George Shultz
George Pratt Shultz was an American economist, businessman, diplomat, and statesman who served in various positions under Presidents Richard Nixon and Ronald Reagan. A member of the Republican Party, he is one of the only two persons to have held four different Cabinet-level posts, the other being Elliot Richardson. As United States Secretary of State, Shultz played a major role in shaping the foreign policy of the Reagan administration, and conservative foreign policy thought thereafter.
Born in New York City, Shulz graduated from Princeton University before serving in the United States Marine Corps during World War II. After the war, Shultz earned a Doctor of Philosophy in industrial economics from the Massachusetts Institute of Technology. He taught at MIT from 1948 to 1957, taking a leave of absence in 1955 to take a position on President Dwight D. Eisenhower's Council of Economic Advisers. After serving as dean of the University of Chicago Graduate School of Business, he accepted President Nixon's appointment as United States Secretary of Labor. In that position, he imposed the Philadelphia Plan on construction contractors who refused to accept black members, marking the first use of racial quotas by the federal government. In 1970, he became the first director of the Office of Management and Budget, and he served in that position until his appointment as United States Secretary of the Treasury in 1972. In that role, Shultz supported the Nixon shock, which sought to revive the ailing economy in part by abolishing the gold standard, and presided over the end of the Bretton Woods system.
Shultz left the Nixon administration three months before Nixon resigned in 1974 to become an executive at Bechtel. After becoming president and director of that company, he accepted President Reagan's offer to serve as secretary of state, holding that office from 1982 to 1989. Shultz pushed for Reagan to establish relations with Soviet leader Mikhail Gorbachev, which led to a thaw between the United States and the Soviet Union. He opposed the U.S. aid to Contras trying to overthrow the Sandinistas by using funds from an illegal sale of weapons to Iran. This aid led to the Iran–Contra affair.
Shultz retired from public office in 1989, upon the end of his tenure as secretary of State, but remained active in business and politics. He had already been an executive of the Bechtel Group, an engineering and services company, from 1974 to 1982. Shultz served as an informal adviser to George W. Bush and helped formulate the Bush Doctrine of preemptive war. He served on the Global Commission on Drug Policy, California governor Arnold Schwarzenegger's Economic Recovery Council, and on the boards of Bechtel and the Charles Schwab Corporation. Beginning in 2013, Shultz advocated for a revenue-neutral carbon tax as the most economically sound means of mitigating anthropogenic climate change. He was a member of the Hoover Institution, the Institute for International Economics, the Washington Institute for Near East Policy, and other groups. He was also a board member of Theranos. His grandson Tyler Shultz worked at the company before becoming a whistleblower about its fraudulent technology.
Early life and career
Shultz was born December 13, 1920, in New York City, the only child of Margaret Lennox and Birl Earl Shultz. He grew up in Englewood, New Jersey. His great-grandfather was an immigrant from Germany who arrived in the United States in the middle of the 19th century. Contrary to common assumption, Shultz was not a member of the Pratt family associated with John D. Rockefeller and the Standard Oil Trust.After attending the local public school, he transferred to the Englewood School for Boys, through his second year of high school. In 1938, Shultz graduated from the private preparatory boarding high school Loomis Chaffee School in Windsor, Connecticut. He earned a bachelor's degree, cum laude, at Princeton University, New Jersey, in economics with a minor in public and international affairs. His senior thesis, "The Agricultural Program of the Tennessee Valley Authority", examined the Tennessee Valley Authority's effect on local agriculture, for which he conducted on-site research. He graduated with honors in 1942.
From 1942 to 1945, Shultz was on active duty in the U.S. Marine Corps. He was an artillery officer, attaining the rank of captain. He was attached to the U.S. Army 81st Infantry Division during the Battle of Angaur.
In 1949, Shultz earned a PhD in industrial economics from the Massachusetts Institute of Technology. From 1948 to 1957, he taught in the MIT Department of Economics and the MIT Sloan School of Management, with a leave of absence in 1955 to serve on President Dwight D. Eisenhower's Council of Economic Advisers as a Senior Staff Economist. In 1957, Shultz left MIT and joined the University of Chicago Graduate School of Business as a professor of industrial relations, and he served as the Graduate School of Business Dean from 1962 to 1968. During his time in Chicago, he was influenced by Nobel Laureates Milton Friedman and George Stigler, who reinforced Shultz's view of the importance of a free-market economy. He left the University of Chicago to serve under President Richard Nixon in 1969.
Nixon administration
Secretary of Labor
Shultz was President Richard Nixon's Secretary of Labor from 1969 to 1970. He soon faced the crisis of the Longshoremen's Union strike. The Lyndon B. Johnson Administration had delayed the walkout with a Taft–Hartley injunction that expired, and the press pressed him to describe his approach. He applied the theory he had developed in academia: he let the parties work it out, which they did quickly. He also imposed the Philadelphia Plan, which required Pennsylvania construction unions to admit a certain number of black members by an enforced deadline—a break with their past policy of largely discriminating against such members. This marked the first use of racial quotas in the federal government.Daniel Patrick Moynihan, Nixon's first choice for Secretary of Labor, was deemed unacceptable by AFL–CIO President George Meany, which pushed to fill the position with Shultz, then Dean of University of Chicago's School of Business,.
Office of Management and Budget
Shultz became the first director of the Office of Management and Budget, the renamed and reorganized Bureau of the Budget, on July 1, 1970. He was the agency's 19th director.Secretary of the Treasury
Shultz was United States Secretary of the Treasury from June 1972 to May 1974. During his tenure, he was concerned with two major issues, namely the continuing domestic administration of Nixon's "New Economic Policy", begun under Secretary John Connally, and a renewed dollar crisis that broke out in February 1973.Domestically Shultz enacted the next phase of the NEP, lifting price controls begun in 1971. This phase was a failure, resulting in high inflation, and price freezes were reestablished five months later.
Meanwhile, Shultz's attention was increasingly diverted from the domestic economy to the international arena. In 1973, he participated in an international monetary conference in Paris that grew out of the 1971 decision to abolish the gold standard, a decision Shultz and Paul Volcker had supported. The conference formally abolished the Bretton Woods system, causing all currencies to float. During this period Shultz co-founded the "Library Group", which became the G7. Shultz resigned shortly before Nixon to return to private life.
Shultz was instrumental in handling relations with Soviet Jewry.
Business executive
In 1974, he left government service to become executive vice president of Bechtel Group, a large engineering and services company. He was later its president and a director.Under Shultz's leadership, Bechtel received contracts for many large construction projects, including from Saudi Arabia. In the year before he left Bechtel, the company reported a 50% increase in revenue.
Reagan administration
Shultz is one of only two individuals to have served in four United States Cabinet positions within the United States government, the other having been Elliot Richardson.Secretary of State
On July 16, 1982, Shultz was appointed by President Ronald Reagan as the 60th U.S. Secretary of State, replacing Alexander Haig, who had resigned. Shultz served for six and a half years, the longest tenure since Dean Rusk's. The possibility of a conflict of interest in his position as secretary of state after being in the upper management of the Bechtel Group was raised by several senators during his confirmation hearings. Shultz briefly lost his temper in response to some questions on the subject but was nevertheless unanimously confirmed by the Senate.Shultz relied primarily on the Foreign Service to formulate and implement Reagan's foreign policy. As reported in the State Department's official history, "by the summer of 1985, Shultz had personally selected most of the senior officials in the Department, emphasizing professional over political credentials in the process The Foreign Service responded in kind by giving Shultz its 'complete support,' making him one of the most popular Secretaries since Dean Acheson." Shultz's success came from not only the respect he earned from the bureaucracy but the strong relationship he forged with Reagan, who trusted him completely.
Diplomatic historian Walter LaFeber states that Shultz's 1993 memoir, Turmoil and Triumph: My Years as Secretary of State, "is the most detailed, vivid, outspoken, and reliable record we probably shall have of the 1980s until the documents are opened".
Relations with Europe and the Soviet Union
By the summer of 1982, relations were strained not only between Washington and Moscow but also between Washington and key capitals in Western Europe. In response to the imposition of martial law in Poland the previous December, the Reagan administration had imposed sanctions on a pipeline between West Germany and the Soviet Union. European leaders vigorously protested sanctions that damaged their interests but not U.S. interests in grain sales to the Soviet Union. Shultz resolved this "poisonous problem" in December 1982, when the United States agreed to abandon sanctions against the pipeline and the Europeans agreed to adopt stricter controls on strategic trade with the Soviets.A more controversial issue was the NATO Ministers' 1979 "dual track" decision: if the Soviets refused to remove their SS-20 medium range ballistic missiles within four years, then the Allies would deploy a countervailing force of cruise and Pershing II missiles in Western Europe. When negotiations on these intermediate nuclear forces stalled, 1983 became a year of protest. Shultz and other Western leaders worked hard to maintain allied unity amidst anti-nuclear demonstrations in Europe and the United States. In spite of Western protests and Soviet propaganda, the allies began deployment of the missiles as scheduled in November 1983.
U.S.–Soviet tensions were raised by the announcement in March 1983 of the Strategic Defense Initiative, and exacerbated by the Soviet shoot-down of Korean Air Lines Flight 007 near Moneron Island on September 1. Tensions reached a height with the Able Archer 83 exercises in November 1983, during which the Soviets feared a pre-emptive American attack.
Following the missile deployment and the exercises, both Shultz and Reagan resolved to seek further dialogue with the Soviets.
When General Secretary Mikhail Gorbachev of the Soviet Union came to power in 1985, Shultz advocated that Reagan pursue a personal dialogue with him. Reagan gradually changed his perception of Gorbachev's strategic intentions in 1987, when the two leaders signed the Intermediate Range Nuclear Forces Treaty. The treaty, which eliminated an entire class of missiles in Europe, was a milestone in the history of the Cold War. Although Gorbachev took the initiative, Reagan was well prepared by the State Department to negotiate.
Two more events in 1988 persuaded Shultz that Soviet intentions were changing. First, the Soviet Union's initial withdrawal from Afghanistan indicated that the Brezhnev Doctrine was dead. "If the Soviets left Afghanistan, the Brezhnev Doctrine would be breached, and the principle of 'never letting go' would be violated", Shultz reasoned. The second event, according to Keren Yarhi-Milo of Princeton University, happened during the 19th Communist Party Conference, "at which Gorbachev proposed major domestic reforms such as the establishment of competitive elections with secret ballots; term limits for elected officials; separation of powers with an independent judiciary; and provisions for freedom of speech, assembly, conscience, and the press." The proposals indicated that Gorbachev was making revolutionary and irreversible changes.