Thursday, April 16, 2009

Pragmatism Wins

Short post today as I am in the midst of a mad scramble to prepare myself for up to a year away from home...

I've never been a big fan of bloggers who frequently tout their ability to predict the future -- which is why I neither try to predict the future very often nor highlight the times that I do so successfully. I hope my patient readers will allow me this one brief exception.

Remember when the world was pulling its collective hair out over Tim Geithner's written comments about China's currency "manipulation" during his confirmation hearings? The general consensus in the press was to accept this as official Obama policy and predict doom for US-China relations.

Though international political economy is not one of the major topics I intended to cover with this blog, I couldn't hold my tongue. I felt people were not taking into account the role that domestic American politics was playing in Geithner's confirmation, and that his words were intended to get him confirmed, nothing more.

I summed up one of my posts, "Why Geithner's Words Don't Matter (Yet)" as follows:
Regardless of what may be said in confirmation hearings, and regardless of the inevitable angry words toward China that will emanate from the Pelosi-led Congress, Barack Obama and Tim Geithner will not countenance major economic sanctions toward China during a time when our cooperation is of utmost importance. To do so would lead to a trade war that would bring about an even longer and deeper world recession.
In another post on this topic, "Don't Worry About Geithner's Words on China's Currency", I said:
...we should take the words of as-yet-unconfirmed cabinet secretaries only as seriously as we take campaign rhetoric. Geithner, like President Obama during his campaign, wants a job that he does not yet have. Appearing to be tough on China is always part of a good campaign strategy in the United States.

Once people win elections or confirmations, they then become responsible for doing a good job. Often the practicality of leading a country negates the necessity of following-through on campaign rhetoric.
Now that Geithner is officially the country's Treasury Secretary, we find that, indeed, pragmatism wins (from the Wall Street Journal):
The Obama administration declined to label China a currency manipulator...

The decision...represents a sharp break from President Barack Obama's position while he campaigned for office.

It also contradicts Treasury Secretary Timothy Geithner's position in late January, when he said China was manipulating its currency, though the administration was careful not to repeat that language.

No one should be surprised by this.