Sunday, August 22, 2004

Say, how's my reality doing?

Every so often, I need to check my assumptions, presumptions, observations, and conclusions. It isn't good enough to simply have them; to just rest on them. I need to make sure they're as well-founded as I'd like. Occasional events that catch my notice and seem to fit aren't good enough; I need to test them and be sure that they're actually valid. For example, is there really a left bias in major mainstream media? I don't just mean pieces that can be interpereted as being a bit to the left, or might have actually been written a little leftish - I mean thinking so solidly grounded in leftist ideology that it's dripping with socialist presumptions.

It was the ringing of just such questions in my head this morning which eventually prompted a pilgrimmage to The Daily Worker New York Times. I give you the first random article I selected: In Germany's East, a Harvest of Silence.

LEIPZIG, Germany — In the flush of German reunification, Chancellor Helmut Kohl declared that the former East German states would be transformed into "blossoming landscapes, where it will be worth living and working."

Germany backed up its promise with one of the greatest transfers of wealth in human history: some $1.5 trillion has flowed from west to east since 1990, propping up living standards and financing epic public works projects, among them a latticework of superhighways.

But many roads lead nowhere. The landscape in eastern Germany remains barren - emptier even than during Communist times, when the planned economy supplied jobs and at least the illusion of commercial activity. Traveling through eastern Germany with a camera 15 years later offers a chance to document how tragically short a grand renovation project has fallen.

Well, it seems that all the best mumbo jumbo the capitalists could come up with has failed [shake head] and failed badly. It appears that no amount of free market witchery can offset insufficient economic planning.

Today, roughly one eastern German in five does not have a job, an unemployment rate nearly twice that for Germany as a whole. The population has dwindled by 1.6 million since 1990, to 15.1 million, as a steady stream of people, particularly young women, have gone west in search of work. The ebb tide has devastated places like Hoyerswerda, a small town that was turned into a model industrial city by the Communists.

The poor east Germans swallowed every drop of snake oil, and woe; Germany is sinking in a quagmire of liberal markets! Oh, for those heady, halcyon days of communism.

With most of its jobs gone, the town has lost nearly half of its 70,000 inhabitants. Empty apartment buildings darken the horizon like cement tombstones. Many fall to the wrecking ball, their jagged remains a hunting ground for scavengers and boys with slingshots.

Witness the suffering wrought by capitalism!

Children seem almost an endangered species, since the couples who would start families are precisely the ones who leave. Dresden, the proud but tattered capital of the state of Saxony, is closing 43 schools this summer because there are not enough kids to fill the classrooms.

Germans, worried that the languishing east threatens to hobble the entire country, have begun a national debate over what went wrong. The answer supplied recently by a blue-ribbon commission is stark: too much money spent on bricks and mortar, not enough on people.

This, the subtext breaking surface, is truly stunning pathology; you may need to read that a few times to truly appreciate it. The reason that merging a hale and hearty, vibrant West German economy with a collapsed and anemic East hasn't worked well is not that the west has adopted too much from the east (i.e., strangling the economy with wage controls) - it's because the east adopted too much of the west.

One can see the legacy of feckless investment in Saxony, once the industrial heart of East Germany. Rust-belt cities like Chemnitz, formerly Karl Marx Stadt, are full of shuttered factories. Many were bought after 1990 by western Germans, who found they could not churn out ball bearings or grinding machinery or auto parts cheaply enough to make a go of it.

These poor, poor people were snookered into all that capitalist chicanery. Alas, in the end it was nothing but smoke and mirrors.

In the wake of that futile gold rush, a more serious class of investors has come, putting up microchip factories in Dresden and automobile factories around Leipzig. Drawn as much by public subsidies as by patriotism, they nevertheless offer a reed of hope for an industrial renaissance.

But there is hope! Planned economy makes a comeback!

Eastern Germany's problems, however, will not be solved by yet another BMW plant. The real challenge is human: how to transform a society reared on Communism and addicted to handouts from Berlin into a vital region ready to compete with hungrier lands to the east.

And as we were just informed, the answer to that challenge is more social programs so nevermind the man behind the curtain and HEY - look over there!

These days, some Ossis, as eastern Germans are not so affectionately called by western Germans, rouse themselves only to protest the government's plan to scale back unemployment checks. Former state farms lie fallow because their new owners see no economic benefit to tilling the fields. Where wheat and oats once grew, weeds and wildflowers now run riot.

Helmut Kohl's promise of a blossoming landscape came true after all. But surely not as he intended.

Yes, look over here for one last, wistful glance back at the old days.

When I look back, I'll be seeing slabs of wall being laid down - warm, colorfully painted on the west, and cold, plain grey concrete on the east. I wonder what The Dawn New York Times sees?

9 Comments:

Blogger Jane said...

Bring back the Keiser!

6:51 PM  
Blogger Rantburger said...

You're just fucking with our heads, aren't you Doug? You just reworked an old "Pravda" article and made like it was from the NYT, didn't you? Good one!

4:53 PM  
Blogger actus said...

I don't know how you read the parts describing a failed public works project as saying something bad about capitalism.

5:04 PM  
Blogger Doug said...

Sorry, Kevin - that's contemporary Upper West Manhattan talking to you there.

Actus - I think maybe the injection of my own presumptions left a couple things unexplained; I'll see if I can make it more clear.

When the author mentioned in the beginning that giant sums of cash went into public works investments, he wasn't kidding. East Germany's infrastructure was badly dated, and falling into increasing disrepair at the time of the Soviet collapse. To have any kind of a future, those investments were badly needed and could only be bled out of West Germany. When the USSR dissolved, the industry that had been driving East Germany went with it - there was massive and sudden job loss, and the East German economy became vapor.

Germany's been undergoing reunification efforts for at least a decade now. Year after year, economic reports on Germany cite reunification as the reason for a stagnant economy; it's becoming tradition. To be sure, reunification was not a trivial matter - but at this point, to have 20% unemployment still in East Germany almost defies explanation. In another environment, this sudden glut of labor would cause supply and demand to kick in - supply of labor goes up, demand goes down, so labor becomes cheaper. Cheaper labor attracts new investment by employers until supply and demand equalize again.

You can also prod this process along with temporary tax incentives or subsidies, which it seems they've done. However, thinking that these incentives attract investment but cheaper labor is irrelevant is akin to thinking that a hull design makes a boat go fast, but the engine is irrelevant. The subsidies are gravy, tax incentives just tip the balance for the undecided - the market value of labor is what moves the process, unless you do something to prevent it.

Back to my comments on the article - the dominant theme seems to be "Yeah, communism wasn't utopia, but it was better than capitalism has been." At the only point in which it really makes any examination of why this might be, it does not conclude that wage controls are preventing east German investment from being desirable; it attributes failure to a lack of money spent on people. It's staggering to me that the author seems to think that there is some amount of money which might be thrown at people to make jobs and economic viability appear. Then again, the reason I posted it in the first place is that I do not agree with the author's presumptions, so I guess that's hardly surprising.

So, to your question - if the public works project you're referring to then is the lump of them referenced in the second paragraph, my answer to your question is this: the author laments that all this infrastructure investment hasn't transformed the failed socialist state into the economically robust state West Germany was. In doing so, it seems as if he expects that "capitalism" is embodied in roads and sewage pipes when he notes that building them didn't do the trick. In fact, they are simply the bedrock that any modern society needs to be founded on regardless of its economic model. When a productive country like Germany (consistantly one of the world's top 5 exporters, often #2) languishes with the sort of economic malaise that Germany has, I tend to look elsewhere for explanations. Mark's answer seems to be "capitalism failed."

7:44 PM  
Blogger actus said...

"In doing so, it seems as if he expects that "capitalism" is embodied in roads and sewage pipes when he notes that building them didn't do the trick."

This is the leap I don't see the author making. I see you projecting that onto him, but I don't see him equating the social-democrat West german plan of public works with capitalism. He does contrast it to communism's jobs and 'illusion of activity', but he does not equate it with capitalism.

11:43 AM  
Blogger Doug said...

If he's going to contrast the old east against the new east (which he does often), both a capitalist model and communist model will be implicit in every past-to-present comparison. In the context of east German economic development, past and communist are synonyms, as are present and capitalist. The thrust of the enormous public works investment was to simply provide a foundation for an economy -- of any model -- to operate on, and he's lamenting that it didn't work. I don't know any other way to read statements like

"Germany backed up its promise with one of the greatest transfers of wealth in human history [...] But many roads lead nowhere. The landscape in eastern Germany remains barren - emptier even than during Communist times"

I translate that as "all that effort to liberalize the east, and it's worse than when it started". When no other part of that effort is even obliquely referenced, it does appear that he thought monumental infrastructure investments were supposed to do the job.

1:28 PM  
Blogger actus said...

"In the context of east German economic development, past and communist are synonyms, as are present and capitalist"

The problem is that the present isn't just capitalist. Its social democract and ex-communist.

"I translate that as "all that effort to liberalize the east, and it's worse than when it started". "

But those aren't efforts at liberalization. Those are efforts at planning. And they don't address one obvious answer for the barrennes: people may have moved out of the east.

11:43 AM  
Blogger Doug said...

The problem is that the present isn't just capitalist. Its social democract and ex-communist.Precisely. The original intent of reunification was to bring the East into the West's model, but instead the whole mess has sort of become a hybrid. Germany has the makings of an economic powerhouse in so many ways, but most Germans can't seem to figure out why it's floundering. The one possibility seldom addressed by Germans (76% of whom in a recent poll expressed that the former socialism was a good idea, just done in a bad way) is that the system itself is the hinderance. The author notes this possibility briefly toward the end with the reference to the "welfare-addicted" east.

But those aren't efforts at liberalization. Those are efforts at planning. And they don't address one obvious answer for the barrennes: people may have moved out of the east.Again, exactly so - but he poses them (planning efforts) as being the failure. In fact, a lot of people have left the east, but as a result of the poor economy, not necessarily a cause of it. Since most moved from east to west, as opposed to emmigrating, that doesn't really hurt the overall economy. I would certainly bet it's been bad for small business in the east, though.

12:05 PM  
Blogger Doug said...

And to think I haven't moved to Haloscan because I like having a preview button...

12:07 PM  

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