Monday, December 05, 2011
How about a serious post for a change?
If I were an economist the area I'd focus on would be the quest for a market driven method of providing full employment, which I define as voluntary employment at a living wage for everybody who is willing and able to work. That doesn't sound like it would be too difficult to achieve but, believe it or not, no modern economic system, including our own, has ever pulled it off. Even communist countries which call themselves "workers' states" haven't been able to do it. There's plenty of unemployment in those countries, they just don't report it.
Oddly enough, the only country which is widely believed to have achieved it was Germany in the 1930s. But is that true? And if it is true, how did they manage to do it? How did they get out of the Depression so quickly and then create full employment besides? I know nothing about economics, but I just read a book on the subject, and I'll pass along the opinions of the author.
The book is "The Nazi Economic Recovery 1932-1938" by R. J. Overy (1982). Overy believes the recovery was a fake. Unemployed people were simply drafted into The Labor Service, where they were forced to work for an extremely low wage, usually on farms. Once they were in the service they weren't classified as unemployed anymore. According to Overy the real German economic miracle occurred in the 50s, and had nothing to do with Nazi policy.
The Nazis were said by some to be Keynesians because they also believed in big government spending to handle unemployment. The author, who's a Keynesian himself, was revolted by the idea. He says Keynes strongly believed that big government spending had to be accompanied by low taxes. The Nazis believed in high taxes. They didn't want consumers to spend money on things, they wanted them to save their money in banks where the Nazi's could make use of it.
Apparently the Nazis inherited what today we might call a "progressive" agenda from the Wiemar Republic. In Wiemar the government owned or controlled some big industries and when the Nazis took over they simply amplified that policy, gradually expanding it til even small business came under their control.
Overy's book left me feeling sad for the Germans. They had a cruel leadership to be sure, but they were also an energetic, educated people handicapped by a system that just didn't work.
Posted by Eddie Fitzgerald at 11:28 PM