Sunday, August 21, 2016

A Brief Essay on Where Nazi Economics Failed

There are several things that propelled the Nazis in the 1930 period to be considered a primary voting vehicle in the 1930 election.  They would receive 18-percent of the national vote.  The chief driving force in this election?  The depression business that hit the US.....and continued through Europe....arrived on the doorstep of Germany, which was still in fragile condition from the 1919 peace treaty and reparations situation.

Most working-class Germans wanted economical stability, and anyone promising to "fix things" got their attention.

What can be said today....about Adolph Hitler's knowledge and and understanding of economics....probably could be summed up on two 3x5 cards.  Sadly, the guy that the general public was viewing as their economic 'savior'....was simply delivering words....not real policy.

The chief pieces of Nazi economics?

You come down to roughly seven key features which went into effect and were features that they operated with....for the next fifteen years.  The seven;

1.  Autarky or a closed economy.  In simple produce, grow or build....ONLY for the German economy.  You don't look for outside sources to sell products.  This limits your need for raw materials, but you also limit yourself in various ways to expand out and create more jobs and income.

2.  Nationalization.  Various industries were measured in some form, and some who met the qualifications were pushed into government-ownership.  If you weren't making a profit....the government didn't care because they could shuffle money into the pot to cover wages and cost from tax revenue.  The idea that you were running an incompetent process, or producing a product that people didn't really need....well, that didn't really matter.

3.  Forced wage increases.  Like the US policy of controlling wages via a government vehicle, the Nazis did the same thing.  For this period, wages went up by approximately 10-percent.....making people happy.  Explaining how the wage increase met or failed to meet reality....didn't matter.

4.  The four chief banks at this time, the Commerzbank, the Deutsche Bank, the Disconto-Gesellschaft, Golddiskontbank and Dresdner Bank.....were in effect nationalized and were mostly used for government expenditure points instead of legitimate banks.  They loaned money at set rates and if the government was late in paying the money back or dragged out the pay-back didn't matter.

5.  Trade unions ceased to exist.  Instead, you got something called the German Labor Front.  You didn't call for strikes, demand wage increases or do anything to aggravate the German government.  If the Front said you deserved a wage got it.

6.  A couple of years into the Nazi economic policy....came military hardware spending.  It did put people to work and demonstrated jobs-growth.  The problem was that they didn't have the money to continue this growth program at the scale they demanded.  In essence, they were spending tons of money at a fast pace, without consideration of the fragile nature of the economy.

7.  By the late 1930s, and as various military campaigns started up.....German shifted to free-labor....using the labor camps where prisoners were held.  In some ways, it kept the economic success of Germany looking good but it was a false reality.  By 1942, you can pretty much say that the economy was a failure and would collapse in the near future.

Most historians will agree that there were already signs in the mid-1930s that the Nazi economic program was a failure.  Because of the way that the four chief banks were being couldn't really gauge the true nature of a stalled economy.  But even at this point, there were still another entire decade of screwed-up economics to continue.

The start of this whole trend?  You can go back to the May 1928 election in Germany.....where the Nazis really weren't a player (2.6-percent of the vote).  The winner of this election?  The SPD Party.  But to run the coalition.....they basically had to settle up with three partners and were creating a marginally ineffective government which could not be expected to do much in a crisis.  Well....roughly 18 months later came the crisis which they could not handle.

Public trust was lost, and grand speeches by Hitler and the Nazi Party sold the public on a solution which looked good on paper but in reality....just wasn't the way to fix this.

Without the US Wall Street episode and collapse?  This is one of those speculative things.  Without the 1929 collapse, and world-wide depression.....there's no need for the early election in Germany in 1930, and there's nothing to pull the Nazi Party to the top of public attention in the 1930 or 1932 election.

Just one of those oddball things about German history, and why this 1920s era matters a great deal.....but we rarely ever chat about it.

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