Guest Post: Starvation And Military Keynesianism: Lessons From Nazi Germany

Tyler Durden's picture




 

Submitted by Julian Adorney of the Ludwig von Mises Institute,

Many Americans, from the Glenview State Bank of Chicago to author Ellen Brown assume that the Nazi economic regime was successful, but closer examination tells a tale of rationing, shortages, and starvation. Learning why their economy failed can teach us how to avoid the same fate.

 

Background

The myth endures that after Hitler inherited a country ravaged by the Great Depression in 1933, his aggressive policies turned the nation around and created an economic powerhouse. But the truth, as Professor Evans of the University of Cambridge argues in his seminal history The Third Reich Trilogy, is something far different.

Evans, a Marxist sympathetic to Keynes and state intervention, nonetheless tells a story of rationing, shortages, and misery in the Third Reich. The Reich Food Estate, the state-controlled corporation responsible for agricultural production, regularly failed to feed its people. Agricultural output rarely surpassed 1913 levels, in spite of 20 years of technological advancement. Demand outstripped supply by 30 percent in basic foodstuffs like pork, fruit, and fats. That meant that for every ten German workers who stood in line to buy meat from the state-owned supply depots, three went home hungry.

The same story was retold when it came to cars, clothing, and iron. New houses had to be built with wooden plumbing, because iron was so scarce. Nationalized iron depots couldn’t produce enough for the army, let alone civilians. Clothing was rationed. Fuel and rubber shortages led to what one US observer called, “drastic restrictions on the use of motor vehicles.” Of course, because the state dictated which car and truck models could be produced, there weren’t very many motor vehicles to begin with.

The overall tale is one of misery for the average German citizen. So how did the Nazis so hurt their people, and what lessons can we learn?

 

Lesson 1: Military Keynesianism Produces Austerity

Hitler’s rearmament program was military Keynesianism on a vast scale. Hermann Goering, Hitler’s economic administrator, poured every available resource into making planes, tanks, and guns. In 1933 German military spending was 750 million Reichsmarks. By 1938 it has risen to 17 billion with 21 percent of GDP was taken up by military spending. Government spending all told was 35 percent of Germany’s GDP.

Many liberals, especially Paul Krugman, routinely argue that our stimulus programs in America aren’t big enough, so when they fail it’s not an indictment of Keynesianism. Fair enough. But no-one could say that Hitler’s rearmament program was too small. Economists expected it to create a multiplier effect and jump-start a flagging economy. Instead, it produced military wealth while private citizens starved. Employed on the largest scale ever seen, military Keynesianism created only ruin.

 

Lesson 2: Production, Not Jobs

Economist Joan Robinson wrote that, “Hitler had found a cure against unemployment before Keynes finished explaining it.” And indeed, rearmament and nationalized industry put every available German to work. There were so many jobs that the Nazis complained of a labor shortage and brought women in to the workplace, even though they were ideologically opposed to it. Unemployment had been cured. And yet, the people routinely suffered shortages. Civilian wood and iron were rationed. Small businesses, from artisans to carpenters to cobblers, went under. Citizens could barely buy pork, and buying fat to make a luxury like a cake was impossible. Rationing and long lines at the central supply depots the Nazis installed became the norm.

Nazi Germany proves that curing unemployment should not be an end in itself. No doubt, jobs are important. But they are important for what they produce, not just by virtue of existing. Real growth means production of what people demand. It means making cars, growing food, building laptops, or commercial planes. Private production grows the economic pie and helps everyone to prosper. Without production, all that a job does is change a man from starving and unemployed to starving and employed.

 

Moving Forward

There are a thousand lessons to be learned from the Third Reich, from the evils of totalitarianism to the dangers of racial thinking. A key economic lesson is that, rather than curing the Great Depression, Hitler’s military Keynesianism on a massive scale left the German people starving and short of goods. It’s a lesson advocates of building tanks to make us rich, from John McCain to Paul Krugman (and now Shinzo Abe), would do well to learn.

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Tue, 12/17/2013 - 22:56 | 4255793 hedgeless_horseman
hedgeless_horseman's picture

 

 

Krugman will not judge between the nations
    and will cause disputes for many peoples.
They will beat their plowshares into swords
    and their pruning hooks into spears.
Nation will take up sword against nation,
    and they will train for moar war.

Wed, 12/18/2013 - 02:09 | 4256187 prains
prains's picture

moar woar.....

 

but who's counting anymore HH

Wed, 12/18/2013 - 04:23 | 4256318 Harlequin001
Harlequin001's picture

Top tip, when a government borrows money to buy a bullet, when that bullet is fired it is not an investment.

There is no way any government can repay that debt unless it is from other income. Yet how many governments finance wars through debt?

What is your government doing now?

Wed, 12/18/2013 - 07:04 | 4256417 G-R-U-N-T
G-R-U-N-T's picture

"There is no way any government can repay that debt"

They have no intention of paying their debt back! Clear it up any?????

Tue, 12/17/2013 - 22:55 | 4255800 mofreedom
mofreedom's picture

If you want your pork fat, I've got your pork fat.

A commie by another name is a commie!!!

Wed, 12/18/2013 - 02:10 | 4256188 prains
prains's picture

you've got plenty o' commies in your own backyard just spelled differently, KKKommie KKKomrade, generally white, fat... and sweaty and talk a different game but with entirely the SAME result...

 

 

fucking r'tard

Wed, 12/18/2013 - 03:33 | 4256293 greyghost
greyghost's picture

OMG.....still fighting the avowed markist/commie against the fascist/nazi WWII battle. all those shortages suffered by the german people under hitler and still they loved him. even more pain and suffering by the german people during the war and still they loved him. In 1968 i was invited over on sunday for dinner at some german's house in so. calif. walking down the hall I couldn't help but notice the picture of Hilter on the wall. I learned two things that day....the germans eat all day long on sunday and they loved Hitler. couldn't help but notice that there is no mention of the nazi government printing the money to buy their tanks/planes/u-boats for the cost of pennies on the reichmarks. just insert the word soviet for nazi and it reads like something out of the cold war.........talk about spinning a story. tell this story long enough and every student in america will believe the soviets had no problems and those problems were really about the germans/nazi....LOL

Wed, 12/18/2013 - 04:47 | 4256333 Diogenes
Diogenes's picture

What makes you think Germans loved Hitler? They never elected him to anything, he finagled his way into the government then hijacked it and declared himself dictator. The concentration camps, Gestapo, the whole apparatus of the police state were dedicated to stamping out opposition and every form of sophisticated mass media propaganda used to make Nazism popular.

In spite of all this there were several plots to do away with him, some at the highest levels of society, in spite of the fact that even joking about such things could mean being sent to a concentration camp and serious plotting meant certain death.

Wed, 12/18/2013 - 08:59 | 4256594 BeansMcGreens
BeansMcGreens's picture

According to Alber Speer, who was Reich Minister of Armaments and about fourth in line behind Hitler in actual power,  in his book "Inside the Third Reich" he was concered along with Goebbels about Germany not going into total war production, but still producing luxury items for the German people. The US had done this with rationing of not only war materials such as tires and fuel, but also with food. Yhe US used women in the factories while Germany did not require its female citizens to work. Of course Germany did not not mind using slave labor, with hundreds of thousands of not only concentration camp workers, but also people removed from conquered territory. this book gives a great actual insight into technocratic fascism. Look at just the news from yesterday, with the marriage of microsoft and obamacare.

 

Hitler was ruthless, and a dictator, but I too met some Germans living in Raleigh NC that spoke with an adoration of him, and that was about late 1990s.

 

Fri, 12/20/2013 - 23:39 | 4266066 FreedomGuy
FreedomGuy's picture

I have seen people who speak glowingly of Obama and as I drive around I see lots of Obama stickers. I think Americans must love Obama.

Wed, 12/18/2013 - 04:25 | 4256317 The Heart
The Heart's picture

"A commie by another name is a commie!!!"

Is not the term liberal, just another name for a communist?

And, how many are all for repeating the same history of nazi germany in fascist/communist/nazi/socialist America?

 

 

Wed, 12/18/2013 - 04:50 | 4256336 Diogenes
Diogenes's picture

National socialism = fascism, international socialism = communism.

Under fascism man exploits man, under communism it's the other way around.

Wed, 12/18/2013 - 09:35 | 4256675 Croesus
Croesus's picture

 

 

 

 

Wed, 12/18/2013 - 09:50 | 4256774 wisefool
wisefool's picture

You can have your pork fat as long as you fill out a 6 page document explaining why you did not send it to the front lines after you drained it from the pan. War rationing is the entire basis of the US tax code. Every action you took, such as saving bacon grease, was a crime against the state.

If a corporation works hard to produce armaments, with record profits in a single year, they are allowed to average their tax burden out over many less "wary" years. If you as human being work hard one year with high income you are not allowed to average your tax burden out over a lean year.

The solution would be to implement consumption based taxation. The problem is, that if the serfs get tired of a war, they can simply starve the state of war taxes by not purchasing things.  don't like the NSA invading your privacy? Stop spending money. Don't like subsidies for green energy cronies? Stop spending money. Don't like property taxes? downsize. They would never allow the serfs to have such direct input on state action. Just go and vote for John Kerry or Geroge W. Bush!

Tue, 12/17/2013 - 22:57 | 4255805 QE49er
QE49er's picture

Peace Sells, but Who's Buying?

Tue, 12/17/2013 - 22:59 | 4255806 nmewn
nmewn's picture

And mandatory health insurance too ;-)

Tue, 12/17/2013 - 23:01 | 4255815 mofreedom
mofreedom's picture

Digging ditches to throw the obamacared into will be the greatest jobs program since the aswan dam.

Wed, 12/18/2013 - 07:44 | 4256451 lakecity55
lakecity55's picture

Yes, and one of the First Items of Business by the NSDAP after gaining control of Germany in 1933.

Tue, 12/17/2013 - 23:04 | 4255817 Goldilocks
Goldilocks's picture

China National Day Parade 2009 to the Imperial March played by Wiener Philharmoniker
http://www.youtube.com/watch?v=Vvm50nmyRTc (3:02)

Tue, 12/17/2013 - 23:08 | 4255823 Clowns on Acid
Clowns on Acid's picture

Why doesn't Krugman just start breaking windows...? Y'know like at the New York Times building.

Wed, 12/18/2013 - 02:22 | 4256203 lakecity55
lakecity55's picture

It is not time for that, just yet. Be patient, Comrade.

Tue, 12/17/2013 - 23:07 | 4255829 blindman
blindman's picture

http://america.aljazeera.com/watch/shows/the-stream/the-stream-officialb... -reagan-sailorsreportcancersafterfukushimarescuemission.html
.
BREAKING: 51 SAILORS SUFFERING FUKUSHIMA RELATED MEDICAL ISSUES!
http://www.silverdoctors.com/update-51-sailors-suffering-fukushima-relat...
.

Wed, 12/18/2013 - 05:50 | 4256384 cossack55
cossack55's picture

Go tell it to the Spartans.  

The sheeple don't want to hear about nuke armageddon, military casualties, war bonds, or any rationing to support their lovely elected leaders constant wars.  

They may listen once they are dead, but don't count on it.

Tue, 12/17/2013 - 23:09 | 4255831 Constitutional ...
Constitutional Republic's picture

Nazis: made, funded and promoted by the rootless cosmopolitan international financiers and their friends in the West including Britain's 'royal family' and New York banks. Remember that.

Wed, 12/18/2013 - 02:25 | 4256214 prains
prains's picture

how else does a bunch of fuck wit krauts go from....

 

750 million Reichsmarks. By 1938 it has risen to 17 billion with 21 percent of GDP

 

SOMEBODY GAVE THEM THE MONEY!!!!!! and it wasn't P.O.L.A.N.D

Wed, 12/18/2013 - 04:50 | 4256339 Diogenes
Diogenes's picture

Where did they get the printing press?

Tue, 12/17/2013 - 23:14 | 4255837 Dr. Engali
Dr. Engali's picture

Many liberals, especially Paul Krugman, routinely argue that our stimulus programs in America aren’t big enough, so when they fail it’s not an indictment of Keynesianism

That's the beauty of Keynesianism, they can never be proven wrong because their response will always be..."It would have worked if only we printed moar".

Tue, 12/17/2013 - 23:58 | 4255920 rwe2late
rwe2late's picture

Dr. Engali

 Actually, that would be an error of a "crass" Keynesianism

(or any other economic theory so over-simplified).

How resources are used, and for what purpose matters.

It is not just the magnitude.

Your straw man argument against "many liberals" does not disprove the worth of having a government, or having government funds well spent.

Instead, any who might argue for unbridled production (GDP, expenditures, etc.) would be wrong, whether they called themselves capitalist, socialist, conservative, or liberal.

(and please attempt to be less one-sided in your complaints since both neo-Liberals and neo-Conservatives support military excess and financial gluttony as described in the article)

 

 

Wed, 12/18/2013 - 00:24 | 4255954 Dr. Engali
Dr. Engali's picture

Oh quit your bitching. If you bothered to read the article you would see that I'm quoting the author. Even if I weren't, I'm not so weak that I need to prove my libertarian viewpoint by equally balancing out a liberal bashing with a conservative bashing. Your political correctness has stunted your cognitive capabilities.

Wed, 12/18/2013 - 01:09 | 4256095 Harbanger
Harbanger's picture

I notice one way Liberals often divert attention from a true statement or fact, is they use the strawman card as defense.  That causes you to defend the charge that your observation is not based on facts but imaginary.

Tue, 12/17/2013 - 23:51 | 4255925 W74
W74's picture

Or as with the healthcare laws: "It didn't work because the other team didn't believe hard enough that it would work"

Wed, 12/18/2013 - 00:37 | 4256048 john39
john39's picture

or climate change... warm weather is caused by carbon... snow in Egypt is caused by carbon...  polar ice melting, yup carbon.   and the same is true of the %50 increase in polar ice this year....  what a theory, you can't be wrong.

Wed, 12/18/2013 - 01:37 | 4256145 FreedomGuy
FreedomGuy's picture

I loved those comments on TV. I watched incredulous at the myopic stupidity of them just on the surface. Then I realized I was watching one of the many high priests of government genius, benificence and ability.

The endpoint of Keynes is that we could hire everyone to dig holes and then fill them in the next day. The functional end is just to ask why bother digging and just pass out the pay checks.

When I hear the colossal idiot Pelosi speak and say that each dollar in unemployment generates two dollars of economic benefit the natural endpoint is simply to fire everyone and let them all collect unemployment.

When I heard several years ago that taxes are actually good for the economy and will cause economic expansion the natural end is to go straight to 100% tax rates.

When I hear that a %15/hr minimum living wage the natural endpoint is to go for a great living wage and head north of $100/hr as well as remove the right to negotiate wages from the private sector completely.

There is pretty much nothing that works in leftist economics but it never seems to slow down their efforts. When they are proven not to work then the answer is that it was not enough (think Krugman) government intervention and that the opposition did not propertly support it. Kind of like Kim Jong's Uncle not really clapping hard enough at his ascension.

Wed, 12/18/2013 - 02:20 | 4256193 lakecity55
lakecity55's picture

Like Adolf Hitler, the goal of the folks you mention is political and personal power, not benefits to their country. Like Hitler, they will make it appear the "People" is their goal as a foil until it conflicts with their politics or personal power. Then the blind drops.

To consummate the Pact of Steel, Hitler tossed off the rights of Germans in the South Tyrol to Mussolini, yet would risk war to acquire the Sudetenland under the excuse of German rights deprived by Prague.

These current guys play by the same rules.

 

Wed, 12/18/2013 - 04:37 | 4256326 The Heart
The Heart's picture

"These current guys play by the same rules."

And these guys are all owned by the same evil that owned hitler. The rotten-tick banksters started both world wars for profit and population reduction agendas, and fully intend on starting the third world war for the same reasons. Everything else is just subtstrata compared to what is obviously on the surface of reality in front of everyone's face.

Meanwhile, in the now, fukushima is putting out more and more radiation and no one seems to even care. The readings are increasing and are especially dangerous during the first rains, and snows. Be aware, be alert, and stay indoors more often to avoid the poisonous contaminations that are increasing.

http://enenews.com/tokyo-press-conference-clear-increase-in-cancer-among...

Got Air Filter?

Wed, 12/18/2013 - 07:43 | 4256448 lakecity55
lakecity55's picture

Fukoshima gets NO Pravda coverage here. That alone shows the danger of this catastrophe.

Many writers are now showing data and visuals in the alternative media of probable radiation poisoning. I read a long article by an Australian a while back who regularly yachts to Japan and back. On his last trip, there were No or very sparse evidence of sealife or birdlife over the ocean between Australia and Japan!

This may well be an ELE, we had better hoope not!

Evidence of radiation poisoning is now being evidenced by USN personnel on site during the disaster! Why is there nothing in Pravda, comrades???

I am not well-versed in any kind of nuclear technology, but common sense alone shows this event is very, very serious and the lack of information in Pravda is Proof!

Wed, 12/18/2013 - 08:02 | 4256478 Cloud9.5
Cloud9.5's picture

Ah, the same rational as to why the Ghost Dance failed, not enough true believers.

Wed, 12/18/2013 - 11:01 | 4255844 A Lunatic
A Lunatic's picture

We're already hitting that same brick wall on many levels. The private sector simply cannot compete with the State when the State writes the rule book, selectively enforces those rules, lays claim to all of the raw materials and prints it's own profits at the ultimate expense of the economic health of the citizenry.......

Tue, 12/17/2013 - 23:18 | 4255845 EddieBurgerPie
EddieBurgerPie's picture

Interesting that in this article you twice mention Krugman juxtaposed with the Third Reich and Hitler. I can feel (and agree with) your loathing! 

Wed, 12/18/2013 - 02:12 | 4256189 lakecity55
lakecity55's picture

Krugman's idea of economics is Soviet. Government should have all the money and decide how to spend it.

Wed, 12/18/2013 - 12:17 | 4257279 falak pema
falak pema's picture

Its NOT Krugman's idea, its the OLIGARCHY'S idea. Krugman and Ben and all the others from University PHD land are their Shamans, the "mr fix its" who do at their bidding; they are expendable as all shamans are.  

The idea is to debase debt by fiat debasement; lots n lots of it on the government ledger and leave a few crumbs for the plebes called Obamacare; so that the real profits accumulate in Caymanland. Its happening in front of you. Count and if you're not a Count or a Duke watch your pensions/salaries dissolve. 

Expendable and interchangeable...Draghi, etc. etc. etc.  A plate of lentils and away we go. 

Hey, this is a POWER MATRIX. ANd its new Aristocracy. No Soviet there. Its back to the Romanovs; ya know the guys before them! 

Tue, 12/17/2013 - 23:18 | 4255846 Ralph Spoilsport
Ralph Spoilsport's picture

This is a good example of US anti-Nazi propaganda featuring Daffy Duck. Very politically incorrect.

https://www.youtube.com/watch?v=oLV5GCbsRTY

Tue, 12/17/2013 - 23:27 | 4255855 reader2010
reader2010's picture

The ideology of the Volk had its own female aesthetic. Beauty—according to this ideology—was a product of a healthy diet and athleticism, not of cosmetics. German girls and women were not supposed to paint their fingernails, pluck their eyebrows, wear lipstick, dye their hair, or be too thin. Nazi leaders condemned the entire cosmetics boom of the 1920s as Jewish commerce, as a cheapening of German femininity that turned women into prostitutes and led to racial degeneration. German men should mate with the girl next door, not the urbanite or the Hollywood-style vamp. A young woman’s natural glow should radiate from physical exertion, from being outdoors, and, in its most celebrated form, from pregnancy.

- Wendy Lower, Hitler’s Furies: German Women in the Nazi Killing Fields, 2013

Wed, 12/18/2013 - 01:52 | 4256165 Anusocracy
Anusocracy's picture

Women go through an awful lot of trouble to present something that isn't really there.

It is a high art designed to manipulate.

Wed, 12/18/2013 - 02:04 | 4256184 Harbanger
Harbanger's picture

They're told by the industry what's hot and what's not.  They play on their insecurities and desire for attention.  If you want to slowly destroy a culture you target the women, the men will follow.

Tue, 12/17/2013 - 23:37 | 4255883 Blazed
Blazed's picture

More ole nazis and the never ending holodrama, got to keep that in the forefront, lol. Remember kiddies, I vus gassed three....no no, six times.

Wed, 12/18/2013 - 01:18 | 4256115 TheLoveArtist
TheLoveArtist's picture

http://www.radioislam.org/islam/english/revision/six_million_myth.htm

Funny how some numbers are repeated over and over

Wed, 12/18/2013 - 01:53 | 4256167 Anusocracy
Anusocracy's picture

Food goes to the troops before it goes to the prisoners.

Always been that way.

Wed, 12/18/2013 - 01:59 | 4256172 FreedomGuy
FreedomGuy's picture

Except that I have met actual survivors with real numbers tatooed on their forearms and heard their stories. Sorry, but I prefer their firsthand accounts to the self serving deniers. Debating the actual number or minor details is avoiding the main issue.  Nowadays for every story and historical event of importance there are the oppositeville conspiracy theorists. Personally, I think this is useful to any current and future autocratic states as it will be a case of crying wolf. When the real thing does happen no one will be able to know or pay attention.

Generally, it will work better to wait until the very last survivors are dead and then start the Orwellain photoshopping of the old photos. I personally think WWII did not really happen. I believe it was all staged by the Illumati-Bilderberg_JP Morgan-Mason-Templars-Birch Society-Zionist-Bankster-CIA-Mossad-Area 51 Alien group. Even if it did I think only about 17.89 million died instead of 50 million so not really so bad and definitely exaggerated. Who counted the people in Hiroshima, Nagasaki or Dresen anyway...if they happened at all.

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