Dictatorships
are often unexpected. They have arisen among prosperous, educated and
cultured people who seemed safe from a dictatorship – in Europe, Asia and South
America.
Consider
Germany, one of the most paradoxical and dramatic cases.
During
the late 19th century, it was widely considered to have the best
educational system in the world. If any educational system could
inoculate people from barbarism, surely Germany would have led the way.
It had early childhood education -- kindergarten. Secondary schools
emphasized cultural training. Germans developed modern research
universities. Germans were especially distinguished for their
achievements in science – just think of Karl Benz who invented the
gasoline-powered automobile, Rudolf Diesel who invented the
compression-ignition engine, Heinrich Hertz who proved the existence of
electromagnetic waves, Wilhelm Conrad Rőntgen who invented x-rays, Friedrich
August Kekulé who developed the theory of chemical structure, Paul Ehrlich who
produced the first medicinal treatment for syphilis and, of course, theoretical
physicist Albert Einstein. It’s no wonder so many American scholars went
to German universities for their degrees during the 19th century.
After
World War I, German university enrollment soared. By 1931, it reached
120,000 versus a maximum of 73,000 before the war. Government
provided full scholarships for poor students with ability. As one
chronicler reported, a scholarship student “pays no fees at the university, his
textbooks are free, and on most purchases which he makes, for clothing, medical
treatment, transportation and tickets to theaters and concerts, he receives
substantial reductions in price, and a student may get wholesome food
sufficient to keep body and soul together.”
While
there was some German anti-Semitic agitation during the late 19th century,
Germany didn’t seem the most likely place for it to flourish. Russia,
after all, had pogroms – anti-Jewish rioting and persecution – for
decades. Russia’s Bolshevik regime dedicated itself to hatred – Karl
Marx’s hatred for the “bourgeoisie” whom he blamed for society’s ills.
Lenin and his successor Stalin pushed that philosophy farther, exterminating
the so-called “rich” who came to include peasants with one cow.
Why,
then, did the highly educated Germans embrace a lunatic like Adolf
Hitler? The short answer is that bad policies caused economic, military
and political crises – chow time for tyrants. German circumstances
changed for the worse, and when people become angry enough or desperate enough,
sometimes they’ll support crazies who would never attract a crowd in normal
circumstances.
Like the
other belligerents, Germans had entered World War I with the expectation that
they would win and recoup their war costs by making the losers pay. The
German government led their people to believe they were winning, so everybody
was shocked when the truth came out. Then U.S. President Woodrow Wilson
gave a speech outlining his high-minded “14 Points,” leading the Germans to
expect a peace negotiation. But the British and the French – America’s
principal allies -- were determined to avenge their losses, and vindictive
terms were forced on the Germans. They felt betrayed and
humiliated. Germany’s principal military commanders realized that whoever
signed the armistice would be hated, so they resigned and let a civilian
official sign it (he was subsequently assassinated). As a result, the
Weimar republic, Germany’s fragile democracy, was immediately discredited.
Hitler
was among those agitating against the Weimar government. He joined the
German Workers’ Party that, in February 1920, became the National Socialist
German Workers’ Party (NSDAP) – later shortened to Nazi. It offered a
witches’ brew of nationalism, socialism, anti-Semitism and
anti-capitalism. The German historian Oswald Spengler influenced early
Nazis with his idea of “Prussian socialism.”
Hitler’s
main talent seemed to be as a speech maker, so he began giving speeches that
appealed to Germans embittered and disillusioned by the outcome of the
war. He denounced Jews, capitalists and other alleged villains, vowing to
rebuild German greatness.
Historian
Ian Kershaw observed that “Without a lost war, revolution, and a pervasive
sense of national humiliation, Hitler would have remained a nobody.”
Then came
the inflation crisis. Victorious Allies demanded that Germany pay steep
reparations, apparently without giving much thought about how the Germans would
get the money for that. Trade restrictions made it harder for German companies
to earn money through exports. European tariffs generally tripled and
were as much as 800% higher than prewar levels.
The
German government defaulted on its reparations agreement. Determined to
extract reparations from the Germans, in January 1923 the French sent troops
into the Ruhr where much of German industry was located. The German
government responded by subsidizing those who pursued passive resistance against
the French. Consequently, German budget deficits soared.
By
itself, reparations would have been daunting, but Germany also had a
financially stressed-out welfare state. Almost 90 percent of German
government spending went for a big bureaucracy, social programs, money-losing
nationalized businesses and other subsidies -- a portfolio of obligations
uncomfortably familiar to us. The German government subsidized
municipalities, much as U.S. states are begging the federal government for
bailouts now. Germany had a troubled government-run pension system like
our Social Security. The German government provided health insurance for
millions of people. There were German government programs for
1.5 million disabled veterans. The government lavished subsidies on
the arts. There were government-run theaters and opera houses.
Government-owned railroads lost money. The German government even
operated factories producing margarine and sausages, which lost money.
The
German central bank began printing stupendous quantities of paper money to pay
for all this. At the peak of the inflation in late 1923, only 1.3 percent
of German government spending was covered by tax revenue. The result was
that in less than five years prices soared 100 billion-fold.
Inflation
harmed everybody to one degree or another. Many bank deposits were
devalued to nothing. Historian Gerald D. Feldman reported that gangs of
unemployed coal miners plundered the countryside, because farmers refused to
trade their produce for worthless paper money. The government enacted
rent controls that limited the ability of landlords to recover their costs and
discouraged developers from building more apartments. So cities borrowed
from foreign lenders to build housing that lost money. Libraries and
museums couldn’t maintain their collections because of inflation. Much
scientific research became financially impossible, too.
Historian
Konrad Heiden reported, “On Friday afternoons in 1923, long lines of manual and
white-collar workers waited outside the pay-windows of German factories,
department stores, banks and offices. Each received a bag full of paper
notes. According to the figures inscribed on them, the paper notes
amounted to seven hundred thousand or five hundred million, or three hundred and
eighty billion, or eighteen trillion marks – the figures rose from month to
month, then from week to week, finally from day to day. People dashed to
the nearest food stores where lines had already formed. When they reached
the stores, a pound of sugar, for example, might have been obtainable for two
million marks; but by the time they came to the counter all they could get for
two million marks was a half-pound. Everybody scrambled for things that
would keep until the next pay-day.”
People
employed in the private sector were enraged when unionized government employees
– who carried out the government’s disastrous economic policies -- succeeded in
having their salaries pre-paid, so they could convert the currency into goods
before the currency depreciated further. The publication Soziale
Praxis reported: “It seems significant to us that public opinion is
now gradually turning against the civil service to an extent that gives great
concern. How much hostility is daily directed against that portion of the
employed German people with civil service status is shown by the press and also
even by those parties which previously supported the civil service and now
press for a reduction of the civil service.”
Hitler
gave speeches appealing to those he called “starving billionaires” who had
billions of paper marks but couldn’t afford a loaf of bread. Altogether,
during the inflation, Hitler recruited some 50,000 Nazis and became a political
force to reckon with. Economist Constantino Bresciani-Turroni called Hitler
“the foster child of the inflation.”
To be sure, he attempted a coup that failed (November 8, 1923),
and he was imprisoned. But he retained his key followers and wrote his
venomous memoir Mein Kampf that became the Nazi bible.
During the late 1920s, the German economy began to recover, and
there was less interest in the Nazis. In the 1928 Reichstag (legislature)
elections, they won only 2.6% of the vote.
If good times had continued, Hitler might have been
forgotten. He needed another crisis for a shot at gaining political
power.
The crisis came as a succession of misguided policies created
obstacles to enterprise and brought on the Great Depression. The
government promoted deflation. It fixed prices at above-market levels that
discouraged consumers from buying, and it fixed wages at above-market levels
that discouraged employers from hiring. government-sanctioned cartels
restricted competition. High taxes made it harder for people to save and
invest. High tariffs throttled trade. When German producers were
able to export goods, they had difficulty collecting payment because of
exchange controls. All these policies made it harder for the economy to
grow.
Moreover, German banks were vulnerable, since they hadn’t fully
recovered from the inflation that had wiped out a substantial portion of their
capital and left them dependent on short-term foreign deposits that could be
withdrawn.
As the number of unemployed went up, more Germans voted for the
Nazis, and the number of Nazi members went up again.
Hitler maintained non-stop agitation for power. He travelled
constantly, giving speeches throughout Germany. He wanted his opponents
destroyed, so he demonized them. He accused them of being traitors.
Two Nazi paramilitary organizations, the S.A. and S.S., launched bloody attacks
on his opponents. This attracted more thugs who liked violence and were
good at it.
Every night, there were Nazi rallies and marches. Hitler’s
henchmen promoted him by publishing a Nazi magazine, distributing Nazi records
and promoting Nazi movies.
They became the largest political organization in Germany,
and by January 30, 1933, with the help of a little blackmail, Hitler emerged as
Germany’s chancellor – the head of government. He proceeded to consolidate
unlimited power before anybody realized what was happening.
We should understand that Hitler didn’t take over a small
government with an effective separation of enumerated, delegated and limited
powers. He took over a large welfare state. It had been created by
the autocratic chancellor Otto von Bismarck, it expanded rapidly during World
War I and gained total control of the economy. War-related private
businesses were turned into government bureaucracies. The government shut
down private businesses that officials considered unnecessary. There was
forced labor, and nobody could change jobs without government permission.
For the first time, this “war socialism” showed the world what a socialist
economy would look like, and it became a model for Lenin and other communist
theoreticians. The Allies directed the dismantling of the German war
machine, but a government-run economy substantially survived.
Although Hitler echoed Soviet-style central economic planning with
a Four Year Plan, his method was suffocating regulation rather than outright
expropriation. There was nominal private ownership but government
control. He dealt with unemployment by introducing forced labor for both
men and women. Government control of the economy made it virtually
impossible for anyone to seriously threaten his regime. Hitler added secret
police, death camps and another war machine.
The German educational system, which had inspired so many American
progressives, played a major role in all this. During the previous century,
the government grained complete control of schools and universities, and their
top priority was teaching obedience. The professorial elite promoted
collectivism. The highest calling was working for the government.
In 1919, sociologist Max Weber reported that “The honor of the civil servant is
vested in his ability to execute conscientiously the order of superior
authorities.”
Lessons for us today:
·
Bad economic policies and foreign policies can
cause crises that have dangerous political consequences.
·
Politicians commonly demand arbitrary power to
deal with a national emergency and restore order, even though underlying
problems are commonly caused by bad government policies.
·
In hard times, many people are often willing to
go along with and support terrible things that would be unthinkable in good
times.
·
Those who dismiss the possibility of a
dictatorial regime in America need to consider possible developments that could
make our circumstances worse and politically more volatile than they are now –
like runaway government spending, soaring taxes, more wars, inflation and
economic collapse.
·
Aspiring dictators sometimes give away their
intentions by their evident desire to destroy opponents.
·
There’s no reliable way to prevent bad or
incompetent people from gaining power.
·
A political system with a separation of powers
and checks & balances – like the U.S. Constitution – does make it more
difficult for one branch of government to dominate the others.
·
Ultimately, liberty can be protected only if
people care enough to fight for it, because everywhere governments push for
more power, and they never give it up willingly.
Jim Powell’s next book will be "The Fight For Liberty,
Crucial Lessons From Liberty’s Greatest Champions Of The Last 2,000
Years." He’s a Senior Fellow at the Cato Institute.
Today’s lunch menu in honor of our
friends on the other side of the wall is a Mexican favorite world-wide, the ubiquitous
“TACO”!!! First, comes the all-important ingredients:
Granny Annie’s Politic Café
Local Taco Bell
Boner Appertite!!!
