CYCLE
COLOGNE == West Germany is experiencing its fourth boom since the end of World War II. A government economic report which predicted a nominal rise in the gross national produce of 6.4% and a real rise of 4,5% -- signifying a price jump of 2% -- proved to be much too low, The estimate now is 9% for the gross national product and 6.5% for the real rise, -
The main stimulating factor was a boost in exports and a resulting rise in investments. The favorable balance of trade may well prove to be the highest in the history of Germany, the forecast being DM 10,000,000,000 Lone Deutsche Mark = $.25].
Profits have shot up and the Institute of Economic Science, a trade-union institution, predicts that DM 20,000,000,000 in profits will be ploughed back into business in the form of self-investment, This us twice as much as the 1963 figure, constituting a new postwar record, ”
The situation is all the more favorable for German capitalism since wage contracts signed at the beginning of 1963 covered the next eighteen months, Under German law, a union is held liable to maintain its contracts unless they contain specific provisions to the contrary, Strikes in violation of contracts can thus mean penal~ ties running into tens of millions of dollars for the unions,
The coalition government of Christian Democrats and Liberals promised measures that would prevent the boom from getting out of hand so as to block undue price rises and a jump in the cost of living. However, the government faces difficulties, It can't lower tariffs on agricultural products, which would help keep.down prices, without risking the loss of. peasant support in the election next year. Moreover, it has begun lightening taxes on certain middleclass layers, knowing very well that..this will be reflected in a still higher rate of investment and further overheating of the boom, This move was also part of the political preparations for next year's election which the government regards as more important than anything else,
As things now stand, the Christian Democrats may very well win the 1965 elections, much to the chagrin of the Social Democrats who sought to gain popularity by dumping the last remnants of a socialist program and conforming to liberal capitalist views.
The latest master stroke of the Social Democrats was to help re-elect Heinrich Ltibke, the Christian Democrat candidate for presi-~ dent. By this strategy, argued Fritz Erler, one of the outstanding | brains of the one-time believers in socialism, the Social Democrats 'co-determined" who would be president of the Federal Republic}
This was too much for even Social Democratic stomachs to hold down without some signs of indigestion. In the secret vote of the. elective body composed of 1,024 members, 445 of whom are Social Democrats, it is estimated that about 40% either abstained or voted for Bucher y the Liberal candidate, 7
This milk-and-toast opposition reflected the resistance in various "Tinder" party organizations to party orders from headquarters in Bonn,