Germany’s grave historical manipulations

Proof that the economy is also – and maybe first and foremost – political, German economists are now trying to rewrite history. There are some big names attempting to fiddle with the historical facts, adjusting them to fit their theories, or rather their fears. These ordoliberals, bordering on the fanatical, are warning against hyperinflation that, in their eyes, will surge due to the coronavirus-induced government spending in Germany that they so vehemently oppose. According to their warnings, budgetary stringency should be the country’s sole objective in order to avoid repeating the mistakes of Weimar that led to the rise of the Nazis via the hyperinflation of 1922-23. Authorities like the economist Hans-Werner Sinn are not holding back in drawing a direct cause-and-effect link between hyperinflation and Hitler.

“Ten years later, they elected Adolf Hitler as Chancellor of the Reich”, Sinn declared rather bluntly in an interview he did a few months ago with NZZ. How can this person, influential and very well-respected in his country, draw a direct link between Germany’s hyperinflation during the Weimar Republic that followed the First World War and the rise to power of Hitler? With the wave of a magic wand he is whisking away the fiscal, budgetary, and inflationary austerity that really and immediately preceded the arrival of the Nazis to power in 1933. To do this, Sinn invokes old phantoms and warns that, now like in 1932, money – “like paper” – might no longer be worth anything. He is wandering already-chartered territory, since these troubles are already anchored in the collective memory of his compatriots who are convinced that the mass unemployment of the start of the 1930s was the result of the hyperinflation that had come 10 years earlier.

Sinn, one of the most-repeated economists in his country, faces almost no internal pushback at all when his historical manipulations make the link with Germany’s current political world that “is living off the printing press”. For him, but also for many other of his Germany countrymen, it is therefore a matter of urgency to return to very strict budgets, to adopt vigorous and targeted measures to counter inflation, in order to avoid a new dictatorship…when it’s actually precisely the phenomenal reductions in government spending and the considerable rise in taxes introduced in 1930 by Chancellor Brüning that propelled the Nazis into power in January 1933. Therein lies the cause and effect link, in fact, with the austerity that drastically aggravated the situation for low-income households and that was the weapon of choice for the Nazis who of course didn’t hesitate in exploiting the public’s discontent. Sinn and his acolytes lose all credibility when we look at the electoral results of Hitler’s party that took 2% of the vote in 1928 but 38% in 1932…

The German hyperorthodoxy turn a blind eye to the economic history of their country, because it is of course not the hyperinflation of the start of the 1920s that paved the way for the Nazis ten years later, but actually the poverty and destitution that followed the deflationary disaster that was knowingly orchestrated by Brüning’s government and their austerity that was in place from 1930 to 1932. In fact, from Germany’s perspective, the economy is basically an emanation of philosophy, theology even. According to this doctrine, it is completely normal to invoke the spirit of Weimar when calling for – today in 2021 – the introduction of austerity, even if it means promoting historical falsehoods that can have grave consequences.