Welcome to The Deep Dive, the show that takes
the most expansive and consequential careers
in modern history and extracts the essential
policy insights you need to know. Today, we're
attempting to map the incredible life and legacy
of George P. Schultz, a man who lived a century
from 1920 to 2021. And Schultz is one of those
figures who operated at the absolute highest
level of government for... Yeah. He influenced
everything from the international exchange rate
you rely on every day to the strategic framework
that basically guided the end of the Cold War.
That's right. And yet for all that enormous impact,
he remains, well, maybe one of the most under
examined statesmen of the entire postwar era.
I think the reason he's often overlooked is precisely
because the breadth of his influence is just.
So staggering. He wasn't simply a political operative.
No, not at all. He was a serious economist, a
corporate titan, and a world -class diplomat.
He worked under two vastly different Republican
presidents, Richard Nixon and Ronald Reagan.
And if you want a single metric, just one number
to understand his unique stature, it's the number
four. Exactly. George Shultz is one of only two
people in U .S. history to have held four different
cabinet -level posts. The other was Elliot Richardson.
And that speaks not just to longevity in Washington,
but to a depth of policy knowledge that just
effortlessly crosses traditional boundaries.
It does. He mastered labor negotiation, federal
budgeting, global finance, and of course, high
stakes foreign policy. So that is the core mission
for this deep dive. We are unpacking the sources
that cover the entire arc of his life. We're
going to examine how his academic beliefs, specifically
his devotion to the Chicago School of Economics,
drove massive governmental actions. Actions like,
you know, the total overhaul of the global financial
system under Nixon. Then we'll look at his pivotal
six and a half years as Secretary of State engineering
the Soviet thaw under Reagan. And we have to
conclude by addressing the, well, the profoundly
contradictory chapters of his later years. We
do. His emergence as a kind of progressive, conservative
iconoclast, advocating for a carbon tax and drug
reform, juxtaposed with the embarrassing, deeply
personal, and ultimately damaging role he played
in the notorious Fairnose scandal. A scandal
that pitted him against his own family. Right.
Exactly. When we are done here, you will walk
away with a clear understanding of the monumental
global shifts he engineered and the moral complexities
that even the most trusted statesmen face. You'll
understand why a man of such profound historical
significance can still be susceptible to a Silicon
Valley fraud. OK, let's unpack this. Let's do
it. To understand the policy giant, we have to
start with the discipline foundations. Schultz
was born in New York City in 1920, grew up in
Englewood, New Jersey. And the source material
is very specific here, clarifying a common misconception.
He was not related to the wealthy Pratt family,
you know, the one. associated with Standard Oil.
So he was a self -made academic. Entirely. That's
a really important distinction because Schultz's
identity was forged through rigorous intellectual
discipline and military service, not inherited
privilege. He was a dedicated student, graduating
cum laude from Princeton in 1942. With a Bachelor
of Science in Economics. Yes, and his senior
thesis... already pointed toward his future career.
The focus on the agricultural program of the
Tennessee Valley Authority, the TVA. Exactly.
So this wasn't just abstract theory for him.
It was applied economics, public administration.
He was studying how massive government infrastructure
and regulatory programs actually impacted local
economies and rural life. It shows he was always
concerned with the practical consequences of
policy. Always. And his education was immediately
followed by active duty during World War II.
a period that instilled a kind of structured
discipline he carried into every single role
he had later. He served in the U .S. Marine Corps
from 42 to 45. And he ultimately rose to the
rank of captain. And this wasn't stateside duty.
This was serious combat. Oh, absolutely not.
He was an artillery officer attached to the U
.S. Army's 81st Infantry Division during the
really intense Battle of Angwar. Which was part
of the larger, brutal battle of Peleliu in the
Palau Islands. It was. And when we discuss his
later negotiating tactics against the Soviet
Union, knowing he has this firsthand combat experience,
it just gives a certain gravity to his diplomatic
positions. He really understood the stakes. He
knew what conflict meant and, by extension, the
value of peace. After the war, he returned to
high -level academics, earning his Ph .D. in
industrial economics from MIT in 1949. He taught
at MIT until 1957. But even during this period,
the call of public service was already there.
It was. In 1955, he took a leave of absence to
serve as a senior staff economist on President
Dwight D. Eisenhower's Council of Economic Advisors.
Then we get to what many people call the Chicago
Connection. And for those who study his career,
this might be the single most crucial period
in defining his entire ideology. Absolutely.
It's fundamental. In 1957, Schultz moved to the
University of Chicago Graduate School of Business.
He quickly became a professor there and then
served as its dean from 1962 to 1968. And the
timing here is critical. This was the ideological
epicenter of the Chicago School of Economics.
It was intellectual ground zero. And the sources
confirm he was profoundly influenced by the heavy
hitters of that movement. Particularly Nobel
laureates Milton Friedman and George Stigler.
Right. So what did that influence fundamentally
mean for his worldview? Well, it wasn't just
a political affiliation for him. It was a foundational
intellectual framework. It was built on efficiency
and a deep, deep skepticism of centralized power.
Friedman and Stigler championed monetarism. Right.
The idea that control of the money supply is
the most important lever for economic stability.
And they fiercely believed in radical transparency
and the importance of allowing market forces
to determine outcomes with as little government
interference as possible. So when Schultz went
to Washington, he wasn't just another appointee.
He was an intellectual missionary. Precisely.
This core conviction meant that when he faced
labor strikes, budget crises or international
financial chaos, his default setting was always
to look for the most efficient market based solution.
He believed that subsidies, price controls. Fixed
exchange rates. All forms of heavy state intervention.
He saw them as inherently inefficient and often
counterproductive. This belief crystallized in
Chicago would shape his entire governmental career.
And most famously, when he oversaw the dismantling
of the entire postwar global financial architecture.
OK, so Schultz's rapid ascent to that quadruple
cabinet status begins in 1969. He accepts President
Richard Nixon's offer to leave academia. And
his entry point was as Secretary of Labor, a
post he held from 1969 to 1970. This was his
first taste of cabinet -level power, and he immediately
had to face a massive challenge. A huge one.
The Longshoremen's Union Strike, which was crippling
major ports across the country. This was a textbook
opportunity to apply his academic theory to a
real -world, high -stakes crisis. Previous administrations,
like Johnson's, had often resorted to the federal
government's heaviest hand, the Taft -Hartley
injunction. Right. Which for our listeners, that's
something that forces a mandatory 80 day cooling
off period. It essentially just delays the inevitable
while the government mediates. But that injunction
had expired. So the political expectation and
certainly the media anticipation was for Nixon
to intervene dramatically. But Schultz did the
exact opposite. He applied his Chicago school
theory. He believed that federal intervention
actually prolonged disputes. He did. He thought
that if the government stepped in. Neither side
had sufficient incentive to make the painful
concessions they needed to make. So the sources
note he deliberately chose to just let the negotiating
parties work it out. And he endured the short
term political pain. And the anecdote confirms
that this non -interventionist approach actually
resolved the crisis pretty quickly. It did. It
seems almost counterintuitive. You know, letting
the strike run its course actually expedited
the settlement. It really validated his theory
that allowing labor and management to find their
own painful equilibrium is often faster and more
efficient than federal mediation. However, his
tenure as labor secretary immediately presents
this. profound paradox, a major moment of tension
in his free market career. Yes. We're talking
about the Philadelphia plan. And this policy
was decidedly not hands off. It remains a deeply
significant and I think controversial moment
in the history of labor and civil rights enforcement.
It really does. What exactly did the Philadelphia
plan require? It was a direct federal mandate.
The plan imposed specific requirements on construction
unions in Pennsylvania. Unions which had historically
demonstrated severe discriminatory practices
against black workers. It required federal contractors
to set specific goals and timetables for minority
hiring enforced by a deadline. And the sources
stress this point. This marked the first use
of racial quotas or set -asides by the federal
government. The very first. So this is a huge
intellectual contradiction for Schultz, isn't
it? It is. The same man who believed in minimal
government intervention used the maximum federal
mandate to enforce integration and correct historical
discrimination. How do you reconcile that? Well,
it highlights the political reality he was operating
in. I think so. He was committed to efficiency,
but he was also in the Nixon administration,
which, despite its Southern strategy, was committed
to finding ways to enforce civil rights compliance
without massive legislative fights. And Schultz
saw entrenched union discrimination as a market
failure. Exactly. A restriction on the supply
of labor. So by imposing the plan, he was using
federal power to force the opening of a closed
market, aligning civil rights goals with a kind
of forced labor market efficiency. It was a significant,
if controversial, policy tool that really opened
the door for many later affirmative action programs.
After his time at labor, Shultz shifted entirely
to economic management, which just shows his
exceptional range. It does. From 1970 to 1972,
he took on his second post as the first director
of the newly renamed and reorganized Office of
Management and Budget, the OMB. And this formalized
the budgetary process within the executive branch,
centralizing financial power right under the
president. Then in 1972, he moved into his third
post, secretary of the treasurer, where he served
until 1974. And his time there was marked by
presiding over, well, One failure in one epoch
defining success. both stemming from Nixon's
new economic policy. That's a good way to put
it. Domestically, he oversaw the lifting of the
price and wage controls that Nixon had initiated
earlier. And what was the outcome of his attempt
to restore the free market there? It was, as
the sources clearly indicate, a catastrophic
failure. Really? Yes. Schultz, driven by his
free market belief, thought removing the controls
would allow prices to normalize quickly. Instead,
the sudden release of all this pent -up inflationary
pressure resulted in a massive surge in prices.
So the domestic... economic situation just spiraled.
It did. It led to such high inflation that the
government was forced to reestablish price freezes
just five months later. It just goes to show
you that brutal political reality, you know,
intellectual conviction doesn't always defeat
immediate economic pressures like stagflation.
But the truly global and lasting shift happened
in the international arena relating to the dollar
crisis. Right. This is where Schultz really solidifies
his place as a figure who fundamentally reshaped
global financial governance. This cannot be overstated.
No, it can't. Schultz was instrumental in formally
abolishing the post -war global financial architecture,
the Bretton Woods system. To understand this,
we need to talk about the 1971 Nixon shock. OK,
let's unpack that. Before 1971, under Bretton
Woods, major world currencies were pegged to
the U .S. dollar, which in turn was directly
convertible to gold at a fixed rate of $35 an
ounce. It provided stability, but what was the
fatal flaw? Well, the fatal flaw was what's called
the Triffin dilemma. For the U .S. dollar to
remain the global reserve currency, the U .S.
had to supply the world with enough dollars for
trade and growth. But the more dollars we issued...
The less confidence the world had that we could
actually redeem all those dollars for gold. We
were running huge trade deficits fueled by Vietnam
War spending and domestic social programs just
flooding the market with dollars. Confidence
was collapsing. So when Nixon unilaterally decided
in August 1971 to suspend the direct convertibility
of the dollar to gold. the Nixon shock, was a
desperate measure. A desperate measure to protect
our remaining gold reserves. And Schultz, alongside
the future Federal Reserve Chair Paul Volcker,
supported this bold unilateral move. It effectively
ended the gold standard. It did, but the global
financial community was left in total chaos,
trying to piece together a new system. Schultz
was the one who presided over the formal abolition
of the entire Bretton Woods system in 1973 at
an international monetary conference in Paris.
What was the consequence of that official? abolition.
I mean, if the old system was fixed, what was
the new system Schultz ushered in? He ushered
in the era of floating currencies. When Schultz
declared the system formerly dead, all major
currencies were allowed to float. Their value
is no longer tied to the dollar or gold, but
instead determined by supply and demand in foreign
exchange markets. The ultimate Chicago school
victory. Absolutely. The government stopped trying
to fix rates and let the market decide the currency
value. And it permanently shifted the global
economy. It did. It constrained the U .S. less,
making it easier to finance deficits. But it
also introduced the volatility we now just take
for granted. Schultz cemented that free market
ideology right onto the global financial system.
And to manage the subsequent turbulence, he played
a crucial role in co -founding the library group.
Which eventually evolved into the G7. institutionalizing
regular high -level consultation among the world's
major industrial economies. They needed a way
to coordinate economic policy to prevent the
new floating system from devolving into currency
wars. It's incredible. He was simultaneously
dismantling the financial system built for the
early Cold War and establishing the architecture
for post -Cold War financial governance. All
while dealing with domestic inflation and sensitive
international relations regarding Soviet Jewry.
And then, in 1974... Just before Nixon resigned,
Schultz briefly left government service. He began
an eight -year interlude in the corporate world.
He did. He became an executive vice president
and later president and director of the Bechtel
Group, a massive engineering and services company.
And this period, from 74 to 82. crucial it establishes
him as more than just a theoretician he proved
himself as a real operational leader in the private
sector he really did under his leadership Bechtel
received numerous large and very lucrative contracts
particularly from Saudi Arabia and the success
was measurable Very. The sources cite that in
the year just before he returned to government
service, Bechtel reported a massive 50 percent
increase in revenue. So this corporate success
gave him the stature, the executive confidence
and the practical international experience that
he would need for his final and most significant
government role. Exactly. That ultimate role
began in 1982 when President Ronald Reagan selected
him as the 60th U .S. Secretary of State, replacing
the rather volatile. Alexander Haig. His fourth
and final cabinet post. And the appointment was
a massive undertaking. It wasn't seamless. Not
at all. During his confirmation hearings, Schultz
faced significant conflict of interest questions
because of his recent high -level role at Bechtel
and those lucrative international contracts,
especially in the Middle East. So he had to navigate
ethical scrutiny related to his business dealings
and his transition back to government. It's a
theme that Ironically, it would reappear decades
later with Theranos, just on a much smaller,
more embarrassing scale. It is ironic. And despite
the grilling, and he did briefly lose his temper,
showing a rare flash of personal heat, he was
ultimately confirmed unanimously by the Senate.
What's remarkable about his six and a half year
tenure is the atmosphere he cultivated. He earned
deep and unwavering trust from President Reagan.
And he made it a core mission to rely heavily
on the career foreign service professionals to
formulate and implement policy. I think that
reliance on professionals. rather than politicize
ideologues, is really key to his success. The
State Department's official history noted that
the Foreign Service gave Schultz its complete
support, making him one of the most popular secretaries
since the 1950s. And that strong internal support,
his reputation for intellectual rigor and honesty,
all of it was absolutely essential because the
1980s were, well... arguably the most dangerous
period of the Cold War since the Cuban Missile
Crisis. His 1993 memoir, Turmoil and Triumph,
is still one of the most reliable and thorough
records of this intense decade. It is. So the
first diplomatic fire he had to put out immediately
involved strained relations within NATO. Yes,
the pipeline crisis in 1982. This is a really
serious rift within the alliance. The Reagan
administration had imposed sanctions on the technology
needed to complete a gas pipeline being built
between West Germany and the Soviet Union. Right.
This was in response to Poland imposing martial
law. But the Europeans were furious. Because
the sanctions damaged their economic interests
while simultaneously exempting U .S. interests,
particularly lucrative grain sales to the Soviets.
It felt like economic unilateralism. It was a
mess. So Schultz had to devise a resolution that
satisfied the allies without abandoning the goal
of pressuring Moscow. This required some genuine
diplomatic finesse. And he managed to resolve
it by December of 82. He proposed a classic tradeoff.
The U .S. agreed to abandon the sanctions on
the pipeline, conceding the economic point. But
the Europeans, in turn, agreed to adopt much
stricter controls on strategic trade with the
Soviets. So they traded an immediate economic
irritant for a greater long -term security cooperation.
Exactly. Preventing technology transfer to the
Eastern Bloc. It restored unity just in time
for the next big challenge. Which was the highly
controversial intermediate range nuclear forces
deployment, the INF deployment. This deployment
was perhaps the single most important strategic
decision of the early 1980s. NATO was operating
under a dual track decision. Right. If the Soviets
wouldn't remove their existing SS -20 missiles
targeting Europe, NATO would proceed with deploying
its own crews and Pershing 6 -diff missiles in
European NATO countries. And the Soviets refused
to negotiate seriously. So when deployment began
in 1983, it sparked massive anti -nuclear protests
all across the continent. But despite that intense
public pressure, Schultz worked tirelessly to
maintain Allied unity. and the plant's schedule.
This decision really showed Washington was serious.
It did, and this all happened against a backdrop
of truly frightening tension. It followed Reagan's
SDI announcement, the Star Wars program. The
Soviet shoot -down of Korean Airlines Flight
007 and the highly realistic Able Archer 83 exercises.
And those exercises, which simulated a nuclear
conflict escalation, were so realistic that intelligence
sources later confirmed the Soviets genuinely
feared a preemptive American attack. That is
the moment of maximum danger. The fear of misunderstanding
was palpable. So how did Schultz push Reagan
to move past this peak tension? Well, Schultz,
recognizing the danger of total noncommunication,
successfully advocated for establishing a personal
direct dialogue between President Reagan and
the new Soviet leader Mikhail Gorbachev, who
came to power in 85. The strategy was clear.
pressure the Soviets militarily and economically.
The shadow of power, as he called it, but couple
that strength with a sincere commitment to engagement.
And the major fruit of this sustained dialogue
was the 1987 Intermediate -Range Nuclear Forces
Treaty. That treaty was a genuine and monumental
Cold War milestone. It eliminated an entire class
of nuclear missiles in Europe, a first in disarmament
history. Schultz's State Department was instrumental
in preparing Reagan for those intense negotiating
sessions. They were able to achieve meaningful
de -escalation from a position of renewed strength.
Exactly. And Schultz saw two key events in 1988
that cemented his belief that the changes occurring
within the USSR were, in his words, revolutionary
and irreversible. Signaling the true coming end
of the Cold War. The first signal was the Soviet
Union's initial withdrawal from Afghanistan.
Schultz noted that if the Soviets were willing
to leave Afghanistan, they were implicitly breaching
the fundamental principle of the Brezhnev Doctrine.
For our listeners, can you remind us what the
Brezhnev Doctrine was? Sure. The doctrine was
essentially the Soviet foreign policy principle
established after the 1968 invasion of Czechoslovakia.
It asserted that the USSR had the right to intervene
militarily in any communist state to protect
its communist regime. The never -letting -go
principle of the Eastern Bloc. Precisely. Afghanistan
wasn't strictly a bloc member, but it was a Soviet
client. By allowing them to pull out, Moscow
was signaling it would no longer pay any price
to enforce its ideological control over allied
states. And the second signal was Gorbachev's
proposed major domestic reforms. Yes, at the
19th Communist Party Conference. Things like
freedom of speech provisions, competitive elections,
judicial independence. And Schultz, the academic,
recognized these structural political changes
as profound. He did. He saw they weren't just
tactical. They aimed to reform the fundamental
nature of the Soviet state. He correctly analyzed
that the USSR was on a path from which it simply
could not return. Now, let's pit it to Latin
America. Schultz was known for his very hardline
stance against the Sandinista government in Nicaragua.
Oh, very much so. He viewed the Sandinista government
as a grave ideological and strategic threat.
He called it a very undesirable cancer in the
area. And his foreign policy philosophy here
was deeply realist. It often tied back to his
market -based concept of power, that diplomacy
requires leverage. Which is perfectly encapsulated
in his famous quote about negotiations. He stated
that negotiations are a euphemism for capitulation
if the shadow of power is not cast across the
bargaining table. For Schultz, diplomacy without
credible strength, whether economic sanctions
or military might, was simply weakness being
exploited. And this hardened stance is crucial
context for understanding the Iran -Contra affair,
where Schultz stood firmly and outspokenly against
the White House's illegal actions. He did. Schultz
was one of the few high -ranking officials to
openly oppose that shadowy, secretive operation
that involves selling arms to Iran to free hostages
and then illegally diverting the profits to fund
the Contra rebels in Nicaragua. What specifically
was his objection? Well, his objections were
multifaceted and principled. First, he argued
it undermined the fundamental U .S. policy against
negotiating with terrorists. He saw it setting
a disastrous precedent. And second, he opposed
the secrecy. The secrecy and the rogue operations
run by the National Security Council staff people
like Oliver North because it circumvented legitimate
diplomatic channels and totally undermined the
State Department. He maintained a position of
moral and political clarity against secret arms
sales. He was a much -needed, if often ignored,
counterweight within that administration. Finally,
let's briefly touch on his diplomacy in the Middle
East and China. Regarding China, he inherited
the sticky issue of Taiwan arms sales. He did.
This was a complex diplomatic negotiation that
culminated in the August 1982 joint communique
with the People's Republic of China. The U .S.
agreed to gradually limit its arms sales to Taiwan.
But only in exchange for China agreeing to seek
a peaceful solution to the Taiwan question. It
was a challenging high wire act. trying to maintain
relations with the PRC while adhering to U .S.
security obligations to Taiwan. In the Middle
East, he was thrust into action following the
devastating 1983 Beirut Marine Barracks bombing.
He engaged in intense shuttle diplomacy. He negotiated
an agreement between Israel and Lebanon. And
despite some severe challenges, including a subsequent
contravention of the initial settlement by Lebanon,
he managed to convince Israel to begin a partial
troop withdrawal in 1985. And he made a major
final move. the Palestinian conflict toward the
end of his tenure. Yes. Following six months
of intense shuttle diplomacy during the First
Intifada in 1988, Shultz convinced the administration
to establish a diplomatic dialogue with the Palestine
Liberation Organization, the PLO. And that was
a significant strategic shift. It was huge. It
moved away from previous non -recognition, and
it was a dialogue that the subsequent administration
continued. Shultz was always pushing for engagement,
but only once he felt the U .S. was negotiating
from a position of strength. Shultz left office
in 1989 and entered the final, longest phase
of his career, the elder statesman. He returned
to Stanford University's Graduate School of Business
to teach international economics and join the
prestigious Hoover Institution. But he did not
retire quietly. No, he became a politically unpredictable,
iconoclastic voice, often challenging the core
tenets of the Republican Party he had served
for decades. While his initial return to public
life reflected his continued standing within
the Republican establishment. He was an informal
advisor for George W. Bush's campaign in 2000.
And served as a senior member of the Vulcan's
policy group, working alongside figures like
Condoleezza Rice, Dick Cheney, and Paul Wolfowitz.
Right. And our sources suggest he was integral
to that group. Some analysts even called him
the father of the Bush doctrine. So what specific
role did he play in shaping the foreign policy
thinking of that era? Well, the Bush doctrine
centered on the idea of preemption and aggressive
democracy promotion. Shultz had long advocated
for a robust use of American power, and his expertise
in dealing with difficult regimes was invaluable
to the Vulcans. He publicly and forcefully defended
the 2003 invasion of Iraq. He wrote in support
of military action months before the war began.
He did, making the case for intervention alongside
other establishment figures. So initially he
was firmly tied to that aggressive foreign policy
consensus. But then the iconoclast streak emerged.
It made him a fascinatingly contradictory figure
in his final years. He started publicly challenging
long held conservative positions, often surprising
and sometimes angering his former allies. And
the most dramatic example of this pivot is his
comprehensive shift on drug policy. It's a huge
shift. Schultz, the Cold War hawk, publicly called
the decades -long war on drugs a total failure.
Not only did he call it a failure, but in 1998,
he signed a highly publicized New York Times
advertisement arguing the global war on drugs
was causing more social harm through violence,
corruption, incarceration than drug abuse itself.
It was a complete rejection of the traditional
law and order Republican stance. By 2011, he
formalized this position by joining the Global
Commission on Drug Policy, advocating for a pivot
toward a public health and harm reduction approach
instead of criminalization. He used his expertise
in public policy and his commitment to efficiency
straight out of the Chicago school playbook to
critique the war on drugs as a catastrophic policy
failure that had wasted trillions of dollars
for zero measurable return. And he showed a similar
willingness to discard outdated foreign policy
dogma specifically regarding Cuba. Right. In
a 2008 interview, he called the U .S. embargo
against Cuba ridiculous in the post -Soviet world.
And think about that perspective. This is the
man who engineered the end of the Cold War. He
clearly recognized that the justifications for
certain policies, like maintaining a Cold War
era embargo decades after the Soviet Union collapsed,
had just evaporated. He strongly favored engagement
over sanctions. This theme of recognizing existential
risk and finding practical evidence -based solutions
led him to become a powerful late career advocate
for nuclear arms control. He maintained that
nuclear weapons were ones we wouldn't use. He
saw them primarily as a catastrophic risk factor
rather than a strategic deterrent. He was intensely
focused on the danger of nuclear terrorism and
accidental war. And the pinnacle of this advocacy
came in 2008. It did. That's when he co -authored
a truly pivotal op -ed in The Wall Street Journal.
And who did he write this piece with? He co -offered
it with three other policy titans, former Secretary
of Defense William Perry, fellow former Secretary
of State Henry Kissinger, and former Senator
Sam Nunn. Four giants of the American security
establishment, many of whom were considered hawkish,
united in calling for a world free of nuclear
weapons. That collaboration just shows the weight
of their conviction. It was incredibly influential.
It led directly to the creation of the Nuclear
Threat Initiative, a global nonprofit dedicated
to reducing global nuclear and biological threats.
It showed that regardless of party, experiencing
the deepest recesses of government can force
a necessary reckoning with the biggest risk.
I think so. But perhaps his most profound and
often politically difficult advocacy in later
life concerned climate change. He urged conservatives
to adopt a market -based solution. This is a
perfect full circle back to his Chicago roots.
Schultz saw anthropogenic climate change as a
clear and present risk, but he insisted the solution
must be economically sound and adhere to free
market principles. His answer was the revenue
-neutral carbon tax. Or carbon fee and dividend
program, as it's often called. Can you break
down what makes this specific policy proposal
appealing to a staunch conservative like Schultz?
The structure is crucial. You impose a fee or
a tax on carbon dioxide emissions at the source,
the oil well, the mine or the import point. But
crucially, the policy is revenue neutral. All
the funds collected are rebated directly back
to the American taxpayers. Either through direct
checks or tax cuts. Exactly. So the goal isn't
increasing the size of government, but changing
consumer behavior through pricing signals. It
appeals to conservatives because it eliminates
the need for complex, heavy handed regulatory
mandates. Exactly. The myriad rules. imposed
by the EPA, for example. It's economically efficient,
transparent, and it uses the power of the market,
the pricing mechanism, to solve the problem.
Schultz argued this plan would benefit all Americans
by eliminating the need for costly energy subsidies
while promoting a level playing field for energy
producers. And he didn't just advocate this theory.
He made sure it became a conservative political
proposal. He did. In 2017, he co -founded the
Climate Leadership Council with other influential
Republican elder states. like James Baker and
Henry Paulson. They explicitly urged conservatives
to adopt this market -based solution. It was
Schultz leveraging his lifelong conservative
pro -business credentials to address what had
become a deeply partisan issue. Arguing that
climate change policy shouldn't be about ideology,
but about the most efficient outcome. Exactly.
Now, we must make a difficult transition. We
move from the triumphs of global policy, diplomacy,
and principled progressive conservatism to a
localized, personal corporate drama that, frankly,
tarnished his legacy. The Theranos scandal. The
Theranos scandal. This period feels almost fictional
given his career trajectory. Schultz, the former
four -time cabinet member, served on the board
of directors of Theranos from 2011 to 2015. A
health technology company notorious for claiming
revolutionary blood testing technology that was,
in reality, completely fraudulent. And he didn't
just quietly sit on the board. He used his immense
and hard won prestige, the trust earned in the
White House and the State Department, to aggressively
promote the founder. Elizabeth Holmes. He publicly
lauded her at major forums like the Stanford
Institute for Economic Policy Research. He was
essentially validating her and her technology
to the world. He was instrumental in recruiting
other high profile figures, Kissinger, Perry,
none to the board, lending the startup an air
of legitimacy that helped it raise hundreds of
millions from investors. The tragedy here is
the irony. the man who championed transparency,
free markets, and the dismantling of Cold War
secrecy. Was blinded by the myth of Silicon Valley
disruption and became the chief validator for
a massive fraud based on total secrecy and deception.
And the scandal turned acutely personal because
of his own family, his grandson, Tyler Schultz.
Yes. Tyler Schultz, a Stanford biology graduate,
actually worked at Theranos and quickly realized
the company's blood testing practices were dangerous
and fraudulent. He became one of the key whistleblowers.
And this created an agonizing public family conflict.
It did. George Schultz, for reasons that may
have included pride, loyalty to Holmes or simple
misjudgment, initially refused to believe his
grandson. The sources indicate he pressured Tyler,
the scientist, to keep quiet about the dangers
he observed, placing the reputation of the company
above the pursuit of truth. It's heartbreaking.
And this leads to the moment of maximum drama
and personal betrayal. Tyler eventually contacted
Wall Street Journal reporter John Kerry Rue to
expose the fraud. Knowing the expose was coming,
Theranos attorneys attempted to use the grandfather
to silence the grandson. Tyler recounted going
to George Shultz's home to discuss the allegations,
only to be surprised by the presence of high
-powered company attorneys. So he's confronting
his own grandson with company lawyers present.
At his own house. It's an unbelievable scene.
They pressured Tyler to sign a document retracting
his claims. And Tyler recalled his grandfather
adding personal pressure, saying things like,
your career would be ruined if Carrie Rue's article
comes out. It was a moment where corporate loyalty
just momentarily severed the family tie. Tyler
courageously refused to sign, but the subsequent
battle involves staggering personal cost. Tyler
and his parents spent nearly half a million dollars
in legal fees fighting Theranos' accusations.
They had to sell their house to raise the funds
necessary to defend themselves against the company
their own patriarch had championed. The sources
confirm Schultz eventually moved to a non -technical
board of counselors, which was quietly retired
in 2016, just before the company shut down in
2018. But the final necessary chapter of this
story is the reconciliation. It is a moving moment
of public humility. In 2019, Schultz released
a public statement that validated his grandson.
He praised Tyler for not shrinking from what
he saw as his responsibility to the truth and
patient safety, even when he felt personally
threatened and believed that I had placed allegiance
to the company over allegiance to higher values
in our family. That is a remarkable admission
from a man who had only ever known success and
high command. a public acknowledgement of his
lapse in judgment, and a powerful final lesson.
That the pursuit of truth and patient safety
must always supersede corporate loyalty or personal
pride. George Shultz continued his work at the
Hoover Institution as a distinguished fellow
until his final days, maintaining his commitment
to economic and foreign policy thinking. He also
served on numerous corporate and nonprofit boards.
Patel, Charles Schwab, Gilead Sciences, reflecting
his lasting influence across multiple sectors.
His long, consequential and often dramatic life
came to an end on February 6th, 2021, at age
100, at his home in Stanford, California. His
passing prompted widespread reflection across
the political spectrum. President Joe Biden's
reaction really captured the essence of Shultz's
enduring reputation as a statesman. He said Schultz
was a gentleman of honor and ideas, dedicated
to public service and respectful debate. I regret
that, as president, I will not be able to benefit
from his wisdom, as have so many of my predecessors.
He certainly accumulated the honors to match
his career's extraordinary reach. The Presidential
Medal of Freedom in 1989, the Seoul Peace Prize
in 1992, and numerous international honors and
honorary degrees from universities worldwide.
He was a force who demonstrated the sheer power
of expertise and intellectual conviction when
applied to the machinery of government. So we
have traced the unparalleled trajectory of George
Shultz. a decorated WWII Marine, a dean at the
University of Chicago, deeply influenced by the
uncompromising tenets of free market philosophy.
He was the key figure in the Nixon administration
who simultaneously managed the U .S. economy,
enforced the first federal racial quotas through
the Philadelphia Plan, and oversaw the dismantling
of the Bretton Woods global financial system.
And then, as Secretary of State under Reagan,
he used a strategy of strength coupled with engagement
to engineer the Soviet thaw. What's truly fascinating
is how his career demonstrates the absolute,
seamless interconnectedness of global finance
and diplomacy. He moved between these worlds
with genuine mastery. Recognizing that economic
health and security are inseparable. He did.
And he applied intellectual convictions, whether
free markets, nuclear control, or a carbon tax
as instruments of global strategy, often placing
those beliefs above pure political calculation.
And that brings us back to the unexpected and
highly complex advocacy. of his later years.
Schultz, a lifelong Republican elder statesman,
the man who helped create the modern conservative
foreign policy consensus, ended his career by
strongly advocating for aggressive action on
climate change. Via a revenue -neutral carbon
tax and for drug policy reform through a public
health lens. This raises an important question
for you, the listener, to carry forward. If a
statesman with such deeply conservative economic
and foreign policy roots can champion these causes,
challenging the anti -tax orthodoxy and the failed
war on drugs, Shultz's final, iconoclastic years
suggest that the biggest threats require radical,
evidence -based solutions, regardless of which
side of the political aisle typically champions
them.