Almost daily, some high-level U.S. official calls on West Germany and Japan to do "their share" for the global economy by lowering interest rates or taking other steps to expand activity.
Beryl Sprinkel, chairman of the president's council of economic advisers, put it this way the other day: "We've been carrying the world with a strong economy, on average, over the past 44 months. What we need is more growth in Western Europe and Japan."
Similar thoughts have been expressed, even more sharply, by Treasury Secretary James A. Baker III and Federal Reserve Board Chairman Paul A. Volcker, who note somewhat bitterly that Japan and Germany resist taking such steps even though they have negative growth rates and no inflation. Moreover, Germany suffers from record high unemployment.
But the escalation of the rhetoric on the American side has been met, so far, with brusque rejection from our two main trading partners, coupled, usually, with the suggestion that if the Americans are worried about the global economy, they might pay attention to the most serious disruptive factor, the huge U.S. budget deficit.
There may be more flexibility shown soon by Japan. Reagan administration officials welcomed last week's Cabinet shuffle in Japan, which brings Kiichi Miyazawa into the Finance Ministry post. Miyazawa, a potential rival of Prime Minister Nakasone, has long favored expanding the domestic economy, including a drive to overcome a basic shortage of housing.
If Miyazawa can overcome the stand-pat attitude of the entrenched Finance Ministry bureaucracy, Japan might yet respond in its own self-interest to the need for generating growth at home, rather than depending solely on exports.
But for the moment, there seems to be a stalemate in international policy cooperation among the Big Three industrial nations. This suggests two important questions:
First, what has happened to the highly touted commitment to coordination that produced such good results at New York's Plaza Hotel last September? At that time, the United States, Japan and Germany, joining France and Britain as the "Group of Five," undertook to assure a better alignment of their currencies.
And second, are the Japanese and Germans right to minimize the potential "locomotive" effect that they could generate on behalf of the global economy if they did, in fact, juice up their own economies?
On the first question, some experts (including the president of the German central bank, Karl Otto Poehl) contend that the Plaza results never were as great as they were said to be. The dollar, they say, was coming down anyway.
Be that as it may, there is little doubt that the sense of urgency present at the Plaza last fall has evaporated. Japan willingly joined in the move to push the dollar down and the yen up, choosing that route as preferable to harsh protectionist trade legislation than might otherwise have been passed by Congress.
But now, both Japan and Germany cry, "Enough!" They have no desire to see their currencies appreciate further at the expense of their own export markets. And the Germans, with a traditional fear of inflation -- even where inflation doesn't exist -- are hesitant to lower interest rates. Meanwhile, Japan's central bank hesitates to cut interest rates, already low, in the fear of wasting one of the few available tools for stimulating the economy.
In a new study of the consistency of international economic cooperation prepared for the Trilateral Commission, economist C. Fred Bergsten concluded that the big nations are pretty good at crisis management (as they were at the Plaza), but that they have failed to build a solid partnership that endures over the longer run.
U.S. policy, he notes, has gone through yo-yo swings from "passive unilateralism" (for example, the benign neglect of the dollar at the beginning of the Reagan administration) to "active unilateralism" (for example, Nixon detaching the dollar from gold in 1972) to "pluralistic cooperation" (for example, the Plaza agreement).
The swings from the one to the other can be extreme. For example, the Carter administration early on began talking the dollar down, then within two years had to throw together a dollar support program. In each of the last four administrations, Bergsten shows, the president started out with a policy that basically ignored the rest of the world, and wound up realizing that he needed a much greater degree of international cooperation.
The Reagan administration, under Baker's leadership, is at a stage where it seeks cooperation. But the Germans and Japanese don't want to play.
"In essence, the United States thus faces something of a scissors movement," Bergsten said in his Trilateral study. "On the one hand its dependence on the world economy is rising. On the other hand, its power to dictate global economic outcomes has declined."
And about the contention that the Germans and Japanese couldn't do much, anyway, to avert a global recession because the economy of each is so much smaller than that of the United States? This pretense of modesty doesn't hold water. The fact is that a solid increase in German and Japanese activity would trigger healthy expansions in Europe and in all of the other major industrial countries.
It is true that if Germany and Japan undertook an expansion, and no other countries reacted, it wouldn't mean much. But if they move, so will all of Europe and much of Asia. "German and Japanese expansion unlocks the key to expansion in a lot of other places," Bergsten says.
How should U.S. policy proceed? If Japan undertakes economic expansion under the new Nakasone-Miyazawa regime, while Germany refuses, there are some who suggest that the United States should put the pressure on Germany by a more conscious coordination of policy between the United States and Japan.
Moreover, as Bergsten proposes, it may be time for the United States to bring other Pacific Rim countries, especially South Korea and Taiwan, into the international policy mix. Such a U.S. policy focus on its Pacific trading partners might be just the thing to jar Bonn into action. Almost certainly, it would bring some increased pressure on the West German government from the European Community, already sensitive to what community leaders regard as their exclusion from the top international economic management.
The Treasury would rather stay with the G-5 or G-7 format, but a high-level official warns that if the United States doesn't get some help soon from Germany and Japan, and "if this trade deficit lingers on, we really run the risk of losing the world's free trading system." So far, apparently, Bonn and Tokyo -- although conscious of the protectionist sentiment building in Congress -- haven't been persuaded to take as grim a view.