Saturday, May 05, 2012

Economies and elections

When I was in graduate school (1971-6), most of my professors had lived through the Depression and the Second World War and cared intensely about politics and economics. Few eras had received more intense attention than the last few years of Weimar Germany (1928-32), when an economic crisis and a political crisis brought Hitler to power. I have compared those years to our last four years more than once. Today I recognized an additional aspect of that comparison.

In 1928, at the peak of a relatively modest economic recovery, the German voters had elected the Grand Coalition, as it was known, of four parties: Social Democrats, the Catholic Center Party, and two middle-class centrist parties. The Chancellor, Hermann Müller, was a socialist. The depression struck almost immediately, and in 1930 the coalition broke up over cuts in the budget that never even should have been proposed. Müller gave way to Heinrich Brüning from the Center Party, who made the disastrous mistake of calling for new elections. The produced such large gains for the Nazis and the Communists--neither of whom would cooperate with anything the government wanted to do--that Brüning could not even pass a budget. With the help of the President, retired Field Marshal von Hindenburg, he began relying on Article 48 of the Weimar Constitution, which allowed the government to issue emergency decrees. Such tactics had long-standing precedents in German history. Bismarck, who created modern Germany in the 1860s, had governed Prussia without a budget for about five years during that decade. Under a truly republican president like Friedrich Ebert, the decree power might have been used to outlaw Nazi and Communist militias, but Ebert had died in his fifties in the mid-1920s and given way to Hindenburg, who did not care about the monarchy at all.

Brüning used decree power to continue cutting the budget for two years. He had an ulterior political motive. President Hoover in 1931 had unilaterally declared a one-year moratorium on payments of war debts and reparations, and if the economic situation had gotten bad enough in Germany Brüning believed that he could get the allies to give up reparations altogether. In the spring of 1932 he succeeded, but Hindenburg rewarded him by removing him and replacing him with two non-political chancellors, von Papen and Schleicher. They in turn gave way to Hitler in January 1933 and within three months Hitler had eliminated the Weimar Republic altogether.

Now we have no Nazi Party, no Communist Party, and no Hitler waiting in the wings, but it occurred to me this morning as I read the latest disappointing jobs report that the Republican Party has been using the tactics in opposition that Brüning used in power. Let us return for a moment to the situation of three years ago, when President Obama, we can now say with certainty, made a dreadful and perhaps fatal mistake when he asked for only an inadequate stimulus from the Congress and gave up on breaking up some of the big banks. On the one hand, he has only managed now to reduce unemployment to the very high level that it had reached when he came into office; on the other, he failed to mobilize populist anger or interest the country in a genuine transformation of our society. Because unemployment was much worse in the fall of 2010 than when he came into office, he lost his majority in the House. Since then, the Republicans have been able to block any meaningful steps on the economic front and have forced Obama into focusing on austerity (which seems to be part of his personal make-up as well.) As a result, although the private sector has recovered somewhat, the public sector keeps shrinking and very few net jobs are being added. The President's approval rating remains stuck at 42% and he may very well lose the election.

I am certain that this is no accident. The Republicans are not the least interested in economic recovery before November. As Mitch McConnell made clear in January 2009, they have no other thought but defeating Obama, and recovery would work against that goal. In this very widely read excerpt from their new book, Thomas Mann and Norman Ornstein rightly blame the Republicans for the deadlock in our politics, but they ascribe Republican behavior to ideology. I think that is about half true, and perhaps growing. The other half is total political cynicism, ready to sacrifice the country's economic health to get themselves back into power on the back of an economic crisis for which they will have much less than no solution. The Boom generation now rules the Republican Party as it never has, and apparently never will, rule the Democratic Party, and it is behaving with totally selfish irresponsibility. The contrast with events of twenty years ago is rather striking. Ronald Reagan and George W. Bush left the federal budget in a shambles, but Republicans did not pursue total obstructionism and allowed Bill Clinton to clean up the mess. (To be sure, even then, Clinton's critical tax increase on higher incomes passed without a single Republican vote in the House, but it didn't need 60 votes to get through the Senate.) We had eight years of responsible fiscal management, which George W. Bush immediately undid, with disastrous consequences. Now no one has been able to fix them.

President Obama bears some blame for the catastrophe, because it has taken him much too long to call the Republicans out on what they were doing. His attempts to look strong by using executive orders will not have dramatic results. Meanwhile, our underlying economic state is looking worse and worse. The chances are good that we too, like Germany in 1932, are in for much worse times--although of a very different character than the ones they went through.


James50 said...

You are mostly right (ie correct :-)) in your assessments. Failing to break up the big banks was a huge lost opportunity.

Unlike you, however, I would welcome a unified government under the Republicans at this point. The path we should be following is stimulus coupled with entitlement reform in the period 5-10 years out. Only the Republicans are willing to do this second thing.

The Democrat's shameful refusal to propose a budget in the Senate disqualifies them from governing. They seem to stand for nothing but the unsustainable status quo.

Bob in NC said...

When Obama appointed Wall Street's own to Treasury and other key posts, we should have known he then couldn't revise our economic future with that crew. The big banks would not be faulted or broken up, public infrastructure and education would be gutted, and the Wall Street bailouts would be paid for by taxpayers share of the pie.
It's a jobless recovery of the private sector precisely because the tax code give business exemptions for "capital equipment", which has replaced workers, increased productivity, and left us with a permanent unemployed class, the "structural unemployment" the pundits are loath to admit is now a permanent condition. (Machines don't pay Social Security).
When Obama "compromised" on extending the Bush tax cuts, rather than taking the opportunity in 2009, with a Democratic majority, to revoke them, we should have known progressive hopes were doomed.
The real question is, "why did we not see this then"? Were we reluctant to criticize the first Black president for fear of appearing to be part of the thinly-veiled racism of much of the fanatical GOP/redneck Obama opposition??

Your analogy to Nazi Germany may not be so far-fetched; Stephanson's book INTREPID shows how 1930's US "isolationism" and "appeasement" was more about ensuring Germany's reparations payments to Wall Street than morality or diplomacy, and IN THE GARDEN OF THE BEASTS, also shows the complicity of Wall Street and the financial elite in Hitler's rise to power and the subversion of it's emerging democracy.

If Romney wins, the Wall Street right will have won total victory, and we will have become a two-class oligarchy. We can then kiss Social Security and most other "middle-class" safety nets goodbye.

Bozon said...


Many thanks.

Wonderful thumbnail sketch of the German situation, and incidental US implications re reparations, in early 30s.

All the best,


The reflection on Weimar quite interesting. I would like to know how Chicago politics has influenced Obama - he was the CHANGE candidate so-called, but behaved like a ward boss instead of a President - Does this jive at all? Ward Bosses don't seek to alter he status quo, they seek to maintain their own positions - please all comers where possible - which is exactly what Obama has been doing. There is now also another parallel - the Republicans are fascist swine without gangs of thugs (yet) to cow the majority.

Anonymous said...

This is a translation of an article in today's SPIEGEL.
You might find it interesting.

Ungovernable Greece: Welcome to Weimar

Anonymous said...

Ultimately, the relationship between voters and
politicians has gone sour because they are focused
on different goals. Voters are interested in a society
that works, while politicians are focused on making government work.

From the perspective of voters, the major political
divide in the nation is between mainstream
and the Political Class. Politicians would
prefer to ignore that divide and focus on whether
DC Republicans or DC Democrats should run the
club for the next couple of years.

In many troubled relationships, both sides deserve
some of the blame. But the United States is a nation
founded on the belief that governments gain their
legitimacy only from the consent of the governed
. In
the relationship between the people and the
Political Class, that means the voters are right and
the politicians need to changeM\