Comment by roenxi | Hacker News Reader

Comment by roenxi | Hacker News Reader

Such articles are fascinating in the way they expose how primitive our conception of the economy is.

> "This is an incredible story from an economic point-of-view. After Hitler’s election in 1933 the Nazis were able to sustain between about 8-10% GDP for five years running with an inflation rate that would be the envy of the Bank of England and other inflation-targeters today."

It is so hard to know what to ask for to get standardised but pithy measures of:

* 8-10% against what base? Growth is easy for the small. Was the German economy large or small at the time relative to 'comparable' 'neighbors'?

* Were these policies sustainable? Were they redirecting resources towards competent long-term managers or towards wartime industrialists who aren't really producing anything useful for the times we want to live in?

* Did any of the benefit from those rosy figures help any one in any way, given that the money all ended up funding one of the costliest and most devastating wars in the history of Europe? Can that context be untangled from the 'positives'?

I'm not convinced I see anything written here to suggest the policies used were good or bad ideas - there isn't even a language to discuss what 'good' means in such extreme times. I just see meaningless numbers from a different world. I'm doubtful they even measured things the same way in Germany 100 years ago compared to today.

Possibly Schacht was an economic genius, but I would like to hear why, given what I know of Germany, rearming wasn't simply raw materials + their world class establishment of craftsmen, who have histories that precede and extend beyond Schacht by generations. Give me a capable workforce and a country that has recently been through hyperinflation, and I suspect I could find any number of geniuses to manage it. The countries sending them raw materials might even have been the ones with the economic problem, rather than the Germans. I doubt they got paid back.

Just one point to keep in mind is that Germany hadn't been through hyperinflation recently. The hyperinflation was in 1923, so it had ended almost 10 years before the Nazis came to power. That should be plenty of time to get the economy back on track.

The first years of the Nazi boom can of course be explained as recovery from the recent depression, but it seems that the boom went beyond that. And it's important to keep in mind that other countries didn't recover as quickly.

As for benefits to individuals, at the very least those programs created jobs. That is bound to have helped the living standards of many people.

Indisputably it would have been better to create jobs geared towards peaceful production. The question then is, why were democratically-oriented politicians unwilling or unable to take similar measures?

(And I don't mean that as praise of fascism. I mean it as a challenge to all those who consider themselves lower-case democrats: the job of democracy is to foster the well-being of the people. Stories like this article suggest that a lot more can be done on that front than we tend to see in contemporary democracies.)

> the job of democracy is to foster the well-being of the people

The basic "social democrat" mission statement, rarely heard these days even in Europe.

> why were democratically-oriented politicians unwilling or unable to take similar measures?

The short answer is that while politicians are dependent on the public for votes, they're dependent on a much smaller group of opinion formers, media organisations, and donors for everything else including winning those votes. And the small group tends to be wealthy, conservative, and not willing to have their economic freedom restricted.

The causality between any one adminstration/regime and economic development is far weaker than than your comment implies, at least in the short and middle term (say, a decade).

Specifically, all industrialised countries saw very similar developments, even though their politics differed vastly: https://en.wikipedia.org/wiki/Great_Depression#/media/File:G...

The US and United Kingdom happen to be rather close analogs to Germany. This isn't too surprising, considering they were already economically coupled, especially the financial sector.

In absolute terms, growth would seem to be roughly in line with making up not just the absolute losses during the Great Depression, but also factors in some modest growth that would have happened during that time. Population growth, for example, continued almost unabated during the 1920s.

I'd argue that the graph you linked to actually shows significant differences between countries.

Yes, they all experienced the depression around the same time, and if you just look at the signs of the slopes there's a lot of similarity.

However, the US was barely back to its pre-depression peak by 1940, while Germany was way higher. The only country in that graph that is somewhat comparable to Germany is the UK.

"a country that has recently been through hyperinflation"

I think you mean deflation. The hyperinflation was in 1923, but the period of 1929 to 1933 was one of shocking deflation, one without precedent in an industrialized country. Germany was left with 60% unemployment, which in a sense made a remarkable bounce back easier -- all of the factories were still there, and all of the workers still existed, they simply needed some money to be pumped through the system so the workers could go back to work at the factories.

I would read the article and the source it links to again. If you do, it answers most of your questions.

Yes, the performance of the German economy was considerable. But the point with Schacht for all economic historians is that the German economy was operating under immense constraints. And what impresses is the way Schacht created endless devices to keep production growing despite these challenges.

And yes, they did measure things the same way. The way of the world today is to look at historical statistics and assume that no-one had a clue about economic policy before the 1980s (Germany was actually one of the most earliest adopters of stats in policymaking). But if you actually look at the primary sources, it is apparent that there was actually a great deal of knowledge. And, in some ways, that understanding was far more deep than today (as it was often based on practice and experience). As the article says, Schacht is an example of this.

More broadly: the job of the economic historian is not to work out whether things were "good or bad ideas". Historians realised many decades ago that the answer to these questions is subjective. You have to look at these decisions within the conditions that existed at the time.

> Did any of the benefit from those rosy figures help any one in any way

I guess we'd need to define what the end-game was for different regimes/governments back then. For the Nazi regime their end-game/target (or one of their main ones, in any way) was to reverse the post-WW1 Versailles humiliation against France and its allies, to gain some extra territorial space further East and to wipe out an entire populace based on its religion alone. I'd say they were quite successful in all of that up to a point, and given the limited economic resources Germany had at its disposal up to the late '20s studying how its leaders in the '30s and early '40s managed to do it can be quite interesting.

We, the people living in liberal/democratic regimes, need to be aware that the endgames/targets of different other regimes around the globe is not always aligned with our way of seeing things, i.e. they don't care all that match about the domestic consumer market the much as we do, for example (and the Nazis were pretty much in favor of physically eliminating a great part of their domestic consumer market).

Your approach to defining an endgame is interesting, but I think more thought has to be put into the deconstruction of the goals, and looking at the cost of policies long term.

IMHO,

A) Too much credit is given to the leadership when it comes to economic decisions. For instance, the plan to build Autobahns comes out of the drawer of the monarchy oriented authorities of Prussia, and was adapted to the economic situation by the NSDAP after they took power.

B) The goals for territorial gains (not "some", but substantial) and extermination and enslavement of Jewish and Slavic populace were rooted in an inhuman ideology. Of course, the restoration of Germany's power was their goal - but the communists, monarchists etc wanted the same, just in another manner.

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Looking at the results, the NSDAP leadership, it's party followers, and the majority population that went along took a leading tier-1 state by scientific advances, technologic level and infrastructure, and by industrial potential, with a more or less intact culture from the historic perspective, and transformed it into a pile of rubble, and Europe along it. I think that is not really good long term leadership, but the result of a mass phenomenon that had roots in imperialism, obedience of authority, revanchism of prior wars, racism, change from an agricultural to an industrial society, poverty and misery.

I always wonder how an EU might have looked like at the time, and how much more prosperity it might have brought (partly at the cost of it's exploited colonies) - but then again, this is not a historic question.

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