Fast Company: How do you see the relationship between government and business?
Schwarzenegger: We get a lot more done when we create a great partnership to tackle problems. Whenever government does something alone, inevitably it fails. Why? Because even if we include Democrats and Republicans and Independents and say, “We’ve got the best brainpower,” that’s only the public sector. We need the best brainpower from the other half, the private sector. The important thing, as we’re creating a vision and setting guidelines, is that we’re working with business. We can say, “We want to reverse global warming and go after it from every angle without hurting business.” We want to show we’re friends and not the enemy.
FC: California’s Global Warming Solutions Act is the first environmental law to require companies to dramatically reduce greenhouse-gas emissions–by 25% to 1990 levels. How do you make that sort of mandate palatable to companies?
Schwarzenegger: We want to use a market-based system to give businesses incentives. That’s why the cap-and-trade system is a brilliant idea. We’re using the typical government “stick” approach–there will be an emissions cap–but we’re also recognizing that that alone could hurt businesses and the economy. So we say, “Okay, let’s add the trade mechanism so we can accomplish both.” We inspire businesses to make the changes as quickly as possible. If they get below the cap, they can trade emissions credits and make a profit while helping a company that can’t make as quick a turnaround.
FC: So you reward leading-edge companies. How else are you moving markets to pursue your environmental goals?
Schwarzenegger: With new fuel standards, we’re trying to create alternative fuels. [By 2010, California’s oil refineries and gas suppliers are required to show how they’ll incorporate alternative fuels to reduce carbon emissions by 10%. In January, the governor announced that California, the world’s 12th-largest greenhouse-gas emitter, will lower emissions that much by 2020.] We have a very good relationship with the oil companies. I tell them, “Look, we’re not saying a different company should be providing the alternative fuel. You could provide it and you could be making the money.” We want them to see, here’s a great opportunity. This is a new market. This is a new business that we can create here with clean energy that no one has ever asked for.
FC: Where does this notion of using the free market as a mechanism for change come from?
Schwarzenegger: I come from a business background. I studied business in college, and I was always interested in the business side of everything. In all I’ve ever done–you know, bodybuilding, fitness, the movie business–I’ve always looked at it not only as the joy of doing the sport or the joy of acting but also, how do we make $1 into $10? How can we make a business out of it? Because everything has a business aspect.
FC: What do you mean?
Schwarzenegger: You can be the greatest painter, but if you don’t know how to market your work and showcase it in the right frame and the right gallery, how successful can you be? All this stuff is part of the business. It’s marketing. So if you look at everything with that spin and acknowledge that you need this in order to be successful, that helps you. It helped me in my promotion of movies. I recognized that actors in the 1970s and 1980s never went overseas to promote their movies. I said, Wait a minute, the globe is our marketplace. So I went to Italy and France and Spain and India and Japan and Australia, and my movies grossed two-thirds overseas and one-third in America. Normally, it was the other way around. But I was able to increase my salary and increase my partnership because so much more money came in.
FC: Are there parallels between promoting movies and promoting policies such as greenhouse-gas reductions and universal health care?
Schwarzenegger: Nothing changes when you’re talking about health care. You still have to market it the right way and make people understand it. You have to get people to participate. That’s important. People get very creative if you include them. There are these very smart people, not only in my state but all over the country, who come in and say, “Hey, guys, I heard that you listen to ideas. I have a great idea.” Now it may be a bogus idea, but it’s worth listening to find out.
To get everyone on board and move the agenda forward, we say, “How do we make it hip?” rather than “Here’s another government regulation.” We don’t want to drag it down. We want: Here’s a brilliant idea on how we can make more money and serve more people and insure more people and make people healthier. Here’s a great idea on how we can be innovative and reduce the amount of fossil fuel we’re using.
And we can always use this: Come on, we’re from California. We’ve always been number one. We’re the smartest. We have the best universities. We’re the most innovative. And on and on. Let’s show the rest of the world that we can come up with the best ideas. Let’s kick some butt here. That, too, inspires people.
FC: How does California’s size–36 million residents and a $1.5 trillion economy, the world’s sixth largest–affect your expectations for the impact that solutions like the climate-change law can have?
Schwarzenegger: What we are trying to do is show leadership in this area. If you look at the globe, you see California as a tiny box geographically speaking. But if you look at the power and influence of California, it immediately changes the picture. We have this huge name. This is what I want to benefit from to get the ball rolling all over the world.
I just got a call this morning from Germany. I was on the cover of a magazine, and the story was, How is it that California is able to combine green with business? This is unheard of in Germany. The conservative party, the business-aligned party, would never ever line itself up with the environmentalists. What we’re doing inspires them to find a way to sit at the same table and discuss the issues. I get stories from all over world. Whenever they write about the environment, they use California as an example.
FC: Tell us about some of the companies that are going after the clean-tech market you’re trying to stimulate.
Schwarzenegger: There are hundreds of companies that are moving in that direction. In the next month or so, I’ll do what we call a “green tour” and visit companies all over California that have new concepts. I want to see how the factories work and let them explain what they’re doing, why they’re profitable, how they are going to market. You get firsthand knowledge.
For instance, we’re going to inspect maglev delivery systems being developed in San Diego to move containers inland from the ports [“maglev” is shorthand for magnetically levitated trains. They travel up to 300 mph and are pollution-free, but it costs about $100 million a mile to construct a system for freight]. We can’t get goods out of the ports fast enough, because the trucks get stuck in traffic. This way, we would not use freeways.
Forty-two percent of all containers coming into the U.S. are coming through our ports. We are the gateway to the Asian economy. During our trip to Japan, one of the first things Prime Minister Koizumi told me was to get the ships unloaded quicker. If cargo gets unloaded right away, we can deliver more and ship more. Everybody can make more money. But if it waits for weeks to get unloaded, that is a loss of money. The Japanese made it clear they can send those ships to Canada or Portland or Seattle or Mexico. We want them to come here so we can create jobs and benefit from that. To do that, you have to always think of new technology.
FC: Your policies are rather contentious. The Environmental Protection Agency is refusing to regulate greenhouse-gas emissions in California, and automakers are suing the state over proposed emissions rules. How do you deal with the resistance?
Schwarzenegger: First of all, you should never say, I can’t believe all the obstacles we’re facing. Every time there’s some new idea about anything, you will have people who despise any change. They love to hang on to the status quo. They will fight and they will take it to court. You have to expect it. The car companies have, you know, 25,000 lawyers, and this is what they do. We said, “Look guys, we understand, but eventually you’ve got to come our way, because it’s the best way to go.”
We included them in the car show and said, “Why don’t we all stand together on stage and celebrate the great accomplishment of the car companies?” They are moving slowly in the right direction with cars that get more mileage. Cars that drive on alternative fuel. Cars that charge on batteries. I didn’t bite and talk about the lawsuit. I said, Look, guys, you do what you need to do, but remember we are your friends. We want you to succeed. We want you to sell twice as many cars in California, but clean cars. I think we can do it. Last year we had three cars at the car show with alternative fuel. This year, we had 18.
FC: What’s the hardest part of this public-private approach?
Schwarzenegger: Things take longer than if you’re just in the private sector, because you’re working with so many entities–people from both parties, the federal government. That makes it much more difficult to move things along and get a consensus. But that’s part of the job. That’s the beauty of the job. The bigger the obstacles, the more fun it is for me. Because anyone can overcome little obstacles. To overcome the big ones, it’s a huge challenge. If you have the personality that enjoys that, then you enjoy this job. For me, it’s inspirational to have big goals. You can have a tremendous impact on people’s lives.
These are things that others have shied away from even touching [greenhouse-gas emissions, universal health care, stem-cell research], but they’re all subjects we’d like to deal with even with the risk involved. Let’s pull them out from under the rug. Let’s have everyone debate. Let’s go create a vision. People say, “You can’t get everything done. There’s no way. It’s just too big. You’re one of these big action guys that likes big things, but everything can’t get done.” Well, so be it. But the only way to know if you can lift 500 pounds is if you put 500 pounds on the bar.
FC: Since you weren’t born in the United States, you’re ineligible to run for president. How much does that free you to say and do things that other politicians can’t?
Schwarzenegger: I don’t think I intentionally try to be bold because I don’t have to look for the next step. But I think that people are going to look at what I’m saying in a different way than someone who is running for office. You know, “That guy is talking about it because he has an agenda.”
We want these issues to be on the national stage. We want to remind people that when you listen to the presidential candidates these next two years, make sure that the environment is an important issue and health care is an important issue. They should have a plan. What year should we have a reduction of 20% or 30% of fossil fuel and get away from our reliance on OPEC? There will be increase in fossil fuel in America if we don’t make changes right now.
How are they going to reform social security? Press them to talk about those issues. Here are the things that will be important way beyond the Iraq war, 20 years from now, 30 years from now. What’s their answer?