Why was the chorus predicting failure so thoroughly drowned out by the actuality of what happened in the recent meeting of leaders of the seven rich countries in Bonn? The answer, I think, lies in the workings of the summit process.
Being with one another at the top brings out the good angel in individual leaders. It causes them to act as statesmen with responsibilities broader than mere national advantage. They are thus obliged to confront - rather than merely live with - the forces of darkness inside their own countries that push them toward narrower perspectives.
At Bonn the critical relationship lay between President Carter and Chancellor Helmut Schmidt. The president had counted heavily on the Germans and Japanese in joining the United States to lead the industrialized world out of the slough of slow growth. In an interview given only the day before he left for Bonn, the president expressed anew almost wistfully the hope that "both Germany and Japan . . . stimulate their economies so that growth can be higher."
The hope-against-hope tone of that statement was well founded. The Germans and Japanese had been far more concerned with inflation than expansion. They had not met the growth target set for their economies in the 1976 summit in London. Worst of all, Schmidt had actually taken the offensive against the president and his economic policy.
The chancellor's argument, expressed over and over again in semi-private, was that the United States was exporting inflation abroad. The mechanism was the falling dollar. The dollar fell because of the huge American trade deficit. the trade deficit occurred because of the mammoth imports of oil. The mammoth imports derived from the failure of the Carter administration to drive through an energy program.
At one meeting in Frankfurt, the chancellor called the American policy on energy "irresponsible." On the eve of the summit, he told a group of West German newspapers that he was still more inclined to fight inflation than promote expansion. "I see little use in a German offer to hear up the economy," he said in a pointed shot at Carter, "if others . . . do not even try to balance their current accounts and do not contribute to greater domestic and foreign monetary stability."
The critical meetings in Germany were the bilateral summit sessions between the president and the chancellor on July 14 and 15. The president convinced the chancellor, or rather disabused him of his fantasies, as to the administration's seriousness about applying an energy policy that raised prices in this country and thus curtailed oil imports.
Schmidt responded at the end of the bilateral summit by convoking his own team of economic advisers. He persuaded them of the president's seriousness, and won their approval for at least a slight move by West Germany toward economic expansion. He told Carter he would make his move in a Cabinet meeting on July 28. Apparently what the chancellor will do is go for a tax reduction - a policy not awfully popular in his own Social Democratic Party.
Having confronted his owned party people, the chancellor forced the president to confront his internal pressures. Carter was asked to give pledges that oil prices rise and that oil imports be curtailed by 1980. The president took the pledge, and now he has to try all the harder to drive his energy program through Congress.
With the Americans and Germans pulling together, the meeting of the seven was child's play. The Japanese, apprehensive about protectionist feeling in Europe and the United States, could do no less than the Germans. Prime Minister Takeo Fukuda agreed to limit exports and to consider more economic stimulus if Japan's growth rate, now running at about 5.6 percent, did not reach the 7 percent rate by fall. To oblige the Japanese, the British and French were then roped into a pledge by all of the industrial countries that they would not follow protectionist policies.
To be sure, the results of those various pledges - even if all are kept - will be meager. At best, economic growth will be advanced by a fraction of a point above the 4 percent projected for this year. But that is enough to prevent things from getting worse.
Moreover, the summit process did work. The leaders traded up, not down. Having pledged themselves to each other, they must take stronger stands against domestic forces. That is why they did better than rational analysis predicted and even than they expected.