Month: February 2021 Page 1 of 3

by Tony Wikrent

Strategic Political Economy

Austerity and the Rise of the Nazi Party

Gregori Galofré-Vilà, Christopher M. Meissner, Martin McKee, and
David Stuckler
Economic History Association, published online by Cambridge University Press, 11 January 2021

We study the link between fiscal austerity and Nazi electoral success. Voting data from a thousand districts and a hundred cities for four elections between 1930 and 1933 show that areas more affected by austerity (spending cuts and tax increases) had relatively higher vote shares for the Nazi Party. We also find that the localities with relatively high austerity experienced relatively high suffering (measured by mortality rates) and these areas’ electorates were more likely to vote for the Nazi Party. Our findings are robust to a range of specifications including an instrumental variable strategy and a border-pair policy discontinuity design….

In this paper, we investigate the association between the austerity measures implemented by the German government between 1930 and 1932 and voters’ increased support for the Nazi Party. A growing literature studies the interactions between political preferences and fiscal policy with evidence that austerity packages are correlated with rising extremism (Alesina, Favero, and Giavazzi 2019; Bor 2017; Eichengreen 2015, 2018; Fetzer 2019; Ponticelli and Voth 2020)….

We also provide some novel quantitative estimates concerning the channels by which austerity mattered. To do so, we study the relationship between mortality rates and austerity. We find a plausible link, since where public spending on health care dropped more, mortality was higher. These places also saw a relatively large increase in Nazi support at the polls. Finally, looking at archival documents of Nazi propaganda, we document how Nazi leaders invoked austerity to attack Brüning and the Weimar Republic and how Brüning’s tax rises were seen as inefficient and unfair by the German masses.

Eviction Moratorium Deemed Unconstitutional by Federal Judge in Texas

[Naked Capitalism 2-26-21]

Business Licensing and Constitutional Liberty
Amanda Shanor [The Yale Law Journal 314 (2016)]

….the Constitution is increasingly being invoked as a trump against certain types of economic regulation. My thesis is that the central arguments currently marshaled in favor of extending stringent judicial review to business licensing regulations are untenable. These lines of reasoning have no logical endpoint. Individual rights, on this view, could trump any manner of governmental regulation in favor of free-market ordering.

These business licensing cases raise deep and pressing questions about the purpose and scope of rights and constitutional judicial review more broadly today. Underlying these debates are competing conceptions of constitutional liberty. One view, perhaps the ascendant one, reflects free-market libertarian values, whereas others understand the First and Fourteenth Amendments to reflect ideals such as democratic self-governance, anti-subordination, or civic republicanism. Resolving disputes about the constitutional status of business licensing requires that we grapple with those deeper questions.

Predatory Capitalism in the Time of COVID19

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If you were born a male in the GI Generation, you had a better chance of having a good life than any American generation (true even of blacks, compared to before, must not nearly as good as whites.) You became an adult in the best economy in American, and perhaps world history. Even menial labor jobs paid enough to have a house, a wife, 2 kids, a car and a vacation, and there were always jobs available. Leave one, you’d have another in a few weeks, maybe even a few days.

This led to a deep misunderstanding of the world, and of themselves. They assumed a benign world that worked, and that they themselves were worthy of and has caused all that had actually been given to them, even though the generations that created the world the GIs, Silent and Boomers (who destroyed it) inherited, were pre-GI. It wasn’t GIs who made the decisions that created the great post-WWII prosperity, though they were, yes, the foot soldiers (the prosperity expanded beyond the US, and is still remembered fondly in much of Western Europe.)

A similar, though not identical disease afflicts modern financial elites. They think they’re geniuses, because they make a ton of money.

But they make that money because for about 40 years the Federal Reserve and government in general (and indeed, not just in the US) have created one of the largest set of financial bubbles in history. Central banks decided securities could never be allowed to down (aka. subjected to actual market forces) and stepped in with interest rate changes, loan guarantees and actually money creation, to the tune of hundreds of trillions (added all together.)

Only a moron who starts with money at the beginning of a four decade bull market that is guaranteed by the full faith and credit of the most powerful government in the world, won’t get rich. The main danger was thinking it was still an actual market: once you realized it wasn’t, you just had to hold (the one exception being the Nasdaq crash, which everyone knew as coming.)

Contrary to propaganda, for most of history in most countries, that wasn’t a good bet. If you had “held” thru 29, you wouldn’t have recovered your money for decades (remember, you can’t use the DOW as a proxy, because most of those companies went bankrupt. They never recovered their value.) In the fifties and sixties, in a stock market designed to not be fraudulent or create bubbles, there is an up and down patter and bull and bear periods.

What modern financiers lucked into (or, for the very old ones, helped create, by financing the politicians, intellectuals and bureaucrats who created neoliberalism) was simply a fraudulent market that was no longer a market in any meaningful way.

Those alive and benefiting now are almost always not even those who helped overthrow the previous order, they are simply the lucky recipients of the Federal Reserve, Treasury and other organs of government backing dump truck after dump truck of money and pouring it into the market.

At the same time, of course, infrastructure and utilities and virtually every measure of social health and welfare have turned negative and yeah, that’s related.

Financiers are just the people in the right position to benefit from government money. All they do to deserve it is continue to keep their hold on government.

Not geniuses. Not people to take advice from, unless it’s advice on how to get in on the scam.

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by Tony Wikrent

Strategic Political Economy

Nietzsche’s Marginal Children: On Friedrich Hayek.

Corey Robin [The Nation, May 7, 2013]

Why have marxists and socialists failed so spectacularly in opposing movement conservatism and neoliberalism?  I think one major factor is an intellectual infatuation with Nietzsche, which blinds them to Nietzsche’s oligarchical pedigree and mindset. This is why I believe we need a revival of the ideas and ideals of civic republicanism, because the issues always come down to republicanism versus oligarchical elites. 

The Nobel Prize–winning economist Friedrich Hayek is the leading theoretician of this movement, formulating the most genuinely political theory of capitalism on the right we’ve ever seen. The theory does not imagine a shift from government to the individual, as is often claimed by conservatives; nor does it imagine a simple shift from the state to the market or from society to the atomized self, as is sometimes claimed by the left. Rather, it recasts our understanding of politics and where it might be found. This may explain why the University of Chicago chose to reissue Hayek’s The Constitution of Liberty two years ago after the fiftieth anniversary of its publication. Like The Road to Serfdom (1944), which a swooning Glenn Beck catapulted to the bestseller list in 2010, The Constitution of Liberty is a text, as its publisher says, of “our present moment.”

But to understand that text and its influence, it’s necessary to turn away from contemporary America to fin de siècle Vienna. The seedbed of Hayek’s arguments is the half-century between the “marginal revolution,” which changed the field of economics in the late nineteenth century, and the collapse of the Habsburg monarchy in 1918. It is by now a commonplace of European cultural history that a dying Austro-Hungarian Empire gave birth to modernism, psychoanalysis and fascism. Yet from the vortex of Vienna came not only Wittgenstein, Freud and Hitler but also Hayek, who was born and educated in the city, and the Austrian school of economics….

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