Seems to avoid even mentioning the desire of most of Europe to try and learn from what went wrong after the Great War. In 1918-1930 Germany was left so weakened by peace treaties that the seeds were sown for WW2.
Post-WW2 the allies felt that a Germany crippled would only bring future wars, and a huge co-ordinated effort to build a sustainable industry and economic growth was put into motion. Germany and the people of Germany should profit from peace. Part of this was the Marshall Plan, part the European Recovery Program.
This positioned Germany to have a couple of advantages, namely that the Victorian era mass production methods that had been pioneered could be discarded (but remained in place in a lot of the other European developed countries). In Germany these were fully replaced by WW2 era production methods as most of Germany's industrial capability had been destroyed or damaged.
Additional processes to limit industrial capabilities (the key method of which was limiting steel output of the Ruhr Valley, which acted to restrain all industry) meant that industry was incentivised to find a larger profit per unit rather than slimmer margins from more units.
Combined with not being able to maintain a military, Germany was able to invest in skilled manufacturing like no-one else were able to.
Over a course of 50 years this resulted in not just a modern manufacturing capability to be put in place, but for that to be at the very highly skilled end of manufacturing.
The reason so many of the mid-sized market leaders come from Germany can be traced back to post-WW2 policies to ensure that Europe could be at peace. Some of these policies were undoubtedly exploitative in the short term, but long term have achieved their goal.
> (most of Germany's industrial capability had been destroyed or damaged)
Tony Judt in Post War (https://www.goodreads.com/book/show/29658.Postwar) actually claims that this is patently false. That Germany actually came out of WW2 with most of its industry intact (it was away from the most bombed cities and majority of fighting actually happened in France/Poland/USSR) and was in significantly better shape than Frace and UK industry-wise. As an added bonus, the industrial lines were freshly retooled, significantly more modern than the ones in France and UK and its wartime focus could be rather rapidly converted into highly profitable peacetime industries that were highly sought after in 20th century economic boom (chemistry, car manufacturing, electronics, etc.)
The fact that BRD didn't have to support and invest into standing army also funneled investment into emerging industries - investment that was way slower to come in destroyed France and exausted UK.
Was he wrong? Are there any sources contradicting his research?
It's simplified Germany took a few years, policy changes, and loans to really get back into shape. https://en.m.wikipedia.org/wiki/Wirtschaftswunder Longer term it benefited from both good longer term policies and positive cultural influences, and the Korean War.
But yea, Germany had more intact industry than often portrayed.
if Germany had more intact pre-WWII industrial sites than is commonly portrayed, that makes the original question even more interesting. how did German industry become, and remain, so competitive in the first place?
the US also had intact industrial sites after WWII, but its middle class job base has not been so well preserved in the face of recent global competition.
May have something to do with taxes and maybe more effective use of public funds? Germans are taxed at higher rates (and more importantly, lower thresholds for higher rates) compared to the US or UK, so the distribution seems more even, allowing a larger middle class.
Okay, first things- first - no lessons where learned, nobody out of the good of their hearts did anything for anybody. The original plan after world war 2 was to turn Nazi Germany into a agrarian border stripe between the two emerging power blocks.
This plan was put into action, and some starvation resulted from the dismantling and moving of the factories. The reason this changed is because the cold war tensions, made it necessary to bind the former enemy as a useful puppet and ally to each corresponding site.
Thus west and east Germany got away with a blue eye for blundering and murdering east European countries and several minorities.
There is no moral here to be taken home with- maybe some tactical advice- if you want to stab and rob your neighbor - do it in the midst of a gang-shootout and then join in on the side nearby with the stolen goods and weapon.
You say that like every single German personally executed jews and other minorities.
Yes, a lot of Germans did. Yes, more Germans went along and didn't do anything against the Nazis.
But only a minority of Germans knew how bad it was. My grandmother told me that they knew about some labor camps were certain people were put. She said that she didn't know anything about the industrialized murder. If you look on the map, you will see that the extermination camps (the concentration camps constructed to kill people) were located outside of the German Reich so that the German public would not get to know about it. Hitler knew that the extermination camps could weaken his position and enrage the public.
Most Wehrmacht soldiers followed orders and marched against the enemy they were told to shoot at. Yes, this is also bad and "I just followed orders" should not be an excuse. But the recent 72 years showed that most Germans were peaceful and just wanted to live their live. Homecoming soldiers didn't jump on the next minority and beat them up. The overwhelming majority was just happy that everything is over. Hitler was never elected by a majority and he came to his final power through a coup d'état.
There is a program called "Stolpersteine"- they have put little bronze-bricks into the streets before houses where Jews and others who where "Transported" lived. There are little bronze bricks in nearly every street of the town i live nearby. Yet many of the old people there claim to never have known. And many claim they have helped the prisoners in some way.
The Wehrmacht shot and torched whole villages for partisan activity. And soldiers talk- they have convoys through the hinterland- they knew exactly what the SS was doing in the conquered territories.
They guarded millions of war-prisoners while not giving them food and shelter until they succumbed.
Im not singling out germany. Every country, and all people on the planet are capable of this. WorldWar2 or the holocaust where not something particular unique.
They where just humanity's worst behavior combined with organization skill and industrial capacity's.
Stalins Holdomor, the Archipel Gulag or Maos Killing spree are similar in dimension but lacked the cultural scenes echo chamber for sentimental political reasons.
These messy large scale crimes where not ended by education, a protest generation or self civilization of the species, but by the invention of the nuclear bomb, which limited the war like activities of larger, well organized nations.
Among non nuclear deterred groups or within country's, such breaks of civilization can happen anytime even today.
(See Yugoslawia, Iraq/Syria, The Hutu/Tutsi Genocide)
I also assume some dictators started to turn away from ethnic scape-goating, after in several countrys riled up masses turned against them and China showed that even a crony-corrupt-dictatorship can be economically functional.
"The reduction in steel production that resulted from the first and the second level of industry plans meant that a steel production bottleneck ensued which forced other parts of the German industry to fall below their own permitted production levels. The economy of the Bizone finally hit rock bottom early in 1948 as a consequence of this.[21]"
It might have looked like a swift turnaround on the politics, but if you influence economics, the system behaves very physical, meaning, bottlenecks propagate, and effects ripple.
For most Germans i guess, the contrast of the war economy (which always felt good, due to wealth of whole Europe being fed into Germany) - and the aftermath, with refugees and year long food shortages was quite stark.
I guess all other nations have a prolonged history of suffering with the start of WW2 and slow improvement after the end.
Spilled milk under blown up bridges over long dammed rivers.
Whats way more interesting is the question of prevention. I actually propose the idea of Extremism-Vacacination. Controlled Synthetic extremism is introduced, in a controlled environment and the lectures are really learned.
Its quite similar to the approach i always suggest to transmitting live-experience from generation to generation. Usually advice is not really taken or valued, until the same mistake has been repeated.
Take scam-prone investments, for which every generation falls again and again. Now imagine a service a father/mother (or grandmother/father) could hire, that would scam the kid, and retransfer the funds upon lesson learned. Such a lecture, though also painful, would be less prone to do all the damages the real scam would do.
This is just incorrectly attributing germanys success to the Marshall plan! Yes, the Marshall plan helped Germany recover. But the Marshall plan had absolutely nothing to do with the "Mittelstand" emerging as a predominant industry type. There is nothing in the Marshall plan that enabled this to happen.
More than anything, this has to do with German ability to unite goals of labour and market capitalism, commonly referred to as social capitalism in Germany. It majorly aligns labour and company ownerships goals. Labour wants to have reliable jobs, which you achieve by being highly skilled and thereby competitive. Owners want to be competitive and can do this via highly skilled labour. Labour representatives are by law required to be on a companies board. This is what forces labour and owners to work together. It has lead to a highly skilled and competitive workforce that enables the Mittelstand. There are other factors that help, but none of them are as important.
This has nothing as such to do with the Marshall plan. It's very ignorant to attribute this success to "americas help". it's borderline offensive and does not actually engage with the primary argument in the article. If you want to learn from germanys success, you should read up on labour represantatives being on the company board, rather than attributing it to something that is barely related.
>The reason so many of the mid-sized market leaders come from Germany can be traced back to post-WW2 policies to ensure that Europe could be at peace. Some of these policies were undoubtedly exploitative in the short term, but long term have achieved their goal.
Hilariously, the Volkswagen designs (The Type 1/Beetle), factories, etc. were actually offered as a free war reparation to both the US and to Britain. However, neither party was interested... in what would end up being the most profitable automotive concern on the planet. It is considered the single greatest blunder of the entire automotive industry.
Although I'd agree that the Volkswagen Group as a whole may not be the same as it is today if it were under different management...
...it remains that passing up a robust, reliable, and simple car design -- and the factories/tooling to produce it -- for an acquisition cost of zero is still a blunder.
> post-WW2 policies to ensure that Europe could be at peace
What do you mean by this? According to Wikipedia, the other Western European nations semm to have received more funds from the Marshall Plan than Germany did.
> most of Germany's industrial capability had been destroyed or damaged
Source? I remember my history teacher telling us the exact opposite.
Anyway, I don't understand how your points shed light on the differences in ecomomic structure to other Western nations, e.g. France.
Another geopolitical factor unaddressed is the more recent export growth of the other CE4 countries (Czech Republic, Hungary, Poland, and the Slovak Republic) in to Germany since 1990. The growth of these supply chains to the east play a big part in the German global export machine, largely at the expense of the competitiveness of southern European countries.
does the fact that Germany is right smack in the middle of Europe between Eastern European powers that can supply cheap (EDIT: and skilled, looking for better universities or opportunities) labor and Western/Northern European markets that can afford their goods have anything to do with this?
Not really. Historically (especially in the massive growth period after WW2 and before the reunification) the largest influx of immigrant workers came from countries like Italy and Turkey. A large number of seasonal workers these days come from Eastern Europe but that doesn't explain the decades prior.
Historically (since about the 1700s) didn't large numbers of Europeans from all over the continent go there for the conveniently located scientific community and trade crossroads?
Germany didn't really exist as a nation until 1815 so I'm not sure what you're arguing. Also the Eastern borders of Germany changed a lot until 1990.
Also the current economic situation of Eastern Europe has likely more to do with the failure of the Soviet Union than with whatever happened in the 1700s.
Not really as that only represents time since the Berlin Wall fell.
Whilst the flood of cheap labour is of course an important factor since then... the companies being talked about established themselves long before the borders were opened.
I wonder how/whether increasing the defense budget would help the German economy. Let me just say right away, that I am in no way advocating for increasing the supply of arms and ammunition in the world, which already seems to be at dangerous levels. However, if Germany invested as much in military R&D and a domestic arms industry, I wonder if that would boost the economy as it has done in the US.
Also, the immigration system seems less broken for smart people to emigrate to Germany. Could probably get the best global talent as well.
No, it's not. With investment in military R&D, there's no "broken window." Claiming that destruction in one place (aka war) spurs growth is the broken window fallacy.
It's possible that investment "directly into the economy" might be more effective except for the fact that you have to take the money out of the economy and put it into a few peoples' hands to direct. The fewer hands means the easier it is to corrupt or hijack the process. I'd rather for "the economy" to invest on its own.
As Hayek said, I want "plans by the many not by the few."
But with the military, you are already taking that money out of the economy and putting it into a few people's hands directly.
I wasn't suggesting redistributing money from one company to another.
I was suggesting having some sort of government agency, that spends trillions of dollars a year on doing all those R&D things that the military does that have nothing to do with blowing people up.
Literally just "The military, minus the guns, bombs, fighter jets, and everything else that involves killing people".
That wouldn't be perfect, but for the purpose of making the economy/world a better place, such a "not killing people military" seems like it would be strictly better than our current military.
Trillions of dollars per year? The entire US Defense Budget for 2016 was $600B while the entire budget was $3.8T.[1]
Further, many large scale tech advancements have come from military R&D, originally with the goal of blowing people up, preventing them from getting blown up, or making them recover after the fact. Everything from the Internet to GPS to microwave to many synthetic fabrics to emergency medicine.
I agree that investing in things that don't kill people is great and should be encouraged. It's just outside the scope of government.
The military tech is actually useful - many of the things we use today as ubiquitous was an artifact of military. It's definitely not the same thing as digging down holes.
However, what i do not know is how much of US military spending is on R&D
Example: GPS was invented by the military. But you could have a different government organization work on all the useful stuff that comes out of the military that has nothing to do with blowing people up.
You could also argue that if you invest trillions of dollars into digging holes, that might result in useful technology. Taking the example of GPS, maybe you need to very accurately know what your position is, so that you can pinpoint exactly where you want the hole to be built.
My hole digging government department could have invented GPS too!
Military needs a way to position vehicles, you get gps, same goed for arpanet. A good chunk of military inventions are done by civilians on military funding.
I think it is the desire in US military to be always on the bleeding edge, and the accountability that it brings. There is also less pressure for profit, I guess.
You said digging holes, elon musk is doing that boring job :)
Sometimes space and military programs will produce technology that later becomes commercially very useful, eg, Raytheon and the microwave oven (First introduced Radarange 1946 - and Amana made a more generally consumable model in 1967). The whole "dig holes and fill them up again" was wonderfully covered in Orwell,1984.. The noble version of this would be Space Exploration, search for unlimited energy (eg, fusion), or cancer cures. The military industrial complex speech given by a sitting US president, Eisenhower, here - http://avalon.law.yale.edu/20th_century/eisenhower001.asp - more or less predicted that the 1984-style approach to perpetual state of war will be taken unless big changes were made.
"War, it will be seen, accomplishes the necessary destruction, but accomplishes it in a psychologically acceptable way. In principle it would be quite simple to waste the surplus labour of the world by building temples and pyramids, by digging holes and filling them up again, or even by producing vast quantities of goods and then setting fire to them. But this would provide only the economic and not the emotional basis for a hierarchical society. What is concerned here is not the morale of masses, whose attitude is unimportant so long as they are kept steadily at work, but the morale of the Party itself. Even the humblest Party member is expected to be competent, industrious, and even intelligent within narrow limits, but it is also necessary that he should be a credulous and ignorant fanatic whose prevailing moods are fear, hatred, adulation, and orgiastic triumph. In other words it is necessary that he should have the mentality appropriate to a state of war. It does not matter whether the war is actually happening, and, since no decisive victory is possible, it does not matter whether the war is going well or badly. All that is needed is that a state of war should exist. The splitting of the intelligence which the Party requires of its members, and which is more easily achieved in an atmosphere of war, is now almost universal, but the higher up the ranks one goes, the more marked it becomes. It is precisely in the Inner Party that war hysteria and hatred of the enemy are strongest. In his capacity as an administrator, it is often necessary for a member of the Inner Party to know that this or that item of war news is untruthful, and he may often be aware that the entire war is spurious and is either not happening or is being waged for purposes quite other than the declared ones: but such knowledge is easily neutralized by the technique of doublethink. Meanwhile no Inner Party member wavers for an instant in his mystical belief that the war is real, and that it is bound to end victoriously, with Oceania the undisputed master of the entire world. "
I don't think it's as much the fact that the US invested in the military sector as it is the fact that the US invested in something.
What I mean by that is that yes, the US likely benefited from investing trillions of dollars in the military. But it could've also benefited, perhaps even more so, if it had invested trillions of dollars in infrastructure. This would have made it easier and cheaper for businesses to ship their products across the states, as well as creating a lot of blue collar people jobs. Perhaps the same would be true if the US invested trillions of taxpayer dollars in other industries, too (healthcare, manufacturing, solar industry, etc).
I'm not saying the US shouldn't invest at all in maintaining its superior military status. I'm mainly saying that a lot of the money is being wasted (like say for buying more tanks, or just to keep certain military jobs, in the same way it's trying to keep coal jobs), and it could've been invested elsewhere with at least as many results (for the economy).
I would also say that a lot of the military budget is being wasted on unnecessary wars, so that money doesn't really go into "strengthening US military" either. It's being thrown away in the Middle East.
Likely difficult to get proper data on that but two things make me doubtful that increased military expenditure would boost its economy:
- it's likely that significant part of the spend would go to the US and hence not really help the German economy
- recent European (and also US) military projects were pretty much a disaster (the A400M being a point in case). Not that this would be much different in other countries but it leaves you wondering how effective it really is to spend money on the military rather than proven ROI-positive investments such as education
Edit: Also, it's not like Germany would really struggle economically ;-)
_Selling_ weapons to nations not threatening you is a great business. You get to do some R&D, you employ quite a few people (often including manufacturing) and the buyer can't use the thing you sell them to advance their economy.
_Buying_ more weapons than you need to defend yourself on the other hand is a terrible investment. If they just sit around and aren't used against someone (or at least the threat of you using them gets you something) is a colossal waste of money.
Considering the German society is overall very pacifist, I don't see how buying more weapons (if even they build them within Germany) gets them much of anything.
Germany was strong before WK2, the buildings where gone, but the enterpreteneurs, scientists, developers, the workers morale and their experince were still there. Also obedience of the law, memories about how things should be organized etc.
If some money would help so much, more contries would be doing better.
If some money would help, more countries qould be soing better.
It's interesting, because many of the neighboring countries were in much better shape after the war, but since they were forced by the Soviets to reject the Marshall plan, Germany got ahead economically and Eastern Europe became the "poor part of Europe" again.
Seems to avoid even mentioning the desire of most of Europe to try and learn from what went wrong after the Great War. In 1918-1930 Germany was left so weakened by peace treaties that the seeds were sown for WW2.
Post-WW2 the allies felt that a Germany crippled would only bring future wars, and a huge co-ordinated effort to build a sustainable industry and economic growth was put into motion. Germany and the people of Germany should profit from peace. Part of this was the Marshall Plan, part the European Recovery Program.
This positioned Germany to have a couple of advantages, namely that the Victorian era mass production methods that had been pioneered could be discarded (but remained in place in a lot of the other European developed countries). In Germany these were fully replaced by WW2 era production methods as most of Germany's industrial capability had been destroyed or damaged.
Additional processes to limit industrial capabilities (the key method of which was limiting steel output of the Ruhr Valley, which acted to restrain all industry) meant that industry was incentivised to find a larger profit per unit rather than slimmer margins from more units.
Combined with not being able to maintain a military, Germany was able to invest in skilled manufacturing like no-one else were able to.
Over a course of 50 years this resulted in not just a modern manufacturing capability to be put in place, but for that to be at the very highly skilled end of manufacturing.
The reason so many of the mid-sized market leaders come from Germany can be traced back to post-WW2 policies to ensure that Europe could be at peace. Some of these policies were undoubtedly exploitative in the short term, but long term have achieved their goal.