Wednesday, December 26, 2018

East Germany and the Menzies era

The Communist State of East Germany (the DDR or Deutsche Demokratische Republik) is now long gone. In the day, East Germans could receive West German TV programs so were acutely aware that the capitalistic West Germans were much richer than they were.  So they envied that and wanted the opportunity to move to the West. But the famous wall between East and West prevented that. So when the Gorbachev reforms in Russia allowed it, thousands of them breached the wall, leading to the downfall of the East German regime and a peaceful takeover of the Eastern lands by the West Germans in 1990.

Easterners had not generally foreseen any negative consequences of reunion but some soon emerged. In particular, the businesses and industries of the East were not remotely competitive with their Western counterparts and rapidly went broke.  This led to very high levels of unemployment and economic depression generally in the East and there very soon emerged among some people "Ostalgie" -- a longing for the old Communist regime, a longing that continues among some to this day

What Easterners miss from the old regime was stability, particularly stability of employment, but they also missed the orderly and predictable availability of goods and services as well.  You didn't have to compete for anything.  All was provided, albeit at a low level. So there was a brotherly feeling among Easterners and that is missed by some too.

Below is a DDR propaganda video set to the words of the old DDR national anthem.  It gives you some impression of what the DDR was like at its best.

You may, incidentally get some impression of why some Germans from both East and West say that the old DDR anthem was much better than the current Federal anthem.  The ideals expressed are certainly in general commendable.

So is there any chance of reviving at least some of that system? Almost certainly not.  The system was kept calm and stable through coercion. Individualism was discouraged under what was to an extent a benign despotism. One of the State governments in the East might one day attempt some approximation to it but the federal government would not put up with too much of that. The German Basic Law (constitution) would also impose limits.

Nonetheless, it is clear that some of the aspects of extreme socialism were and are appreciated by some people. The entire developed world does have a degree of socialism (welfare measures etc.) so there is clearly something basic in the appeal of socialism. 

And it is perfectly obvious where that appeal resides.  It is encoded into us by our evolutionary past. As we see in primitive societies to this day, caveman life was heavily into sharing.  If one member of the tribe had managed to catch a juicy animal, he would share it with the whole of the tribe.  In the absence of refrigeration, it would not keep anyway and by sharing his kill he would be entitled to a share of all the kills made by all tribe members.  And common defence was also practiced.  If members of another tribe staged a raid to kidnap one of your women, the whole tribe would rise up to defend the desirable dame.

So there is a sense in which we are all born socialists, which accounts for the virtual ubiquity of some socialist practices in human societies.  The great discovery of 18th and 19th century Britain, however, was that individualism was also beneficial -- particularly for generating wealth.  Money talked and it talked loudly.  Britain did have its socialist system (Workhouses, poorhouses, church schools etc) but they left plenty of room for individual enterprise.  And the rest is history, as they say.  In the developing, mostly European, world of the 19th century, Britain became the model and socialism took a back seat to individual enterprise because of its obvious advantages

But socialism is deep rooted and the 20th century saw it roar back -- with extreme socialism in Russia, Germany and China.  And in the rest of the world there were all sorts of restrictions on business and welfare states also emerged.  In Britain only Mrs Thatcher gave socialism a black eye and Mr Trump is working in that direction too.

So an obvious question is whether capitalism can deliver some of the things that socialists like.  The extensive welfare provisions already in existence already go some way towards that but is there more that we can do without wrecking our successful economic model.

East Germany gives us the clue.  The one thing that "Ossis" particularly liked was stability, the absence of change.  In particular they liked economic stability -- confidence that you would have a job tomorrow and that the job is easy to do.

That is in fact a thoroughly conservative wish.  Stability and an absence of change are good conservative values.  So where have we gone wrong?  Why did it take a Communist state to put conservative values into practice?  The answer is that all of life is a tradeoff.  Only feminists think you can have it all. And we have traded too much for economic liberty.  East Germany was poorer but more secure and relaxed and that tradeoff suited many people.

And there is a robust Anglo-Saxon democracy with all the traditional liberties that did offer something like East German tradeoffs.  That was Australia in the 1950s under the long running Prime Ministership of the very conservative R.G. ("Bob") Menzies. I was there. I remember Menzies well.  Menzies resisted almost all proposals for change. People would ask him to "do something" about all sorts of problems but he would always be able to point out ways in which "doing something" could produce as many problems as it solved.  There is a delightful story here about how Menzies defeated one group of "do something" advocates.

And Australia was very autarkic at that time.  It made its own cars and kitchen appliances plus much else.  Some goods were imported, chiefly from Britain, but Australian manufacturers were encouraged and were readily given tariff protection.  If you made toasters in Australia you did not have to worry about overseas competition.  A nice little tariff would protect you.

So businesses and their employees could relax.  Their factory would just keep running year after year.  The workers could plan their savings and their holidays with no fear that their job would suddenly vanish due to a new competitor entering the market and selling the product at a cheaper price.

And under that system there was very little unemployment. Anyone who wanted one could get a job.  Unemployment was always under 2%.  It was a crisis if it seemed likely to rise to 2%.  There is nowhere like that in the world today.

So Australia at that time was a capitalistic economy with East German characteristics.  Those who were there tend to remember it as a golden age.  I do. We were much poorer and had worse dentistry but we ate well, took a train to visit relatives and friends on our holidays and could always enjoy a cold beer.  What else is there?

But that is lost today.  Australia is now a normal nation with few tariffs and unemployment around 5%.  And you can buy things for pocket change that once would have been a serious hit on the budget.

But Mr Trump seems to be coming to the rescue.  He has very similar priorities to Bob Menzies.  He too thinks that a nice little tariff can hold back change and rescue jobs.  He has an economics degree from the Wharton school so he knows the downside of that.  He knows that tariffs are impoverishing but he also knows that stability is a neglected but important value. Money is not everything. It is unlikely that America will ever come near to East Germany in an offering of stability but Mr Trump is rebalancing American priorities in that direction, which should make America a better place overall.

1 comment:

C. S. P. Schofield said...

Also - something that seldom gets addressed in discussions of Trump's tariffs - Trump appears to be using Tariffs largely as bargaining tools. The people running around with their hair on fire, screeching about Trump's tariffs depressing the economy are (mostly deliberately) ignoring the various trade barriers that are raised against out products. Trump is not initiating a Trade War; he is merely returning fire.