WHILE IT IS fashionable to complain about
the poor performance of the American economy, by European standards it is holding up rather well. The strains are worldwide. Inflation, budget deficits and unemployment are the torment of politicians in every industrial country--with the usual exception of, perhaps, Japan.
In Britain, Prime Minister Margaret Thatcher has just fired several of her ministers who were losing faith, publicly, in her rigidly monetarist plan for economic recovery. At the midpoint of its five-year term, her government now confronts an unemployment rate of 11 percent--double the rate when she was elected. But for those people who still have jobs, wages continue to rise a little faster than prices. One lesson of the British experience is surely that monetary restraint is dangerous when the impact falls first on industrial investment and last on wages. It's because the British are very good at keeping their wages ahead of prices that their unemployment rate has now soared far higher than in any other major industrial country.
In Germany, the government has struggled through the summer to try to bring down its deficit. The Germans are afflicted by a more serious variation of the Social Security shortfall well-known to Americans. It originated in exactly the same way, as governments in the high-growth years of the 1960s and early 1970s made large promises of benefits to be financed from the economic expansion that they thought was sure to come. Now political leaders are desperately searching for ways to cope with promises that they can no longer afford. The endless quarreling in Bonn over the budget and social security is progressively weakening Germany's coalition government.
In France, the new Socialist government is committed to a brisk program of industrial nationalization and vigorous action to bring down unemployment. The unemployment rate is about the same there as in the United States, but in France the president is a man of the left. The inflation, in response, is already accelerating. French policy and purposes are now the mirror image of those in Britain, and French success, or the lack of it, will have an incalculable influence on European ideologies.
Since the economic indicators are not particularly encouraging, it is useful to note another similarity among these countries: they are democracies. Much of their present trouble is the result of fairly successful attempts by democratic governments to shield their people from the cruelties of rapid, unpredictable and badly distributed economic change. That kind of success doesn't get counted in the economic statistics. But perhaps it explains the remarkable stability of Western societies in these years of high unemployment and economic turbulence.