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Archive for the ‘Communism’ Category

Back in 2011, I shared eight short videos that captured the greatness of Ronald Reagan.

One of the videos was this excerpt of his famous tear-down-this-wall speech at Brandenburg Gate.

In a column for the Washington Examiner, Quin Hillyer explains why this was a momentous event.

The greatest climactic event of the 20th century occurred 30 years ago Saturday, as thousands of Germans pushed through, climbed over, and began tearing down the Berlin Wall. Human freedom overcame human evil. Human potential was unleashed. Exuberantly but peaceably, the good guys won. The story needs to be told again and again, because those too young to have lived through the Cold War have trouble feeling viscerally the stakes, the danger, and the drama. …the late William F. Buckley said in his last-ever public speech that The Lives of Others, about life in East Germany under communist domination, should be required viewing in every American high school. The film reminds us that not just in gulags where perceived “troublemakers” were sent but in everyday life: The repression was severe; the fear was palpable; the attempted destruction of the human psyche was pervasive. And there stood the Berlin Wall. Both the real presence of brutality and the era’s most chilling symbol of mass enslavement, the wall was the physical, concrete portion of the figurative Iron Curtain. Also featuring extended barriers of metal-mesh fences, trenches, and 259 vicious-dog runs, and guarded by 186 observation towers manned by machine-gun-toting soldiers, the wall was a monstrosity. The joy that greeted the wall’s fall, not just on-site but around the world, remains almost indescribable.

By the way, I echo Quin’s endorsement of The Lives of Others. It really does capture the day-to-day horror of statism, and has a really nice twist at the end.

Returning to the issue of the Wall and communism, Reagan deserves considerable credit for this victory over evil.

Part of Reagan’s genius is that he attacked the moral foundations of communism. Or the lack of any moral foundation, to be more precise.

Here are some observations about his speech at Moscow State University in 1988.

Ronald Reagan, in the last year of his presidency, delivered one of his most magnificent speeches. …It was the last day of his fourth and final summit with Mikhail Gorbachev. …Reagan never regarded his meetings with Mr. Gorbachev as pertaining solely to arms control. Arms control was merely the pretext for a more fundamental challenge. …If the theme is diplomacy, the underlying purpose is liberty. …He did…understand that victory would belong in the end not to one nation over another, but to one political-moral idea over another. Freedom must triumph over totalitarianism. Reagan had always abominated communism. …Reagan’s ultimate aim was to plant the seed of freedom in the newly receptive furrows of a cracking totalitarianism. “Mr. Gorbachev, tear down this wall,” he cried at the Brandenburg Gate in 1987. “Isn’t it strange,” he mused to reporters, “that there’s only one part of the world and one philosophy where they have to build walls to keep their people in.” …Reagan delivered his Moscow speech standing before a gigantic scowling bust of Lenin and a mural of the Russian Revolution. He incorporated them as props in his address. “Standing here before a mural of your revolution,” he said, “I want to talk about a very different revolution,”… “The key,” Reagan said, “is freedom—freedom of thought, freedom of information, freedom of communication.”

Yes, Reagan’s rejuvenation of the American economy helped lead to the collapse of communism (notwithstanding the fact that some western economists were dupes for Soviet central planning).

And, yes, Reagan’s military buildup helped weaken the Soviet Union’s resolve.

I’m convinced, though, that Reagan’s attack on the core evil of communism made a key difference. Aided and abetted by his relentless mockery of communism’s many failures.

Let’s not forget that history also is the result of random events.

David Frum last year wrote about a bureaucratic snafu that helped hasten the downfall of East Germany’s evil regime.

At an evening news conference on November 9, 1989, a spokesman for the East German Communist government made a history-altering mistake. The spokesman had been authorized to say that travel restrictions on East German citizens would be lifted the next day, November 10. Instead, he said that the restrictions were lifted effective immediately. Within minutes, hundreds of thousands of East Berliners rushed to the checkpoints of the Berlin Wall. Since the erection of the wall in 1961, border guards had killed more than 750 people seeking to escape East Germany. That night, the border guards had heard the same news as everyone else. Their license to kill had been withdrawn. They stood aside. The long-imprisoned citizens of East Berlin rushed out into West Berlin that night, in what became the greatest and best street party in the history of the world. Soon, Berliners east and west began to attack the hated wall, smash it, rip it apart.

Here’s a video that describes the same event.

By the way, we can’t write about the Berlin Wall without taking the opportunity to reflect on the failure of socialism.

Writing for the U.K.-based Spectator, Kristian Niemietz points out that big government failed in East Germany, just like it fails everywhere.

Thirty years on from the fall of the Berlin Wall, socialism is back in fashion. The anniversary is a good occasion to reflect on some of the lessons that we have collectively un-learned, or perhaps never learned properly in the first place from the fall of Communism. The division of Germany into a broadly capitalist West, and a broadly socialist East, represented a natural experiment, and did so in two ways. It was, first of all, a gigantic economic experiment about the viability of socialism, and it produced conclusive results. Around the time of Reunification, West Germany’s GDP per capita was about three times that of East Germany’s. There was also around a three-year-gap in average life expectancy.

Amen.

I invite people to compare the numbers on East German vs. West German economic performance.

Last but not least, let’s close by adding an item to our collection of socialism/communism humor.

To be sure, this is dark humor. Hundreds of people were killed trying to escape into West Berlin. That may seem like an asterisk compared to communism’s horrendous death toll, but every needless death is a tragedy.

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John Papola has done it again. His video showing a Keynes v. Hayek rap contest was superb, and was followed by an equally enjoyable sequel featuring a boxing match between Keynes and Hayek.

Now he has a rap contest about capitalism and socialism featuring Ludwig von Mises and Karl Marx.

The video touches on three economic topics.

The obvious focus is the track record of capitalism vs. socialism. Given the wealth of evidence, that’s a slam-dunk victory for free markets.

But there are also two wonky issues referenced in the video.

  • The socialist calculation debate – As I’ve repeatedly noted, genuine socialism involves government ownershipcentral planning, and price controls. Economists from the Austrian school, such as Mises, were the ones who explained that governments were incapable of having either the information or knowledge to make such a system work.
  • The labor theory of value – Marxism is based on the strange notion that the value of a product is a function of the hours it took to produce. This overlooks the role of capital and entrepreneurship. Moreover, as explained in the video, value is subjective, determined by the preferences of consumers.

Let’s close with a nice compare-and-contrast image a reader sent to me.

P.S. John Papola also did a great satirical commercial for left-wing toys.

P.P.S. Even though it’s not the right time of year, here’s his satirical commercial for Keynesian Christmas carols.

P.P.P.S. If you want to learn about the Austrian macroeconomics, click here and here.

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Today, October 1, is the 70th anniversary of communists seizing power in China.

Given the horrible consequences of Mao’s rule, including tens of millions of deaths from famine and tyranny, this tweet from President Trump seems rather inappropriate.

That being said, it’s also worth pointing that today’s China is far better than Mao’s China.

Simply stated, it’s no longer a communist nation, at least in the sense that there’s been a decent amount of economic liberalization (starting in a small village in 1979).

China is now ranked #113 by Economic Freedom of the World. That’s definitely not anything to cheer about, but its score of 6.42 is way higher than the 3.59 of 1980.

And, for what it’s worth, China is currently ranked higher than Kuwait (#114), Brazil (#120), Ukraine (#135), and Pakistan (#136). And none of those are considered communist nations.

This isn’t merely my opinion.

In an article for Project Syndicate, Zhang Jun explains that a shift toward capitalism – even if only partial – explains what China has enjoyed impressive growth.

The rise of China is widely attributed to its state capitalism, whereby the government, endowed with huge assets, can pursue a wide-ranging industrial policy and intervene to mitigate risks. Accordingly, China owes its success, first and foremost, to the government’s “control” over the entire economy. This explanation is fundamentally wrong. …China is using its long-term planning and robust implementation capacity not to entrench state capitalism, but rather to advance economic liberalization and structural reform. It is this long-term strategy – which has remained unswerving, despite some stumbles and short-term deviations – that lies at the heart of the country’s decades-long run of rapid economic growth. …this process of economic liberalization and structural reform is also uniquely Chinese, insofar as it has emphasized local-level competition and experimentation… The result is a kind of de facto fiscal federalism – and a powerful driver of economic transformation. …China has traveled far along the path of reform and opening up. But it should not underestimate the challenges ahead, let alone forget how it got this far in the first place.

You won’t be surprised to learn that Crazy Bernie hasn’t learned from this experience.

Here are some excerpts from a column in the Wall Street Journal by Joshua Muravchik.

Sen. Bernie Sanders’s praise for the government of China should raise eyebrows… In an interview last month with the Hill, Mr. Sanders…asserted that “what we have to say about China, in fairness to China and its leadership, is . . . they have made more progress in addressing extreme poverty than any country in the history of civilization.” …Mr. Sanders’s comment about China has a basis in fact. According to the World Bank, 88% of Chinese lived on less than $1.90 a day in 1981. Today less than 1% do. (These figures are in 2011 dollars, adjusted for purchasing power parity.) Yet that success didn’t come from socialism. It’s a product of China’s move away from socialism. And it came at the cost—at least by Mr. Sanders’s usual lights—of heightened inequality. …Mr. Sanders urges a “political revolution” and a “wholesale transformation of our society” from capitalism to socialism—the reverse of what China did 40 years ago. …Yet Mr. Sanders’s accurate observation about China’s record in ending poverty ought to give him pause. Mao Zedong’s China was the apotheosis of class warfare…and shared poverty (except Mao himself, who lived like royalty with a few of his cohorts). …the core difference between socialism, which focuses on how to distribute wealth, and capitalism, which is concerned primarily with how to produce it. China’s experience teaches anew that the latter is more important than the former, for the poor as well as the rich.

But what about the future? Is China on a reform trajectory?

There’s no way to answer that question with any certainty, but there are some worrisome signs.

Here’s a tweet from a journalist for the Economist (hopefully he has more sense than some of his colleagues). It shows a shift toward more state-driven investment.

I’m not sure if we’re seeing a trend of a blip.

But I am sure that much more reform is needed. One area is the “hukou” system, which Leo Austin describes in an article for CapX.

China has had a ‘hukou’ (or similar) household registration system…, which identifies and determines the rightful home of each individual, the place where they enjoy state education and medical services. If you are very lucky this is Beijing, Shanghai, Guangzhou or Shenzhen. …But for most people it is a rural county. …It is very difficult for the children of rural migrants to graduate from an urban school… The hukou system has led to a long history of wage suppression in China. Compared to its Asian neighbours, wages in China have historically been much lower than they should be at the same level of GDP. …People weren’t free to move to where the best jobs were. The huge state enterprises in their hometowns provided free education and free medical services, but they didn’t have to compete for workers and they didn’t have to pay the best wages. …If you look at consumption as a share of GDP and compare China to the other Asian Tigers, by 2016 China was consuming 20% less than Japan and 30% less than Korea did at the same level of development.

And China also is being held back by the politicized allocation of capital.

Resources go to the wrong people. State owned enterprises represent maybe a third of GDP in China today, but they still received around 82% of all the corporate bank loans in 2018, at least in the legal banking system. The money is not invested wisely. According to the Nikkei Asian Review, for the nearly 300 non-financial state owned enterprises (SOE) listed in China, returns on equity fell by half in the loose-money boom years between 2007 and 2017. Over the same period, the return on equity for comparable US and European companies rose – ending more than double the level of Chinese SOEs. All this has a serious impact on productivity – as Conference Board research shows, China’s Total Factor Productivity for the period 2013 to 2018 was negative.  In most economies, productivity improvements drive GDP growth every year in the absence of population or capital growth. In China, productivity was a drag on growth… China cannot be a true competitor to the US until it allows merit and innovation to allocate capital and rewards. An economy built on wage suppression and state investment can be large, but it cannot be competitive in the long-term. …Unless the state retreats, it may yet bankrupt the country.

My two cents is that state-directed investment is a big problem, and it is an indirect cause of bad trade relations with the rest of the world.

Let’s wrap up with a look at the history of economic freedom in China.

As you can see, there was a big improvement from 1980-2000, then very incremental improvements this century.

The good news is that China continues to move in the right direction.

The bad news is that the pace of reform is very slow.

And the big worry is that China’s score could move in the wrong direction. Especially with policies that exacerbate the nation’s debt problem.

P.S. What happens with Hong Kong is a wild card. Hopefully, Beijing will resist any temptation to intervene.

P.P.S. China definitely needs to ignore the horrible advice it’s getting from the IMF and OECD. It should also ignore the New York Times.

P.P.P.S. If nothing else, China shows us why policy makers should focus on growth rather than equality.

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Time to augment our growing collection of satire about the twin horrors of socialism and communism.

Today, we’ll concentrate on the latter form of totalitarianism and mock Marxism.

The New York Times has a bizarre history of going out of its way to praise communism, often for very weird reasons.

So this bit of satire from Babylon Bee seems like it could be real.

The New York Times…prais[ed] the Soviet Union for its unprecedented gender equality at its brutal prison camps. …the Soviets provided forced labor opportunities for people of all races, genders, and orientations, pointing out that while the United States may have won the Cold War and the Space Race, the USSR won the victories that counted: imprisoning all people equally. “They even employed female guards, LGBTQ guards, and guards of color,” the piece read. “From prison guards to prisoners, the Soviets were years and years ahead of the U.S. when it came to equality. …Many people on social media pointed out that gender equality wasn’t really something to be praised when it comes to a totalitarian regime. But the Times simply doubled down, publishing pieces that praised the Soviet Union for.. The wage gap: everybody made almost no money equally…Environmental policy: constant blackouts mean smaller carbon footprint.

The last sentence of that excerpt is especially funny since it’s true.

Folks on the left have actually lauded impoverished nations because they don’t produce and consume as much.

Now let’s look at the communist version of a famous board game.

For what it’s worth, the communist version of the game isn’t quite as elaborate as the Bernie version.

Now let’s return to Babylon Bee for some additional mockery.

A study performed by researchers at Harvard University found a strong link between supporting the idea of communism and never once having even briefly opened a history book, sources confirmed Tuesday. …“We found that of the people who advocate communism today, over 97% slept all the way through each of their history classes in elementary school, high school, and college,” head researcher Todd Devlin said in a statement accompanying the release of the study’s findings. …The study also found that the majority of modern communists who do happen across a stray piece of information showing the horrors and atrocities of real-life communism are able to quickly rationalize the historical facts away by labeling those examples “not real communism.”

Reminds me of this cartoon about AOC.

Speaking of the never-ending rationalization that communist failures weren’t “real communism,” let’s close today’s column with this link sent by a reader.

There’s a similar lather-rinse-repeat cycle among apologists for socialism.

But while it’s amusing to mock socialism and communism, let’s never forget the horrific suffering and death that these evil ideologies have produced.

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Cuba has a very sad history.

It traded a regular dictatorship for a communist dictatorship six decades ago, and the results have been predictably awful.

Oppression, persecution, rationing, spying, deprivation, and suffering are facts of life in that socialist hellhole.

For a while, it was subsidized by the Soviet Union, but that communist system eventually collapsed. More recently, it’s been subsidized by Venezuela, but now that socialist system also is collapsing.

And this means extra hardship for the people of Cuba.

Jose Nino explains one of the grim consequences of Cuba’s central planning.

Cuba is now implementing a rationing program to combat its very own shortages of basic goods. A CBC report indicates this program would cover basic items such as chicken, eggs, rice, beans, and soap. …When Fidel Castro took control of Cuba in 1959, the Cuban state maintained an iron grip on the economy. For decades, the country has been a communist garrison state with very little respect for property rights… Because of the economic dislocations caused by state control of many industries, the government has had to provide citizens with Libretas de Abastecimiento (supply booklets) to ration out basic goods like rice, sugar, and matches. …Cuba’s recent political behavior indicates that the country’s leadership still does not get basic economics. …After more than 50 years of embracing socialist governance, Cuba will have to learn that it needs to stick to the basic economic principles if it wants to break free from its long-standing cycle of poverty.

Bizarrely, there are still some proponents of the Cuban dictatorship.

Writing for CapX, Kristian Niemietz ponders this lingering semi-support for Cuba on the left.

…socialist experiments usually go through three stages, in terms of their reception by Western intellectuals. The first is a honeymoon period, during which they are widely held up as a glorious example of “real” socialism in action. The second is a period of angry defensiveness, during which some of the system’s failures are acknowledged, but blamed on external constraints. The third stage is the stage of retroactive disowning: intellectuals now claim that the country in question was never socialist, and that it is a cheap strawman to even mention it. The Western reception of the Soviet Union, Maoist China, Vietnam and, more recently, Venezuela followed this pattern to a tee. Cuba, in contrast, is a bit of an outlier, in that the country seems to be permanently stuck somewhere between stages two and three. It may no longer attract widespread enthusiasm, but Cuban socialism has never completely gone the way of Soviet, Maoist, Vietnamese or North Korean socialism.

Robert Lawson and Benjamin Powell have a book about statism and socialism that’s very informative. But also very entertaining.

Here are some excerpts from their chapter about a visit to Cuba.

In government-directed economies, a disproportionate amount of money is spent on what political leaders desire—typically, great Olympic sports teams, and a few showcase hotels and restaurants to impress foreigners. In Cuba’s case, this included the opulent Hotel Nacional… But we were on a mission to see what life was like inside Cuba’s socialist system. We couldn’t experience that by drinking Cuba libres at a fancy resort… Before the revolution, Cuba had a thriving urban middle class, along with widespread rural poverty. Twentieth-century socialists claimed socialism would deliver greater equality and out-produce capitalism by ending wasteful competition, business cycles, and predatory monopolies. Socialism hasn’t delivered the goods it promised in Cuba or anywhere else. Today, Cuba is a poor country made poorer by socialism. Socialism also gives tremendous power to government officials and bureaucrats who are the system’s planners—and with that power comes corruption, abuse, and tyranny. It is no accident that the worst democides of the twentieth century occurred in socialist countries like the Soviet Union, Communist China, and Nazi (National Socialist) Germany.

The book is basically a travelogue, mixed with economic insights that oscillate between amusing and horrifying.

The hotels are no good.

The Hotel Tritón’s decaying edifice was a crumbling tribute to Cuba’s central-planning problems. Cuba had the resources to make large capital investments in state-run enterprises when it received aid from the Soviet Union. But many of these hotels can’t generate enough revenue to sustain the initial investment. Cuban government planners then had to pick which hotels to subsidize to prevent decay. The Hotel Tritón didn’t make the cut. It was rotting, inside and out. And nobody cared because nobody owned it. …In a capitalist economy, entrepreneurs create businesses to make profits, which they earn by pleasing their customers. But in a socialist system, a bureaucrat decides which businesses can open, where they can operate, and what they can sell, and he really doesn’t care what the customer thinks. Adopting a socialist system is like turning your whole economy into a giant Department of Motor Vehicles.

The shopping is no good.

In Central Havana, the lack of commerce unrelated to tobacco, alcohol, or sex was striking. Habaneros lived in these neighborhoods. So where did they shop? …We found one store that was a large open room with high ceilings and cement support columns. …behind a counter, there were shelves with bottles of rum, cases of the local cola, a few canned goods, cartons of eggs, and large sacks of rice next to a scale. A line of Cubans shopped their way down the counter. The place was an odd mix, somewhere between the worst imaginable version of a grade school cafeteria and a grocery in which 95 percent of the stock is depleted.

The dining is no good.

… we decided on our last evening on the island to try a state-owned “Italian” restaurant on the main boulevard between the shitty Hotel Caribbean and the Capitol. We were disappointed to see that Italian meant nothing more than a few basic pizzas and a couple types of pasta, along with the same chicken, pork, seafood, and beef dishes we found everywhere else. We ordered two beers and “mozzarella from the oven” as an appetizer. To say that it was the equivalent of Taco Bell queso with tomato chunks in it would be insulting to Taco Bell. In fact, it was a steaming pot of greasy white goo. … most Cubans can’t afford to eat at the places we ate, and Cuba’s socialist economic system can’t even deliver variety to rich tourists. We were tired of the food after a week. But we could leave; Cubans are stuck with lousy food (outside the private restaurants), limited ingredients, and little variety for as long as they’re stuck with socialism.

And Che is no good.

Unfortunately for Cubans, Che wasn’t nearly as good at planning production as capitalists have been at plastering his image on merchandise. During Che’s stints as head of the National Bank of Cuba, minister of finance, and minister of industry, Cuba not only failed to industrialize (as promised), but its sugar production collapsed and severe rationing was introduced.

But Cubans are very good, at least when they’re out from under the tyranny of socialism.

We were in Little Havana, in Miami. The economic contrast between Little Havana and the real thing began before we even stepped out of our Uber. The half-hour car ride cost us only $13.72 instead of the absurd taxi costs in Cuba. …Unlike stores in Cuba, this store had hundreds of different items for sale. …we headed off to a Cuban restaurant for dinner. The six-page menu contained more options than we had seen from all of the restaurants in Cuba combined. …Cuban cuisine is excellent—just not when it’s served in Cuba. It’s not the Cubans’ fault. It’s the fact that socialism sucks. Cubans under a socialist system remain poor and eat bland food. Ninety miles away, Cubans who live in Miami become relatively rich and make wonderful food. Same people, two different economic systems, two drastically different economic— and gastronomic—outcomes.

By the way, I recommend the book.

There are also chapters about Sweden, Venezuela, North Korea, China, Georgia, and Russia/Ukraine.

My contribution today is this chart showing per-capita economic output in various Latin nations, derived from the Maddison database. At the time of the revolution, Cuba (orange line) was one of the richest nations. Now it has fallen far behind.

It’s always useful to look at decades of data because short-run blips aren’t a factor. Instead, you really learn a lot about which nations are enjoying good growth and which ones are stagnating.

What we’ve learned today is that the people of Cuba are poor because of awful economic policy. Other nations (most of which started in worse shape) have become much richer.

Perfect policy would be great, but even decent policy creates enough “breathing room” for more prosperity. Unfortunately, even that’s not allowed in Cuba.

P.S. For some unintentional Cuban-related humor, see here and here.

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One advantage of being a child of the Cold War is that I got to live through the fall of the Berlin Wall. The collapse of the Evil Empire truly was one of Reagan’s most amazing accomplishments and a moment of joy for the world.

Best of all, the war ended peacefully.

Which is a wonderful thing since I hate to think of how many lives would have been lost if things heated up.

And since it’s Memorial Day in the United States, why don’t we display some patriotism (in the proper sense) by laughing at the idiocy of the communist ideology.

We’ll start with a collection of failures (though I wish the person who created it had a better grasp of the English language).

Reminds me of this book collection.

The next item for our collection features an excellent comment from Aykhan Imranov.

I can vaguely understand how some naive youngsters can be seduced by socialism. Especially if what they have in mind is merely a pro-market Nordic welfare state.

But I’m utterly sickened that there are some people who go one step further and advocate for Marxism.

Is this their thought process?

I’ve always been nauseated by the Che Guevara death cult.

So I obviously need to share this t-shirt collection.

Though I confess I prefer the t-shirt at the end of this column.

Communism is famous, of course, for the “bad luck” of having decade after decade of food shortages supposedly caused by weather (amazing how the bad luck quickly ends when people get to grow for themselves rather than the collective).

And this means we have many opportunities for dark comedy.

Yes, it’s not nice to laugh about famine, but I confess that this bit of satire got a chuckle from me.

Hmmm…, I need to do a bit of reshelving the next time I’m in a book store.

Here’s another example with the same theme.

Though I must disagree with the premise. The communist bosses have always lived fat and happy lives. Ordinary people are the ones who starve.

But let’s not get caught up in details. If you like communism-starves-people humor, listen to Reagan’s jokes. And this prom dress satire is my all-time favorite, followed by this tweet from Marx.

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Donald Trump is an incoherent mix of good policies and bad policies.

Some of his potential 2020 opponents, by contrast, are coherent but crazy.

And economic craziness exists in other nations as well.

In a column for the New York Times, Jochen Bittner writes about how a rising star of Germany’s Social Democrat Party wants the type of socialism that made the former East Germany an economic failure.

Socialism, the idea that workers’ needs are best met by the collectivization of the means of production… A system in which factories, banks and even housing were nationalized required a planned economy, as a substitute for capitalist competition. Central planning, however, proved unable to meet people’s individual demands… Eventually, the entire system collapsed; as it did everywhere else, socialism in Germany failed. Which is why it is strange, in 2019, to see socialism coming back into German mainstream politics.

But this real-world evidence doesn’t matter for some Germans.

Kevin Kühnert, the leader of the Social Democrats’ youth organization and one of his party’s most promising young talents, has made it his calling card. Forget the wannabe socialism of American Democrats like Bernie Sanders or Alexandria Ocasio-Cortez. The 29-year-old Mr. Kühnert is aiming for the real thing. Socialism, he says, means democratic control over the economy. He wants to replace capitalism… German neo-socialism is profoundly different from capitalism. …Mr. Kühnert took specific aim at the American dream as a model for individual achievement. …“Without collectivization of one form or another it is unthinkable to overcome capitalism,” he told us.

In other words, he wants real socialism (i.e., government ownership). And that presumably means he also supports central planning and price controls.

What makes Kühnert’s view so absurd is that he obviously knows nothing about his nation’s history.

Just in case he reads this, let’s look at the evidence.

Jaap Sleifer’s book, Planning Ahead and Falling Behind, points out that the eastern part of Germany was actually richer than the western part prior to World War II.

The entire country’s economy was then destroyed by the war.

What happened afterwards, though, shows the difference between socialism and free enterprise.

Before…the Third Reich the East German economy had…per capita national income…103 percent of West Germany, compared to a mere 31 percent in 1991. …Here is the case of an economy that was relatively wealthy, but lost out in a relatively short time… Based on the official statistics on national product the East German growth rates were very impressive. However, …the actual performance was not that impressive at all.

Sleifer has two tables that are worth sharing.

First, nobody should be surprised to discover that communist authorities released garbage numbers that ostensibly showed faster growth.

What’s really depressing is that there were more than a few gullible Americans – including some economists – who blindly believe this nonsensical data.

Second, I like this table because it confirms that Nazism and communism are very similar from an economic perspective.

Though I guess we should give Germans credit for doing a decent job on product quality under both strains of socialism.

For those who want to read further about East German economic performance, you can find other scholarly articles here, here, and here.

I want to call special attention, though, to a column by an economist from India. Written back in 1960, even before there was a Berlin Wall, he compared the two halves of the city.

Here’s the situation in the capitalist part.

The contrast between the two Berlins cannot miss the attention of a school child. West Berlin, though an island within East Germany, is an integral part of West German economy and shares the latter’s prosperity. Destruction through bombing was impartial to the two parts of the city. Rebuilding is virtually complete in West Berlin. …The main thoroughfares of West Berlin are near jammed with prosperous looking automobile traffic, the German make of cars, big and small, being much in evidence. …The departmental stores in West Berlin are cramming with wearing apparel, other personal effects and a multiplicity of household equipment, temptingly displayed.

Here’s what he saw in the communist part.

…In East Berlin a good part of the destruction still remains; twisted iron, broken walls and heaped up rubble are common enough sights. The new structures, especially the pre-fabricated workers’ tenements, look drab. …automobiles, generally old and small cars, are in much smaller numbers than in West Berlin. …shops in East Berlin exhibit cheap articles in indifferent wrappers or containers and the prices for comparable items, despite the poor quality, are noticeably higher than in West Berlin. …Visiting East Berlin gives the impression of visiting a prison camp.

The lessons, he explained, should be quite obvious.

…the contrast of the two Berlins…the main explanation lies in the divergent political systems. The people being the same, there is no difference in talent, technological skill and aspirations of the residents of the two parts of the city. In West Berlin efforts are spontaneous and self-directed by free men, under the urge to go ahead. In East Berlin effort is centrally directed by Communist planners… The contrast in prosperity is convincing proof of the superiority of the forces of freedom over centralised planning.

Back in 2011, I shared a video highlighting the role of Ludwig Erhard in freeing the West German economy. Given today’s topic here’s an encore presentation.

Samuel Gregg, writing for FEE, elaborates about the market-driven causes of the post-war German economic miracle.

It wasn’t just Ludwig Erhard.

Seventy years ago this month, a small group of economists and legal scholars helped bring about what’s now widely known as the Wirtschaftswunder, the “German economic miracle.” Even among many Germans, names like Walter Eucken, Wilhelm Röpke, and Franz Böhm are unfamiliar today. But it’s largely thanks to their relentless advocacy of market liberalization in 1948 that what was then West Germany escaped an economic abyss… It was a rare instance of free-market intellectuals’ playing a decisive role in liberating an economy from decades of interventionist and collectivist policies.

As was mentioned in the video, the American occupiers were not on the right side.

Indeed, they exacerbated West Germany’s economic problems.

…reform was going to be easy: in 1945, few Germans were amenable to the free market. The Social Democratic Party emerged from the catacombs wanting more top-down economic planning, not less. …Further complicating matters was the fact that the military authorities in the Western-occupied zones in Germany, with many Keynesians in their contingent, admired the economic policies of Clement Atlee’s Labour government in Britain. Indeed, between 1945 and 1947, the Allied administrators left largely in place the partly collectivized, state-oriented economy put in place by the defeated Nazis. This included price-controls, widespread rationing… The result was widespread food shortages and soaring malnutrition levels.

But at least there was a happy ending.

Erhard’s June 1948 reforms…abolition of price-controls and the replacement of the Nazi-era Reichsmark with much smaller quantities of a new currency: the Deutsche Mark. These measures effectively killed off…inflation… Within six months, industrial production had increased by an incredible 50 percent. Real incomes started growing.

And Germany never looked back. Even today, it’s a reasonably market-oriented nation.

I’ll close with my modest contribution to the debate. Based on data from the OECD and Wikipedia, here’s a look at comparative economic output in East Germany and West Germany.

You’ll notice that I added some dotted lines to illustrate that both nations presumably started at the same very low level after WWII ended.

I’ll also assert that the blue line probably exaggerates East German economic output. If you doubt that claim, check out this 1990 story from the New York Times.

The bottom line is that the economic conditions in West Germany and East Germany diverged dramatically because one had good policy (West Germany routinely scored in the top 10 for economic liberty between 1950 and 1975) and one suffered from socialism.

These numbers should be very compelling since traditional economic theory holds that incomes in countries should converge. In the real world, however, that only happens if governments don’t create too many obstacles to prosperity.

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