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Regulation and Compliance > State Regulation

At Schwab Impact, Condoleezza Rice Addresses Political, Financial Issues

By James J. Green

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“Today’s headlines and history’s judgment are rarely the same,” Condoleezza Rice said Thursday evening to a receptive audience at Schwab Impact 2010 in Boston. The former national security advisor and Secretary of State in the George W. Bush Administration, who has now returned to academia as a professor at Stanford, addressed a wide range of political and economic issues in her prepared speech and a Q&A session with advisor attendees at the Schwab show, which ends Friday morning.

Her “headlines and history” comment was the mantra she said she repeated to herself while serving as Secretary of State, noting that during that time she had also kept close to her images of four previous secretaries of state for inspiration: Thomas Jefferson, George Marshall, Dean Acheson, and William Seward. The earliest applause she received from the audience was when she suggested that Jefferson might have been overrated at the expense of fellow founding father Alexander Hamilton. Her point was that it was “important to stay focused on what’s important,” and as a leadership suggestion, she said that how a leader behaves is how the leader's colleagues and employees will behave.

While she talked of terrorism and education, of Russia and music—and received more applause when she said “we all owe our gratitude to those men and women who have volunteered to stand in the front lines of democracy"—she first addressed the state of the global economy, and asked how we could “get a good judgment of history” on the economy.

“What did we learn from how the major economic powers dealt with the financial crisis?” she asked. For one thing the European Union did not come out well; the Greek debt crisis showed that the EU’s “one currency, one fiscal policy” headline was flawed, that the crisis was “eating away at European unity,” and that in addition to “sclerotic demographics,” the European Union has an underlying weakness.

By contrast, she said Brazil and India came through the crisis well due to solid reserves and banking policies. India could very well emerge

 

 

as a major world player economically, which is one of the main reasons that “both countries want a seat at the United Nations Security Council.”

She said Russia, however, has become a “strange merger of political power and stateism and oil and gas.” Rice, whose academic background is in Russian studies, said that Russia is “ever more dependent on extractive industries,” and that a dispute is raging between what she called Putinism,” characterized by state ownership of the means of production, versus younger leaders with a more global bent.

As for China, and when it might overcome the U.S. in “economic might and thus polity,” Rice noted that the country has had “extraordinary social change and stress.” She warned that growing labor unrest, including development of an independent trade union, would be bothersome for the Chinese leadership, and further suggested that China is “not a place for innovation.

The greatest danger for the world, she said, would be for the U.S.

itself to “go bad.” The private sector, she said, needs fiscal responsibility and certainty from Washington, and would be able to deliver jobs “based on innovation, creativity, and risk taking. “ However, she said “Washington is good at many things, but not innovation, creativity and risk taking.”

She then put in a plug for Charles Schwab the man and the company, where she served on the Board of Directors. Schwab, she said, epitomized innovation, in “essentially democratizing” investing for consumers. “He,” said Rice, “created a whole industry.”

Finishing her prepared statements, she said that as Secretary of State, “you learn what people like and dislike about the U.S. What’s universally admired is our great national myth—the log cabin—that you can come from humble circumstances and achieve.”

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