"Nazi Privatization in 1930s Germany," Journal of Economic Perspectives

[swag]

PDF of Germa Bell's article published in "Journal of Economic Perspectives"

Excerpted and discussed at Economist's View.

Against the Mainstream: Nazi Privatization in 1930s Germany, by Germa Bel:

I. Introduction

Privatization of large parts of the public sector has been one of the defining policies of the last quarter of the twentieth century. The privatizations in Chile and the United Kingdom, implemented beginning in the 1970s and 1980s, are usually considered the first privatization policies in modern history (e.g. Yergin and Stanislaw, 1998, p.115). A few researchers find earlier instances. Some economic analyses of privatization (e.g. Megginson, 2005, p. 15) identify partial sales of state-owned firms implemented in Adenauer’s Germany in the late 1950s and early 1960s as the first large-scale privatization program, and others argue that, although confined to just one sector, the denationalization of steel and coal in the United Kingdom during the early 1950s should be considered the first privatization (e.g. Burk, 1988; Megginson and Netter, 2003, p. 31).

None of the contemporary economic analyses of privatization takes into account an earlier and important experience: the privatization policy applied by the Germany’s National Socialist Party (Nazi Party). The lack of reference to this early privatization experience in the modern literature on privatization is consistent with its invisibility in either the recent literature on the Germany economy in the twentieth century (e.g. Braun, 2003) or the history of Germany’s publicly owned enterprise (e.g. Wengenroth, 2000). Occasionally, some authors mention the re-privatization of banks with no additional comment or analysis (e.g. Barkai, 1990, p. 216; James, 1995, p. 291). Other works, like Hardach (1980, p. 66) and Buchheim and Scherner (2005, p. 17), mention the sale of state ownership in Nazi Germany only to support the idea that the Nazi government opposed widespread state ownership of firms. However, they do not carry out any analysis of these privatizations.

. . .

VII. Conclusions Although modern economic literature usually fails to notice it, the Nazi government in 1930s Germany undertook a wide scale privatization policy. The government sold public ownership in several state-owned firms in different sectors. In addition to this, delivery of some public services previously produced by the public sector was transferred to the private sector, mainly to organizations within the Nazi Party.

Ideological motivations do not explain Nazi privatization. On the contrary, political motivations were important. The Nazi government may have used privatization as a tool to improve its relationship with big industrialists and to increase their support for Nazi policies. Privatization was also likely used to enhance more general political support to Nazi party. Finally, financial motivations did play a central role in Nazi privatization. The proceeds from privatization in 1934-37 had relevant fiscal significance: Not less than 1.37 per cent of total fiscal revenues were obtained from selling shares in public firms. Moreover, the government avoided including a huge expenditure in the budget by using outside-of-the-budget tools to finance the public services franchised to Nazi organizations.

Nazi economic policy in the middle thirties was against the mainstream in several dimensions. The huge increase in public expenditure programs was unique, as was the increase in the armament programs, and together they heavily constrained the budget. To finance this exceptional expenditure, exceptional policies were put in place. Privatization was just one among them. It was systematically implemented in a period in which no other country did so, and this drove Nazi policy against the mainstream, which flowed against privatization of state ownership or public services until the last quarter of the twentieth century.

[swag]

1. This passage sets the bells to ringin':

The Nazi government may have used privatization as a tool to improve its relationship with big industrialists and to increase their support for Nazi policies. Privatization was also likely used to enhance more general political support to Nazi party. Finally, financial motivations did play a central role in Nazi privatization. The proceeds from privatization in 1934-37 had relevant fiscal significance: Not less than 1.37 per cent of total fiscal revenues were obtained from selling shares in public firms. Moreover, the government avoided including a huge expenditure in the budget by using outside-of-the-budget tools to finance the public services franchised to Nazi organizations.

[redqueen]

3. That last sentence, especially so.

Not much for originality, the neo-cons.

[whistle]

2. Everything BushCo and the neoconservatives are doing has all been done

...before by the Nazis. If we want to take a glimpse at what still remains for BushCo to accomplish, just go to Mein Kampf for the outline

http://www.crusader.net/texts/mk/

[indepat]

4. The neocons have detoured nary a bit from their game plan that has eerie

similarities to an earlier game plan which will be kept nameless to protect the guilty.

[Hoping4Change]

5. In Britian Blair & Brown accused of the same thing by Theo Dalrymple.

"A recent book, Plundering the Public Sector, alleges and quotes chapter and verse that the Blair-Brown government has diverted more than $140-billion of public money to private consultancies, which -- not surprisingly -- have often returned favours to the government. The book provides stories of such monumental governmental and private-sector idiocy that it could only be deliberate, actually more a form of sabotage to create further work for the government and consultancies, than incompetence.

Not a single new information technology system initiated by the Blair-Brown government has worked, despite the expenditure of untold billions. It is difficult to escape the conclusion that they were never intended to work, but rather to create vast profits for favoured companies, to reward supporters and to raise donations for the Labour Party.

<<snip>>

The Blair-Brown government has eroded the distinction between licit and illicit enrichment, and between the public and private sector, creating something close to a corporate state in which government controls almost everything and people fear to speak their minds because they are afraid of harming their pocketbooks.



THEODORE DALRYMPLE
Globe and Mail, 9/13/06



http://www.theglobeandmail.com/servlet/story

[teryang]

6. The reorganization and dismantling of traditional government...

...institutions are a telling characteristic of developing totalitarianism. The rule of law is abandoned and traditional sources of authority are undermined. Those who played a role in formal government functions with law, regulation and custom defining the limits of their function and activity within society are now standing on quicksand, testing the political wind blown by the leader and his cadre. The limits of activity are set only by the will of leaders who say "trust me."

The Patriot Act, the Homeland Security Act, and the intelligence reform acts all served this purpose of undermining traditional sources and definitions of authority, rendering the federal government an unintelligible mismash of ineffective agencies and empowering the corporate contractors/looters of the public treasury. Rumsfeld and Cheney have done the same with endless minions of corporate looters unaccountable to the law and Congress replacing traditional national security institutions or worse yet strangling their vital functions like a metasticizing cancer.

For example, the rejection of the Geneva Conventions and the transfer of military and intelligence functions to private parties (favored cadre) are a mutation of the corporate independent contractor mechanism to avoid accountability for illegal or unlawful activities. This is in fact how a country becomes a totalitarian dictatorship. The corporate media deliberately obfuscate the traditional law and customs with respect to human rights, social, governmental and international relations. This is why the average person appears to be confused about what American political tradition and constitutional checks on power are.

It is absolutely ludicrous that in the United States of America people debate the pros and cons of torture and rendition. Equally ludicrous is the "debate" in the media about warrantless wholesale electronic surveillance of the entire population. This reflects a complete destruction of the traditional beliefs, laws, and political organization of the country.

[Phoebe Loosinhouse]

7. great post! nt.

[cap]

8. I wonder what Prescott Bush's role was in all of this...

reprivatization involves selling shares... I wonder if any of this was sold on Wall Street and if that sale was facilitated by Bush's firm.