John Maynard Keynes would approve of recent actions by President George W. Bush and Minnesota Gov. Tim Pawlenty.
The British economist once was taunted for taking a position on some issue that was at odds with his previous statements on the same subject. He retorted, “When somebody persuades me that I am wrong, I change my mind. What do you do?”
The president and the governor have changed their minds recently. For both, the change represented a turn away from folly and toward good sense. Only skeptics will question whether they changed because someone genuinely convinced them their previous position was wrong or simply because political winds are blowing in a new direction or have died down.
Bush has decided to drop the special tariffs on imported steel he imposed 20 months ago in the heat of the 2002 congressional campaign. The decision was a bad one and ignored the advice of key Cabinet members. It hurt the U.S. economy far more than it helped. Dropping the tariffs will help consumers and help employment at least modestly.
This U-turn will be embarrassing for Bush in a few states during his re-election campaign. The fact that steelworkers unions have already endorsed U.S. Rep. Richard Gephardt perhaps made his decision easier.
His change of heart, however, will ward off possible embarrassment in states such as Florida that would bear the economic impact of any retaliatory restriction on U.S. imports by the European Union or World Trade Organization.
Pawlenty has backed away from a campaign position he took in 2002. Then, he repeatedly advocated targeting investments of funds managed by the Minnesota State Board of Investments to foster specific industries considered key to future economic development.
Jesse Jackson has advocated analogous moves at the federal level. Whenever he does, Republicans go bananas. GOP stalwarts had several reasons to bite their tongues last year when their gubernatorial candidate adopted this proposal.
The investments board has a statutory duty to manage these funds for the benefit of state and public retirees whose pension accounts make up the bulk of these monies. It has no mandate to engage in economic development or other good works.
Secondly, the Leninist fallacy that government is good at picking industrial winners and losers historically has been anathema to principled Republicans. This sort of central planning is even falling out of favor among many Democrats.
It is not clear whether Pawlenty had a true change of heart or if it simply was one of those promises that a candidate never has any intention of keeping. The important thing is the governor is letting the idea die quietly and is not going to muck around with public investment funds.
Two announced changes of mind — one national and major, the other state-level and minor — but both are changes in the right direction.
That’s not a bad week.
© 2003 Edward Lotterman
Chanarambie Consulting, Inc.