Herman Kahn Award Dinner in Honor of Governor Mitch Daniels Willard InterContinental Hotel Washington, DC October 14, 2010

Transcript

Allan Tessler, Board Chairman:

Good Evening and welcome. I am Allan Tessler and it is my distinct honor to serve as ’s Chairman. Tonight we celebrate the memory of our think tank’s founder and those who walk in his footsteps. Herman Kahn was an ideas man — and while he did not hold public office, he saw it as his purpose to think deeply and strategically for those who did. Governor Daniels is that rare hybrid — a think tanker and a politician in one. I’d like to say that Governor Daniel’s tenure in public office and the benefits he has accrued for the public are a testament to his experience gained leading the Hudson Institute, as well as his considerable period of service in the Executive Branch.

Next year, Hudson Institute will celebrate its 50th birthday. In a think tank world that makes us old timers. In the beginning, RAND was the only think tank show in town. If you were the best, you worked at RAND and so Herman Kahn worked at RAND. For those who know their tank history, I am sure you are aware that Brookings, preceded by RAND by over twenty years and at that time of Hudson’s founding, AEI was a teenager. So, we have followed very quickly on that path.

Herman Kahn founded Hudson Institute, because he saw the market need for a more publicly engaged think tank. One that not only would think about a better future, as well as “unthinkable” threats, but one which would jump into the public debate and try to shape the future. My older friends tell me that turning fifty [Laughter] ... I thought I would get that response — is something of an existential moment. So, in that context it’s time to look back and think about who are, what you’ve done, and what you want to do going forward. Tonight is a “who we are” event. And just on a personal note, I’m at the age right now — I have actually gone past Medicare and Medicaid eligibility and now, I’m thinking about Obamacare and I am kind of saying to myself, “What’s going to keep me healthy and keep me going?” And my health plan is Hudson Institute.

[Applause]

So, Hudson is the ideas lab that Herman Kahn built. And tonight you’ll hear from Ken Weinstein, who runs and manages our think tank, about the world historical intellect who founded this place. And think tanks don’t magically pop out of the soil after one writes a mission statement. Think tanks are born and sustained through this incredible mix of minds and unfortunately, money. And while our work is the nation’s business, we lack the power to tax. [Laughter] 1

I was going to add that we also lack the power to coerce ... but I thought our board members would label me a hypocrite, because I am their chief coercer and the truth be told, idea people need money people. That’s what keeps ideas going. That’s what keeps everything running. As Richard Weaver famously said, “Ideas have consequences.” A truer statement would read, “Ideas have consequences only after a few have put their money where their minds are.” That’s when ideas have consequence. So, in the end, truth always wins out, but it’s usually after much human suffering and concern. It’s better to show up early and stop bad ideas before they happen or before they really take growth. And if it has already happened, it’s the use of logic that often is the answers and the medicine that get rid of bad ideas. In that sense, as we always say, the truth is what we care about, because the truth is nonpartisan. And this is what we look for — the truth.

So, I want everyone to enjoy this evening and shortly you will hear from Ken and you’ll hear from Herb London and you’ll hear more and more about Hudson and it’s antecedence — they have a great depth of knowledge — far better than mine in that regard. This evening is very much the result of the generosity of our sponsors and our co-host, AMGEN has done a wonderful job in supporting this and a number of other corporate sponsors as well, and a number of you all as individuals. We are very grateful to you for doing so and we will hear more about this as the evening progresses. So, enjoy the dinner and the program will continue. Thank you.

[Applause]

Kenneth Weinstein, CEO:

Good evening. Governor Daniels, members of the Diplomatic Corps, former Prime Minister Abe, former Vice President Quayle, Chairman Tessler, Chairman Emeritus Stern, trustees, including Debbie Kahn, Herman Kahn’s daughter and Jessie Cunningham, Herman Kahn’s granddaughter.

Friends of Hudson Institute, we are first of all deeply appreciative of your support this evening. We gather this evening to honor two extraordinary individuals. We will hear from and about our honoree Governor Mitch Daniels very shortly. But before we hear from Mitch, I have the honor of talking about the man whose legacy and memory we celebrate tonight, the late Herman Kahn, who founded Hudson Institute in 1961, and who remains our guiding light some forty-nine years later.

Herman Kahn was a giant — and I am not simply referring to his size. Though Kahn stood more than six feet tall, something very impressive to, I’d say about four of us at the head table, and he weighed somewhat over 300 pounds, probably twice what our honoree does even in full Harley get- up. We are here tonight to celebrate Kahn’s gargantuan insights, his personality, and the Institute he so proudly built — armed with a powerful imagination, photographic memory, an IQ of over 200, deep foresight and moral courage, and a willingness not to flinch when asking tough questions. Herman had the ability to see through and beyond policy conundrums that obsessed and depressed the chattering classes.

His was an extraordinary time. He was born in the roaring twenties and came of age in the Great Depression, World War II, and the . A century of total war and a rise in the information age, framed his life and his thinking. The son of Yiddish-speaking Polish immigrants led a quintessentially American, which is to say, an exceptional, life. He rose from menial labor and lower middle classes to brief American presidents from Kennedy to Reagan and dozens of world leaders, including Pompidou of France, Sato of Japan, and Schmidt of West Germany.

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Herman was one of the world’s most recognized public intellectuals, spawning not just research monographs, which we view today, but major magazines profiles around the globe, novels, and even movies in a career spanning four decades.

His accomplishments were astounding — pioneering the use of scenarios for defense planning, founding the fields of both future studies and systems analysis; opposing the Neo-Malthusians of his time and playing a critical role in development economics; and championing the ideas that free markets and human ingenuity can meet the most pressing of policy challenges.

Kahn was no narrow policy wonk, nor was he a wild polemicist. He was a brilliant mathematical physicist, training in part at Cal Tech, with an impressive command of world history. He joined the RAND Corporation after World War II — hey, everyone makes mistakes — gravitating toward the emerging study of and there Herman honed his skills, including the ability to analyze issues in the broadest possible perspective.

One of those perspectives was to be broad enough to think the unthinkable, including the consequences of nuclear war. Not to promote it certainly, but to meet the challenge of preventing or eliminating it. By so doing, Kahn showed how its horrible consequences might be reduced including through civil defense, which he advocated.

Though Kahn enjoyed, one might say a dark reputation in some circles as a thermonuclear strategist and he certainly became one of the models of Dr. Strangelove, the title character of his friend ’s 1964 film, he was far from the brooding character and the brooding figure some imagined and certainly nothing like Dr. Strangelove.

He was an enfant terrible — this is a quip — even on the darkest of subjects. So much so that the Village Voice declared that Herman should stop wasting his time and follow his real talents — stand-up comedy. I might say that the Village Voice should stop wasting its time on political commentary and follow its real talent — astrology for pets. [Laughter] But that would be rude and gross and out of character for a dignified evening like this evening.

Kahn was legendary for his multi-hour and multi-day briefings on a dazzling array of subjects that kept diverse audiences on their toes, with a mix of brilliant insights — pop culture references, anecdotes from ancient Rome of course — and a wicked, if not — I might add — Borscht Belt sense of humor. Kahn’s persona was too big for the RAND Corporation and he parted ways when his willingness to be a gadfly and court controversy on the thermonuclear war was too much for the stiffs in gray suits out in Santa Monica. And he decided to head East, North of New York City to found the Hudson Institute. An organization founded under his own image — big, bold, anti- bureaucratic, intellectually diverse, devoted to longer range, inter-disciplinary areas of research that would challenge the conventional wisdom.

Now Kahn to be sure was no ideologue. For most of his life, he saw himself as a Cold War democrat, Kennedy liberal, he never argued from first principles, but instead believed that the best way to understand issues and problems was to ask the right questions and to avoid the trained incapacity of specialists.

At the helm of Hudson Institute, his attention shifted to economics and international development. Whereas others saw a shrinking pie in declining living standards, Kahn recognized the critical

3 importance of human ingenuity, especially as manifested in the power of new technologies to make resources more readily available, pollution less dangerous, manufacturing cheaper, and to raise standards of living for all of us. Kahn was in short, the champion and early champion and early intellectual champion of pro-growth economics for the and around the globe.

To be sure, his 1967 volume, The Year 2000: A Framework for Speculation on the Next Thirty- Three Years, missed a few developments — the rise of Brittney Spears — thirty-six days of Bush and Gore — but it did predict a world of portable telephones, never computers, agricultural abundance, and a level of prosperity few would have imagined at the height of the Vietnam War.

And when the U.S. hit a recession in 1981 and 1982, Kahn responded optimistically with his final book, The Coming Boom, translated in German — and I am not making this up — Der kommende Boom. [Laughter]

Here Kahn expressed his firm belief that tax cuts combined with technological advancement and an emerging information age would unleash an unprecedented increase in world wide prosperity. Sadly, Kahn never lived to this new era of abundance he foresaw. He died suddenly and very tragically of a massive stroke on July 7, 1983. On July 8th President Reagan described Kahn, and I am quoting here, “A futurist who brought the lessons of science, history, and humanity to a study of the future and remained confident of mankind’s potential for good, value and thinking. All who value independent thinking will mourn the loss of a man whose intellect and enthusiasm embraced so much.”

Needless to say, working in Herman Kahn’s shadow as we do at Hudson Institute, we have an immense legacy to live up to every day. Now that we face international terrorism, a nuclear North Korea, the potential of nuclear Iran, the challenge of economic regulation and over-taxation here at home that threatens to stifle investment, innovation, and growth – Kahn’s broadmindedness and his policy imagination is alive in the work of the think tank that he founded and in which my colleagues and I are so proud to be a part of.

And now, I have the immense honor of introducing one of the most distinguished statesmen on the global scene today to offer his thoughts on Herman Kahn, former Japanese Prime Minister Shinzō Abe. A longstanding friend of Hudson Institute, a true friend of the United States, and a foreign policy intellectual whose many accomplishments include transforming Japan’s Self-Defense Agency into a full-standing Defense Ministry. Mr. Prime Minister, I am truly honored to introduce you.

Prime Minister Shinzō Abe:

Many thanks, Ken. Good evening ladies and gentlemen. Before I start my short speech, let me introduce my colleague, Mr. Onodera, he is a member of the Diet. [Applause] And he is also Foreign Minister of the Shadow Cabinet of LDP. I hope he will be Minister of the actual cabinet next year. [Applause] We’re in Washington to exchange views on the U.S.-Japanese alliance in the 50th anniversary year of the revision of the security treaty between Japan and the United States. We are very pleased to be here. And it’s a great honor to be with Hudson Institute, as we salute Governor Mitch Daniels and see some old friends, including Vice President Quayle and Scooter Libby and Chairman Tessler and many others tonight.

4 Hudson Institute is one of the leading think tanks, and I look forward to addressing you tomorrow at lunchtime. Governor Daniels, let me congratulate you on being honored tonight. Your style of leadership is now getting attention, even in Japan, to tell the truth. We could use some of your ingenuity in facing down our fiscal challenges. But I am here to pay a tribute to Hudson founder, Herman Kahn.

Let me begin by saying that Kahn was not simply a giant in the United States, as Ken noted, but in Japan as well. We in Japan owe Kahn a unique debt of gratitude for having the foresight to show our nation a future of real possibility. Kahn was one of the earliest — and certainly the best known — of the Western observers to recognize that Japan was en route to unprecedented growth and a role as a global economic power.

Kahn’s book, The Emerging Japanese Economic Super State, was a massive best seller. The book gave my nation immense confidence and helped inspire a generation to change Japan into a rich manufacturing and high technology nation. But Kahn and his colleagues also had unique insights with regard to Japan’s unique security dilemma in the thermonuclear age. Today — around the globe — has really been a time of incredible economic uncertainty and international turmoil. Policymakers like me need the work of thinkers like Herman Kahn to help us meet unthinkable challenges by thinking in the broadest possible terms.

We are lucky that Hudson Institute continues to carry the torch for his ideas and approach to public policy. Thank you very much.

[Applause]

Herbert London, President:

Ladies and gentlemen. In 2003, Hudson Institute produced a book, that I wrote with my colleagues, about Japan. I wrote a letter to the than Prime Minister of Japan, Koizumi asking if I could meet with him. He didn’t have the foggiest idea who I am, but he remembered Herman Kahn, something of an icon in Japan. And he said, “Please come and see me. Bring a copy of the book with you.” And I did so. When I walked into his chamber, Mr. Koizumi looked at me up and down and said, “You must eat more.” [Laughter] Based on this sumptuous meal this evening, I am trying. I have the distinct pleasure this evening of introducing a friend. Let me be very precise, Dan Quayle.

[Applause]

Back in the early 70s that I met a remarkable man named Jim Quayle, Dan’s father. Over coffee we discussed his son and his son’s ambitions. Although obviously proud of Dan Quayle, neither of us realized the heights to which his son would rise. In 1976, Dan was elected to the Congress and in 1980 he rode the way of pro-Reagan sentiments into the Senate. In his eight Senate years, he displayed a keen understanding of armed services matters and was recognized by members of both parties as a keen analyst of defense-related issues. In 1988, when Dan was forty-one years old, he was tapped by President George Herbert Walker Bush to run as his vice presidential candidate. It was a controversial, but wise decision since Dan served his president and his country as a superb 44th Vice President of the United States.

[Applause]

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Since his tour in the White House, Dan has been author, having written three books, a professor who taught international studies at Thunderbird, the American Graduate School of International Management, and a businessman who serves as global chairman of Cerberus Investments. Most noteworthy is Dan’s association with Hudson Institute. It was Dan who assisted with our relocation to Indianapolis at a critical juncture in our history and I should hastily add that Dan served on our Board of Trustees for several years, as well. I had the pleasure of spending time with Dan over the years and can attest to the fact that he was truly an imminent public servant and is, in my judgment a man for all seasons — resourceful, devoted to this nation, and in command of the central issues of our time.

It is indeed a unique pleasure for me to introduce the former Vice President, former member of the Hudson board, a person I am proud to call a friend, and a truly great American, Dan Quayle.

[Applause]

Vice President Dan Quayle:

Herb, thank you very much. Thanks for the introduction and more importantly, thank you for a long time of friendship that we have had. Allen, it’s great to back — great to be back with Hudson Institute. I have so many fond memories of the service and association that I have had with friends here. Abe-san, thank you Mr. Prime Minister for coming here; he is a great Prime Minister and a long-time friend. I have been traveling to Japan since 1977, and I was very familiar and worked with his father when he was Foreign Affairs Minister and I have worked with him in the public arena and also in the private arena. Herman Kahn was the person that really discovered that Japan was going to be an economic superpower, so your presence here tonight is very much appreciated by all of us. Thank you for making the effort.

[Applause]

It’s great to be back in D.C. …you know [Laughter] … I just love this place. Let’s see I left this city in ‘93 and just to show you how times have actually changed a little bit — I walk into the front desk, escorted by a friend from Hudson. I go up there and this guy had a trainee badge on — he said, “May I help you?” I said, “Well I would like to check-in.” He says, “Well what’s the last name?” I said, “Quayle.” And he goes, “Is that with a “K?” I go, “You got to be kidding me. They are going to get into the spelling stuff right away?!”

[Laughter and Applause]

I just love this place, it’s just so great to be back in D.C. Herb was talking about my father and my political career and many of you may know that my son is now running for Congress and got through [Applause] … he got through a rugged ten-person primary and ah, right after the ah primary, he’s got a lot of name recognition now. So, I called the local restaurant because four of us wanted to go to dinner. And I called down there and said, “Hi, I’m Dan Quayle and would like to make a reservation for four, I know it’s pretty late, but I frequent this place quite a bit and I know Mark, who is the owner, if he is there he will give me my corner table, he says.” “Okay,” she says, “Quayle,” yep, “Dan Quayle.” She says, “Are you related to Ben Quayle?” [Laughter] I said, “Well yes, he’s my son.” She goes, “Well is he coming with you tonight?” And I said, “No, he’s not.” She

6 goes, “Oh darn.” I said, “Well ma’am can I have my reservation?” And she finally gave me the reservation. Now I am using my son to get a reservation at a restaurant, which I used to be taken care of quite frequently, so, anyway …

You know being back in this city, even though we’ve got the mid-term elections, but you know … all the conversation out there — presidential politics — but we’re not talking about presidential politics tonight, but if you want to know I can tell you how not to get elected President. What you do is you get elected to the House; you get elected to the Senate. Serve four years with a great President and then run against his son for President. That’s the way not to do it. And then you can come back and be a volunteer for your son’s campaign for Congress.

But anyway, tonight is a special opportunity for me to introduce to you our recipient of the 2010 Herman Kahn Award, Mitch Daniels. I have known Mitch I think probably over thirty years and I watched him with Senator Lugar, went back to Indiana as the President of Hudson Institute, Ely Lilly, and then came out and worked in the Reagan Administration and served as OMB Director under George W. Bush.

Like Herman Kahn, Mitch is an innovator. He thinks outside the box. And you don’t see that too often today in politics. Because you have the conventional campaigns and they got all the consultants and you’ve got things that you can do and can’t do and it’s pretty well many times scripted. But Mitch has always been a person that would think outside the box. And that’s why I think he’s been tremendously successful in the State of Indiana and has notoriety according to Abe- san in Japan because of what he’s done with the toll road, what he’s done with the pro-growth, low taxes, so I think it’s – and having been President and CEO of Hudson in the past, I can’t think of a greater honoree than the Governor of the State of Indiana, the Honorable Mitch Daniels.

[Applause]

Governor Mitch Daniels:

Mark Twain said that the perfect audience was informed, intelligent, inquisitive, and drunk [Laughter]. It’s been a long evening, I’m thinking we’re pretty near perfect here, which would come in handy. Dan [Quayle], thanks a million. Ken [Weinstein], all my friends, this has been like a college reunion. There are folks here that I have longed to see for quite a long time and you’ve made it possible; for that alone, I am incredibly grateful.

It is an intimidating audience though. Even, as the man said, Jefferson dining alone would have a hard time exceeding the candlepower that is assembled in this room.

And it’s intimidating because, I’ve learned in this job — the first and only elected office I have ever sought or held — you get a lot of awards and recognitions you don’t really deserve. Now, for the second night in a row, that’s happened. Last night it had to do with education, something I aspire to contribute a great deal more to, but we are a work in progress in Indiana and they gave us one of these recognitions last night in the presence of somebody who’s actually been there and done that — a tutor of mine, former Governor Jim Hunt of North Carolina. So, once again tonight, I feel like I am out of my league, fighting above my weight class. Speaking of weight, Carol Adelman said earlier on, “You know Herman [Kahn] was probably three times your size.” [Laughter] And I said, “His brain was thirty-three times mine.”

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I am advised that the only previous recipient of this recognition was Bill Simon. Now that’s intimidating. Bill Simon was a genuine giant, a lot to live up to there. I have always admired something about Bill Simon. Some of us think that George Washington’s greatest of countless contributions to our nation was his last one, namely that he stepped out of the presidency after two terms, when he might easily have continued, and established a precedent more regal than democratic.

Bill Simon, as the Chairman of the Olin Foundation, faithfully presided over the founder’s instructions to spend that foundation down to zero and go out of business. I see some former grantees in the audience who probably really hate the fact [Laughter] that Simon did his duty, but he always did.

To be mentioned in the same breath with a person like that, leaves you sort of speechless. But then of course to accept an honor named after Herman Kahn really does go beyond my powers of description and the risk is that anything one says on an occasion like this will only prove how unworthy you are.

I read that on another occasion, in which someone in that case, someone was controversially graced with an award, Andrew Jackson was given an honorary degree at Harvard. It was very much disputed by certain people who felt he didn’t measure up to the standards. One of the faculty, by way of demonstrating that, challenged him to acknowledge the honor in Latin. Jackson apparently drew himself up to his full height and said, “E pluribus unum, my friends. Sine qua non,” and sat down. [Laughter] Before we’re done, both you and I may wish that I’d adopted a similar approach.

It’s a cliché of higher education to say that college and graduate school are where people learn to think critically. You may not have learned anything there, but you learned to think critically. Well, maybe you did. I’m not sure I can say that about either my undergraduate or my spotty law school experience, but Hudson Institute — that was my graduate school. If I learned to think critically or how to think more profoundly about things, it was there. When I think about Herman Kahn and the gang, the merry band who left RAND Corporation and who he assembled at Croton-on-Hudson and later in Indianapolis, this is what first comes to mind: They thought in ways we all should aspire to think.

They thought long-term and wrote books with modest titles like, The Next Two Hundred Years. [Laughter] My current job gives me some opportunities for this. At one point, until a couple years ago, the two oldest people on the planet Earth both were farm women who lived in Indiana about thirty miles apart. They were both girlfriends of mine; I got to know them pretty well. [Laughter] In fact, I got them together — Bertha Fry and Edna Parker — on Edna’s 114th birthday. Bertha was a spring chicken of 113. Some guy from the Guinness Book of World Records showed up that day and proclaimed that this was the oldest combined meeting of two human beings in the history of the planet — 227 years, X months, Y days.

But on Bertha’s — well it wasn’t her birthday, it was New Year’s Day, and I took her to lunch — a New Year’s Celebration in her 113th year. Afterwards I overheard a guy from the local radio station interviewing her, and he asked the obvious question. He said, “Oh, Mrs. Fry all those years, all the history you’ve lived through, there must be things that stand out — what are they?” She named a couple of things — you know VE Day and, “Of course,” she said “the assassination of the president.” He said, “Oh yes, any American who was alive at the time remembers exactly where

8 they were when President Kennedy was killed.” She said, “No young man, McKinley.” [Laughter] She was seven years old when McKinley got shot. Went home to the farm, no one believed her, there was no….

Experiences like that help you. And listening to and reading back through the work of Hudson helps one to stretch your sense of historical perspective.

Herman Kahn was a believer in anecdotal information. Oh yes, he was the great analyst and poured through the quantitative record and statistics. But it was well known — and the History of Hudson details this — how he would interrogate taxi cab drivers searching for some nugget of insight that you might not get elsewhere.

Now, my current job is like that too. I cannot tell you the kinds of anecdotal knowledge I have come by. For instance, I am probably the nation’s expert at how to sign one’s name on a goat. [Laughter] You go to 4-H fairs and kids want you to sign hats, shirts, animals…anyone who wants to know the technique, feel free to see me afterward.

Two weeks ago in Goose Pond, Indiana, I learned the following: You cannot safely neuter a hibernating animal. [Laughter] In case this comes as news to you, let me inform you that there is something about the fact that a hibernating animal’s kidneys and liver shut down and the testosterone is essential.

The reason I know this is because my friend Dan Gamble, down around Goose Pond, who used to raise bears as domestic pets the way you might have a dog or a cat, once neutered his favorite bear, the seven-foot four-inch Otie, who eventually developed liver cancer as a result. It was a very sad event. Otie is still remembered down there for having gone into the bars in Dugger, Indiana with Dan on many occasions. One night [Otie] had too much beer and knocked Dan out cold with his paw. [Laugher] You’re not going to find this in a think tank book anywhere. You’ve got to get out and do research. [Laughter]

Herman and the people of Hudson always thought in a contrarian way. I have always thought that the word should have been respelled — K-A-H-N— Kahntrarian because he and his colleagues so personified the view that by the time everybody believes something, it’s almost certainly wrong. By the time wisdom becomes conventional, you ought to presume that it’s lost its validity.

One of the early Hudson folks, who I learned tonight to my delight, is still alive and in his nineties is Frank Armbruster. He once told me about the early days of operations analysis, of which Hudson was a pioneer. In World War II, a bunch of British academics came up with the idea that they would reassemble in a hanger the pieces of RAF planes that had come back. The point was they would reassemble all these pieces and they would count the bullet holes and shrapnel holes and, therefore, they would see which places on the plane might need to be reinforced. And when they put it together, they were going around counting and there was one piece of the fuselage where absolutely zero holes were found. One of them said, “Well I guess we don’t have to worry about that.” Some Cockney guy painting the wall of the hanger hollers down, “Well, you ought to.” They said, “Why?” And he said, “Those are the ones that don’t come back.” This is the way that people at Hudson learned, this is how we were trained to think — perpendicular.

The people of Hudson were trained by Herman and his group to think in a way that was principled, yes, but practical — immensely practical. Will you indulge yet again an old Hudson chestnut? The

9 story is that come the Revolution, the intellectuals are being taken to the guillotine. The first one is taken off the tumbrel up to the blade, the blade gets stuck halfway down, it’s an act of God, and by custom, the guy goes free. The second guy puts his head on the block, and the same thing happens, he goes free. Herman is third. They put his head on the block, he looks up and says, “Wait! I think I see your problem.” [Laughter]

When you look at the old kinescopes, when you read the old books, when you debrief the old timers, Herman and the folks who started Hudson always had a bias for action. The thinking was never about scoring a scholastic or an academic point; it was always about figuring out a better way forward. One of the beautiful little phrases Herman came up with was the term “educated incapacity.” It’s been said there are some things so absurd only an American intellectual can believe them to be true. Herman looked around and recognized that it is possible to spend so much time thinking and studying and cogitating and analyzing that you’re not likely to produce a practical, common sense answer to the problems that confront and bedevil us.

We have in Indianapolis still, thank goodness, this wonderful old Jewish man, who is one of the survivors of the famous Bielski brothers band of partisans; maybe you saw the movie, Defiance, about their exploits. These were Jews who refused to submit and went to the forests of Poland and Eastern Europe and fought and saved each other and survived. In talking to him and in the books about them, there’s a phrase that I had never heard before, I guess it’s a Yiddish term. The term is “malbush.”

A malbush was an intellectual — formerly an elite person in the society before the Nazis came. But in the forests, in the fight for survival, these formerly leadership elites were now next to useless. They didn’t have crafts. They didn’t understand weapons. They didn’t know how to fight. They didn’t know how to do the things that were now necessary. And Herman Kahn and his kindred spirits were never malbushes — if I pronounced that right — they were always about applying their intellect and their great gifts to real practical outcomes and to the human progress that could come from them.

As Ken so well depicted, they were optimists. Herman always said “realists.” He lived in a world of pessimism, so he said in the Club of Rome environment of the day, that to be optimistic would simply be realistic. We’re not going to run out of this and we’re not going to run out of that.

His buddy and my friend, Julian Simon, won the famous bet that was on the cover of The New York Times Magazine, does anybody remember this? [Applause] Mr. Ehrlich I guess; much celebrated author. Got a genius award for being wrong every day of his life for thirty years. And Julian Simon said, “Fine. You think we’re going to go bust in this world? You think we’re going to run out of things? I’ll bet you. You pick the commodities, I’ll bet you ten grand the price is lower ten years from now.” Julian wins.

That’s the way people at Hudson Institute thought — they understood this fundamental fact: Extrapolation always leads to a wrong answer, always leads to a dead end. History, and in particular the history of technology, is discontinuous. There will be breakthroughs. There will be discoveries. There will be radical perpendicular turns in history and they do eventually lead upward.

So, Ken’s right. We could use Herman today. Some of the issues he dealt with then are back, but with a twist. He thought about the unthinkable — nuclear weapons and how to prevent their use. He

10 was thinking about a world in which the possessors of those weapons, however evil, were rational and wanted to survive.

How do we think about nuclear weapons when they may be possessed by people whose theology tells them that their own immolation may be their passport to paradise and their mission from God? Now, there’s a tough one. I wish we had him to help us think through it.

The Malthusians are back, but with a twist this time. I read as recently as last Saturday’s Wall Street Journal that people who have profited mightily from technological advances now worry that we’re stalling out, that scientific insight, breakthroughs, and innovation may simply not be up to the task of continuing to lift living standards here and around the world.

Now, Herman is still with us. In thinking about tonight, I went to the bookshelf and pulled down some of those volumes and there’s just great stuff there, things I had forgotten. I mean, from The Coming Boom, just try these two. In the context of arguing for lower taxation and a lighter regulatory hand that would let innovation and initiative flower, Herman wrote, “One fully justifiable tax would be on imported oil. Any large importation of oil by the U.S. raises security problems. There are, in effect, external costs associated with importing oil that a tariff would internalize.” Now, maybe that transgresses some philosophical viewpoint of yours, but to me that’s an interesting point today and just as valid as the day he wrote it.

Or he wrote, “It would be most useful to redesign the tax system to discourage consumption and encourage savings and investment. One obvious possibility is the value added tax and a flat income tax, with the only exception being a low standard deduction.” That might suit our current situation pretty well. It also might fit Bill Simon’s line in the late ‘70s: that the nation should have a tax system that looks like someone designed it on purpose. [Laughter]

Herman died in 1983, as we were reminded, right at the dawn of the boom that he had forecast, which went on with one hiccup for a quarter of a century. And I know that he would tell us today — one thing I know for sure — he would tell us as he did then, that it’s important to preserve what he called an “ideology of progress.” He said ideology is a way of thinking about the past, a way of framing the future, and is really important to achieving it. If you believe that humankind is capable of meeting its challenges and of devising new and better ways of getting forward, it is more likely that will finally happen.

It seems to me in our day, the question is not whether humanity will continue to march upward, whether it will continue to devise the inventions and the new arrangements which lead to more progress for more people, higher standards of living, and a better and more just world. The question is whether the United States of America will continue to lead that march or whether someone else will. In the long view of history, in which 235 years is a blip, it is not a given that any one nation either will continue in leadership or even exist for very long.

Now, none of us is Herman’s equal, but we are all his heirs if we choose to be. If we think as he thought, long-term and skeptically about what is commonly accepted, and practically, open- mindedly, following the facts where they lead, there’s every reason to be optimistic, not only about the result, but about our nation’s role in it. And one other thing. When I think back and read through Herman Kahn’s work, there is an affection there for his fellow citizens that I hope we never lose sight of. Those who would be friends of freedom and who believe in free institutions, free markets, the free competition of men and

11 woman aspiring for a better life, are the best motor to lift everyone. In fact, it’s the very best hope of those who enter life with the fewest advantages and opportunities. I hope that each such person will resist any temptation, which I occasionally see, to engage in a despair that occasionally creeps in. I hear too many people who are headed the right direction say things like, “Think how few people pay any taxes. Think how many people are on the government dole in one way or another. Think how our social mores, the ones that enable and encourage and protect freedom and prosperity, have eroded.”

Yes, real issues. Herman, I believe — I don’t presume to speak for him, but I just believe from everything I have absorbed from him and those who were around him — would never have given way to that sort of pessimism either. That should be left to the statists; it fits them better. It fits their world view. It fits a view in which the average citizens of this country and elsewhere are helpless victims incapable of dealing with the complex modern world, who need the benevolent ministrations of their betters.

That will prove to be a failed strategy as, I think, we have seen in recent days. It must be countered, not only with a different policy prescription, but with a different view, a different outlook that is more confident about our fellow citizens, about the taxi drivers, about the people who raise bears as domestic pets. And if we place our faith in their capacity, not just as individuals, to make the decisions necessary in their own lives to live as free men and women of dignity, but also to make the collective decisions, — the hard ones we’re going to have to make, the ones that skeptics through the ages have said a democracy would finally not be able to make — to discipline itself, to defer gratification, to think more about the future than the present, in short, to govern ourselves responsibly.

The starting point of an ideology of progress in our day must be to believe in those people. I do. I bet you do. I know Herman Kahn would have. We all do. If we follow that conviction where it leads us, America will boom again and the American project as we’ve known it will resume.

Thank you for this honor and a great night of fellowship. [Applause]

Kenneth Weinstein, CEO:

Governor, as we wrap up this evening, I want to thank you for those inspiring remarks. I think we have three lessons to take away from this evening; one never neuter a hibernating bear; two and I hope I have my job in the morning – the oldest meeting of individuals around the world is not the Hudson Institute Board Meeting; and three that you are a worthy heir of Herman Kahn and his vision and that our nation needs your leadership. On behalf of everyone here, my colleagues, Executive Vice President John Walters, Senior Vice President Scooter Libby, obviously President Herb London. I want to thank first of all, former Prime Minister Abe, former Vice President Quayle, and Governor Daniels thank you so much for honoring us this evening. We appreciate your support and hope to see you again, thank you.

[Applause]

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