Weimar Analogy #101: Will Democrats Finally Ditch Austerity Economics?

 

<"Alas, Mein Herr, that overdue library book 

will cost you five more marks a day now...":

Heinrich Brüning, circa 1930,
stares down his detractors: Wikipedia.com>

<i>

Heinrich Brüning (1885-1970): unless you're a student of German history, his name probably won't ring a bell. Yet it's worth revisiting the less than stellar career of  Germany's notorious "Hunger Chancellor," especially after the stunning flipflop of the Democrats' electoral hopes -- and see if there's a correlation to their previous face plants, that's worth exploring.

Who was Heinrich Brüning, and what makes his story relevant today? Well, with so many historians sifting through the tea leaves of Weimar-era analogies amid fears of a potential Trump restoration, Brüning's misfortunes serve as a powerful reminder of the perils of austerity economics, and how they often grease the skids for autocrats.

Brüning emerged on the German national stage in March 1930, when President Paul von Hindenberg appointed him Chancellor, following the collapse of the so-called "Grand Coalition," led by his predecessor, Hermann Müller. Nevertheless, the Müller government did manage to implement some fairly impressive baseline progressive reforms, before its own political fortunes came crashing down.

Those reforms included the introduction of nationwide, state-controlled unemployment insurance (1928), the addition of 22 occupationally induced diseases to accident insurance coverage (1929), and the creation of a special pension for jobless people at age 60 (1929). Note the year of the last two examples -- 1929, when the US stock market crash triggered the worldwide agonies of the Great Depression.

But once the Depression took hold, most of these reforms essentially came undone by the summer of 1930, as Brüning's government -- hobbled by the increasing headwinds that it faced -- uncorked a series of harsh economic policies, characterized by steep wage and salary cuts, and a significant tightening of credit. However, Brüning lacked the votes to pass them in Germany's main legislative body, the Reichstag. It had become an increasingly dysfunctional body, whose largest parties -- Communists and Nazis -- traded insults, punches, and threats on a daily basis. So Brüning relied on emergency decrees to impose his legislative will, a move that would soon become his go-to response to the adverse situations that he continually faced. 

Predictably, the unemployed suffered the harshest blows, as the Brüning government sharply curtailed eligibility criteria, jacked up taxable contributions, and shrank the length of time for claiming benefits. By December of 1931, unemployment would max out at 20 weeks, thanks to the last of Brüning's five emergency decrees, a move that left many of the jobless scrambling for basic survival.

The results were as inevitable as they were predictable. By June 1932, an additional 3.31 million Germans, or roughly 9% of the work force, joined the jobless ranks (see Econstor link below). Gross Domestic Product also shrank by 4.5%. By then, these problems were longer Brüning's concern. He stepped down in May 1932, after von Hindenburg -- offended by a series of land reform proposals that would have impacted his own large estates, and those of his aristocrat buddies -- brusquely demanded his resignation.

Harsh as his policies were, Brüning argued that he needed them to deal with the burdens of reparations payments imposed after World War I, and keep the economy on some sort of operational footing. Although Germany's obligations had been reduced under the Young Plan, brokered in 1929, they continued to remain a major drag on the economy, one that also chilled foreign investment. 

For millions of voters, however, it was business as usual. With no obvious end to their hardships in sight, a starving nation ignored Brüning's stern admonitions to just continue eating their spinach. Like any good normie politician, Brüning proved incapable of meeting the moment, and unable to grasp why popular resentment now ran so visibly and strongly against him -- to the point of stones being hurled against his personal train and motorcade, as he campaigned for von Hindenburg during the March 1932 national elections.

The results ended in a runoff, with von Hindenburg narrowly denying Hitler the chancellorship, and the enormous power it represented. In spite of this setback, however, the Nazis emerged as the Reichstag's largest party, which made their presence in the government seem inevitable, if not its eventual masters. If you've seen the movie, you know how it ended, as von Hindenburg -- aided and abetted by operators like the notorious Franz von Papen, and Brüning's replacement, Kurt von Schleicher -- opened talks to bring Hitler into the government.

Even after the Nazis finally slithered into power in January 1933, after Hitler's appointment as Chancellor, Brüning could not shake his addiction to "lesser evil" logic. Why else, it's fair to ask, did he join the Centre Party that he continued to lead in supporting the aptly-titled Enabling Act, that finally gave Hitler the dictatorial powers that he'd craved so openly, and for so long? 

Like many of his peers, Brüning couldn't grasp the existential threat that such a measure represented, even at this particular eleventh hour. The rigors of party discipline required it; indeed, his political self-identity as "the adult in the room" demanded it.

Brüning's reward for impoverishing his fellow Germans was to end up being marked for death, once Hitler unleashed the Night of the Long Knives against his political enemies in June 1934. Seeing the danger, Brüning finally fled Germany, and fled to America. He returned to his academic roots at Harvard, where he taught from 1937 to 1952.

One anecdote sums up Brüning's legacy better than any other. In 1945, as Germany tasted the ashes of total defeat, a claque of Brüning supporters approached Allied officers, with a proposition: would they consider bringing back the former Chancellor? Who better, they argued, than the "adult in the room," who'd done his best, however ineffectual it had been deemed, to stem the Nazi tide?

Back came the reply, terse and dismissive, as soon as the suggestion had been made: "We were afraid you would mention him." And there, we will leave it.

<Doing his political duty: 

Brüning campaigns for von Hindenburg,

1932, at the Berlin Sportpalast: 

Bundesrachiv, Bild 192-13229>

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Now that President Biden has finally admitted that he's finishing his term on December 31, it becomes easier to see why his re-election prospects looked so dim -- even against an opponent like Trump, with all his Grand Canyon-sized baggage, Still, if the race was neck and neck, the commentariat fretted, how could polls consistently show an outsized advantage for Trump over Biden, on whom voters trusted better to handle the economy?

The answer is simpler than they may want to admit. From the get-go, Team Biden banked heavily on conventional economic indicators to anchor their 2024 strategy, as this statement released from the President in April suggests: 

"The economy has grown more since I took office than at this point in any presidential term in the last 25 years -- including 3% growth over the last year -- while unemployment has stayed below 4% for more than two years. But we have more work to do. Costs are too high for working families, and I am fighting to lower them."

All well and good, right? Biden, like his predecessors, was filling his role as cheerleader in chief; otherwise, why would anybody follow him over the top? The problem lay in the glaring disconnect between the C-suite's narrative, and what those on the ground are enduring behind the scenes. Because, for the most part, their struggles go unreported, and therefore, unnoticed. 

Two-thirds of Americans, for example, say they couldn't find $500 to resolve an emergency, while half of all renters are cost burdened, meaning that 30% or more of their income is going to housing. (If that figure is 50% or more, you're considered severely cost burdened.) If this is really how the world's richest nation is doing, what does mean for poorer or middling ones?

And that's before we get to the relentless squeezing of the masses, whether it's happening at the kitchen table, or on basic monthly bills. My phone, for example, has rocketed from $70 to $115; electric, from $120 to $170; and cable, from $170 to $240 per month, all within the last two years.

It's the same story for smaller bills, like laundry, which has jumped from $1.50 to $2 per load for washing, and $1.25 to $1.75 per load for drying. It all adds up, and not in your favor -- because, in most cases, you're either getting the same, or way less, than you did previously, for your dollar. The last thing anybody wants to hear is how well the stock market's doing. "You mean, more make believe money, for those who've already socked away too much of it? Who's ready to party?"

Oh, wait. What about that unemployment metric, or Biden's claims of creating 400,000 new jobs per month? Well, there's a black joke making the rounds, that goes something like this: "Mr. President, I'm glad you're creating so many new jobs, because I have three of them." Pause for the punchline. "And they still don't pay my bills!"

It's a familiar refrain that leaves millions drained and defeated at the box office. Life loses any semblance of meaning when you're spending most of it trying to outrun the folks at the finish line, waiting with their hands held out. It's the kind of climate that leaves bank accounts as little more than polite fictions, since you don't get to keep most of the green paper that you struggle to accumulate, anyway. Someone else has already figured out a different use for it, so you might as well cough it up, and be done with it.

But it's a lesson that Biden -- much like his bygone German counterpart -- seemed hellbent on learning the hard way. When you insist, "Just keep on eating that spinach, and staring straight ahead, I don't exactly know when the hamburgers and steak dinners are coming yet," people begin tuning out the message, if not the messenger. And, of course, as we've detailed -- seeking out alternatives, no matter how extreme they may sound, to those who see through them.

<"Timely Reminder"/Take I:

The Reckoner>

<iii.>

Of course, it's simplistic to attribute Biden's exit from the Presidential race solely on the economy -- we're giving the "Cliff Notes" version here, to keep things moving -- but it definitely played a major part. So did the ongoing concerns about his age and overall condition, as well as his inability to hold the Democratic coalition, which had begun to fracture over those very issues.

In many ways, BIden proved a more consequential President than anyone could have expected, despite the constraints that he faced. The tragedy is that, like most established politicians, Biden didn't go bolder, when the opening presented itself. Quitting as he did -- right on the eve of the Republican convention -- marked the most punk rock thing that Biden ever did. 

It's a pity that Biden didn't apply those punk rock instincts to other dilemmas that bedeviled him, like the Supreme Court's dismissal of his student debt forgiveness plan. What would have it cost Biden to flip the bird to Extreme Supremes like Alito and Thomas, and say on national TV, "We're doing it, anyway, folks! Send the Supreme Court Police to arrest me, if you don't like it!"

The same goes Biden's belated embrace of a Supreme Court reform package -- including term limits, and an enforceable code of ethics, a notion that raises undeniable anxiety in the likes of  Alito and Thomas, who have gleefully accepted an eye-popping array of goodies from their billionaire bro buddies. 

However, like most of the punk rock thinking that Team Biden finally embraced, it came too little, and too late, to have any hope of saving his bacon. For progressives, Biden's refusal to entertain any regulation of the same court hellbent on kneecapping him marked one of his more puzzling lapses -- the Extreme Supremes being the only public figures with consistently lower approval ratings than his own. Failing to capitalize on such discrepancies seems like political malpractice, though again, Biden won't be the last established politician to commit it. 

Heinrich Brüning has also gone down in negative terms as a shy, reserved policy wonk, whose earnest approach and economics doctorate marked him as a poor fit in an age that had little patience for either, as Benjamin Carter Hett notes, in his Weimar autopsy, The Death Of Democracy:

"As chancellor, he was always trying to bring reasoned arguments to people who would never be reasonable, who in fact had no interest at all in facts or logic. Brüning's problem was that he was too reasonable to grasp such unreason." 

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All right, then. With the sun slowly setting on the Biden era, it's worth asking, will the eleventh hour ascent of Vice President Kamala Harris take us to a better place? Perhaps, although so far, the initial evidence is inconclusive. 

On the plus side, Harris has staked out some strong markers through the various economic proposals that she's floated, starting with the need to crack down on price gouging. Everybody can get behind that one, right? Because, quite frankly, we've seen how well the gougers police themselves: 

It -- Doesn't -- F#cking -- Work!

She has thrown out a slew of proposals that are sound, and desperately needed, starting with cost of living: crack down on mergers and acquisitions that entrench monopoly power. Slap a ceiling on how much food producers and grocers can continue to charge.

Housing? Build three million more units. Cut bureaucratic red tape that's stifled the construction of affordable housing, and led to the explosion of McMansions. Ban the use of algorithms that landlords and property management companies to keep prices in line with each other, and frozen at permanent stratospheric levels. Promote new homeownership by making up to $25,000 in down payment assistance available. 

Taxes and medical costs? Cancel up to $7 billion in medical debt for three billion qualifying Americans. Expand the Earned Income Tax Credit, one of the few financial lifelines that working people get, by up to $1,500. Restore the child tax credit that gremlins like Joe Manchin ostentatiously tossed on the junk heap, once they declared "normalcy" back in fashion, by up to $3,600, plus a new credit (up to $6,000) for families with newborns. Speed up a Biden-era effort that would allow for regulation on drug prices, and lower them for everybody.

Once again, all well and good, right? On the worrying side, we've heard all this before -- until the Austerity Gumps, as I like to call them, pop up from their hiding places, wringing their hands, and unreeling their standard issue mantras: "Ooh, that's too expensive." "What's wrong with you? Do you really want the overclass going out in the cold and snow?" And so on, and so forth. Wash, rinse, repeat.

I bring this up, because we're looking at the potential fourth cycle of a Democrat coming in, to sweep up the enormous messes left by Republican predecessors (predators?). What happens, though, once the initial wave of excitement subsides? Every time the Democrats claw back into power, they lose their nerve, and fall back on standard lines -- which makes this particular nugget, marbled in Harris's nomination acceptance speech, sound suspiciously familiar:

"That’s why we will create what I call an opportunity economy. An opportunity economy where everyone has a chance to compete and a chance to succeed.”

As idealistic as this catch phrase sounds, it's really just the latest variation on similar mantras that I recall hearing in the Obama ("We are the people that we have been waiting for") and Clinton eras ("not a hand out, but a hand up"). Creating more opportunity sounds wonderful, until you realize that the United States has worked quite hard at becoming the world's most socially unequal society. All the high-flown vows won't mean anything, if Harris follows her predecessors, and remains content to tinker around the edges of an undeniably broken system.

How will we know if, or when, she finds the nerve? It might help to lift a page or two from the past, such as the approach that President Harry Truman undertook to jolt his Republican rivals -- and reset expectations among a public that largely written off his chances of winning a second term in office.

I leave you with these words from a radio address that Truman gave on October 13, 1948, in St. Paul, MN, during his celebrated "whistle stop" speaking tour of the nation. They feel every bit as relevant now, as they did then, especially when you consider what it takes to fight for truly transformative change, and bring it about:

"Republicans approve of the American farmer, but they are willing to help him go broke. They stand four-square for the American home — but not for housing. They are strong for labor — but they are stronger for restricting labor's rights. They favor minimum wage — the smaller the minimum wage the better.

"They endorse educational opportunity for all — but they won't spend money for teachers or for schools. They think modern medical care and hospitals are fine — for people who can afford them... They think American standard of living is a fine thing — so long as it doesn't spread to all the people. And they admire the Government of the United States so much that they would like to buy it."

Let's hope that Team Harris gets that message, too, and puts out the word, once it does, and follow those intentions with some old school direct action. For a handy reminder, look no further than the slogan on any DOA record sleeve:

"Talk - Action = 0."

I rest my case, Your Honor. Even though the defense, mind you, never rests. Because there is always so much work to do.--The Reckoner

Links To Go (Food For Thought --

Figuratively, And Literally)
Econstor: Brüning's Austerity Policies...:
https://www.econstor.eu/bitstream/10419/261405/1/1811659055.pdf

Naked Capitalism: The Rebellion Will Not Go Away:
https://www.nakedcapitalism.com/2016/03/gaius-publius-the-rebellion-will-not-go-away.html

[Written on the eve of the 2016 election, with many comments that seem eerily prescient of our current malaise]

Newsweek: Here's Why Americans
Always Think The US Is On The Wrong Track:
PBS News: Harris Has Proposed A Slew Of Economic Proposals...: https://www.pbs.org/newshour/economy/harris-has-proposed-a-slew-of-economic-policies-heres-a-look-at-whats-in-them

[Well written- and reasoned summary of our current malaise...]

PBS News: Harris Has Proposed A Slew Of Economic Proposals...:
https://www.pbs.org/newshour/economy/harris-has-proposed-a-slew-of-economic-policies-heres-a-look-at-whats-in-them

Peterson Institute For International Economics:

https://www.piie.com/blogs/realtime-economics/2024/trumps-proposed-blanket-tariffs-would-risk-global-trade-war

Professor Gerhard Rempel: The Nazi Road To Power:
https://www.johndclare.net/Rempel_Nazi27.htm