Blough-Kennedy `a la Deutsch

In West Germany last week, government and business played out their own version of the great Kennedy-Blough drama. The German actors did their best to follow the original script faithfully, but somehow something got lost along the line in translation.

Playing Jack Kennedy in the German version was Economics Minister Ludwig Erhard, who made his reputation as the laissez-faire-dealing architect of Germany's postwar prosperity. Seven weeks ago, as West German televiewers waited for the evening weather broadcast. Erhard's owlish face unexpectedly appeared on their screens. Coldly, the Minister warned that unless labor stopped pressing for higher wages (which went up almost 15% last year) and business stopped boosting prices, German exports might well be priced out of international markets.

Scarcely had Erhard delivered his message when six German automobile manufacturers, led by Volkswagen, increased their retail price from $60 to $97 per car. With Kennedy-like rage, Erhard denounced the price rise as "irresponsible" and summoned top automakers to his office for what Germans like to call "soul massage." At first it appeared that Erhard had won the day. Shaken by his assault, Volkswagen's board of directors recommended that the price increase be abandoned--and whatever Volkswagen did, the other automakers could be expected to follow.

But under German corporate law, a directors' vote is not binding on management, and last week, politely rebuffing his board, Volkswagen's laconic President Heinz Nordhoff coolly announced that the increase would stick.

"Outrageous!" trumpeted Erhard. At his insistence, West Germany's Cabinet discussed the possibility of punishing the automakers by cutting the tariffs on imported cars. But Chancellor Konrad Adenauer, never averse to taking would-be Heir Apparent Erhard down a peg, remained silent, and at week's end, despite continuing blasts from Erhard and the threat of three parliamentary investigations, the automakers still stood fast.

Meantime, the German press, which had joined most of the nation's politicians in denunciation of the price rise, began to have second thoughts about Erhard's tactics. Wrote the Banner Rundschau: "It is necessary to recall the basic foundations of our economy ... No Cabinet, no minister, no Bundestag faction can replace entrepreneurs' freedom of decision, no matter whether one regards those decisions as good or bad."

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