Another Professor with Power

CONCLUDING a speech on economic policy at a VIP-stacked Manhattan dinner three years ago, George Shultz startled the audience by abruptly breaking into song. To the lively tune of Silver Dollar, the then director of the Office of Management and Budget belted forth in full voice:

A fact without a theory

Is like a ship without a sail,

Is like a boat without a rudder,

Is like a kite without a tail.

A fact without a figure

Is a tragic final act,

But one thing worse

In this universe

Is a theory without a fact.

Shultz is seldom short on either fact or theory, although the softspoken, smooth-faced economist seldom expresses his ideas in song. His quick grasp of facts and theories, his skill in persuading the federal bureaucracy to act on them--plus an ironclad loyalty to the President--are the qualities that have prompted Richard Nixon to keep investing his Treasury Secretary with added clout. By now Shultz has become one of the two or three most powerful men in Washington.

Working a twelve-hour day from a West Wing White House office as well as in his quarters in the Treasury, Shultz has taken over as trusted second in command (after Nixon) in an enormous range of Government functions, some of them only indirectly economic. Increasingly, when Nixon is called upon to make a final decision on policies affecting agriculture, labor, transportation or industry in general, he is listening to--sometimes leaning forward to hear--the quiet, unruffled voice of Shultz setting forth the choices. "He's Mr. Clean," says a longtime associate. "When the President asks him a question, George gives an answer on an honest and open philosophical base."

His most compelling job last week clearly was to handle the devaluation. Another stunning example of just how far Shultz's answers can lead the Administration was the President's new farm program. Largely on the recommendation of his economic chief, Nixon proposed that Congress gradually abolish the federal subsidy program, which the nation's farmers have relied upon for income since the Depression (see TIME ESSAY, page 22). Shultz has long argued that the old farm policy, which has cost federal taxpayers many billions over the past 40 years, is drastically outdated and keeps food prices higher than they would be in a free market.

At times, Shultz has given some bad advice. As the first director of the Office of Management and Budget, he held to a steady-as-she-goes insistence that the economy in 1971 would turn up strongly without more Government stimulation. He made a celebrated prediction that the gross national product in 1971 would reach $1,065 billion; it turned out to be some $15 billion less, a huge error. "The most dramatic mistake I was involved in," he admits, "was in judging that the economy in 1971 would expand more rapidly than it did."

Even so, Nixon grew increasingly impressed with Shultz's basic philosophies and his abilities as an administrator and negotiator. An economist largely influenced by the monetarist school, which holds that the Government should try to affect the nation's economic well-being by regulating the supply of money and letting free markets do the rest, Shultz sees eye to eye with the President on almost every major issue. Says a colleague: "He is in tune with the President because, like him, George is an honest-to-God conservative." Indeed, Nixon reportedly chided Shultz at one point for being a bit too dogmatic in the face of political necessity. The complaint was quickly taken to heart after the switch to wage-price controls in 1971--a move that Shultz bitterly opposed until Nixon adopted them, but which he then did his best to support. Said Shultz of his friend Chicago's Milton Friedman, the supreme monetarist who denounced controls as a drag on the free market: "I may be a Friedmanite, but I'm not a Friedmaniac."

In Washington, Shultz has become generally less rigid and more pragmatic in his views. Another reason that he gets on well in Nixon's Administration is that he has no further political ambitions. As he has often said: "I don't want to be a politician. Basically, I regard myself as a professional person." But, he adds: "I have more respect for politicians after four years in Washington. They have an instinct for what's troubling people and why."

Shultz, now 52, was raised in the comfortable commuter town of Englewood, N.J., the son of a teacher who, with Historian Charles Beard, co-authored a book on the Progressive movement. After graduating cum laude from Princeton, Shultz was a Marine in the Pacific during World War II, rising to the rank of major. He entered Massachusetts Institute of Technology, earned a doctorate in industrial economics and settled in for a teaching career. At 36, he got a full professorship at the University of Chicago's graduate business school, where he also gained experience as a labor mediator. He was dean, of the school when, with help from Federal Reserve Board Chairman Arthur Burns, he got Nixon's offer to come to Washington as Labor Secretary. A patient, honest negotiator, he remains the Administration's only emissary who is really trusted by AFL-CIO President George Meany. Busy as he was with devaluation matters, Shultz still took the time to jet to Florida last week with Secretary of State William Rogers to explain the move personally to Meany. A staunch advocate of racial equality, Shultz helped sell the "Philadelphia plan," which guaranteed minority groups a set share of new jobs, to construction unions when the plan was still in favor at the White House. He has also quietly handled some delicate chores concerning busing in the South.

With his wife "Obie" (a nickname derived from her maiden name, O'Brien), Shultz lives quietly in a modest brick home in Arlington, Va. Except on mornings when he breakfasts at the White House, the Shultzes have their first meal of the day together in bed. They have five children, one collie and at least one generation gap. During antiwar demonstrations in 1970, guests at the Shultz home were startled to discover a GET OUT OF VIET NAM NOW sign in the hallway. Shultz had pointedly let his daughter Kathleen, who had joined the protesters, make her point by not removing it from sight. To relax, Shultz plays tennis and golfs; one of his frequent fairway partners is Meany.

Shultz's ascension to the Nixonian mountaintop may well turn out to be less peaceful than he would like. The economics professor has drawn ominous rumblings of displeasure from the farm bloc in Congress, and Nixon is counting on him to deal forcefully with other interest groups on potentially explosive labor and trade matters.

Loyalist Shultz is not ready to shy away from any gathering storms. Recently, a group of Princeton alumni approached him with a discreet feeler about the possibility of his taking over the presidency of his alma mater. Shultz was flattered, but he firmly let it be known that, out of his sense of extreme loyalty to Nixon, he would not even consider abandoning Treasury for the leadership of Princeton.

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