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The 44 percent support for the neo-Nazi Alternative for Germany (AfD) party in the small east German state of Saxony-Anhalt has produced great anxiety about the causes of a new turn to fascism in the nation that produced Hitler. Call me an economic determinist, but for the most part it’s the economy, stupid. And absent drastic changes in the global economic order and the role of China, Germany and the West are headed for much worse.
This story comes in three parts. Part One: Hitler came to power due to the collapsed German economy following the draconian terms of the 1919 Treaty of Versailles. During the post–World War II boom, with over-full employment and the return of prosperity, there was virtually no support for neofascists. The far-right National Democratic Party, predecessor of the AfD, founded in 1964, whose leaders included former Nazis, never succeeded in gaining the 5 percent required for seats in the federal Bundestag.
Part Two is what occurred after German reunification in 1990. The West German government, under conservative Helmut Kohl, basically bungled the economic integration of the former DDR.
Communist East Germany had a state-run, command economy. Living standards were well below those of the West. On the other hand, everyone had a job and the communists were serious about good health benefits, pension plans, and child care. When I visited East Berlin in 1990 after the wall came down, several anxious people whom I interviewed used the same words: “Not everything here was bad.”
Protected East Germany was soon exposed to the full force of the productive West. The Kohl government did invest in infrastructure but executed a hasty sell-off of state-owned enterprises through a transitional trust called the Treuhandanstalt. Within five years, the agency transformed a state-run economy into a private market-based model. The Treuhand privatized more than 8,000 state companies. About 60 percent were sold to private businesses; another 30 percent were liquidated; the remainder were restored to previous pre-communist owners.
As an exercise in crash privatization, the conversion was a success. But the project left out one key detail: What would all the displaced workers do for a living?
While the government did try to use job retraining and temporary employment in environmental cleanup and infrastructure, it was insufficient. For much of the post-unification period, unemployment in the East was about double that of the West, though lately rates have partly converged, and wages in the East have lagged wages in the West.
A pertinent digression: When I was in my early twenties, I was very into photography, and my first serious camera was a Praktica. It was very inexpensive for a fine single-lens reflex camera, because it was made in East Germany. (You could buy a Praktica in the U.S. because consumer goods were exempt from the strategic embargo of Soviet bloc exports.) It wasn’t quite as good as my next camera, a far more expensive made-in-Japan Nikon, but it was more than good enough. It was, after all, German.
After the war, the famous Zeiss optical company was split into a private Western company, Carl Zeiss, and an East German state-owned company, called Zeiss Jena. Among other products, Zeiss Jena made lenses for Praktica cameras. Zeiss Jena employed about 70,000 people. Today, it employs about 3,000. The company that made the cameras, Pentacon, based in Dresden, employed 6,000. It went bankrupt and employs none.
With the abrupt absorption of the East German economy into the West, a lot of decent jobs for skilled workers just vanished. Some of the political reaction went far right. For others, who had benign memories of the Soviet era, it went far left.
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