"The Stream" on Obama's Legacy

There is already a lot of coverage of Obama's legacy, which will presumably intensify over the next month until the new President takes office.

Al Jazeera English's The Stream take a 25 minute look at Barack Obama's legacy 12/21/2016 with six different writers, including Sarah Jaffe, Mychal Denzel Smith, Michael Days, Trevor Thrall, Karen Attiah and Vijay Prashad:

Sarah Jaffe is one of my favorite political writers. But just after 10:15, she sends me into fingers-on-the-blackboard mode with, "the environment that Hitler rose out of was a massive, massive inflation crisis."

This is a zombie idea very popular with Americans. The infamous hyperinflation in Germany was mainly in in 1923-4, resolved in early 1924. Karl Schleunes' article on that period in the "Germany" entry of the trusty Britannica 2015 observes, "Although the inflation was rooted in the huge debt that Germany had amassed in financing its war effort, the hyperinflation of 1923 was triggered by the French-Belgian military occupation in January 1923 of the German industrial district in the Ruhr valley." It was directly related to the popular cause in Germany of opposing the occupation of the industrial German Ruhr district by France that began in 1923.

The political facts in this table from Peter Gay in his The Dilemma of Democratic Socialism: Eduard Bernstein's Challenge to Marx (1952), p. 209, have yet to put this zombie idea to rest. The Nazis (National Socialists in this table) pulled 0.9 million votes in 1924, a smaller vote of 0.8 million in 1928, then jumped to 6.4 million in 1930 and to 13.7 million in July of 1932, then down to 11.7 million in November 1932.

There was one more semi-free election in Germany in early 1933 after Hitler became Chancellor, but there was considerable political repression already in motion and that vote total isn't so meaningful, which is presumably the reason it wasn't shown on Gay's chart.

So, there was a very dramatic hyperinflation in 1923-4. It was stabilized and did not recur. Then, six years later in 1930, the Nazi vote shot up 800% from 1928 - because people suddenly got really upset about the 1923-4 hyperinflation? Or could the onset of the Great Depression, massive unemployment and deflation, and the Merkel-like austerity policies of Chacnellor Heinrich Brüning have had some affect on that voting outcome?

I'm certainly tempted to think so.

BTW, that decline in the NSDAP (Nazi) vote from July to November of 1932 was 15%.

Al Jazeera English calls the program the first in a series. (And it really is about Obama, not about prewar German politics.)

It's obvious that the fact of who and what his successor is will weigh heavily on our evaluations of Obama's Presidency, now and in the future.

Today's PBS Newshour 12/21/2016 has an interview with Ta-Nehisi Coates, How Obama’s unique background shaped his outlook on race. It's informative, though the video segment strikes me as a bit on the hagiographic side:

Inflation-phobia in Germany

Interesting reflections by Frances Coppola on the possible reasons for Germany's inflation-phobia. (The dangers of historical taboos 10/11/2015)

She hasn't convinced me of her argument, because I think the inflation fixation is related to the very conservative economic doctrines now dominant in the German economic and political elite. I doubt that it reflects any kind of deep-seated preference on the part of the general public there.

But I like the fact that she emphasizes that the public spending that stimulated the German economy during the Third Reich were oriented toward war.

State of the eurozone

Reuters is sponsoring a summit on eurozone issues this week. (Reuters Euro Zone Summit Reuters 02/06/2014) Mike Peacock provides some background in Europe faces electoral, policy crossroads Reuters 02/09/2014: "The threat of deflation is stalking the currency area and increasing pressure on the European Central bank to act."

But as Paul Krugman points out in The Low-inflationary Trap 01/31/2014, it hardly matters at this point from a policy view whether we say they're in deflation or deflation is threatening:

... there are three reasons low inflation is bad for the euro area. First, the euro area as a whole remains depressed, with core interest rates near zero; falling inflation raises real rates, and deepens the slump. Second, many players in Europe, private and public, are burdened by an overhang of debt; inflation makes it easier to work down this debt, so low inflation makes things harder. Finally, Europe still needs large adjustments in relative wages, with wages in Club Med [southern Europe] falling relative to wages in Germany; it’s much easier to do this via rising German wages than falling Club Med wages, so low inflation makes this much harder.

And yes, Europe is very much in a trap. Inflation is falling because the economy is weak, and the economy is being weakened in part by falling inflation. That’s the Japan syndrome. It leads eventually to actual deflation, but to the extent that there’s a red line (or more accurately, an event horizon), it's crossed when monetary policy starts being limited by the zero lower bound, which happened years ago.

Peackock also reports:

Euro zone leaders are still struggling to generate solid economic growth that can eat away at unemployment rates running at 25 percent and more in the hardest hit countries, and efforts to create a banking union to prevent a future financial crisis are widely viewed as having fallen short.

The bloc will also try to get Portugal and Greece back on their feet after Ireland successfully exited its EU/IMF bailout. Athens is likely to need more help to do so.

Italy remains a potential flashpoint. Efforts to reform its electoral law to allow for a more stable government in future, one that can push through much-needed economic reforms, will be critical for it and the euro zone this year.

French President Francois Hollande's ability to push through his own labour and pension reforms in the face of rock-bottom popularity ratings is also a focus.

As so often in the financial press, "labour and pension reforms" as Peacock uses the phrase means lowering wages, reducing labor protections and cutting pensions. That's what neoliberal-speak means by "reforms." Austerity policies, in other words. The opposite of what the eurozone needs.

In the official eurozone view, which Peacock echoes here, "Ireland successfully exited its EU/IMF bailout" and is therefore considered a success story for austerity and neoliberal reforms. Since 2009, Ireland has periodically been touted by defenders of austerity as a success story. And this time like the others it's hot air. Ireland's economy is still facing bad conditions and growth prospects are questionable, at best. They are out of the EU/IMF bailout but not out of the eurozone depression. (Fall in lending ‘hinders recovery’ Irish Examiner 02/01/2014)

Fantasy is running wild in many quarters about the effectiveness of Herbert Hoover/Heinrich Brüning austerity policies, despite the accumulating contemporary evidence since 2008 of how they hamper recovery, which in itself is hardly a new discovery. Henrik Müller writes in Crisis Management: Europe Eyes Anglo-Saxon Model with Envy Spiegel International 01/06/2014:

In Spain, on the other hand, harsh austerity is having an effect. To be sure, the country is still afflicted with a horrific unemployment rate of more than 25 percent. But reforms and belt-tightening measures have significantly improved Spain's competitiveness. Exports are on the rise and the country has a positive trade balance.

Spain should be able to reap the benefits of their exertions -- if the country's financial situation ultimately improves.

It would be comical if the real-world effects weren't so awful: Spain will benefit from austerity if they can ever recover from the depression that continued austerity makes it impossible to recover from.

I thought that was spaced-out until I saw a piece that makes Müller's comments seem also sensible and sober: Alexander Jung, Sowing Fear: World War I and the Seeds of Hyperinflation Spiegel International 02/07/2014.

Some zombie ideas survive in their undead state even longer than Keith Richards is likely to. The opening line of that article says, "The current debt crisis in Europe evokes painful memories of the German hyperinflation." For whom? People who know absolutely nothing about the German hyperinflation of 1923-4? For people who have decided every day for years that today was the wrong day to stop sniffing glue? Did France just re-occupy the Ruhr area over the weekend and Germany started promoting a resistance movement to drive them out? (Which was the biggest part of the story in the 1923 hyperinflation.)

Apparently some editor was awake enough to take out the Hyperinflation! Hitler!!! section that I bet was in there. Which is part of the undead zombie German hyperinflation story. Did something that happened in 1923 give the Nazis (National Socialists on this table from historian Peter Gay) a big surge in popularity? Or was it more likely something that happened around, oh, 1929-30, like a massive depression and DEflation? Gosh, it's so hard to tell from these numbers!

Source: Peter Gay, The Dilemma of Democratic Socialism (1952)

Tags: angela merkel, austerity economics, eu, euro, european union, france, françois hollande, greece, hyperinflation

Again on hyperinflation during the Weimar Republic and Hitler's rise to power

I posted back in January about Paul Krugman commenting on what has long been one of my pet peeves, the idea that the German hyperinflation of 1923 led directly to Hitler and his Nazi Party (NSDAP) taking power in 1933, nine years later.

M E Synon also posted on that same topic in February, Merkel forgets Germany's history: 'Austerity not inflation gave us Hitler' Daily Mail 02/07/2012:

... here are some lines from a letter to the editor in the Financial Times yesterday. It comes from Anthony Murray in Kingston-on-Thames.

Murray recommends that readers should study the record of Heinrich Bruning, a predecessor of Adolf Hitler as German chancellor. They could discover 'the real reason for Germany's descent into Nazism.'

'Monetarist fetishists have helped to circulate a pernicious falsehood that the Weimar uber-inflation caused the rise of Hitler.'

'The wild inflation storm occured in 1924. [sic; it was actually 1923 - Bruce] The Weimar economy recovered from it.'

'The Nazis came to power only in 1933, as an immediate consequence of the deflationary spiral that resulted from what Mr Wolf [commentator Martin Wolf, in an earlier article] refers to aptly as the "catastrophic austerity" introduced by Bruning.'

In my earlier post, I included this table from Peter Gay's The Dilemma of Democratic Socialism: Eduard Bernstein's Challenge to Marx (1952):

Repeating what I wrote in January:

The hyper-inflation incident was primarily a phenomenon of 1923. This is the period about which those stories are told about a loaf of bread costing a wheelbarrow full of money or whatever. A new currency was introduced late in 1923 and inflation stabilized.

This chart of election results shows the election results in millions of votes for the NSDAP (National Socialists, Nazi Party). In 1924, the year following the hyper-inflation, the NSDAP got 0.9 million votes. That fell to 0.8 million in 1928. Then in rose dramatically to 6.4 million in 1930 and 13.7 million in July of 1932. What else might have happened between 1924 and 1930? What could it have been?

Oh, yeah, that Great Depression thing. Economic crash, soaring unemployment. And Heinrich Brüning's Chancellorship of 1930-32.

None of this implies that the hyper-inflation of the early 1920s had no lasting effect. It's just that it's hard to match the notion that hyper-inflation brought the Nazis to power with the historical record as shown in election results.

While we're on the subject, it's worth noting that the NSDAP vote dropped significantly from the July 1932 election to November 1932. It's true that Hitler came to power mostly through electoral means. But Hitler's  feverish politicking that got him appointed Chancellor at the end of January 1933 was driven by his falling electoral support.

On the hyperinflation itself, see also Alexander Jung, Millions, Billions, Trillions: Germany in the Era of Hyperinflation Spiegel International 08/14/2009 14.08.2009

Tags: german history, hitler, hyperinflation, weimar republic

Krugman on European austerity and that German hyper-inflation thing

Paul Krugman has been looking at the lengths of the current depression in Britain and Italy compared with the Great Depression. In Britain, this one has gone on longer. (The Worse-than Club 01/28/2012) In Italy, it has gone on as long.

Heinrich Brüning (1885-1970)

And he makes an important historical point about the German economy in those days. Conservatives like to claim that the "hyper-inflation" in Germany in the 1920s resulted in bringing Hitler to power. Krugman writes:

France and Germany are doing much better than in the early 1930s - but then France and Germany had terrible, deflationist policies in the early 1930s. (It was the Brüning deflation, not the Weimar inflation, that brought you-know-who to power).

With two of Europe’s big four economies doing worse than they did in the Great Depression, at least in terms of GDP — and that’s three of five if you count Spain — do you think the austerity advocates might consider that maybe, possibly, they’re on the wrong track?

Peter Gay provided a helpful chart on this subjects in The Dilemma of Democratic Socialism: Eduard Bernstein's Challenge to Marx (1952):

The hyper-inflation incident was primarily a phenomenon of 1923. This is the period about which those stories are told about a loaf of bread costing a wheelbarrow full of money or whatever. A new currency was introduced late in 1923 and inflation stabilized.

This chart of election results shows the election results in millions of votes for the NSDAP (National Socialists, Nazi Party). In 1924, the year following the hyper-inflation, the NSDAP got 0.9 million votes. That fell to 0.8 million in 1928. Then in rose dramatically to 6.4 million in 1930 and 13.7 million in July of 1932. What else might have happened between 1924 and 1930? What could it have been?

Oh, yeah, that Great Depression thing. Economic crash, soaring unemployment. And Heinrich Brüning's Chancellorship of 1930-32.

None of this implies that the hyper-inflation of the early 1920s had no lasting effect. It's just that it's hard to match the notion that hyper-inflation brought the Nazis to power with the historical record as shown in election results.

While we're on the subject, it's worth noting that the NSDAP vote dropped significantly from the July 1932 election to November 1932. It's true that Hitler came to power mostly through electoral means. But Hitler's  feverish politicking that got him appointed Chancellor at the end of January 1933 was driven by his falling electoral support.

Tags: german history, hitler, paul krugman, weimar republic