The West German government in Bonn doesn't like it at all: In other world capitals and at international institutions such as the World Bank and the International Monetary Fund, the Germans are being asked to help extend the global recovery by giving their own economy a major thrust.
"It's the same old story as 1979," a German official said angrily. "At the Bonn summit that year, the Carter administration pushed us into being a 'locomotive' for the rest of the world, and all it did was to churn up a big inflation for us. So we're not going to do it again."
It's not just the Germans who are being urged to take the lead, which would relieve the United States of some of the burden. The fear is that the 1984-85 recovery will peter out unless the Big Three -- the United States, West Germany and Japan -- move together to foster economic growth. World Bank analyst Jean Baneth made this point at the end of the year, arguing that there is a probability of recession if they don't.
The Organization for Economic Cooperation and Development pointed out a few days ago that Japan and West Germany had been asked to do more to support world recovery at the now-famous Group of Five meeting in New York on Sept. 22, 1985, when representatives of five major industrial nations met to discuss ways to reduce the dollar's value.
But since then, while Japan has put in place a mildly stimulative package, the West Germans have refused to take expansionary measures beyond an already planned series of tax cuts for 1986 and 1988.
Assistant Treasury Secretary David Mulford has publicly criticized the West German government for not intervening forcefully enough in exchange markets after the Group of Five agreement to devalue the dollar. But Mulford has been careful not to be explicit about Germany's internal economic policies.
Nonetheless, the pressure is there, and the ruffled feelings of the German government come through clearly in the guarded formal statements of Finance Minister Gerhard Stoltenberg and central bank President Karl Otto Poehl, and in less diplomatic comments made privately.
Historically, the Germans have a fear of inflation that borders on paranoia. Goldman Sachs Vice President Robert Hormats, part of the American team that demanded that Germany become a 'locomotive' in 1979, now believes that "we shouldn't push them." Just back from a visit to West Germany, Hormats argues that "the German economy works best when the people there are confident of low inflation. When it looks as if inflation is picking up, their economy just doesn't function." The projected economic growth rate for this year is about 3 percent.
But the OECD economists and many private experts believe that it is essential for Germany and Japan to be more aggressive, and that it can be done without serious risk of a new inflation.
Jack Albertine of the American Business Conference, a lobbyist whose views often parallel those of high Reagan administration policy makers, told me: "There is no danger of inflation in West Germany. As a matter of fact, there is a serious disinflation, with commodity prices falling." He cites an "enormous" excess capacity following five years of sluggish economic growth and high unemployment.
"It all argues for a much looser German monetary and fiscal policy. It would make sense for the Germans to cut their interest rates by at least 2 full percentage points. Since the West German economy dominates Europe, all other Common Market countries would follow suit -- and so would we and Japan," the business lobbyist contends. Not only would that generate economic growth, Albertine says, but it would help reduce the U.S. trade deficit and prevent a free fall of the dollar.
If the case for lower German interest rates is so overwhelming, why do the Germans resist? For one thing, no sovereign nation likes to be told by others how to conduct its affairs.
In April 1985, at a breakfast with reporters in Washington, Economics Minister Martin Bangemann laid the policy out this way, and it hasn't changed: "Germany doesn't plan to stimulate domestic demand. We've already done a lot -- a two-stage, 20-billion-D-mark reduction of taxes -- and we do not want huge deficits in the budget. We have seen the dangers of such totally wrong policies."
But there is a more subtle counterargument made by the Germans. In a recent Washington appearance, the respected German economist Kurt Biedenkopf -- a member of the national board of the Christian Democratic Union (CDU) -- said that a 3 percent growth rate "is the highest performance that can be expected under stable economic conditions."
Population growth has stagnated in West Germany. By the year 2,000, Germany's population will be down a couple of million from the 60-million-plus peak of the 1970s. As a result, the construction and home-building industries are already in a decline.
Moreover, Biedenkopf said, the old pump-priming methods of stimulating economic growth no longer can be counted on to overcome unemployment, admittedly a major problem for Germany and all other European countries. "With greater productivity, we're getting a higher GNP with a lesser amount of work," he said. That translates into fewer jobs and high unemployment, even with a shrinking population.
In this environment, according to Biedenkopf, a Keynesian stimulus would be counterproductive. If the unions could be persuaded, he sees more benefits coming from acceptance of a shorter work week (at reduced pay) and a cut in the West German government's social security expenditure burden, now 31 percent of GNP.
Nonetheless, to the rest of the world, West Germany appears to be a very affluent society, benefitting -- as do the Japanese -- from a solid export surplus with its trading partners.
The Germans therefore must place considerations such as international "responsibility" alongside their fears of inflation, particularly in view of their low population growth. As their numbers shrink in the next century, West Germans will be even more dependent on the strength of the global economy to support their home economy.