
Austerity and the rise of the Nazi party [pdf] - ericdanielski
https://www.anderson.ucla.edu/Documents/areas/fac/gem/nazi_austerity.pdf
======
dang
All: if you comment in this thread, please avoid ideological tangents and
political rhetoric. They are repetitive and lead to flamewar. Interesting
discussions are able to stay specific.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

------
BenoitEssiambre
I'm not sure why, but a lot of these articles fail to properly distinguish
between government fiscal austerity (government reducing deficit or debt) and
monetary austerity (central banks reducing the growth of the money supply).

There are reasons to perform austerity but it's rarely a good idea to do it on
both of these sides at the same time. When governments are trying to get out
of a debt hole, monetary policy should be expansionary enough to allow for the
private sector to grow and replace the economic activity that the government
is halting.

The alternative double austerity leads to, on an economy wide scale,
investors' attempts at building wealth, being transformed into hoarding of
intrinsically valueless pieces of paper or electrons instead of being tied to
something real, instead of being tied to factories, businesses projects and
tools that allow people to work. It leads to people not working and not being
able to subsist because the investment market is put into a gridlock.

The detrimental effects are not evenly distributed. It disproportionately and
very nonlinearly affects groups that are economically vulnerable, the less
educated, people working in commoditized industries where margins are thin,
the inexperienced. The potential for livelihood for these people simply
disappears when hoarding paper becomes more alluring than investing in these
types of job creating projects.

The resulting desperation pushes people to extremes.

The ECB has been doing a mild version of this for the past decade, putting
western civilization at risk. The US central bank is finally doing a better
job but only after reasonable leaders were pushed aside and fanatics gained
power. There is now a risk that the fanatics will get the credit for the
better economy which might help them maintain power.

~~~
qubex
I’m Italian and I’ve witnessed this over the course of the past five to ten
years. The whole county, fragile enough to begin with, has been subjected to
an utter death-march of diminishing returns as margins decrease, no longer
cover fixed costs, and cause businesses to fail while dropping prices all the
way until whole swathes of the economy simply shrivel up and die.

I was struck by the parallels between what is described in this paper and the
very recent (week old) national elections, the first to be held in five years.
There was an overwhelming swing towards extremist parties (one in two voted
either for the xenophobic nationalistic formerly openly racist Northern League
or the wildly populist Five Star Movement). The disposition along the
north/south axis correlates sharply with unemployment and other forms of
economic/social duress and I cannot help fearing that this is the fate that
will befall us.

~~~
BenoitEssiambre
It's all so sad... The ECB could solve these problems by a snap of their
fingers at not cost. Almost everyone would profit. I'm stumped as to how to
solve the problem of central bank incompetence.

~~~
qubex
It’s not only the ECB and it wouldn’t be at no cost, insofar as quantitative
easing (which I think you’re referring to) would cause inflation which in turn
would diminish the real value (in terms of future purchasing potential) of
creditors and consequentially would be unpalatable to creditor nations (such
as the much-maligned Germany, for example).

~~~
BenoitEssiambre
Any gains Germany gets from overly tight money are temporary and transient.

If they want to get a better deal on their loans, they should negotiate the
loans better. Running a disastrous monetary policy to indirectly improve their
loan terms is an insanely destructive thing to do both to the indebted
countries and to the weaker parts of their own economy.

Also, the loans they make are mostly with the countries' governments but as
you probably know, euros are used by non government entities too. Germany
shouldn't strangulate all of the eurozone's private markets just to manipulate
terms of government loans.

On top of this, not allowing people to work and destroying their countries'
economies greatly increases the chance these countries are going to default or
restructure parts of their debt, again, not to Germany advantage.

Finally, having neighbors with poor economies is bad for your exports and your
own businesses.

In the long run Germany has much to gain if people of Europe have functioning
investment markets and the tools are available for people to work and produce.

~~~
qubex
Actually you’re right. Italy at least is being totally ruined by this state of
affairs. It seems that at some point this country is undergoing some kind of
social collapse, and that once that has passed the critical threshold a
financial side-effect will be inevitable.

I don’t really see a way out of this. It seems that all the citizens are
passengers in a crashing aeroplane, and that the pilots themselves are sitting
up front but have been severed from the controls and stripped of all agency.
The aviation the outcome would be obvious, and that’s why you’re essentially
correct in saying that gravity needs to be switched off, at least temporarily,
for the benefit of everybody. Again, I don’t see this happening.

------
lifeisstillgood
What I take from this is not "austerity allows extremists to take over" but
you need the middle and upper classes support to take over a country. The
austerity part was just the bit that persuaded the middle classes to put up
with all the rest of Hitlers rhetoric.

The spending cut was dramatic in the paper - 25% drop in government spending.
In the UK our austerity program at the height of 2010-15 was a reduction in
the growth of spending (not a nominal cut). AFAIK only greece has seen such a
dramatic reduction in GDP (and I am not sure the government spending cuts have
been so deep).

Additionally it's worth noting David Runciman's comments on Greece and Nazi
party (#) here - he posits the major difference is one of age - Germany and
Europe were young (25 years on average) then but now greece is a muchnolder
population- old guys riot less it seems.

This looks like a decent paper on an area of interest but Runcimans
presentation above reflects my thoughts - if we do screw up the world again,
the threat this time will look different, come from a different angle. We
should not just avoid the mistakes of history - we are really good at coming
up with whole new mistakes as well.

(#) Talking politics podcast cannot find the right episode.

~~~
markvdb
Other than Greece, recent examples of brutal govenment spending cuts can be
found in Estonia, Latvia and Lithuania. The cuts there were actually worse,
both in relative and absolute terms.

Latvia for example had a 26% drop in GDP and a 55% drop in housing prices at
the peak of the crisis. On many levels, 20-33% of public servants were fired,
with the remainers' already low wages reduced by 20-33%.

~~~
lifeisstillgood
Thank you - was not aware. That is stunningly bad any good sources on this ?

~~~
markvdb
Sorry, reading your comment just now, and have to run soon, so... the obvious
starting point:

[https://en.wikipedia.org/wiki/Economy_of_Latvia](https://en.wikipedia.org/wiki/Economy_of_Latvia)

------
matt4077
Resist the temptation of applying this to other situations. Some caveats:

\- The US didn't actually embark on anything resembling austerity in
2008-2016.

\- The narrative that the current US Oresident was swept into office by
economic complaints has not held up well. Among other things, it's become
quite clear that Trump voters were not primarily those under economic threat.
Race, education, and gender were far more meaningful predictors of voting
(R)[0].

\- Any such causality also fails if you compare economic conditions in 2016
to, for example 2012. Or, if you want to focus on economic anxiety and not
headline numbers such as unemployment, 2008.

\- Economic factors also fail to explain the decidedly different situations
with similar outcomes we've seen in Britain, or Austria.

\- Even the poster child for austerity in modern politics, Greece, has somehow
managed to keep it together, somehow.

[0]: [http://fivethirtyeight.com/features/education-not-income-
pre...](http://fivethirtyeight.com/features/education-not-income-predicted-
who-would-vote-for-trump/)

~~~
tlogan
I agree - it is very hard to find the cause.

I'm thinking the raise of extreme nationalism and populism (i.e., nazis) seems
to caused more by pace of changes (rate of it) in the society and economy than
by economical problems or even immigration.

It seems like that Nazis are more a reaction on the pace of the changes. For
example, science was rapidly changing (weird quantum mechanic and even weirder
general relativity are both from Germany), society was becoming very liberal
(religious tolerance, etc.), economy (fiat currencies, etc.) and so on.

In short, "change" anxiety causes this.

~~~
mikeash
I wonder if it’s just cyclical.

Nazism and similar ideologies are clearly attractive. They hook into some
fundamental part of the human psyche. They are also repellant. Their success
depends on which of these factors is stronger.

A big part of what makes them repellant is seeing what the real world
consequences are. It’s hard to find Nazism attractive when you’ve seen it
produce genocide and the near total destruction of its country in war.

But that was a long time ago. There aren’t many people left alive who remember
that time. The horrors are going from concrete to abstract. I hope it’s not
true, but maybe we can’t shift away from it until we have another example of
how bad it is.

------
verylittlemeat
RE: Austerity and economic analysis in general

>How Seriously Should We Take Economics?

>Economics is a science—it proceeds via hypothesis and empirical testing—but
it’s a soft and squishy one, and any argument to the contrary should be
treated with great suspicion. Especially in macroeconomics, hard-and-fast laws
are hard to find. So are stable parameters and reliable empirical studies.
Often, about the best we can do is isolate general tendencies, and then look
carefully to see whether they apply in the case under consideration.[0]

[0][https://www.newyorker.com/news/john-cassidy/the-reinhart-
and...](https://www.newyorker.com/news/john-cassidy/the-reinhart-and-rogoff-
controversy-a-summing-up)

I encourage anyone interested in austerity to read this article. It's
relatively short and insightful.

------
trappist
> ... austerity measures, measured as the combination of tax increases and
> spending cuts...

Wikipedia defines the term as either or both of these things. Investopedia
defines it as only the latter, and modern political discourse seems to do the
same. At any rate the definition seems contentious, and the headline
potentially misleading (increase spending to avoid the rise of a
catastrophically evil regime).

------
purplezooey
"...combination of tax increases and spending cuts..."

As of the moment we only have the political appetite for the spending cuts and
tax _cuts_. The tax raises will come later when we realize how far we've
bankrupted the social safety net programs, perhaps 10, 20 years from now.

~~~
trhway
>As of the moment we only have the political appetite for the spending cuts
and tax cuts.

if you're about US then it is spending increase and tax cuts. "Spending cuts"
in US is just a rhetoric in order to redirect money from some political
opponents' programs into political allies' program while overall increasing
the spending.

------
philippnagel
So, what's the solution to prevent such escalations? As per the discussion,
there are at least some hints that some countries are heading in that
direction again.

~~~
pdkl95
Mark Blyth has been trying to explain this situation ever since his warning
about economic policy leading to a rise of populism, "Austerity: The History
of a Dangerous Idea"[1]. For a very good overview of the problem - and some
suggestions on how to fix it - see this[2] recent talk.

Briefly, the political situation can be fixed quickly _if-and-only-if_ the
actual needs of the working classes are actually addressed. That means e.g.
some type of single payer healthcare and paying off the student loan burden.

[1] [http://markblyth.com/books/austerity-the-history-of-a-
danger...](http://markblyth.com/books/austerity-the-history-of-a-dangerous-
idea/)

[2]
[https://www.youtube.com/watch?v=BsqGITb0W4A](https://www.youtube.com/watch?v=BsqGITb0W4A)

~~~
tptacek
The rise of populism is tied to student debt, a phenomenon that overwhelmingly
impacts the upper middle class?

~~~
pdkl95
It's limiting who can even enter college. Blyth specifically recommends "Free
College Tuition". I (perhaps unwisely) mentioned the milder goal only
addressing _current_ student debt with the goal of avoiding being dismissed as
"marxism".

I strongly recommend listening to Blyth's actual explanation (in this or his
other talks & publications), not my poor-quality summary.

~~~
tptacek
The idea that the solution to the core problem of toxic populism just happens
to be the policy prescriptions of the Bernie Sanders campaign (I say this as a
Democrat!) seems like a bit of a just-so story.

~~~
wfo
Well sure, it seems dubious if you frame it chronologically like that but
that's not necessarily how it happened. "The idea that the solution to the
core problem of X just happens to be the prescriptions of Y" is exactly the
case whenever Y is purposefully and intentionally constructed to solve the
problem X.

Who's to say social democratic policies (i.e. Sanders, FDR) don't usually
arise in response to the toxic populism that austerity creates because they
(anti-austerity) are the natural cure? Isn't that the story behind the new
deal?

Is it so hard to believe that creating an entire generation of people who will
have negative net worth until they are 40 fosters resentment?

~~~
tptacek
That's a tautological argument. No good-faith participant in public policy
debates aims to push whole generations into debt; they simply disagree about
the best way to avoid that outcome.

I don't doubt that people who believe in single payer and subsidized tuition
do so because they think it's the best way to keep generations out of debt. It
would be weird for them to think otherwise.

What I'm doubting is that they can evoke public policy outcomes from the 1930s
as a natural experiment proving that those are the best policy interventions.
I think that argument assumes a whole variety of facts not really in evidence.

~~~
wfo
>No good-faith participant in public policy debates aims to push whole
generations into debt

I agree, but I don't agree that even a majority of participants in public
policy debates are acting in good faith. I think it's possible, but given the
results and empirical evidence we have to the contrary you should provide some
evidence or argument to back up this extremely controversial claim.

I don't think they actively wish to push generations into debt like mustache-
twirling cartoon villains, but I do think they are not particularly concerned
with this side effect of their other policy goals which are essentially a
massive transfer of wealth and power to the private sector, like, e.g.
privatization of the loan industry and education.

>I think that argument assumes a whole variety of facts not really in
evidence.

The original argument was made by Blyth, who is a serious academic, not me,
and you haven't made any attempt to engage with him at all. The crux of the
argument is that "anti-austerity is the cure to the ills of austerity" which
is honestly nearly tautological because of its obvious correctness, not
because of a flaw in its reasoning. It's natural to look back at similar
historical situations, like a gilded age of massive inequality and the
destruction of working class power preceding a depression. The only real
difference between then and now is that we've chosen to call our depression a
recession, and pretended there was a recovery from it instead of creating one.

------
nimbius
Reading the article I can draw some distinct comparisons to the United States
colonies in the sixteen hundreds at the helm of people like Cotton Mather. He
may have been a decent local leader if England hadnt insisted on bleeding the
US dry to pay for war. Instead he rose quickly to power and not only doubled
down on his west african savage rhetoric in order to preserve what would now
be considered libertarian ethos, but helped to cement a 200 year old legacy of
racist and prejudice thinking in the united states. Much of the reason
interracial marriage was shunned throughout american history is due to
prejudice he introduced intentionally to avoid marriage conditions rendering
slaves automatically freed. Mather worked directly to oppose englands
emancipation laws from being extended into the colonies, as it would have
restricted the ability to trade on the open market (specifically cotton) and
continued US dependence upon the crown.

------
jernfrost
Not completely surprising, given that we saw similar effects in Greece, during
the austerity measures there.

------
stuaxo
I thought this was common knowledge, but it wasn't mentioned at all when it
was pushed as a policy after 2008

------
TangoTrotFox
I'm surprised this paper omits any mention of the Bavarian Soviet Republic
[1]. In a paper discussing precisely what would have given the Nazi's more
support, I don't understand how they managed to omit this. Like the paper
discusses there was an increasingly radicalized conflict between far left and
far right groups. This first came to organized violence when a group of
communists and anarchists overthrew the government of Bavaria, a German state,
and declared it the Bavarian Soviet Republic.

It was a brutal country for all month long that it existed. Guns were seized
along with money, food, and most other necessities of the times. People's
houses were stolen and given to vagrants. Factories, farms, and other
production facilities were stolen from their owners and given to the workers.
And the country rapidly began to face food and supply shortages, similar to
what would happen to China during its "great leap forward."

And these shortages were met with comments from the government such as, _"
What does it matter [if we do not have milk]? ... Most of it goes to the
children of the bourgeoisie anyway. We are not interested in keeping them
alive. No harm if they die – they’d only grow into enemies of the
proletariat."_ And on top of all of this, two of three of the leaders of the
groups that overthrew the government were Jewish, at a time when many were
already blaming Jews for Germany's defeat in WW1.

I'm certain there are many causes for the rise of the Nazis, but not even
giving this event mention seems unreasonable. This is certainly one of the
most important events in setting the stage for the political changes of the
times.

[1] -
[https://en.wikipedia.org/wiki/Bavarian_Soviet_Republic](https://en.wikipedia.org/wiki/Bavarian_Soviet_Republic)

~~~
matt4077
I have no idea why this decidedly minor failed movement should figure
prominently in any telling of the rise of fascism in Germany.

As you state yourself, it lasted for less than a month. I will add that this
month in semi-power occurred before Hitler had even joined the Nazi party.

~~~
TangoTrotFox
Imagine for a minute that in some moderate sized state in the US, radical left
or radical right individuals organized and violently overthrew the government
by force with tens of thousands of 'soldiers.' And then they started living up
to every imagined stereotype of their ideology.

Can you imagine how that would change this country? How would you respond? I
expect we would almost certainly end up going hard in the opposite ideological
direction of whomever did it. This a crucial point in understanding how and
why it was so [relatively] 'easy' for quite absurd views to start to take
hold.

~~~
mikeash
Why imagine? We experienced this in the 1860s. Unfortunately our reaction was
not to veer hard in the opposite direction, and much of the rebels’ ideology
persists in our government to this day.

~~~
skrebbel
I'd like to understand your comment better but I really have a hard time
understanding what happened in the USA in the 1860s. Just like TangoTrotFox
was kind enough to assume that not everybody here knows Bavarian history by
heart, can you not assume everybody here is American?

I googled for "USA 1860s" and followed some links but I can't get further than
stuff like the "Dakota War of 1862" which I doubt is what you're referring to.

~~~
matt4077
They’re referring to the civil war.

~~~
skrebbel
Oh right, of course. Thanks.

------
Gys
> ... it has been speculated that radical austerity measures, including
> spending cuts and tax rises, contributed to votes for the Nazi party
> especially among middle- and upper-classes who had more to lose from them.

> Our analysis shows that chancellor Brüning’s austerity measures were
> positively associated with increasing vote shares for the Nazi party.

------
allthenews
> please avoid ideological tangents and political rhetoric.

I worry you may be asking for a bit much in a thread discussing austerity and
the rise of Nazism.

~~~
dang
Perhaps, but it's a high-quality submission, and worth seeing whether we can
stick to the site guidelines in discussing it.

~~~
jnordwick
You should just start an econ and politics aggregator. This is about the most
blatant of "naked politics" as you can get.

It is high quality... For another site.

From the guidelines of what off topic: "Most stories about politics". If this
is allowed, the guidelines don't mean much.

~~~
dang
I've asked you before to stop posting tedious harangues about HN. You've done
it way too often, it's off topic, and has become annoying.

The site guidelines say _most_ and _probably_ for a reason. This article
obviously clears that bar. The vast majority of political stories don't, so
what you say downthread is far from true.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

~~~
tptacek
I think you've overreacted here. I don't think that brief 'jnordwick comment
qualifies as a "harangue" and I think it raises a reasonable point: lots of
things are "high quality" but not really germane to Hacker News.

You might hope that a story like this is one we can all find intellectually
interesting and discuss without falling into a political vortex. But it's a
political topic that reacts with almost every other political issue on HN,
from US politics to Greece and the EU.

I think he's right and you're wrong, for whatever that's worth.

~~~
dang
It becomes haranguey if it happens often enough.

I'm not sure your point is borne out by the thread. Most comments are civil
and substantive. It isn't the highest quality discussion but graded on a curve
it's good.

My inclination was to penalize the article because of the triggery title. But
I took a look and had to change my mind. The article is substantive and
gratifies intellectual curiosity; that's the site mandate
([https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)),
so I'd say it's clearly germane.

The topic itself is troll city, of course, which is why I posted the sticky
comment at the top. We have to judge this by the article, not overall topic.
Even if nearly everything on a topic is crap or flamebait, occasionally
something isn't, and it's important to how HN works to treat those exceptions
differently—even though having blanket rules would be easier, and a lot of
people mistakenly think we do have them.

------
UncleEntity
So...having failed to convince everyone that austerity would lead to the fall
of Western Civilization now the Keynesians are saying that austerity is the
cause of Neo-Nazism?

Not that I'm surprised, very little of their pseudo-scientific mumbo-jumbo
(complete with equations) surprises me anymore.

What I don't understand is they claim austerity is the cause of Trump's rise
to power when Clinton was pretty much the poster-child of the anti-austerity
movement, I don't think anyone seriously considered she wouldn't continue
following Obama's economic roadmap as opposed to Trump's claims of reigning in
government deficit spending and waste.

~~~
pjc50
> Trump's claims of reigning in government deficit spending and waste

Trump _also_ promised a huge infrastructure spending plan and a border wall. I
wouldn't say Clinton was especially anti-austerity either, that was Sanders'
thing.

