 I think of all the introduction what Secretary Schultz is most proud of or he gets most proud when we introduce him as a former marine. I'm not a former marine. I'm a marine. You're a marine. Stand corrected. So Mr. Secretary, you have had a long history with energy. You're deeply interested in it. And it started decades ago. Perhaps you could tell us a little bit of how that interest in energy started. Well, I'll tell you sort of the story and the things I learned as I went along. First of all, in 1969 I'm Secretary of Labor and the president makes me chairman of the Cabinet Task Force on the energy problem. President Eisenhower, he was a general who became president for you younger people. Anyway, thought that if we imported more than 20% of the oil we use, we were asking for trouble in national security terms. So there was a quota system and we're starting to bump up against it. That's the reason for the task force. And we had a good group and we made obvious recommendations. That is, Middle East is very unstable. We should try to restrict our imports from there. We should have some storage for an insurance policy. We should change our system from a quota system to a tariff system so we collect the money rather than somebody else. And we said, you know, we've been studying this issue for a few months and we know more about it than anybody else in the government. Energy is a strategically sourced. Somebody should be paying attention on a regular basis. And the president patted me on the head and said, thank you for a nice report it was published. There were some congressional hearings. Nothing was done. Nothing. So I concluded from that that a strategic analysis of something isn't enough. A few years later in 1973, I'm Secretary of Treasury and here comes the Arab oil blackout. More or less what we predicted. All hell broke loose. At that time, a lot of electricity was produced with oil. So Christmas lights were discouraged. Gas stations closed on weekends. It was a giant event. And since we were ready with what we should do, all the things that we recommended got done. So I concluded from that that if there's some event, you can get something to happen. But it won't happen unless you're ready. So the idea of being prepared is very important because we had this frustration of getting a thing done. But at least we had the ideas and then we put them into effect when we had the chance. Then in the mid-80s, I'm Secretary of State. And I became convinced that the scientists who were saying that the ozone layer was depleting were right. And Ted Long talked to the President about it. He became convinced. There were some good scientists who thought otherwise, but they all agreed that if it happened, it would be a catastrophe. So President Reagan did something that people don't do anymore in Washington. I don't know, Dan. These days, if somebody opposes you, you try to vilify them and eliminate them. He put his arms around them and said, you don't agree with this. We respect that. But you do agree that if it happens, it's a catastrophe. So why don't we take out an insurance policy? You take out an insurance policy in your house, not because you think it's going to burn down, but just in case. So that appealed. It didn't get them on our side, but it got them off our back. And in the end, what came out of this was something called the Montreal Protocol. And it worked. And retrospectively, I think there's a general agreement. The scientists who were worried were right, and the Montreal Protocol came along just in time. So another thing I learned is insurance policy. That's very applicable today, I think. So these things took place. And then I come out here to Stanford. And I started to see things in the climate arena. And I'm saying to myself, you know, I look into it more and more. And I read scientific papers, but then I say, wait a minute. Suddenly, we attracted to the Hoover Institution, the retired chief of naval operations, Gary Ruffin. And he was interested in the Arctic. And what's happening? A new ocean is being created in the Arctic. How did that happen? Then you look a little bit more and you see the ice cap over Greenland is melting. A little bit more. And then there's a biologist here at Stanford. She's the various person any room you're in. She's fun. Lucy Shapiro is her name. And she had a paper for us in the meeting that we had. And it says, as the global warms, tropical diseases are coming north. We should be getting up our diagnostics. We should be getting our treatment. And we can alter genes and we should be getting some of these mosquitoes and trying to fix them. So they are dangerous in doing these things. And then with the ocean warming, the reefs are acidifying. That affects the food chain. That's a big deal. So it's not an argument about whether the globe is warming. It's an observation of what is happening as a result. So I look at this debate in Washington where they don't seem to get it, Haver, that this is a problem. And I say to myself, what can we do? So my recommendation of an insurance policy is to fold. Number one, let's have support for energy R&D. And you're looking at the federal budget and the amount of money going to it is none of the rounding error of the budget. It's very small. But it has the effect. And I know about MIT. I chair their energy task force advisory committee. So at MIT and Stanford both, the amount of private money coming is three times the amount of government money coming. So the government money is very high powered, but it's essential because the private comes because they want to know what's going on. And we're glad to tell them because here at Stanford we figure Silicon Valley is just a big Stanford spin-off. We know these guys. We're not afraid of them. So if you have companies around and you come up with an idea that can be commercialized, fine. They know how to do that and they know how to scale it. And they come to the business school to learn about that stuff. So that's the way it sets up. And so now we have a collaboration with MIT at Stanford. We've had game changer meetings back and forth and they bring their scientists and we bring ours and they talk about what's going on. It's fun. And we're about to have it. We did that a few years ago and we published a book called Game Changers. And we're about to have another one in Washington next Tuesday. And we're going to try to tell the Washington people here's what is the result of the energy R&D game changer. I'll give you an example of the game changer and he'll tell me if I get it wrong. But the holy grail in energy right now I think is large-scale storage of electricity. If you can do that, you do two things. Number one, you have an insurance policy. Everybody realizes our grid is very vulnerable to attack. So if you have large scores, you have a little energy. You have an insurance policy that can keep you going. But furthermore, if you have large-scale storage, then that takes the intermittency problem away from wind and solar. The energy goes in when it's created and out when it's needed. So it's huge, huge. With the energy costs of solar and wind now having been brought down by energy R&D to where they're really competitive without any subsidy, it's a big deal. So from a little personal standpoint, I have solar panels on my house on campus. I've had them for quite a while now, long since paid for them by what I've saved on my energy. So I have an electric car. The car uses less energy than the solar panels produce. So what's my cost of fuel? Nothing. No cost. What's wrong with that? Come on, let's get with it. I say all of these experiences, you learn a few things as you go along. And I think today, and we have Senator over here, we need to think about an insurance policy. And here's what it is. Support energy R&D and particularly Republicans, but a lot of people don't like a heavy regulatory hand, slows down the economy. The government bureaucrats telling you, do this, do that, don't do this. Instead, use the marketplace. Put a substantial revenue-neutral carbon tax in place. And people say, oh, call it a three, people are afraid of taxes. And I say, look, be frank, don't try to kid people, it's a tax. But you make it revenue-neutral, then there's no fiscal drag connected with it. And it's not something in order to produce a new program with some kind. It has the exclusive purpose of getting people to take into account of their decisions the amount of carbon they produce. And they try to minimize it if you have a good substantial tax. And that's what you're after. So it's very simple, Dan. What you need to do is write. Colonel Solomon. So there you are. So what you pointed out in storage is exactly right. I think someone in my talk on Monday, someone promised they were going to solve the problem. Who was that? Someone raised their hand talking about storage. But some of you will solve that problem for us in the next four years when you're here, four or five years. But let's come back to the issue of the revenue-neutral carbon tax. Then revenue-neutral means that the money that the government collects is given back to the people so that if the prices of energy go up, they still have money in the pocket so that for their own personal income and the money in the pocket, they're not seeing a higher price because they have more money. But you may get a progressive tax by this. Our recommendation is you let it be administered by the Social Security Administration. Right. That's the bureaucracy that has a good reputation for doing good work. And what they do is they take money in and they pay it out. So they can take the money in and then pay it out in an equal amount to each person who has a social security number. That makes it a progressive tax. It gives it back to people. So obviously when people look at about $304 billion, given the let's say the price of CO2 is let's say $40 a ton, that's a lot of money. And how can we get the discipline to be able to give all that money back? Or do you think there are people who want to use the money for other things? Well, that's the problem. And I've pounded the halls of Congress a little bit and talked about it. And they all say, oh, well, the way you get a pass if you give so much to this and so much to that. So no, it's revenue tool. But that's going to be a big battle. That's going to be a battle. Probably in the end, we'll have to compromise and give some back and some. But anyway. But if it comes to that place, that's a good place to be because they've already accepted the fact that there'll be a carbon tax. Isn't that? That's the big thing. But the trouble with a tax is that it disrupts the economy. It holds the economy back. So if you want to make it viscally neutral, you give the money back. Then it isn't a drag on the economy. We saw when President Kennedy came in, he lightened regulations and he lowered taxes and the economy boomed. When President Reagan came in, he lightened regulations and cut taxes and the economy boomed. Now we're seeing the same thing all over again. Lighten regulations reduce taxes, the economy booms. So if you make it revenue neutral, you're not going to mess up the drive that's now in the economy. Anyway, I'd keep arguing for that. So you identified storage as a very important component of our energy system in the future. One of the other carbon-free sources of electricity besides solar wind and hydro and solar wind cost is coming down. The other big one, in fact, the biggest generator of electricity that is carbon-free is nuclear. And we are seeing some hiccups, I would say, in terms of the cost, et cetera. And you are a big proponent. So are many of us. How should we address that in the United States? Well, I think we have to make it known. We had a couple of my colleagues at Hoover published a book on this. And it was interesting how much interest it generated in Washington. But nuclear power is carbon-free. And once you get that plant built, it's not that expensive, although there are problems. I think what we ought to be working on, and I hope we can push on this, it'll take government effort, is a small nuclear reactor. After all, if the Navy can do it to put in a submarine or a ship, why can't we do it for civilians? Maybe you couldn't take the Navy ones because they use weapons-grade uranium. And so you don't want that brewing around. But it ought to be possible to do that. And it would be a wonderful source of energy because it's carbon-free. Among other things, it could be a really smaller area covered. So you don't have as much good vulnerability if you had something like that. The way you could do this, you'd bury it. And you don't have to refuel it for a year or more, at least as I understand the way it's developing. So I think this is very prospective. And I hope that efforts can be made to develop it. And the regulatory environment can be conducive. The regulatory environment for a nuclear power plant has improved a lot. I used to be in the construction business. Quite a few nuclear power plants when I was there. But the thing we wanted now is that you can get a permit to build a plant from first concrete to turbine roll. So that's the big deal. You always, whenever you talk about energy and you've taught us to think about it in a balanced way. That is, energy affects not only the economy, but affects the environment and national security. Those are the three things. And the minute you drop one of those out, you're in trouble. You have to keep all three in mind. From the security point of view, you have been a big proponent of thinking regional. That is, the United States has been extremely fortunate. And we are blessed to find a lot of unconventional... We have developed the technology to be able to extract unconventional oil and gas. Incidentally, fracking is a result of energy R&D. And a good entrepreneur saw that and developed it. But it was energy R&D that produced the knowledge about horizontal drilling. Initially, when people started doing it in the early 80s, it was expensive. So people thought that this is never going to make it. And people worked on it, got down the learning curve that I talked about on Monday. And now it is cheap enough to be able to make money. So if you think about the United States and from a geopolitical sense, we have Canada and Mexico as a North American region. Compared to that, and if you look around the world, tell us what your impression is. And as we move forward, how blessed are we? What are the other regions thinking in terms of their own security? And how should the United States position itself from a geopolitical sense to enable others to also have access to energy? Well, I think we are blessed in North America because you put U.S., Canada and Mexico together with the technologies now available and we are secure. We don't have to import anything. I remember this is a little off the subject, but I always thought and President Reagan thought that foreign policy starts in our neighborhood. If you buy a house somewhere, you look at the house, but if you look around, don't you? You say to yourself, is it safe around here? Where is the church? Where are the schools? Where is the grocery store? In other words, you look at the neighborhood. And if you have a good neighborhood, you buy the house. The same thing with us. If we have strong, successful neighbors that are stable and friendly, that's the right base. So I remember my first trip out of the country. The Secretary of State was to Canada. And the traveling press said, what the hell are you doing going to Canada? But you know there's a cold war going on. I said, who do you think is our biggest training partner in Germany and Japan? And I said, Adam Allop, they don't come close to Canada. Furthermore, there were more telephone calls between Canadians and Americans. They had two countries on Earth. This is our neighbor. And my second trip was to Mexico. By that time, however, Mexico considered itself part of Latin America. But they had a wonderful president, Dylan Madrid, and he and I talked a lot. And gradually he laid the framework for Pedro Aspe and Salinas to bring Mexico into North America. And so we had a U.S.-Canada free trade agreement. And essentially Mexico joined it. And it was trimmed out with some other things than after agreement. And an agreement like that isn't just for trade or worked well for trade. Our imports from Canada are 25% U.S. content. Our imports from Mexico are 40% U.S. content. There's nothing like that anywhere else in the world. Nowhere. And all three countries have benefited from it. But it goes beyond trade. Because you are friendly and you have security problems. You have environmental problems. You talk about them. And I got to the point where the three presidents would meet each year. They called themselves the three amigos. And three amigos right now. Trudeau Trump and the new guy. But things like that are important. Because it creates a neighborhood and a security. And you talk about all sorts of things that make it a better neighborhood. And it's fun. So if you look at the energy system... Incidentally, we're hoping to get Pedro Aspe to come here and spend a lot of time. Any of you guys at Latino's, Pedro is special. He has a Ph.D. in economics from MIT. He was the Mexican finance minister when they came into North America. And he's a very successful guy. Fun. And he has a wonderful wife, Comcha. And if you're ever in Mexico and Comcha invites you to a party, go. Because it's the best party you ever went to. So if you step back for a moment and look at the whole energy system and take a long view, a hundred year view, it is going through... We are in the middle of a massive change. The cost of renewables have come down. They'll be integrated on the grid. We need storage. We have to develop that. On the transportation side, you are looking at an electrification of electric cars, the battery cost coming down. And the oil and gas companies are talking, not about peak oil, but peak demand in oil. Not about peak supply because the demand will go down. If you look at that progressing in the future, let's say we look at 10, 20 years ahead, the implications of that on geopolitical stability of flashpoints, where do you see the flashpoints likely to be? Well, the Middle East is obviously a very unstable region. And it still produces an awful lot of energy. Although even in Saudi Arabia, they're trying to diversify their sources of energy. So they're trying to change. But I think the subject right now is probably about an exciting moment as ever because it is at this inflection point. And we want to be able to produce energy that's kind to the environment, it's defense, it's secure, and this economically provides us the energy we need to have the economy move along. And we're on the cusp of being able to solve those problems. We have work to do, but still, you can see it coming. But if you look at the Russians, for example, their economy is 70% or so dependent on oil and gas. And do you see that as a flashpoint in the future? Let me make a little diversion here. We had a meeting about a year ago, and we had some terrific papers at the meeting. A book was just published about a month ago called Beyond Disruption. And you read these papers and you say to yourself, the world is changing rapidly and drastically. Democracy is changing. Technology is changing. Artificial intelligence, which is machine learning, really. And 3D printing, which is not called hold, people's imagination enough, but it's revolutionary. And at the same time, the processes of government are much more difficult because there's information floating around, all kinds you don't know. Some of it's right, some of it's wrong, some of it's deliberately false. It makes it harder to govern. So this is a situation that we're faced with. And we're studying it now. We have a project going to figure out what's the effect on Russia, what's the effect on China, what's the effect on us? What about Europe? Pedro's doing one on Latin America. He's an interesting guy, but he agreed to put together this thing. The first guy, he calls it the President Chile, and he's going to come. So Pedro has good credentials. Anyway, so Russia is—we're going to have a discussion of Russia. We have a former Foreign Minister of Russia, former U.S. Ambassador to Russia, a scholar who's written two wonderful books about Stalin and another general Russian scholar, and maybe some other person. But each written very interesting papers. We've already got the papers. And in December, we'll have a meeting to discuss Russia. And we're going to—we're kind of a private meeting in a discussion room at Hoover. And then there's a big open thing. We're just going to advertise around the campus. Anybody who wants to come can listen to the discussion. And what you're going to find out about Russia is first they have a demographic major problem. Their fertility is low. Their longevity is beginning to increase. It's not high. They are losing working-age population rapidly. A lot of their high talent is leaving. So their economy is not as big as Italy's. And Italy's is—they have half the population. So they have huge problems. And so they have economic problems. They have demographic problems. And I can't help but feel that the kind of government process they have, very dictatorial at the center, is beginning to get unraveled a little bit. What they do have is a very formidable military capability and a huge nuclear arsenal. So we somehow have to find our way back to the kind of discussions that we had when President Reagan was in office. And then we need to engage with them. And they need that themselves. So I hope that we can manage to do that. But right now it's a very sour situation. But it's very important to— Important to engage and actually help them along— Well, I mean a lot of the subject here. But in the Cold War period, things were really tense. And when the Soviets invaded Afghanistan, President Jimmy Carter cut off everything. There was no contact at all. No athletes to the Olympics. Gromyko not invited to Washington when he came to the General Assembly. Oh, everything was cut off. And I, the Secretary of State, and the situation was very tense. It didn't seem right to me. Because I had been Secretary of Treasury and one of my jobs was the economic relations between the U.S. and the Soviet Union. So I'd gone there a few times, made deals that worked, and I had some experiences that were fun. And I thought, so I got permission to have Ambassador De Bruyne come once a week to the State Department. And the purpose of the meetings was described carefully as, our job is to see if we see a weed, let's get it out before it grows. We don't need any more problems than we've already got. So one time I'm just coming back from China, and I was lucky to land at the end of the Air Force base with snowing. Snowed all that Friday. Snowed Friday night. Snowed Saturday morning. Phone rings in our house. It's Nancy Reagan. She says, how about you and your wife coming over for a happy supper with us? Reagan's were stuck in the White House. So we go over and we're sitting around the four of us having a nice time. And all of a sudden the President and Nancy started asking me about the Chinese leaders. What do they like? Do they have a sense of humor? Can you find their bottom line? There are all kinds of questions about them. Then they knew I dealt with the Soviets so they started asking me about them. What are they like? And I'm sitting there and it's dawning on me. This guy has never had a real conversation with a big time communist leader. And he's dying to have one. So I said to Mr. President, to bring him over here next Tuesday at 5 o'clock what if I bring him over here and you talk to him. That's a great idea. So I only think about ten minutes. His new leader, Andropov, had just succeeded to branch it off. His new leader is Interactive Constructive Compensation. I'm ready. That was a blockbuster piece of news. But I can see he and Nancy had talked it over and that's what he thought. So I bring to bring it over. We were there for about an hour and a half. We did some arms control discussions. But most of the discussion was on human rights things. He talked about Soviet Jewry. And he had names and places and incidents. It wasn't just generality. Then we talked about the Pentecostals that rushed into our embassy in the Carter administration. And they were in there. If you expelled them, they probably killed. And yet it was a very uncomfortable thing. So he kept saying, you know, it's like a big neon sign you've got in Moscow you don't treat with the right. Don't let them worship if they want. Don't let them immigrate if they want. You've got to do something about it. So running back to the State Department to bring it and I said, let's make that our special project. So we exchanged memos back and forth. I had to believe that his came back from Moscow. Finally I got a pretty good one and I brought it over to the president. I said, Mr. President, please don't call in your lawyer because he'll tell you can drive a truck through the holes in this memo. But I have to believe in all the background of this. If we can't persuade them to leave the embassy, they'll be allowed to go home and they'll be allowed to immigrate. So we talked it over and thought about it and we rose the dice. We got them out of the embassy. They were allowed to go home. And then they were allowed. All their families were allowed to immigrate. It was about 50 or 60 people. It was a giant event. And all along, Reagan kept saying, I just want something to happen. I'm not going to say where, I just want it to happen. So I always felt this little incident that hardly anybody knows about had more significance than you might think because you could make a deal with these people and they would carry it out. They saw the same thing. They knew how tempting it was for an American politician to say, look what I did. He said he wouldn't do it and he didn't. So you could trust him. And trust is the coin of the realm in all these dealings. Remember that trust is the coin of the realm. And so we go out from there. But then we had, the Soviets had what were called intermediate nuclear weapons, intermediate range. They were aimed at European targets, Japanese targets, Chinese targets, but none of us could reach us. And their diplomacy was, would we risk their retaliation with their intercontinental ballistic missiles by using ours to defend our allies? They were trying to divide us. So we had to deal with NATO that we would have a negotiation with the Soviets and if we couldn't get anywhere, we would deploy our own intermediate range weapons to counter. So the negotiations didn't go anywhere. They were very well conducted. President Reagan was very aware of the fact he wasn't just negotiating with the Soviets, he was negotiating with European publics because they put a nuclear weapon near where you are, that's not very comfortable. That's a target. So we deploy our, we tried cruise missiles in Britain with Margaret Thatcher's help. In Italy with Andriani's help then comes ballistic missiles called Pershings in Germany. That was the big deal. And the Soviets thought they could hit Moscow. So they withdrew from negotiations. They fanned war talks. It was very, very tense. But the NATO alliance held firm. Mitterrand talked to the Bundestag. We did all kinds of things and the missiles were deployed. And after that everything changed because of a show of strength. There was not a shot fired but a show of allied strength and cohesion. And then we started negotiations. Groverik and I met and Geneva did that. And then Gorbachev comes along. All this happened before Gorbachev. But then he comes along. He's a totally different kind of guy and we could work with him. But I think what we need now is what I call a Pershing moment. Something has to happen that says that Mr. Buten stop. Because he's been doing all kinds of things and he gets away with it. And you've got to tell him that day is over. You're not going to get away with it. My candidate is to get him out of Eastern Ukraine. But I don't know. I'm not there. But anyway, if we could do that and we could get back to some kind of real interaction with the Soviets, then you can get somewhere with them. I know it because I've done it. They're tough, smart people, but they see the light and you can work with them. I had a funny experience that oddly it helped me, but I didn't know about it. When I was Treasury Secretary doing the economic stuff, my opposite number, after we had finished on a Friday, said let's go to Leningrad for the weekend. So to my surprise, he took a ride on my airplane and he said, what do you want to see in Leningrad? I said, I want to see the same thing everybody else wants to see. I want to see the summer palace. He said, no, first we go to the cemetery. So we go to the cemetery and row after row of mass, huge graves, you see. And so he takes me down to Lea Reath at the end. He's telling me about the Battle of Leningrad. There's a tough old communist and he's weeping. The woman who's our usual interpreter, all of a sudden she disappeared. I looked around, she was totally broken up in tears. And he says to me, there's not a family in the Soviet Union that wasn't touched by this battle. It was very moving. We got back to the platform while we were looking at the cemetery and I said to him, I feel a great sense of community with these people because I also fought World War II. I also had comrades shot down beside me. And furthermore, these are the people who stopped Hitler. And I went to the front of the platform and I got my best Marine Corps stature and I gave a long salute. And I came back and Paul Chalk said to me, thank you, George, that shows respect. When I came back, quite a few years later, Secretary of State, I found Soviet people knew about that. And what it stood for is if you praise something that deserves respect and respect it, then when you criticize something else, it has more standing because they figure it's more honest. So in another way, it sort of helped me. But I think the energy subject is a good one to talk to them about. And they are avid on it. And here's another thing we need to be getting on board of and I'm sure Senator Sullivan will agree with me when I say that we're not paying the attention we should pay to the Arctic. The Russians now have, I think, 46 icebreakers. Seven of them are nuclear. It means they can stay on station a long time. When we have one or two, we haven't even passed the law of the Sea Treaty. We're nowhere. We're not paying attention. And here's this gigantic development with all kinds of energy resources, all kinds of strategic meaning. And anybody from Alaska can tell you it's important. And we have a big amount of extra in the sea territory that's ours. We've passed the law of the Sea Treaty. But the Russians are there and there's a nice collaborative thing there. And we ought to be working with them on that. That's an amazing story, your experience in building trust. At the end of the day, that's one of the most... Let me tell you a Marine Corps story. I remember boot camp. You've been a boot camp. We've all been in boot camp. And I remember the day the sergeant hands me my rifle. He says, take good care of this rifle. This is your best friend. And remember one thing. Never point this rifle at anybody unless you're willing to pull the trigger. No empty threats. That's Marine Corps. That's boot camp wisdom. When you violate that, your word becomes meaningless. The other side of that coin is be somebody who does what you say you're going to do. Then people trust you. And I've said earlier, trust is the coin of the realm in human dealings. So you've just got to develop that kind of trust. I have that kind of relationship with Shevernotsy who is my opposite number in the Soviets. And one day he takes me aside and he says, we have decided past tense to leave Afghanistan. We haven't decided when and we haven't decided when to announce it. But I'm telling you this, so maybe we can talk a little bit of how to have it happen in a way that minimizes the loss of human life. He could never have told me that unless he trusted me. Not to go to the press or something and say, all right, we got him out of the camp. The only person I told was President Reagan. And we did work to minimize the loss of Afghan and Soviet human lives in the process. But trust is the coin of the realm. Given what we are facing now, especially for the energy sector, I think it's not exactly the same parallels, but there are some similarities with the nuclear threat we faced at that time. We still face that today. It's the issue of cyber. And how do we, whether it's a Russian or some other country, and we seem to be all attacking each other at this point. And that's one of the reasons government is so much more difficult than before. So how do we address that? We have more problems to worry about. So how do we, I mean, are we doing the right thing right now? Is there a, I remember in the nuclear side, there were lots of agreements, strategic reduction of nuclear arsenal, et cetera. Do you see in the future that we should be looking at engaging with each other, building the trust to reduce the cyber threats, because that affects the energy infrastructure? Absolutely. It can have a huge effect on the energy infrastructure. It can bring down the grid. Well, that's what happened in Ukraine. Yeah. So it's very important to do that. And I don't claim to be a cyber expert, but deterrence probably doesn't work very well as a concept there. So working with people to develop understandings probably is the best way to go. But right now we have no chance of working with Russia, let alone China. I feel we're missing the opportunity with China. Here's, of course, the stories, the things that happen to you have an impact on you. We have a track, too, with China. Henry Kissinger and I and a few other people, Bill Perry. So we're in Beijing, and President Xi, who wasn't president yet, but he was known to be becoming president, gives a dinner for us. And I'm sitting next to him at dinner. I knew he was going to Washington. So I said to him, on your way to Washington, why don't you stop in San Francisco? We've got a Chinese-American mayor. He's doing a great job and be well-received. And he said, I can't do it. I've already agreed to stop in Los Angeles. But then he said, but if I came there, what I'd really like to do is come to Sanford. Something's going on around there, and I'd like to learn about it, and I know you can only learn about it by talking to people. You can't read about it, and you've got to feel by talking to people. I was fascinated that he knew that, that human interactions of that kind that are done on a trusting basis are the way you really learn something. And then this is a, then this is in the Obama administration. There was something called the Sunnyland Summit, Southern California, the Old Annenberger State. And President Xi announced and said he's going to come a day early and bring his wife. That's a statement. I'm going to get to know you. I want to be able to have candid conversations that are off the record and just private between us. Then we can really get something done. So my wife, who's known to be a good protocol, gets an SOS call from the State Department. When she goes down to Orange County Airport where we'd come in and help out, she gets down there. There's no high federal official there to meet the incoming President of China. And the First Lady sends word that she can't come at all because of the birthday of one of her children. So Charlotte puts an S.O. into Jerry Brown, our governor. Jerry comes with his wife, so somebody's there. And the next day the President of China cools his heels and Charlotte entertains the First Lady. I said what she liked. Oh, she's a beautiful woman. She's fun. She's interested in everything. She has an operatic quality voice. They have to keep her stage appearances down or she'll be more popular than her husband. But a winner. So that's not only a missed opportunity, it's a show of lack of respect. And you show a lack of respect for the Chinese and you're done for. So we've got to rebuild with China. I remember I was surprised when I became Secretary of State that our relations with China seemed to be uneasy. And I couldn't figure out why. I finally figured it out. But anyway, I went to China and I said to Deng Xiaoping, who was the Supreme Leader then and Mu Chichen, who was my counterpart, I said you put on the table everything you want to talk about. I'll put on the table everything I want to talk about. We'll make an agenda out of that. And I'll agree to come here once a year. You agree to come, Mu Chichen, come to the United States once a year. In about three meetings we both go to at international meetings. We'll all agree to set aside three hours just for us. We'll work our way through that agenda. And it worked well. I liked it. They liked it. And we had good working relationship. And I like to see us try to do something like that because China is a country that we need to work with. All kinds of things to talk about. And just as with Russia, they would benefit a lot from a good relationship with us, just as we were with them. I might say I think right now I don't know of any people from China here. Well, one, two, three, four, five. I understand there are 2,000 Chinese on the Stanford campus. Not all from China, probably from Hong Kong, from Taiwan, but Chinese. And so that's a wonderful relationship. One time I was in Beijing. I went to Peking University. They gave me an honorary degree. And the chancellor had two Stanford degrees. And then they asked if I would have a seminar. And I went to the seminar. About half the kids in the seminar had Stanford sweatshirt club. So it's a good relationship. And it can be built. And it's important to build it. It's a country full of very capable people with lots of resources. And we can engage and benefit each other greatly. And energy and other. Way off the subject here. This is great. So we're going to open it up for a few questions so you can start thinking. We're asking Mr. Secretary some questions. Let me ask you a little bit. If I change another location in the world and talk about Africa. Because if I'm talking about the demographics, that's the largest rise in population is going to be in Africa. You always talk about governance issues. There are governance challenges in some places, not all. There are climate effects going on. And there is migration as a result of that. How do you think the United States should be thinking about our engagements in Africa in the long term? Well, you're right. Then your demographics. All of the developed countries have low fertility rising longevity declining working age populations. There are three countries that don't have that characteristic that don't have the projected declining working age. That's Canada, Australia, and the United States. What are those three countries having in common? All three are immigration countries. Every American here is an immigrant or descended from an immigrant. That's an exception. We're all immigrants. So we're accustomed to it. Lee Kuan Yew was here one time. He was my friend. He was a genius. He created Singapore. He came to San Francisco. I said, Harry, why are you here? He said, well, something's going on down there around Stanford. It's in Silicon Valley. Maybe we should learn something about it and use it in Singapore. So I'm going to find out about it. He said, well, it's not enough to ask questions. You've got to be part of it. So we're going to start a little venture capital fund and be part of it and see what you Americans are doing. And I said, well, when you get down there, Harry, what you're going to find is there are people there from all over the world. He said, I know that, but it can only happen in America. So we have a history of attracting the brightest, best, and the brightest, as well as the people in the United States. And I hope we're smart enough to keep it that way because that's been a characteristic of the US. Well, we would like to... There's a saying that goes that, you know, for those people who are getting masters of PhDs in science and engineering and other fields and higher education to all of you, all the foreign students, international students, raise your hands. We hope you can staple a green card to your thesis when you leave from here so that you stay here. Can you open it up for a few questions from the audience? Any questions? There you go. Why don't you state your name and where you're from? Okay, I'm Catherine. I'm from Beijing, China. I had a question that might be difficult, or I don't know, how do you build trust and build a relationship with countries that have governance that you know they routinely perpetuate human rights abuses and cover it up? I mean, how can you possibly build trust with governments like these? It's all well and good when you meet the individual people from these countries, but very different on a systematic level, isn't it? Well, it's hard. And I think from our standpoint, we have to stand by our values and express them and not be afraid to do that. And that doesn't mean you refuse to do business with somebody whose values you dislike or human repression and so on. But still, you express yourself. I don't think we should have a big crusade that says we won't have anything to do with anybody who we disagree with on one thing or another. That's stupid. But you should still be willing to say what you think and to help people if you can. Any other question? Hello, I'm Pablo from Mexico City. So my question is around immigration. So we've seen recently a very different discourse coming from a different kind of practices around the United States about how immigrants are perceived nowadays versus years ago. What changed? I have an idea that will probably shock her then. But it seems to me that we are drifting toward what I would call a new federalism. Let's take the subject of immigration which you brought up. Obviously, we need to have control of our borders. That's any country. But still, we can have a strong immigration tradition. But I say, obviously, the federal government has to do that, but once somebody is here and here for a while, I'm beginning to think that the federal government should get out of our hair. For instance, over in Oakland there was a woman in Mexico who had been here for about a little over 20 years. She came illegally. She had three children, two of them were grown up working. She was working as a nurse, a valued person. They expelled her. And we all said, this is not us. So I say, well, let the federal government control the borders, but get their hands off what we do. We'll handle that ourselves. So I think people are looking for a level of decision-making that's close to where they are, where they know the people and they can trust them and understand them and where they're accountable and trustworthy. So maybe that shocks you as a Washington guy, but still you're an Alaskan, right? We believe in federalism probably more than the other states. Okay, we're on same board. But I don't want to carry that too far, but I think the immigration issue is being very badly handled right now, I would say. Yep. And I made some chat in front of China. A question is, it seems in recent, actually this year, there's increasing trading experience between the US and other countries like Europe and China. What do you think is a good thing or a bad thing for the US and especially in terms of the energy side of the US, do you think how that's going to impact the country? Well, the trade picture is like this. We have a big trade deficit. I wrote a piece with Marty Faustin. Marty is a very distinguished economist, a friend of mine. We said if a country consumes more than it produces, it will import more than it exports. That's not a rip-off, that's arithmetic. And that's where we are. So if you want to do something about our trade deficit, you got to do something about our spending. It's mostly the federal government spending that's way out of control. Otherwise, you don't do anything about the trade deficit by these things that we're doing. So there are things about a trade relationship range that's not all perfect and it's a perfectly good thing to try to work at them. With China, I think people are particularly concerned with the efforts that wind up taking your intellectual property and things like that. But if you have a good working relationship, you can talk to the Chinese and say, look, we don't like this way, how come? And get straightened out. In my time, there were all kinds of issues that we had with China. We straightened them out and there were some that we said, well, I understand why you have this but we're not going to agree on it. So let's agree not to agree but we can put that aside. And so I think that's the way we proceed. As I said earlier, I think in the NAFTA situation, what we had with Canada and Mexico was wonderful, absolutely wonderful. It didn't mean it needed to have a few adjustments. But Pedro Aspen, I wrote an op-ed in the New York Times, and here's an agenda for good adjustments that leave its essence in place. Didn't want to rip it up. And how can you say to President Trudeau of Canada that Canada is a security threat? Are you kidding? We have the largest, longest, undefended border in the world with Canada. It's crazy. There's a question over there. Hello, my name is Anu Deep. I'm from Washington, D.C. So my question is how do as we go forward in developing new energy systems and methods of developing energy? I'm not trying to say that again. How what? How as we develop new forms of energy, do we make sure it's equitably distributed so everyone has access to it and some people aren't unfairly reliant on fossil fuels more than others as we go forward? Well, I'm a great believer in the marketplace as the way to solve problems. And that's why I would advocate a revenue-retro carbon tax rather than bureaucratic telling you this, don't do that, and so on. And I think if it's revenue-retro, it's a progressive tax. And so people down the line they get the same amount of somebody wealthy. If you've got a couple thousand dollars, it means much more to you if you have an income of $60,000 than if you have one of two billion. So I think I would advocate that. But I think it can, it's working out reasonably, equitably. And pretty soon, we'll be able to have electric cars without any subsidy, right? Battle prices are going down. They're more powerful. We can see the glide path to battery costs coming down to the point that I think in the next five to seven years we'll have range parity and cost parity of EVs with gasoline cars without subsidies. I don't think we should not depend on subsidies in the long term. And I think that's the place we like to be. So that's a part of the answer to your question, that the R&D is producing potential electricity for automobiles that can change the game. And the prices there, people can buy. That's right. Make it cheaper. Make it better. Make it cleaner. And the market will take care of it. Actually, an electric car is fun to drive. Have you driven one? I just got a ride in a Tesla for two hours today. And I didn't want to drive my car. So my colleague, Dick Swanson, who is the founder of SunPower, who is a former faculty, he and I drove to San Francisco and came back. And it's just a fun ride. And he was telling me he wanted to be a race car driver. So he's taking the Tesla and showing me how good it is in terms of racing. And I said, I wore my seatbelt. I made sure the seatbelts are there. And he was just moving. And it's just the response of the car. And I'm a car guy. The response of a car is so much better. Yeah, but you ride in one of those cars, it's like a big advertisement, I'm rich. Whereas my car is a Chevy, a Bolt. And now Chevy has produced one called a Bolt. That's right. It has an electric range of, I think, 250 miles. So this is where the guy you're worrying about is he buys the Bolt, not the Tesla. Right, that's why I took a ride. I don't know. So one last question. Okay, lady up there. Hi, my name is Ranjita and I'm from India. My question is it's been very depressing, especially for people who are concerned. Can you loud it? Yeah, it's been very depressing for people who are concerned about the environment to see the walk back of regulation that has happened over the past few months. So over the course of your illustrious career, my question is have you seen situations where the walk back of regulation has divorced or things have gotten better in the future? Because I want to stay hopeful, but it's really difficult to do that given the continuous onslaught on environmental regulation. So environmental regulation didn't pull back? Well, I think that we have to have regulations on our environment. And the question is how to do it. And so I've been advocating here, do it by the price system. Then the market regulates. So you're not picking winners and losers by a bureaucracy. You're letting it be done through the market. So I look at the situation. I say coal is no good for the environment. But if somebody can figure out how to mine and burn coal in a way where they capture all the carbon and sequester it properly at a reasonable cost, fine. I don't think they're going to find they were going to be able to do that. But if they can, the market lets them do it. So you're not telling people, if I were doing it, I'd tell coal miners to find another job. Don't think that I'm going to rescue your job. But anyway, I think that we have to be concerned about our environment after all this is the air we breathe. And it didn't just the global warming. There are all kinds of things about the EPA. I might say, people say we Republicans don't pay any attention, but let me tell you something. Who is the first environmental president? Teddy Roosevelt, the Republican. Who did the Montreal Protocol? Ronald Reagan, a Republican. Who created the EPA? Richard Nixon, a Republican. I was director of the budget when that happened. And when a new agency is created, it gets space and people from other agencies. So it needs to have somebody represent them because it doesn't exist, otherwise they'll get all the worst of everything. So the director of the budget becomes their sponsor. So I was the first director of EPA in that sense. And OMB is a good representative because we know where the bodies are buried and nobody wants to mess with us. So I think the EPA has done a huge amount of good in this country. Our streams are clearer, our lakes are purer, our air is cleaner, all of this has happened. And the EPA has had a lot to do with it. So I think it can work. Talking about near-death experiences of new agencies, I was involved with RPE, as you know, and we went through some near-death experiences. But this was a very important development because this was really the sponsor of R&D. And I'll tell you, the people who supported me was Senator Murkowski from Alaska, who was still one of the biggest supporters. Senator Alexander and Senator Bingerman on the Democrat side, Mark Gordon on the House side. And they were the biggest supporters of RPE. And of course we had the support of the White House and OMB, otherwise it would have been very difficult. Because as you said, anything new that starts, people think it's a zero-sum budget and they think that you're eating their budget and they're trying to kill. And it was a character-building experience. We're having our big energy summit here that you're running. That's right, the Global Energy Forum. And we have Senator Murkowski. Senator Murkowski is coming here, that's right. So you can thank her. Oh yes. Well, it's been a fascinating discussion as you now realize the wealth of experience that Secretary Schultz has is just beyond anyone's imagination. And we just want to thank you so much for spending the time with us every year. The energy at Stanford and Slack happens. You spend an hour with us. And this is absolutely a treat to the students. So thank you so much for your time.