@WestphalianPeace comments on "Culture War Roundup for the week of September 2, 2024

Culture War Roundup for the week of September 2, 2024

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WestphalianPeace 2mo ago

As serious as the situation appeared to be in agriculture, it was not the issue of milkmaids and dairy prices that really troubled Hitler's regime in the summer of 1938. After months of bitter argument, the problem of dairy farming was given a political 'fix' by raising the farm-price of milk by 2 Pfennigs. Since Rudolf Hess had made clear that an increase in the prices paid by consumers was out of the question, the conflict was resolved at the expense of the dairies, by squeezing their profit margins. This did not curb demand for milk. Nor was it enough to resolve the income deficit of German dairy farmers. But it did at least send a political signal that the regime was not oblivious to the interests of its agrarian constituency

wages of destruction, pg 268

a perfectly healthy economy. Months of political argument followed by the state setting prices and then demanding that those costs be born by the producer. Then being surprised when the demand for milk is the same.

Context

WestphalianPeace WestphalianPeace 2mo ago

From this point of view the fundamental explanation for the poverty of German agriculture was simple: low labour productivity. According to conventional measures, the productivity of the more than 9 million people employed on Germany's farms was roughly half that of the typical non-agricultural worker.84 What was really scarce in the countryside was not labour but the necessary capital and technology to use labour efficiently. Such productivity comparisons of course depended on the relative prices paid for agricultural and industrial products. And the RNS demanded higher farm prices, but this ignored the enormous gulf between the prices paid by German consumers for their food and the prices prevailing on world markets.85 By the late 1930s, however, the 'world market' as far as Germany was concerned was an increasingly irrelevant abstraction. Given the politicization of its foreign trade, Germany no longer purchased at 'world' prices. Instead, agricultural imports were bargaining items in a complex web of bilateral deals, in which Germany often paid substantial premiums for the willingness of its trading partners to remain loyal to the Third Reich.

wages of destruction, pg 266

a healthy economy is probably not one that has detached price signaling in exchange for political loyalty.

Some skilled construction workers were rumoured to earn better wages than senior army officers. And this was no accident. In May 1938, Hitler had removed control of the Westwall from the army's engineering depart- ment and handed it to Fritz Todt, the man idolized as the master-builder of the autobahns. Todt's mission was to complete the fortifications before the outbreak of hostilities and he was to do so regardless of cost. Goering's decree on labour conscription provided Todt with all necessary legal powers to secure the quarter of a million workers he needed. But typically for the situation of the German economy in the late 1930s he chose to supplement conscription with monetary incentives. The contractors on the Westwall were freed from standard military procurement rules, allowing them to inflate both their profits and their wage bills. By the summer of 1939, Todt had completed his mission. The most vulnerable sections of Germany's western frontier were reinforced with thousands of bunkers and gun emplacements. The price, however, was a huge inflationary shock to the labour market.

wages of destruction, pg 265

wanting to eat their cake and have it to. I want all my workers to have high wages. and i want the Westwall made quickly. but don't make it inflationary. and don't make it so that the high wage low-skill labour competes with agriculture.

And with the armaments effort reaching new heights, Goering's Decree for Securing Labour for Tasks of Special State Importance (Verordnung zur Sicherstellung des Kraeftebe- darfs fuer Aufgaben von besonderer staatspolitischer Bedeutung) of 22 June 1938 provided the Reich with general powers of conscription. Workers could be redeployed for any period required by the Reich, whilst their former employers were required to keep them on their rolls. By the end of 1939, no less than 1.3 million workers had been subject to such compulsory work orders. Though compulsion was not the norm in relation to German workers, any more than it was in the regime's dealings with German business, the possibility was now established that if rearmament demanded, the state could intervene in the working life of every single individual. In this respect as well, Hitler's regime clearly crossed a bridge in the summer of 1938. Perhaps not surprisingly, however, the rationing of labour functioned even less smoothly than the rationing of steel. The decree debarring rural workers from taking industrial jobs had to be abandoned, since, to avoid their children falling under the terms of the decree, rural families had taken to preventing them from entering farm work in the first place.

Meanwhile, in the inflation hot spots of urban Germany, the attempt to repress the market mechanism had only limited success. It was, after all, in the interests of neither employers nor workers to abide by the official wage restrictions. Workers wanted better wages and employers - keen to take advantage of the boom - were willing to pay for their labour. Given the formal ban on wage increases, the resulting upward adjustment of earnings was a covert process, hidden in accelerated promotion, high-status apprenticeships, retraining schemes, hiring bonuses, improved working conditions and a variety of supplementary social benefits. The extent of this 'wage creep' depended on the degree to which employers were subject to direct official oversight.

wages of destruction, pg 261

Nothing says "i'm developing an efficient economy" like compulsory work orders, forcing employers to keep workers on the rolls, and wage controls. Oh an forbidding rural people from taking industrial jobs. Good instincts there. Shame that second order effects exist. Who could have possibly imagined.

The frustrations of the housing shortage were no doubt acute. But, more worrying for the Reich authorities was the impact of underinvestment on the German railway system. By 1938 the Reichsbahn was increasingly unable to cope with the combined demands of the Wehrmacht and a booming economy. Rail investment had been badly squeezed by the steel shortage. In 1938 the Reichsbahn was not able to obtain even half the steel it needed to maintain its current rail infrastructure and rolling stock. From the summer onwards severe delays affected the entire system. Huge pressure was exerted on freight workers to speed up loading and unloading. But by the last days of September, as the Munich crisis reached its climax, the Reichsbahn was nearing the point of collapse. Less than half the requests for freight cars were being met on time. There was no option but to go over to an overt system of rationing in which priority was given first of all to the Wehrmacht and then perishable foods, coal, sugar beet and high-priority export orders.

Help. My rail industry is getting 50% of the steel it needs and I need to ration who gets transport. Should I start a Great Power conflict against all of my neighbors?

The rail administrators struggled to ease the problems of freight traffic by cutting passenger services wholesale. But even drastic measures could not prevent a crisis. By early 1940, tens of thousands of freight cars were frozen in kilometres of traffic jams. By January, turn-around times had risen to more than a week. The effective carrying capacity of the Reichsbahn's rolling stock plummeted and the immediate result was an interruption to coal supplies. By December, the mines were warning of an impending 'transportation calamity'. In the freezing city of Berlin, coal ran so short that even a leading armaments firm such as Rheinmetall could not protect its deliveries from requisitioning by the desperate municipal authorities. Meanwhile, at the pitheads in the Ruhr, the mountains of undelivered coal reached dangerous levels, forcing the mines to slow down production. In total, in the early months of 1940 almost 10 per cent of German armaments plants were affected by the coal shortages. In the central industrial district around Kassel the figure was as high as 27 per cent. In January 1940 Goering described transport as the problem of the German war economy.

pg343-344

My ideal economy is one where lack of capacity of steel production results in a failing transport network where i have to cut off passenger service and yet still have a shortage of coal. In Germany.

By the late 1930s, virtually every family in Germany held at least one 'savings book' (Sparbuch). The accounts of the Sparkassen thus provide a direct insight into the everyday financial dispositions of German households. In the months immediately preced- ing the war, they showed an unusually large net withdrawal, as millions of families did their best to stockpile necessities. Then, from the first months of 1940 onwards, as rationing began to bite and the shelves of the German shops emptied, the accounts of the savings banks swelled with a completely unprecedented volume of deposits. By 1941, the inflow was running at the rate of more than a billion Reichsmarks per month. Under normal circumstances, these funds would have been put to work as loans to local government, or mortgages for small businesses.

But wartime restrictions not only hit civilian consumption, they also bottled up civilian investment. Whilst construction of new armaments capacity accelerated after September 1939, investment in housing was cut to the bone. In 1937, the peak year for civilian construction in the Third Reich, a total of 320,057 apartments were added to the housing stock. By 1939, annual net additions had already fallen to just over 206,000, under the pressure of military construction demands. The year 1940 saw only 105,458 apartments added to the housing stock and by 1942 the annual total came to less than 40,000, a reduction relative to 1937 of 85 per cent."

In 1940 the Sparkassen alone channelled 8 billion Reichsmarks into the war effort. In 1941 they contributed 12.8 billion Reichsmarks. Private investors who held their funds beyond the Reichsbank's immediate reach were directed into government debt through the simple expedient of restricting the issue of any other forms of interest-bearing asset and putting a tight cap on stock exchange speculation. No compulsion was necessary. There was simply nothing other than government debt to invest in.

I'm told that the best possible economy is one where you literally can't do anything with your money except invest in Government debt. It's a good thing the government is propping up my wages. And also propping up prices. But the prices are hidden. But the wages are hidden. But also I can't change jobs.

The disparity with respect to oil was most serious. Between 1940 and 1943 the mobility of Germany's army, navy and air force, not to mention its domestic economy, depended on annual imports of 1.5 million tons of oil, mainly from Romania. In addition, German synthetic fuel factories, at huge expense, produced a flow of petrol that rose from 4 million tons in 1940 to a maximum of 6.5 million tons in 1943. Seizing the fuel stocks of France as booty in no way resolved this fundamental dependency. In fact, the victories of 1940 had the reverse effect. They added a number of heavy oil consumers to Germany's own fuel deficit. From its annual fuel flow of at most 8 million tons, Germany now had to supply not only its own needs, but those of the rest of Western Europe as well. Before the war, the French economy had consumed at least 5.4 million tons per annum, at a per capita rate 60 per cent higher than Germany's. The effect of the German occupation was to throw France back into an era before motorization. From the summer of 1940 France was reduced to a mere 8 per cent of its pre-war supply of petrol. In an economy adjusted to a high level of oil consumption the effects were dramatic. To give just one example, thousands of litres of milk went to waste in the French countryside every day, because no petrol was available to ensure regular collections. Of more immediate concern to the military planners in Berlin were the Italian armed forces, which depended entirely on fuel diverted from Germany and Romania. By February 1941, the Italian navy was threatening to halt its operations in the Mediterranean altogether unless Germany supplied at least 250,000 tons of fuel.

pg 411

In my ideal economy we use the full economic potential of the countries we conquer by reducing their petrol consumption by 92%. Also I have to provide my allies with the fuel they need. Also I'm a net oil importer.

The coal industry, however, had more immediate problems. Even though the German labour market authorities had seen to it that the mining industry suffered no net loss of workers at the start of the war, the Wehrmacht draft had taken the best young men. The result was a steady decline in per capita productivity. In due course, the industry could make up for this with further investment. But in the short term Pleiger needed emergency measures. As of the spring of 1941, Sunday shifts became a normal feature of life on the Ruhr, allowing the men not even a day to recover from their gruelling working week. To restore the quality of the workforce, the Wehrmacht was persuaded to return as many trained mine workers as possible to the mines. As the Wehrmacht office pointed out with remarkable frankness, this concession was necessary above all for political reasons.

when i play nation-state building games this is how I describe my ideal resource economy. First I rob my mines of labor for my armies. Then I make them work without rest. Then send the men I took from the mines to the armies back to the mines. Nothing says sound economics like the necessity of political reasons.

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