Hoover Daily Report

A Remembrance of George P. Shultz by John B. Taylor

Thursday, October 7, 2021

George Shultz was a terrific economist. He majored in economics at Princeton. He earned a Ph.D. in economics at MIT. And he was so much more than that.

Many years ago when George Shultz was secretary of the Treasury, he said, “Economists have a particular responsibility to relate policy decisions to the maintenance of freedom, so that when the combination of special interest groups, bureaucratic pressures, and congressional appetites calls for still one more increment of government intervention, we can calculate the cost in these terms.”

George Shultz’s advice resonates today. He showed why good economics leads to good policy and good outcomes, while bad economics leads to bad policy and bad outcomes. He and I wrote a book last year on that topic called Choose Economic Freedom.

But he recognized that achieving economic freedom is difficult: one must watch for obstacles. So, how do we make decisions consistent with economic freedom? I say follow the methods of George Shultz. “The man we knew had a unique ability to translate ideas into policies.” Call it “the George Shultz way.”

He taught us to look carefully at empirical measures of economic freedom. The data are convincing that economic freedom leads to improved living standards.

Another lesson is that we need to say more about economic freedom. And deal with the digital divide by providing “broadband for all.” 

Perhaps the biggest lesson is to remain optimistic. George showed that we cannot be discouraged, that it takes time, and there are periods of moving ahead and periods falling back. And we should always remind ourselves of his warning that “An economist’s lag is a politician’s nightmare.”

He shared ideas about public service, which we will value forever:

- First is the idea taking on jobs which are operational, not simply advice-giving.
- Second is the idea of developing and following economic principles and having faith in those principles and sticking with them, even when you are getting bashed and criticized for them.
- Third is the idea of looking for ways to let people in the private sector work things out, and being able to say no to the demands that so often arise for government intervention. 

One of his real courageous stances in government was not to intervene in the Longshoremen’s strike, even though there were many calls on him to do so when he was Secretary of Labor. He didn’t intervene, and as a result the collective bargaining process began to work much better. So being able to say no at the right time is a very important principle.

- Fourth is his idea of being on the lookout to find ways, perhaps novel ways, to help support better policy. It’s yet another idea that we learned from George Shultz.

I see Charlotte, and I have to say that Allyn and I appreciate tremendously the support and hospitality that you and George gave. I remember the dinners we had together in the Hay-Adams Hotel, while you were visiting in Washington; they were uplifting. I remember you and George hosting me and my G7 counterparts at your house on the Stanford campus. And, by the way, at that dinner George said to us: “Hey, why don’t you have the Chinese join the next G7 meeting.” Well, the Chinese joined the next G7 meeting. 

There are so many memories. The seminars in his conference room. The fun times here at Stanford, or in San Francisco, with Charlotte.

I loved…
…the trips with him to Sacramento to advise the governor,
…his visit to Washington to advise to me and Treasury staff,
…working with him in Presidential campaigns,
…the Economists Weekend at Villa Cypress,
…this necktie, a gift from him, which reads “Democracy is not a spectator sport.”

George was strategic, always. Loyal to his family and friends. Fun-loving, especially on the golf course. He was a Marine, and he would always say, “Once a Marine, always a Marine,” and that made so much difference. He was insightful as he took ideas to action

It is an honor and privilege to have known him. We are all blessed to have been his friend, and better for having been his friend.