The Comfortable Society; Prosperity, stability, maturity -- the 'miracle' goes on
Frankfurt, West Germany
West Germany is a comfortable society. Its Burgers enjoy great prosperity. They can afford their Konditorei with their fine pastries, their fast cars, their state-subsidized orchestras, operas, and theaters, their tenderly cared-for parks, their stores crammed with goods, and their handsomely furnished apartments.
They cherish their birth-to-death welfare system with its considerable protection against the vagaries of life. They treasure their standard five weeks of vacation, their many holidays, their maternity leaves, their Christmas bonuses.
They pride themselves in a basically healthy and efficient economy with low inflation (a 4.4 percent annual rate in the last three months). Despite a recession, unemployment is still running relatively low (about 4 percent). They use a nationalized railway system that works, although it is costly to the taxpayer. Their industry has become the "machine shop" for much of the world. West Germany has become the second-largest trading nation in the world.
Germans often give considerable credit for their achievements to their trade unions. They generally praise them for being "responsible" in negotiations for higher wages. German workers are not restless. The number of work-hours lost to strikes is small.
Moreover, the average German citizen is politically cautious. He has had more than enough of political extremes. Thus the nation is politically stable. Germany's voters earlier this month re-elected with an increased majority the center-left governing coalition (with the emphasis on center). Chancellor Helmut Schmidt, head of the Social Democratic Party, has four years to go before facing the electorate once more. Despite its "socialist" label, the leading government party is managed today by economic conservatives. The nation has a central bank, the Bundesbank, that is powerful, independent, and determined to keep the deutsche mark sound by keeping a firm grip on the creation of new money.
But where does the German economy go next? Will the massive international payments deficits now facing the nation threaten its economic stability? Will the latest price increase of the OPEC oil cartel renew inflation?
Asked these questions, West German economists and officials sound unalarmed, confident of the future. Their basic forecast is for more of the same -- more affluence, continued good economic management. Here are some of their comments:
Dr. Manfred Lahnstein, state secretary in the Ministry of Finance:
"We will behave much more normally [economically] than we did in the last 30 years. After the war we could build up an absolutely modern capital stock. We had more than enough qualified labor, with so many refugees from East Germany. We could start from scratch intellectually. We had good relations between the trade unions and management. We have had mainstream governments."
Some of these advantages persist, Dr. Lahnstein noted. "We will do quite well in the next 10 years -- if we maintain the political and economic aspects of our "Wirtschaftswunder' [economic miracle]."
The tall, blond official figures that West Germany faces "the destiny of a mature economy." He sees no major breakthrough in technology that would give Germany a lead over other countries in important industrial sectors. Rather, he expects the growth in national output to run on average about 2 percent a year, considerably slower than in the past. "But that is 2 percent of much more. The basic is so much higher. So we should not be overly worried."
Dr. Lahnstein is cheered by the growing number of Germans launching their own small businesses or entering the independent professions. "The younger generation has learned to live with crisis . . . are ready to face risk. I find this very encouraging."
As for the welfare system, he sees no major expansion. "We don't need it and we can't finance it. All the basic needs are taken care of. But there are always minor improvements. We can cit a little bit at the edges."
Karl Otto Pohl, chairman of the Deutsche Bundesbank:
"Fast ecomic growth [in West Germany] cannot be maintained for decades. Our main economic problem will be to react to the change in the energy situation in the world. The room for maneuver has become much lower in all our economies. The higher oil prices mean we have to transfer 1.5 to 2 percent of gross national product to the OPEC countries. That in turn means there is less you can provide for higher wages or government spending.
"We have to do everything we can to find substitutes for oil and save energy. That needs tremendous investment. There will be less room for increases in the standard of living than in the 1960s and 1970s."
Mr. Pohl noted that after the quadrupling of oil prices in dollar terms in 1973-74, West Germany avoided some of this serious impact because of the dramatic rise in the value of the mark. "I do not think we can repeat that," he said. "But we can consolidate the level of wealth we have. We can consolidate our social and political stability. Germany is a bit better off than other countries. Its economy has been fairly flexible over the last 20 years. Our competitive position is very good. So far I am optimistic we will be able to adopt to this structural change resulting from the oil crisis."
Mr. Pohl pledged that the central bank would maintain the deutsche mark as a hard currency through a conservative monetary policy. "I am absolutely determined to maintain this course, which has approved to be highly successful in the past. A stable currency is a very good precondition for high savings, high investment, and high productivity."
Alfred Boss, an economist at the Institut fur Weltwirtschaft, Kiel:
Unemployment, he figures, could increase in the first half of this decade bacause of the nation's population structure. Those of working age (15 to 65) will increase fairly rapidly in the first half of the decade of the 1980s. This trend, combined with an increase in the proportion of women working, will boost the size of the labor force about 1 percent per year. Some 150,000 to 200,000 new jobs will be needed each year. About 1985, the basic decline in the German birthrate during the 1970s will start to have its effect, and a labor shortage could occur.
Until then, however, Mr. Boss expects the trade unions to be relatively moderate in their wage demands.
He forecasts that after the current recession, which will extend into next year, real growth of the German economy could snap back to 2 or 3 percent in 1982. But it would average some 2.5 percent. Unemployment, now around 850,000, could increase to 1.3 million by 1985, then decline gradually to 1 million by 1980.
Population will decline 0.3 percent per year during the 1980s. The per capita gross national product, a measure of the standard of living, will grow between 2.8 and 3 percent per year -- "a little less than in the last two decades," Mr. boss figures.
The tendency for the hours in the working week to shorten and the length of vacations to increase above the current five or six weeks will come to a halt, he adds. "People don't know what to do with their long vacations."
Because of its economic might, West Germany should play a gradually increasing role in world affairs. the defeated candidate for chancellor in this month's elections, Franz Josef Strauss, once said: "Today economic power holds the place that infantry divisions held under the Kaiser." By that measure, Germany has many divisions.