After 1945 and 1989, are we now facing end and turnaround no. III?

by Professor Dr Eberhard Hamer, Mittelstandsinstitut Niedersachsen e. V.

The author experienced the end of our Nazi and wartime economy, which entailed such a profound change in all values and living conditions that today’s generation can have no idea of this.
  But, as a visiting professor in Magdeburg and as a forest manager in Saxony-Anhalt, the author also directly and on site experienced the second end of a dictatorship, in the turnaround of 1989. In the summer of 1989, the former GDR was already showing signs of disintegration: People no longer trusted its political leadership. The old functionaries were apprehensive; they feared for their future and sought secure positions outside politics. The laws were no longer taken seriously, nor were the administrative bodies, which in their turn were also losing confidence. The Ostmark was depreciating, the call for freedom and change was growing ever stronger among the population. The political leadership still tried to suppress all this, if ever less confidently, by means of its old methods. Finally, it was no longer able to control the prayers for peace and the Monday demonstrations in Leipzig. Above all, however, the economy collapsed, as the functionaries Schalck and König had predicted as early as 1988.1 In particular, the experts reckoned the GDR’s solvency secure only until 1990 at the most, because “the annual under-fulfilment (of the plan) of between 1.4 and 5.1 billion ‘Verrechnungsmark’2 reduced export earnings by up to 25 %”, while the GDR’s growing indebtedness made “between 5 and 6 billion ‘Verrechnungsmark’ payments per year necessary for interest alone”. The authors pointed to the growing debt due to deficit-ridden foreign trade, substantiated this with figures, and concluded that solvency could no longer be guaranteed in 1990, that the planned increase in national income would not be possible and that the foreign trade over-indebtedness would also lead to internal consequences.
  These predictions were correct. But they came true a year earlier than predicted, because the Soviet Union could not keep up with the arms race against the USA (having been “bled dry”) and partly stopped paying its suppliers in the satellite states, because Gorbachev’s “Perestroika” became more and more of a “catastroika” and because, as a result, the Soviet Union could no longer assert its leadership vis-à-vis its satellite states.
  In the end, the German reunification brought about a currency reform in the East, the collapse of entire sectors of the economy, general impoverishment, a completely new economic system and also an over-heavy state and bureaucratic regulatory burden that the people in the East could not control, with all the Western laws, which had already partially stifled entrepreneurial activity in the West. In part, the success of a new economic start may only have been due to the fact that the administrations themselves were not able to master these new laws and could therefore not apply them.3
  In spite of all this, the people in the former communist central administrative area in the East have survived this most profound change in all of their living conditions, but they are still very much aware of it. The end of an era and the turnaround are still in the minds of the East German population today; and have therefore in many cases imprinted different basic attitudes than those the “Wessis” (former citizens of the FRG) have – due to their different political experiences.
  It is therefore no wonder that, in Eastern Germany, the old parties without alternatives are on the losing side and the new Alternative for Germany (AfD) is winning voters by relentlessly naming the signs of disintegration and Merkel’s mistakes.
  In conversations with fellow East Germans, the author noted that:

  • –  The “Ossis” (former citizens of the GDR) criticise much more strongly than the “Wessis” that Germany is being plundered by the assumption of liability for the whole of Europe and by its financial support of the highly indebted EU states. Personal and national prosperity takes precedence over European redistribution and alleged “solidarity”.
  • The “Ossis” have laboriously struggled back to their feet after the collapse of the GDR and are less willing to share a prosperity they have not yet achieved with millions of unemployed immigrants. The fact that many of these unemployed immigrants are unpleasantly conspicuous in cities is also less accepted in the East than in the West, and meets with resistance that Western officials in turn falsely combat as “racism” and “right-wing extremism”.
  • Since the “Ossis” have already experienced over-indebtedness and the dissolution of currency and economy once before, fear of the largest European debt in history and the devaluation of the euro is much stronger in the East than in the West, where people still believe more in the words of politicians and central bankers than in the facts.
  • It was particularly interesting to the author that many Eastern citizens reported that they already again had the feeling of economic disintegration, as in the final days of the GDR. People trust politicians less and less. The mistakes of the Merkel era are now coming to light. The state, on the other hand, is trying to prevent demonstrations and dissent with more and more repressive measures. And again there are attempts at socially marginalising critics of “political correctness” and government opinion. The author often hears: “We experienced the dissolution of the GDR and we see many parallels again today!”

A state that provides more for the EU, for the banks and for immigrants, but taxes, restricts, disciplines and exploits its own citizens ever more, inevitably loses the consent of these citizens and can only hope – as the Greens do – that those Germans who have lived in the country for a long time will soon be in the minority, also in regard to political influence.
  If theoretically the middle class is the core force of every democratic freedom movement, of market economy and prosperity, these advantages are in any case still limited in the East for lack of a middle class. The Western middle classes (47%), on the other hand, seem to have been more corrupted and degenerated by prosperity than people in the East:

  • The children of affluence no longer want to perform; they want to have fun. The yuppie generation believes: “There’s enough money around.” Even schoolchildren are seduced into demonstrating, on their “Fridays for Future”, not for an increase in their own achievement potential, but for an imaginary saving of the world, even though Germany only has a 2.3 % share in environmental pollution.
      
    And when the East criticises the destruction of the future through over-indebtedness, immigration, economic strangulation or currency devaluation, the citizens in the West will reply: “But we're doing so well!”, “The state has enough money for all the immigrants” (they themselves do not), “We can’t let other European countries go bankrupt” or “As long as I have enough money to go on holiday, I don’t care about the devaluation of the euro”.
  • Citizens in the East are indeed concerned with much more real things than those in the West. The extension of one’s own house is not yet completed, one’s own assets have not yet been built up, the concern about one’s job is much stronger than in the West, and school education as well as the future of the children also have much greater weight than in the West.
      
    The “Ossis” therefore do not understand why the leading media and politicians beat the drum for gender equality and against normal families, give priority to leadership positions for women and minority representatives, genderise our language and demand same-sex marriage. And claim that life should not be exhausting (“terrorism of achievement”), but fun.
  • The East Germans also deplore the fact that the decentralised democracy that after reunification spread as far as to the villages has now been gradually dismantled: The villages have been merged into joint municipalities, and the districts into large counties, so that especially the rural population in the suburbs no longer has a say. It is also a fact that, as in Western Germany, functionaries more and more dominate politics alone, the competences have grown from the bottom up into an authoritarian state, and even national democracy is being abandoned in favour of a supranational European council system (e.g. the unelected commission). I often hear, “locally we had more of a say even in the GDR than we do today.”
  • Perhaps stemming from the former capitalism critique, in the East there is also much more concern about political and association officials acting not in the citizens’ interest but in the interest of banks, corporations and international ideologues.4 

The warnings of an economist that never in history has a fun society survived, that the pursuit of ideological goals has always led to a loss of prosperity, that only morality and custom instead of pleasure, only decency instead of freedom of movement and family order instead of promiscuity have been organising principles of long-term societies, this is affirmed in the East, but predominantly denied in the West.
  The feeling of the East Germans that we are once again heading for a dissolution, for an end of our social system, is a feeling from experience, that the West Germans do not have, that they will deny and bitterly regret when the current signs of dissolution of our Western society and economy come to a head in the impending crash.
  In any case, it can be mathematically predicted that

  • it is not possible to permanently make a living from debt rather than from achievement,
  • unlimited growth of an ever-larger number of service recipients at the expense of fewer and fewer achievers will lead to a loss of prosperity,
  • our western yuppie and fun society cannot be a model for the future in international competition.
  • and that all ideologies have so far failed economically.5  •


1 König, Herta; Schalck, Alexander. “Geheimdokument an zur voraussichtlichen Entwicklung der Verschuldung der DDR” (Secret document for submission to the Chairman of the State Council on the expected development of the GDR’s indebtedness). In: Hamer, Eberhard. Ende – Wende – Wiederaufbau (End – Turnaround – Reconstruction), Mittelstandsinstitut Niedersachsen, 1993
2 Verrechnungsmark – here a currency for the transaction of business between FRG and GDR
3 This was the big difference to 1945, when all Nazi laws had been abolished and thus there was the greatest possible economic freedom. In the meantime, however, the West had spent more than 40 years building up the densest legal network in history, which brought stumbling blocks and obstacles to entrepreneurial activity everywhere.
4 Environmental, gender, diversity or social ideologes
5 The socialist ideologies as well as the nationalist ones and probably also “ecology instead of economy”.

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