Dan Morain

Take it from George Shultz, everyone needs a little insurance

"I salute you Ronald Reagan," said Former U.S. Secretary of State George Shultz, 94, on Mon., June 22, 2015 in Sacramento, Calif. as he spoke about this former boss. He was there to help celebrate 100 years since the birth of the former President and California Governor at the the unveiling of a bronze statue in the lower rotunda of the California state capitol.
"I salute you Ronald Reagan," said Former U.S. Secretary of State George Shultz, 94, on Mon., June 22, 2015 in Sacramento, Calif. as he spoke about this former boss. He was there to help celebrate 100 years since the birth of the former President and California Governor at the the unveiling of a bronze statue in the lower rotunda of the California state capitol. rbyer@sacbee.com

The job title, insurance agent, probably doesn’t come to mind when you think of George P. Shultz.

Shultz is the academic and economist who advised presidents dating back to Eisenhower and served in four Cabinet-level posts.

As Ronald Reagan’s secretary of state, he helped bring about the end of the Cold War. As he testified in explosive congressional hearings in 1987, he argued against the dirty deal by which the Reagan administration supplied arms to Iran in exchange for hostages, with the profits used to fund an illegal war in Central America.

At 94, Shultz, a fellow at the Hoover Institution, is sounding the alarm on climate change. Earlier this week, the elder statesman came to the Capitol to witness the unveiling of a bronze statue of Gov. Reagan, and tell a few tales about President Reagan.

Afterward, he sat in a small Capitol office and answered my question: What would President Reagan have done about climate change? His response is relevant to deniers, doubters and politicians who would toss snowballs across the U.S. Senate chambers and claim that climate change is fiction.

“I’ll tell a story about it,” Shultz said.

In the mid-1980s, some scientists became convinced that the Earth’s protective ozone layer had become depleted. Other scientists had their doubts. They all understood that if the ozone disappeared, the implications would be catastrophic. There’d be global warming, crop damage and disease.

“He became convinced that the scientists who were worried were probably right,” said Shultz, whose red and blue tie was autographed by his late boss. “But he said rather than do what people do now – try to vilify people who disagree with them – let’s put our arms around the people who disagree.”

Here’s where insurance comes in.

“Since we know that the consequences are severe, we’ll take out an insurance policy,” he said. “You take out fire insurance on your house. That’s not because you expect your house to burn down. In case it does, you’ve taken out a policy.”

Certain chemicals deplete ozone, notably chlorofluorocarbons used in a variety of products including refrigerants. The Reagan administration led other nations to agree to the Montreal Protocol on Substances that Deplete the Ozone Layer, which requires that the products be phased out of commerce.

“To this day, it is the only environmental treaty that has ever worked,” Shultz said. “So Ronald Reagan’s insurance policy turned out to be a gifted approach.”

The ozone crisis wasn’t unlike climate change today. Then as now, you could observe the evidence.

“In the Arctic, we’re having a new ocean being created. Fast. Greenland is melting,” he said. “There is a lot of evidence that carbon has a lot to do with it. So let’s take out an insurance policy. That’d be the Ronald Reagan way.”

One clause in that policy would require the federal government to fund research and development focused on energy and carbon alternatives. Private investors will more than match government spending.

Another clause would be to impose a revenue-neutral carbon tax, which would raise the price of carbon, and prompt smart business people to develop ways to reduce our reliance on it.

As Shultz envisions it, government would collect the tax at the source, an oil well, for example, rather than at the pump, and periodically return the money to people in the form of “a check that says this is your carbon dividend.”

Why not cap and trade? That’s California’s method of charging refineries and other polluters, who then pay to reduce pollution by, for example, preserving rain forest. State politicians and environmentalist entrepreneurs have grown quite fond of cap and trade, as annual revenue has ballooned to about $2.5 billion.

“Cap and trade is a tax,” Shultz said. “It is just more popular because you don’t call it a tax. It is a tax. So be frank about it. It is a tax.”

Better to be direct and charge a carbon tax, he said. And does he think he could have sold his former boss on all this?

“I’m saying this is the way he would have gone about it, if he were to go about it. Let’s take out an insurance policy,” Shultz said. “What is the cost of the insurance policy? Not that much.

“I don’t think there is any question but that the climate is getting worse. You can have an argument about why. If it happens, there are going to be a lot of unpleasant results. That’s why an insurance policy is a good thing.”

Many conservatives lionize Ronald Reagan and deny that the climate is changing. Perhaps they should listen to a guy who knew how Reagan thought, and buy a little insurance, just in case.

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