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George Shultz Addresses the Sub-Cabinet

January 24, 2003
George Shultz Addresses the Sub-Cabinet

CLAY JOHNSON: My name is Clay Johnson, I'm the head of Presidential personnel for now. [LAUGHTER]

One of the things that the President asked us to was not only help him pick very good people to come in here to lead his administration, but also to help his people be successful.

And, so, we've spent a lot of time the last year and a half working on that, working with the Council for Excellence in Government, Pat McGinnis' group, on things like Results.Gov and orientation sessions for the President's management agenda.

And we hope a series of monthly or every six-week luncheons like this where we get people like George Shultz, if there are many people like George Shultz, to come and talk to us about what their experiences were like. What they found to be particularly successful, unsuccessful, to take advantage of their perspective from the time when they were here.

Why should we have to reinvent this. About half the people in the leadership group have never been in -- worked in Washington before -- about half has.

So, let's try to take advantage of the wisdom of all the people, the wise people that have gone before us. The first person we've asked to come and speak today is George Shultz.

Three and a half years ago, when then Governor Bush asked me to start putting together a plan for a transition -- his charge to me was figure out what we do when we win. He said one of the first people you need to go talk to is George Shultz. You'll find him out in Northern California somewhere.

So, I found his phone number and I called him up and he said, great, I'd love to talk to you. You need to come out here and Charlotte and I will put you up and we'll have dinner and we'll talk and he would introduce me to a lot of his Hoover friends.

It was the most fascinating conversation. We spent about a day, day and a half out there. And I learned so much. So, I have every reason to believe that you all are going to learn so much from George's comments today.

George has been involved in just about everything that moves in the federal government. He has been the Secretary of Labor, he has been the head of OMB, he has been the Secretary of the Treasury, he has been the Secretary of State. He's been the head of various advisory panels, he.s been in academia, he has a PhD in this and a masters in that. This man is very well credentialed.

I don't want to go line by line, because I'd like to have the bulk of the time devoted to George.s comments. He is joined here today by his wife, Charlotte, and by his granddaughter, Kristen Jorgenson who is a freshman at George Washington.

Let me turn this over to George Shultz to make some comments. And one of the beauties about a group this size is it lends itself to a lot of questions and George has been kind enough to open himself up to questions after he makes his comments. So think about what it is you.d like to pick his brain about. George Shultz.

SEC. SHULTZ: First of all, I want to say thank you for what you're doing. And I say that from the heart, as somebody who's been where you are and hardly ever does anybody say thank you, like you deserve it. So, I say thank you and at the same time I say I envy you.

I just wish I was about four decades younger and I could join you and work along side you, because you're working in government at a time of tremendous importance. The world is shifting gears. There's no doubt about it.

And you have a chance to work in an administration with a President who is principled, has tremendous drive and is on the right track, an important track and, so, it's a privilege. I thank you, but I also envy you.

Now, some old sayings kept getting said because they have a ring of truth to them. And one of them is the days are long, but the years are short. Now, why are the days so long. Well, they are long, you're working long hours. But it isn't just the long hours, it's the intensity. You're involved; you're really working at it. Not just sitting at a desk turning a crank.

So, the intensity comes from the fact that you're working on issues that matter. Even some of the smaller issues you're dealing with -- if you put them along side something you might be doing somewhere else in private work -- they're very large.

So, you have this sense that what you're doing is important and it makes you intense in your work and at the same time the years are short. It probably seems like an instant since you started. For the same reason that it goes fast because you're working so hard and what you're working on is really worth doing.

So, just to repeat, I think for all those reasons, public service is an opportunity and a it.s a privilege -- you're working on these public issues and you are dealing interest with the taxpayers money. You're dealing with interest -- you're a fiduciary for the money the taxpayers who are in here -- and which you use.

In thinking about what I might say here before we have a discussion, I thought I would tell you four experiences that I had and what conclusions I drew from them about work in government, governance type things.

When I was nominated to be Secretary of Labor back in 1968, probably before most of you were born -- a long time ago -- I was told that if I wanted to make an appointment with President Eisenhower, he would see me. He was then in Walter Reed hospital, he died about four or five months later.

And when I was told that, immediately I made an appointment and went over there. And I go in and here's this man, he's propped up in bed, very genial, fun. So, we had this animated conversation. His Secretary of Labor had been a guy named Jim Mitchell who was friend of mine, I knew Jim well, so we talked about Jim Mitchell and we talked about the Labor Department.

And I was astonished at how much President Eisenhower knew about the Labor Department. And it gave me a sense -- Presidents know more than you think they know about what's going on around here. [LAUGHTER] They're smart people. And he knew all kinds of stuff about the Labor Department.

Then we got to talking about other things and we talked about golf. Ike loved golf. As a matter of fact, I remember a Gridiron Club skit. When he first took office, they were saying he didn't know very much about anything and nobody knew what his position was on this and that and the other.

So, the Gridiron Club skit has the reporters interviewing Ike's caddy. They asked, well, how does he stand on antitrust and the caddy says, .There ain't no anti in that man, he trusts everybody.. [LAUGHTER] There's a little magic in that and I think there is a sense in which the current President trusts people and they trust him. Of course, if you violate that trust, it's over. But you start out trusting people.

Anyway, we talked about golf and we had a great time and then the doctor walked in and said it's time to go. And all of a sudden, this genial man got very stern, his expression changed and he shook his finger in my face and he moved up close and says to me, young man, you're going to come down here and you're going to work 14 hours a day, seven days a week. And you're going to think you're doing your job.

Let me tell you if that's what you do, there's no way you can do your job. He said, I can see you like golf as much as I do. If you don't get out on that golf course a couple of times a week and let your mind relax a little bit, do something else every once in a while, there's no way you're going to do your job.

And I thought it was pretty good advice. And I look around -- I know my friend, Condoleeza Rice works pretty hard. She plays the piano. If you're trying to play the piano and you have any kind of standards -- you know, it's an intellectual exercise. You can't be thinking about anything else. You do that. And it's relaxing.

I see the President jogs and works out, and so on, but I thought that was pretty wise advice. And President Eisenhower, you know the press will get on you if you do anything other than -- don't pay any attention to them. You've got to do your job and can.t do your job unless you bring a certain freshness to it. And you get a freshness by occasionally doing something that gets your mind off of it.

Here's another experience I had. Just before I was invited into the cabinet, I scoured a place called the Center for Advanced Studies on the Stanford Campus -- it is a separate entity from Stanford. Some people refer to it as the Center for the Leisure of the Theory Class. [LAUGHTER]

I was pretty engaged. I was working on President Nixon's campaign a little bit and I was on a couple of corporate boards. I was a Dean at the University of Chicago. And I had this year and it was a year off, but yet I was engaged.

And the director of the center takes me into my little cubicle -- study he called it -- it was a desk and a chair and a big window that looked out on San Francisco Bay -- not bad. And I looked around and I said, .Where is the telephone?. He said, .There isn't any telephone..

I said, .I'd be glad to pay for installing a telephone.. [LAUGHTER] He smiled at me and he said, .If you get a call, there's a buzzer. Down the hall is a place where you can take a phone call.. Then he laughed and said, .Try it. You'll like it..

So, I didn't have any alternative and I tried it. And after a couple of weeks, it suddenly dawned on me for the first time in a long while I'm working entirely from the inside out. I am doing what I decide I want to do.

So, all of a sudden I find myself Secretary of Labor and then budget and all these things that Clay mentioned, all intense jobs. And I said to myself maybe I got a lesson from that experience at the center.

And I developed a pattern of once or twice a week of taking some time when I'm alert -- prime time -- not toward the end of the day when you're dog tired -- and saying, shut off the phone, if the President calls you put that through, if my wife calls, you put that through. Other than that, no calls.

And I say to myself I am not going to look into my in box, I sit in the chair, get a pad and pencil and say to myself what am I doing here. Why am I here? What am I trying to accomplish. Where are the things that I could do if I can get myself a little bit away from the hurly burly of what's going on, where I can improve what I'm doing.

I just think about it a little bit, quietly, to myself and maybe make a few notes. And say to myself, I'm going to call some other people up and get them to do what I want them to do rather than the other way around all the time.

So, I think doing something like that -- at least it helped me to keep my perspective straight and to do a little bit better job.

Third experience, I played football in college. And when I came into my senior year, I was in wonderful physical condition and I was ready to -- this is going to be my year. But in the pre-season practice, I got clipped, blocked across the back of my knees, and it tore my knee. I can tell you today whenever it's going to rain.

And I was knocked out, I couldn't play. And, of course, I was really disappointed. But I knew enough about the system there -- in those days you had a freshman team and then there was a varsity team, it was different.

They asked me to be the coach of the freshman back field. So, suddenly it was my first, you could say, teaching job. It was my first management job in a sense. And that was a special kind of an atmosphere, because you don't give people lectures in that kind of an atmosphere.

It's a bunch of guys and they're about the same age you are. And you know a little bit more about it than they do, because you know the plays, the moves and you've been through a little of the experiences. So, you wind up almost instinctively creating an environment where everybody's learning, including yourself.

And I took that lesson first into my work as a college teacher, university professor. Obviously the classroom is a little different but not that different. And then I found myself adapting the same idea to all my managerial jobs.

When I was Secretary of State, I said to myself, if I can create an atmosphere around me, where everybody here feels they're learning something, I'm going to have a hot group. I'm going to have to send them home at night. Because when you're learning something you're excited, it's fun. You're not turning a crank; you're realizing things you didn't quite realize before.

And, so, I always felt that if I could do that, it would be a big plus for me in what I was trying to imagine, what I was trying to get done. Because I'd have people who were participating with me and who were giving me their best and giving me their thoughts.

And people who are involved are willing to take direction better than those who aren't. And I think it's a -- it's a way of going about things that -- at least it helped me.

Final experience. When I was nominated to be Secretary of Labor -- actually it was a fortunate position for me to come to, because I knew the subject matter and I knew the Department of Labor very well. But I didn't know anything about Washington, the press, politics. I worked on the campaign, but I didn't really understand very deeply. Congress was a mystery.

But there was a guy in the White House named Bryce Harlow, who -- he's a mythical figure around. He was -- I always thought of him as probably the best Congressional relations, political strategist that ever -- was very savvy. And he was about 5'2".

And there was also coming into the cabinet a man named Rogers Morton, a gigantic person. He stood about 6'7". So, Bryce gets us together and he's going to give us a little instruction on how to deal with the Congress.

And he gets up and he says, Rogers Morton, would you please stand up. Well, Morton unfurls himself. And Bryce says, when I started dealing with Congress 25 years ago, I was as tall as Rogers Morton. [LAUGHTER] It gave you an idea what it was like, hand to hand combat all the way.

But then he went and he said a couple of things that stuck with me that I think are important. He said never make a commitment to do something unless you can carry it out. And if you make a commitment to do something, even if it turns out to be more difficult than you thought, knock yourself out to get it done. Because that's your word. And in this town that's the currency, as he put it. Trust it the coin of the realm.

So, that really stuck with me as something fundamental and it's not only in dealing with Congress, but dealing with your colleagues, conducting diplomacy. If you undertake to do something with another government and you don't do it, you're down the drain.

I had that connection with President Reagan -- a very interesting and revealing experience. Chancellor Kohl of Germany came to call. And he said to the President -- I was sitting there with him in the Oval Office -- it was a great thing for German reconciliation. The President of France and I went to a cemetery where Germany soldiers were buried and we had a handshake [Inaudible] over Europe. It was a great thing.

So you're going to make a state visit to Germany and how about we go to a cemetery and have a handshake. So, the President said, fine, I would be glad to do that. So, then we get word of the cemetery. It's a place called Bitburg.

And Mike Deaver, who was our chief guy to know everything, went over and he looked at the cemetery, it seemed to be okay and the President agreed. So then the press comes. And they dust the snow off all the grave stones and they look into everything and it turns out in this cemetery there were buried German SS soldiers.

So, from the standpoint of the American Jewish community, let alone others, that is an anathema. And this became one of the most gigantic issues that you can image. The President's going to visit Bitburg.

And I remember Eli Weasel coming and saying in the White House to the President, with the press there, Mr. President your place is not of Bitburg, your place is with the victims of Bitburg. We asked Chancellor Kohl to change cemeteries and he said, no. He said, Mr. President, if you renege on this, my government may fall. I thought that was an extravagant statement for him to make, but that's what he said.

The President finally did go to Bitburg. We went to the holocaust site. We did everything we could. We were only in Bitburg for 12 minutes, but he went. And all over the world you saw other leaders shaking their heads saying, I can't imagine that he would do that, it cost him so much, politically at home.

And even Margaret Thatcher who is not a wobbly woman shook her head and said I would never have gone. But then they also said, the Russians, the Chinese, everybody we were -- they said, you know, the man keeps his word, even under the most difficult circumstances. So, trust is the coin of the realm. And Bryce Harlow told me that and I think it's a very important thing.

Now I just want to say one further thing a little bit. Clay, when he asked me to come, said now I don't want to talk about anything substantive. [LAUGHTER] So, Iraq is out, South Korea is out, dividends are out, terrorism, judicial nominees, nothing.

But I want to say word about something that is substantive at least in a generic sense. And it reflects at least what I have observed in the contacts I've had with President Bush, first as Governor Bush, then as candidate Bush and as President Bush.

It seems to me that he is a person who puts tremendous importance on the idea of accountability. It's a theme. And there's a good reason for that, because in personal behavior if you aren't accountable, things go off the rails.

In the economic system, if there isn't accountability built into it then it goes off the rails. In the security system, the same thing is true. After all, as the President says, if a state harbors terrorists, the state is as responsible as the terrorists. In other words, is going to be held accountable. So, accountability is a very important concept.

And I think it's a value that goes way back in our history and it's a reason why the -- the mythical story of George Washington cutting down the cherry tree, and saying to his father, .I can not tell a lie,. why that has such staying power in America.

Because it's giving us a lesson that is very important to us. And you can see it -- look at problems of corporate governance, as I said with the terrorist business and many other aspects. So, the President has this theme of accountability.

Now let me step back a minute and let me tell you about an article that a faculty member at the university Chicago wrote when I was dean there. He sent it in and it was printed in the Harvard Business Review. Hard to swallow as a Chicago person. [LAUGHTER]

The article was entitled, "Good Managers Don't Make Policy Decisions." That was a catchy title. And he wasn't arguing that there aren't big decisions that people have to make. But he was saying that quite often you're here, you're at A and you look the situation over and you know you'd like to get to B.

And if you announce that, it seems so far out of place that it doesn't do you any good. But still you know that you want to get to B. So, he says, a good manager doesn't do that.

What does he or she do? Well, what do you spend your life doing? What do you spend your day doing? Most of the time during the day, you're coping with some problem or some opportunity that comes across your desk and it's a fire you've got to put out or it's a problem that's arisen or you see a little opportunity here.

And the so-so manager just puts out the fire. The good manager -- this was the point of the article -- the good manager knows he trying to get from A to B. And, so, for every little thing you're doing, you can slant it a little bit.

And all of a sudden, you're at B. How did we get here? We got here by coping -- is what he called it. So my message here is it seems to me the President has basically laid down a strategic idea, accountability. Test it according to this idea a little bit. And as you're coping, keep slanting things in the direction of making the system more accountable. And in doing that I think you will be furthering the President's objectives and be true to the kind of thing that he's trying to bring about in his Presidency.

I hark back often to Ronald Reagan and you know he talked about America as a shining city on the hill. That used to bother Gorbachev. He'd say, what does that mean. It wasn't just an image or an ideal or something, it meant it's on the hill, so you can see it. And it's shining so it's transparent and you can see what's going on inside that city on the hill, inside that White House.

And I think what you can see these days with President and Mrs. Bush can make you proud of what's there in that shining city and White House on the hill. Thank you. [APPLAUSE]

Thank you. So let.s have a little conversation. I would be glad to hear your comments or take questions, have a little conversation here. If somebody doesn't raise their hand, I'll call on somebody. [LAUGHTER]

Tell me who you are.

QUESTION: [Inaudible] USAID. I used to work with you [Inaudible] [Asking about upcoming State of the Union speech]

SEC. SHULTZ: Well, I'm sure he'll tell it like it is. And I think of some speeches that he's made -- last year's State of the Union message was riveting and it had a huge impact on the way people saw things.

His speech last September, I think it was, to the United Nations was a seminal speech. It laid out his national security statement. It's the first time in a long while that any President has tried to say something that's significant that says here are some -- here are the ideas that are evolving here.

And the process of moving things along is partly doing things. But then a company with ideas -- so people can see as you're doing -- here's where you're trying to go.

So, I think that that's what he will be trying to do. You always have a problem with the State of the Union -- having struggled with that problem, trying to help Presidents in the past.

You have one or two things that are of preeminent importance at the moment. And you want to put them into context. But there are lots of things out there and you don't want to give people the impression that you're so preoccupied with this that you're not paying attention to all these things that are a part of people's lives.

So, you've got to have some sort of balance without, I think, succumbing to the laundry list temptation that -- and making it long and laborious and being sure you touch every button, reach every constituency.

But the President has been masterful in these big important speeches, in speaking to the best of America. And in speaking in a way that people all over the world have to listen to him.

So, I'm sure he's going to talk about the war on terrorism and Iraq, North Korea and these things, but put them in context. But we are at a very important moment and, so, I think the State of the Union speech -- it comes -- I think the day before is the Hans Blix report. We sort of know what that's going to say.

And as I understand it, each country's ambassador will make some comments. But then refer the report back to home governments and then on Wednesday or Thursday, as I understand it, the responses from the home governments will come.

So, the State of the Union comes right in between those things and he will be speaking to those other governments as well as to the American people and on behalf of the American people.

So, he's got a big task. Personally I think the world is shifting gears rather dramatically. And the President and his policies are right at the center of that. And it's very conceivable that when we look back four, five, six years from now, we can be looking back from a safer better world at a time of tremendous change where how well that is managed -- managed is not quite the right word.

How well it's worked with, the kind of statecraft, will make a big difference. And the President has this special ability to speak plainly but with an inspirational lift to it that people need. Both that sense of contact with reality, but also the inspiration to see the Promised Land.

QUESTION: [Inaudible] -- Department of Transportation. You've had a wonderful career of public service and we all have heard the call and have come to public service. But I think what's important for us to do as well is to initiate others coming to public service as we have, so that we can have folks around that can create that learning environment that you spoke about.

What might we do to get the call to other people and to others to fill our bench, if you will, for those who will come behind us to public service?

SEC. SHULTZ: Well, I think it's all example. How do you perform and the attitudes that people have. I also believe that there is room for a lot of initiatives in the administration and I've talked to Clay enough to know that he has this on his mind.

How do you make it more inviting to go through the process of getting to where you are in a job somewhere? [LAUGHTER] And it's not very pretty what happens to people. After all, you drove Henry Kissinger out of town and he's pretty formidable. And there's a talent. And if the country has got itself into position where it can't use a talent like that, there's something wrong.

So, I think there's something that needs to be fixed and it's something the administration, I know, thinks about. I know serious people in the Congress think about it and Pat thinks about it. It's one of the reasons that her Council is of such importance that it's thinking about this issue all the time.

So, I think there's a real important issue and it's got a lot of dimensions to it, but there needs to be -- more inviting. A suggestion I've made and I've made it to everybody under the sun and everybody said it's a great idea, but nobody does anything about it -- I'll make it again.

But I think particularly at a time when there's a certain emergency nature to a lot of what's going on that you ought to create an emergency service corps. And get it passed by the Congress, so it's understood that it's not something the President just asserts, that gives the ability under Presidential direction to reach out to people in the private sector who have something special to offer.

Put a restriction on it. They can't be there more than six months, maximum, maybe four months, but there are a lot of people out there in the private sector who know a great deal about things you're working on and you don't have very good access to them. And one of the reasons you don't have access is all these rules that make it hard. So, try to create something that makes it a little easier to get somewhere.

And it's interesting to me -- I've worked on the problem of terrorism for a long time, including recently. And a lot of the action will be, if we are attacked in this country -- will be somewhere, some city, some place.

And, so, there are all sorts of recommendations. You can see it in the Homeland Security bill; you see it in all kinds of ways. There are things that probably cities and states, and so forth, need to buy. And probably a lot of the financial support for that is going to come from the federal government.

So, if you had any chance of buying something within the space of a month, you better have a way of getting around the federal procurement rules, because they will cause you to take at least a year to buy anything it seems. I'm exaggerating.

You question is a good question. It's not as inviting now as it was. Paul Nitze, does that ring any bells, one of the great public servants, tells a story in his autobiography about his entry into government service. He was a partner at Dillon Reed and a man named Jim Forestall, who was the first Secretary of Defense, had been a partner at Dillon Reed.

And as World War II was coming President Roosevelt I guess saw that he didn't have any contact with the financial community or the business community and sort of totally alienated and he persuaded Jim Forestall to come to Washington and work in his executive office and try to do something about that.

So, according to Paul Nitze, he's down in Texas trying to do some deal. And he gets a cable from Forestall saying, I need you in Washington, be here at 10 AM Monday morning.

So, he drops what he's doing and he goes there and Forestall says to him, well, here I am in what was called the Old State Building, I have this big room, that's my office. I put another desk over there, that's for you [LAUGHTER] We've been assigned a very wonderful woman out here who's is going to be our secretarial help.

I have rented a house over in Georgetown and I've got a room there for you. I have no money to pay you. So you have to stay on the Dillon Reed payroll, but get to work. Here's what we got to do. So, Paul says, in that totally illegal way, I started my career [LAUGHTER] with the government.

Well, Clay, how about it. [LAUGHTER] You've got to find ways to attract the Paul Nitzes to come to work and not only the Paul Nitzes, but everybody deserves to be thought of as an honorable person unless you're proven otherwise, rather than starting the other way around.

So, I think there's some work to do for the people who come behind. And I know it's on Clay's mind and a lot of other people's mind and I hope something can be done about it, because there would be a lot of support for that.

QUESTION: My name is Ed Fox, I am with USAID. With all of your experience with the various departments, OMB and elsewhere, you are very familiar -- that although we represent the government, we are really not the government. The government is the hundreds of thousands of career employees out there that work with us.

Our challenge in many ways to be successful is to figure out how to have them accept what we're trying to do and work with us. They were here before we got here; they're going to be here afterwards.

And I know that you were greatly respected by the career servants in all of the departments that you worked. Do you have any words of wisdom for those of us on how to manage those employees and get the best out of them in order to achieve what we can for the President?

SEC. SHULTZ: I remember again when I became Secretary of Labor and people told me, you're a Republican Secretary of Labor, you have no chance. This department is owned by the AFL-CIO. They're on the other side of everything. Forget it.

It didn't turn out that way, because I had a terrific group of people who came with me. I said I want a guy from management who's dealt with labor and I asked who's the best person in the country and everybody told me it was a guy named Jim Hudson, who was Vice President of Lockheed. But he would never come. So, we asked him and he came.

Then I said, I need a guy from the labor movement. I didn.t want a lawyer who represents the labor movement. I want someone who ran for office, sits at the bargaining table, who is a real labor [unintelligible] and who will be sympathetic with us. And I found a guy named Bill Essery [phonetic], he was the best.

We have a manpower administration to work in, Arnie Webber, who subsequently went on to be all kinds of things, including President of Northwestern. He and I had worked on manpower problems. He was about the best person there was to do that.

We had as our solicitor general Larry Silverman who's done pretty well as a judge. We had an outstanding group of people. And I could mention some others, Art Fletcher, Libby Kuntz [phonetic], and others. But it was an outstanding group of people.

We were in a sense professional at what we were doing. We worked hard and when there was a hard decision to be made, we made it. Too often I saw people come up to a hard decision and they sort of stepped aside and let the bureaucrat make it.

They don't respect that. They'll make it, but they know it's not their decision to make. Some decisions are to be made there, but a lot of the decisions, it's up to the political people to step up and make those calls. And when you do that, they'll respect you and they'll follow you. So, that was my experience there and it's been pretty much the experience elsewhere.

One other point -- people have different ways of going about things, but this was particularly on my mind when I became Secretary of State. Because in a sense you're going to run a big department -- there are two ways in which you can manage it -- there are lots of ways, but there are two main ways.

One is that you can get some bright people around you, five or six or seven or so, and they're your intimate colleagues. And you sort of work everything through them. And that can work.

But you don't see people in the department that way. They see people in the department. My instinct was not to do it that way. There had been great successes doing it that way, but I thought that wasn't the way I wanted to do it.

So, I had one senior substantive Foreign Service officer as my executive assistant. A Foreign Service officer, because I needed somebody who really understood the Foreign Service and understood, as they say over there, the building. And was respected.

And then I said to all the Assistant Secretaries, my staff and if I want a staff paper, or something or other, I.m asking you. And I also have a little check system, because got something called the Policy Planning Bureau over there, and they can give me another view.

And then I found as an economist, as a trained economist there are -- there are lots of people in the federal government who are labeled economists. And they're almost always very able, knowledgeable people. And their trade is to know something about an issue that has to do with economics, like how do you negotiate air rights or how you negotiate fishing or how you do something or other. And that's called an economist.

But that's not the way a professional economist thinks. That's a different matter, a little price theory, and so forth. And, so, I got frustrated, frankly, by some of the memos I got from -- that came up that seemed to me virtually illiterate as far as genuine economics is concerned.

And, so, we created in the Department of State at the time a little Council of Economic Advisers with the help of the Council. So we got three or four people who were there and they were trained economists.

And people said, how -- nobody's going to pay attention to them. I said I know how to get them to pay attention. They sent me a memo, I'd write on the memo, what does my little CEA think about it and send it back. And then they have to go ask them what they thought about it.

And pretty soon they passed by them and pretty soon they'd get a little education on how to think in economic terms. So, it's sort of the long way around in response to your question, Ed.

But I think it's a matter of standing up to your responsibilities, working hard, being professional about it and making the hard calls. Don't duck the hard calls, because they're there and they're going to be controversial, but that's -- that's the job of the political appointee. And you got to do it. And when you do it and fight for it, you get respect.

Eduardo, my gosh, I knew I shouldn.t have asked for another question.

QUESTION: Eduardo Aguirre, Export-Import Bank. I'd like to move on to maybe our backyard, if you will, Latin America. The United States through various administrations has been pretty much of a catalyst to bring democracy to Latin America, with the exception of Cuba, of course.

Right now these democracies are going through some growing pains, if you will. I'd like for you to just kind of broad brush, what's your macro view of where the hemisphere is going in terms of the process, transparency, democracy, and so forth.

SEC. SHULTZ: Well, it's kind of a rocky time as you point out. The President, as I've listened to him talk about these things, is very much of the view that foreign policy starts in our neighborhood, Canada, Mexico, Caribbean, Central America, South America.

And I believe he has expressed a number of times the vision of a North American/South American trade agreement. So, I think it's got to be front and center. And with all due respect to the problems that are on everybody's front page, those things are there and they need to be addressed.

I think there is a lot of room for the application of the idea of accountability. And when people blunder badly in the way they manage their finances -- it seems to me we ought to be saying, well, we're as unhappy as you are that there is this myth. And the worst thing in the world that can be done is to bail it out. So, you do it again and don't learn anything from it.

And, somehow, I think we have to have the steel in our backbones to say that if things are wrong, why are they wrong and if the answer is something that you have to change, well, change it. But we're leaning forward. We're with you.

My contacts with people in Latin America, which have been quite a lot -- they love to be loved. They'll love you, but they love to be loved. They loved to be paid attention to. And we should pay attention to them.

And there are all sorts of ways of doing it. And the President can do so much, but it's a big government here. We're running a global foreign policy and we need to be leaning forward and working with what's there.

We have a new President in Brazil. Brazil's half of Latin America. He's the guy that caused everybody to be -- he's starting out a little bit better than most people thought he might.

And I was interested to see that the President sent, I believe, his special trade representative, Bob Zoellick, down to represent him at the inauguration. That's a very high level representation. And it's chosen well, because it is -- because the subject matter is about trade and economics and so on.

And, so, that tells me you got your eye on the ball. But it's a hard -- there are some unpleasant things going on and I don't have to go through them all with you. But we need to be leaning into those issues and being part of the solution, as far as I can see, as the Zoellick example that I cited goes -- that's where the President is trying to go.

Well Clay said last question, so I assume his word is the last word. [LAUGHTER/APPLAUSE]

Let me just say once more, however, so you know it, that you're working hard -- a lot of people know that. Anybody who's ever been in government knows that. You're working very intensely. What you're doing makes a difference and people thank you for it.

I was kind of astonished the night before last. We were in New York and it was an odd dinner, it was a football dinner. I played football in college. And as I told you, I got hurt. But anyway, I played football in college. And the Ivy League for reasons I don't know, some people in the Ivy League got together and they hold a dinner every couple of years. A thousand people showed up.

Each school nominates somebody to speak for five minutes about football and life or whatever. And all the people there were the head of Goldman Sachs, the head of this and the head of that. It was a bunch of heavy hitters. There was only one person who got a standing ovation, both when I was introduced and when I finished, was me.

And the other speakers were good. They were funny, they had something to say. And that wasn't me. That was an expression that I think people have of thanks for public service. So, I know sometimes it doesn't feel like anybody knows what you're doing or cares or if they care it's because they want to whack you for something or other. [LAUGHTER]

But there is an underlying reality that people know what you're doing is important and they appreciate it and I want to assure you I appreciate it. Thank you. [APPLAUSE]

CLAY JOHNSON: George, it's been an honor and a privilege for us to have you with us today. Thank you so much.

I still see a lot of cookies in the middle of the table. You all are encouraged to stay until they are all gone. Continue your conversations and so forth. And we look forward to seeing you back, probably in this venue, in another six weeks or so, with somebody else to share their thoughts and experiences with us about their experience in federal government. Thank you so much George. Thank you all for coming.


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