Given the level of coordination, how far in advance do you believe the terrorist attacks in New York and Washington were planned? How much money do you think was needed to fund it?
GS: It must have been planned – at least in a vague way – quite a long time ago because people came here, they got training, and they had in mind capturing an aircraft and turning it into a bomb. How much money was involved I have no idea. People came here and they probably got jobs and they tried to behave like normal people, to blend in, to be part of the scene. So it didn’t necessarily cost a lot.
The Reporter: Quite a few elected leaders have been quoted as saying that it was a mistake to leave Saddam Hussein in power after the Gulf War. What is your view, in retrospect, about the way the Allied Coalition concluded the Gulf War in 1991?
GS: Well, you can argue whether we should have kept going for another day or so. I don’t think we particularly wanted to go to Baghdad, but there was a fairly sizable Iraqi military contingent that escaped. But I think the real mistake that was made was after the war was stopped. We should have negotiated a cease-fire “in place.” That is you can have a “cease-fire” meaning “I won’t fire on you.” But if you have a “cease-fire in place,” then these forces have to stay where they are. And I read that was our initial position and that the Iraqi general negotiating with General Shwarzkopf said, ‘Well, General you know you have to move your helicopters around. We are both generals and know that.’ And so Shwarzkopf went along with that. He later said he got snookered. And I could never understand why he didn’t go get unsnookered. Because if you had a “cease fire in place” then I think the people of Iraq at that point might very well have overcome Saddam Hussein because he would not have been able to use his military forces for the repressive purposes that have kept him in power. That’s relevant to the question of what we do now, and I think the lesson we learned is that there is a network here and you have got to get rid of the network as much as you possibly can. And it is a network that has leaders that last night President Bush compared to the mafia. If you give a little thought to that I suppose what that means is that if the head man – Osama Bin Laden – is eliminated, then one of the lieutenants may come along, so then you have to take a look at the network and the organization. You have to do more, in other words, than just eliminate a person.
The Reporter: Thinking back to your own time in government as Secretary of State for a moment … Kiron Skinner’s new book, Reagan, In His Own Hand, has brought to light President Reagan’s writings on foreign policy – from before he was President – that until recently had not been known to scholars. Has this book led you to think differently at all about President Reagan and his views on foreign policy?
GS: No. I have always been very impressed with Ronald Reagan. I didn’t know he had written all these things. But it is interesting to see what he wrote before he was President, and the book Reagan, in His Own Hand is a very important document. Kiron Skinner found the documents. She understood the importance of what she was looking at. And she teamed up with the Andersons [Martin and Annelise] to edit the book together. I actually wrote a forward for it. The conceptual underpinnings of the Reagan Presidency are right there. Incidentally, there is another book that is about to be published – Stories in His Own Hand: The Everyday Wisdom of Ronald Reagan. You know, Ronald Reagan was a great story-teller. He was so funny. He would have you rolling on the floor. He understood that if you want to get people’s attention and drive home a point, often the best way to do it is with a story. Because you can make a point in the abstract and people get it in their head. But if you tell a story, people get it in their gut, so that it has a much deeper meaning. So he told stories all the time.
The Reporter: Could you share a more memorable one?
GS: I tell in my foreword to that book about a time when I was designated to make an important policy statement on behalf of the administration and the president. I wrote out my speech very carefully and I met with the President twice a week, so I took a copy of my speech with me, and said, ‘Mr. President I have put together our policy on this subject, and I have written this out and I want to be sure – because it is important – that it is just the way you want it. So would you take a look at this.’ So he read through it and he said, ‘Well, sure. Perfect. Just exactly right. But, of course, if I were doing it, I wouldn’t do it that way.’ And I said, ‘Well, what do you mean by that?’ And he picked the speech up and flipped it open at random, and he proceeded to edit one of those pages. When I looked at it, I could see that he had changed the tone. It was much more personal. And he said, ‘You wrote this to be reprinted in The New York Times or in your State Department Bulletin for people to read and that’s important. But that’s not what I do. I talk to people – whether they are in front of me or at the other end of a television camera. When I give a speech, I like to talk to people.’ And I noticed that he had a little caret in one place and had written ‘story’ to underline a point.
The Reporter: Over the course of your lifetime, there has been a great sea change in the way the public and economists view the proper role of private enterprise and government. Internationally, most of the command economies of the 20th century have privatized their state owned enterprises or taken on elements of free enterprise, and domestically there has been a gradual re-thinking about the limitations of the welfare state. What do you make of these changes?
GS: It’s a big change. In the early years after World War II, people who were believers in the free market were not thought of so highly in the economics world, and we had to battle. There were a few hearty souls, of which I was one at a younger age. Since then it has become conventional wisdom that this is the way to work things. But the battle is never won, and so you have to keep after it. Look at this California electricity mess. It’s all because when the crunch came, the governmental authorities were not willing to use the market, and the result is bankrupt utilities, the state having to pay out huge amounts – billions of dollars – to buy electricity at a high price and sell at a low one. If they had let the market operate, the problem would have been gone long since. So yes, we’ve come a long way. But the battle is never over.
The Reporter: One final question. Before heading into high-level positions in government in the late 1960s, you were Dean of the Business School at the University of Chicago. Have you observed any significant changes in graduate business school education in the three decades since?
GS: There have been big changes. There was a revolution in the 50s and 60s that put much more intellectual content in the business curriculum. The curriculum became much stronger as a result. The graduate business schools themselves are rather different because the student body is so different. Twenty-five or thirty years ago people came directly from college to the business school. And let’s say they were equally bright as those today. But they had zero experience. Nowadays, you can’t get into any of the main business schools unless you have worked for a while. And I guess they don’t really care what you’ve worked at, as long as you have had the experience of working and somehow struggling in the world out there. So nowadays the students have that added dimension and I think it makes for a much richer experience because they bring a lot to each other and they bring a lot to the classroom. Obviously, there are all sorts of changes that go with the information age, the knowledge age, the global dimension, and so on.
The Reporter: Well, we thank you for taking the time to speak with us today. We greatly appreciate it.
GS: You are most welcome.
Hon. George P. Shultz is the Thomas W. and Susan B. Ford Distinguished Fellow at the Hoover Institution. He served as U.S. Secretary of State from July 1982 through January 1989 under President Ronald Reagan. In January 1989, he joined the GSB faculty as the Jack Steele Parker Professor of International Economics. Earlier in his career, he served as Secretary of the Treasury, Secretary of Labor, and Director of the Office of Management and Budget (Nixon Administration), and as Dean of the Graduate School of Business at the University of Chicago. He is currently a member of the board of directors of Bechtel Group, Fremont Group, Gilead Sciences, Unext.com, and Charles Schwab & Co., Inc.