For the first time in years, the world's major nations are turning their attention to the need for economic growth. Their minds focused by the grim reality of 32 million people unemployed in the industrial countries, politicians finally seem willing to take whatever risks there may be in a mildly expansionist policy, and give the anti-inflation fight a No. 2 priority.
At least that was the course agreed on here in the past few days at the Organization for Economic Cooperation and Development, for the United States, West Germany, England and Japan. The cozy phrase evolved by the OECD bureaucracy is that these countries have "growing room."
This represents at least a mild retreat from what New York Federal Reserve Bank President Anthony Solomon called "Euro-pessimism"--a belief that domestic macro-economic policies had become impotent. Europe has been losing confidence in itself--and there are deep-seated problems that caused it to seek answers in protectionism rather than growth.
The need to reinstate the economic-growth goal, even if the heady gains of the 1960s are no longer achievable, has also been urged for the past many months by Secretary of State George Shultz.
Without growth, he has argued, the industrial nations will continue to be tempted by protectionism, shutting off imports from each other and from the Third World. But if there is no hope for expanding their sales to Japan, Europe and North America, poor countries do not have a prayer of paying off the interest on their debt, let alone the $600 billion to $700 billion principal.
But as three days of intensive and generally productive meetings here at the OECD demonstrated, unanimity in the Western world is rarely possible, and even broad compatibility is a fragile thing. Thus, even though England is included among nations with "growing room," no one expects Margaret Thatcher to push a major expansionary program.
And with high rates of inflation and generally weak economies, France and Italy do not wish to take the dramatic step recommended for the others--a relaxation and dismantlement of protectionist measures.
Yet this is the first time since the second oil shock that any governmental group has dared mention growth first and inflation control second. Inflation has been receding--and oil prices have been falling--but the cost has been a terrible increase in unemployment.
Huge numbers of young people in Europe, like teen-age blacks in the United States, have never had a job. A survey last fall showed that 70 percent of unemployed British teenagers expect never to have a job. Never. That's a measure of hopelessness that spells trouble.
Over the past decade, with all the ups and downs of recession and growth cycles, about 10 million new jobs have been created in the United States. Over the same period, according to an OECD analysis, Europe has had a net increase of the incredibly small figure of 100,000 to 300,000 new jobs. That is net over 10 years, and as an American diplomat said here this week, "That's ridiculous."
So the world's statesmen aren't acting too quickly as they rediscover the virtues of economic growth. The only question is whether they are planning to do enough about it: The fear of regenerating inflation is a constant restraining force.
But they seem to have recognized, in this dry run for the Williamsburg economic summit, that whatever other policies they follow, nothing will do much good if the drift into protectionism is not reversed. As U.S. trade ambassador Bill Brock told the meeting here, about one-half of world trade is now restricted by quotas and similar non-tariff barriers.
Unless these are chipped away, they will continue to inhibit recovery, he said, "and undermine incentives to adopt more efficient and cost-effective means of production."
Danish Foreign Minister Uffe Ellemann-Jensen added: "The rollback of trade restrictions must not await recovery but, on the contrary, should be used as a supportive policy."
Ironically, in the United States, the Democratic Party, which used to carry the banner for free trade, has left this as an issue for the Republicans. Yielding to labor-union pressure, every leading Democratic presidential hopeful has slipped, to one degree or another, into the protectionist camp. That now goes under the euphemistic disguise of "fair trade."
Last week in Paris there was at least a small step taken toward restoring faith in "free trade."