Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

30 April 2012

Germany and America II: Could it Happen Here?

[The first and third posts in this three-part series are here and here.]

Conventional Wisdom
Reversal of Fortune
Analogies in America
Fuzzy and Dangerous Thinking
Distinctions in America
Conclusion: Precautions Needed

Introduction. In a companion essay, I traced Germany’s evolution from the last century’s Nazi scourge to the exemplar of today. In almost every way—refraining from violence, helping others, fostering social and economic equality, using science and technology to improve human life, and respecting real knowledge and expertise—Germany today is a model nation, worthy of study, respect and emulation.

Put in broad historical perspective, those conclusions are not surprising. You could have said the same thing about Germany a century ago. At that time, just years before the first of the two world wars, Germany was not only at the top of its game. It was a global paradigm.

No educated person on Earth then could have belittled Germany, let alone ignored it. In literature, it had Heine, Goethe and Schiller, the last of whom is oft compared to Shakespeare. In music in had Bach, Brahms and Beethoven, not to mention Haydn and Mozart (if you include its cultural neighbor Austria). In mathematics and physics it had Euler, Gauss, Von Helmholz, and Planck, not to mention Einstein, who had already written his Nobel-Prize-winning paper on the photoelectric effect, in German, in 1905.

The average, honest, educated person, asked then what was the leading nation in advanced human culture, probably would have named Germany. Yet little more than twenty years later, mass rallies of mindless German soldiers were shouting “Sieg Heil!” on the parade grounds of Nuremberg.

So the key question from the twentieth century is not “How did humanity let mindless and brutal wars kill so many innocent people”? Our species had been doing that since time immemorial. Twentieth-century technology just gave it more efficient means of killing.

The really key question is “What the hell happened to Germany”!? More to the point, it’s “Could the same thing happen again, closer to home?”

Conventional Wisdom. The conventional wisdom is that Germans are a different subspecies, more prone to “following orders,” no matter who is giving them, as long as he is a “leader.”

For a long time, I believed that comforting myth. After all, I’m a Jew. It’s hard to think clearly about a people that just systematically murdered six million innocent and defenseless civilians solely because they looked and acted like you.

But time and peaceful reflection tend to clear one’s mind. Today I no longer believe that comforting but simplistic caricature of Germans and Germany.

Like everyone else, Germans have their salient, even idiosyncratic, cultural features. But I now believe the roots of Nazism lie much deeper. More important, I believe they are there in all of us, waiting only for the wrong circumstances to emerge. Most important of all, I can now see those same circumstances beginning to emerge in the country I was born into and love.

Reversal of Fortune. The error in conventional thinking inheres in the introduction to this essay. “How,” the question goes, “could the paradigm of human culture that once was Germany stoop, a mere generation later, to the bestiality of Nazism”?

The very question assumes that Germany’s state at the turn of the twentieth century and its state thirty years later were and are in irreconcilable contradiction. But what if they are related? What if one is actually the cause of the other, at least in part?

To see how this might happen, think about individuals, not nations. What happened, for example, to a universally respected monarch who was deposed and later became despised? What happens today to a corporate CEO who suffers the same fate?

Rage is what happens. The desire to get even, to re-establish one’s formerly exalted status, becomes overwhelming. Any means of doing so seems justified. Could the same thing happen to an entire people?

We all know the more subtle and sophisticated explanation of Nazism. It’s largely economic. After losing World War I, the same Germany that earlier had been universally respected became despised. The Versailles Treaty demanded reparations and economically isolated Germany, leaving it not only without its desired Atlantic port, but without the means to participate fully in international finance and the coming explosion of capitalist industry. The result was the Weimar Inflation—the worst suffering of that sort that any major power has ever experienced.

Our American president then, Woodrow Wilson, was a former professor, just like our present one. He tried to stop the first war’s other victors from persecuting Germany in the name of rude “justice,” i.e., collective punishment, but to no avail.

Never has a US president been so sadly and prophetically right. Wilson was a modern Cassandra: he foresaw the consequences, but nobody listened.

The resulting punitive and vindictive policies had a terrible effect. They reduced to abject poverty the very same people who, just a generation before, had been paragons of engineering, technology, industry, and commerce, not to mention literature, music and mathematics. The resulting inflation, stagnation and economic stress in Germany were universal and spared no one, even the very best.

My father knew this from personal experience. He had Austrian roots and spoke fluent German. As a young man he visited Austria during the Weimar Inflation. Then he had a chance to buy an entire block of apartment buildings for $24. (No, that’s not a typo. It’s the dollar equivalent of the price in German marks at the height of the Weimar hyperinflation.) My father declined and returned to the US, thereby likely sparing our family from perishing in the Holocaust.

Is it so hard to imagine that these stark circumstances engendered a blinding, collective rage—especially in a people accustomed to high productivity and concomitant respect? How else can you explain descendants of the historic intellectual leaders named in the introduction to this essay following a half-crazed former corporal and house painter into the most bestial (yet) of wars and the Holocaust? How else can you explain the scapegoating of Jews?

Maybe Adolf Hitler was just the first to express the collective rage. Maybe the Germans needed someone close to home to blame, lest they blame themselves and let their collective rage provoke collective suicide.

Analogies in America. Viewed in this light, the German experience no longer appears so unique and culturally determined. It could happen to anyone, or any people. As literature tells us—from Agamemnon, Troy and Oedipus to Richard III—reversals of fortune are part of the human condition.

That’s what makes America’s present state so dangerous. We Yanks have no great pretension to intellectual supremacy. No American sits in the ranks of history’s greatest scientists, for example, with Darwin, Einstein, Newton, and Adam Smith. There is no American author to compare with Shakespeare, or composer to compare with Germany’s “Three B’s,” let alone Mozart.

But for the last century, we Yanks have been supreme in the things that mattered most: science, technology and invention. We have won more than our share of Nobel Prizes, especially in economics and medicine. Our list of inventions and innovations is unmatched: the electric light, the phonograph, controlled flight, atomic energy, aircraft cabin pressurization, nuclear weapons, television, transistors, electronic computers, lasers, integrated circuits, CAT scans, magnetic resonance imaging (MRI’s), transplants of hearts and other vital organis, and now “designer” drugs and the Internet.

Of all the fields of human intellectual endeavor, science and technology reigned supreme in the twentieth century. We reigned supreme in them, and our collective success made us winners in industry, commerce and war.

So we got, and are, proud and arrogant. We began to think of ourselves as better than others, “exceptional.” While deriding the old pre-war German national anthem, “Deutschland über alles [Germany over others],” we began to think precisely the same of ourselves. Isn’t “exceptional” just a more polite and slightly more subtle way of saying “über alles”?

Pride, the Bible tells us, cometh before a fall. And so it was with us. We began to get sloppy, lazy and imprecise, in thinking and in action.

Losing wars followed. First came Vietnam, then Iraq (still a stalemate), then Afghanistan (a stalemate now, perhaps a loss in the long run). Next, we sold our manufacturing base to China. Finally, with a slight foreshock in 2000, came the Crash of 2008—a global financial catastrophe that, for the first time, was demonstrably and almost entirely a result of American greed and stupidity.

Can there be any doubt that we have suffered a dramatic reversal of fortune, and that most of it is our very own fault?

Fuzzy and Dangerous Thinking. The key indicator and primary cause of our decline was and is fuzzy thinking.

The Crash of 2008 began with a species of financial “innovation,” namely, securities backed by liars’ loans and “insured” by derivatives. So did the Great Depression. Then, the innovation was simple and easy for even laypeople to understand: buying stock on “on margin,” i.e., with borrowed money. This trend became an epidemic, so much so that the great financier Bernard Baruch sold out and saved his fortune after his cab drivers began recommending stocks to him.

But society’s collective reaction to rogue “innovation” in finance then was very different from today’s. Within four years of the Crash of 1929, we had strict legal rules limiting margin and requiring people to put up cash to buy stock. The credit-induced bubble of 1929 never precisely recurred.

It’s now nearly four years after the Crash of 2008, and we still have no rules limiting derivatives, including the credit-default swaps that are even now encouraging global, systemic financial risk. There are reportedly $700 trillion of them outstanding, and regulatory authorities, in their perverted “wisdom,” just exempted some 60% of their issuers from any government oversight.

Part of the reason is a deliberate lie of right-wing propagandists: that government itself, not private greed, caused the Crash of 2008. I’ve debunked that lie extensively elsewhere (1, 2, and 3) and won’t repeat the analysis here.

But it’s curiously similar to the Nazis’ scapegoating of Jews in one respect. Contrary to the Nazi lie, Jewish commerce and culture were part of prewar Germany’s strength, not a cause of weakness. Jews were solidly entrenched in Germany’s upper middle class. They had been pre-eminent in German science, engineering, literature, drama and music, as well as banking, commerce and trade. Albert Einstein, for just one example, was Jewish, although not particularly observant. So were the Rothschild banking family.

So in forcing its Jews to flee and later gassing them, Germany was not just committing mass murder. It was in part committing economic suicide—ripping out part of its own heart and brain.

Just so, we are ripping out part of our heart and brain by trying to drown government in a bathtub. During our best years, strong government regulation of a strong private sector made capitalism run like a Swiss watch [search for “pragmatic”] and insured our social cohesion and industrial dominance.

Well, you might say, we Yanks have done nothing as nasty and stupid as driving out and murdering one of our own ethnic groups, at least not yet. But are you so sure? In a country that, since the Civil War, has prided itself on racial and ethnical equality and religious tolerance, it’s hard to be overt about scapegoating.

But we do have clear scapegoats. Not only are they thinly veiled euphemisms for certain ethnic groups and economic classes. They reflect thinking every bit as fuzzy as Nazi Germany’s scapegoating of its own successful Jews.

Let’s start with the obvious, the epithet “socialism.” That name-calling is pervasive in our politics and media today. Every Republican candidate for president, including Mitt the winner and all the sore losers, aims it repeatedly against the President and all his supporters, as well as the few remaining moderates in the so-called “GOP.”

But does it make any sense?

Anyone who owns a dictionary can find the true meaning of “socialism.” Here, verbatim, is the very first definition from my Random House Webster’s American College Dictionary of 1991:
“a theory or system of social organization in which the means of production of goods are owned and controlled collectively or by the government.”
In other words, socialism is a system in which the government or smaller “collectives” (like the “collective farms” in the former Soviet Union) own and control what private business owns and controls in a free market.

By that definition, there are no socialists in America. None at all. No one here has ever seriously proposed that the government or “collectives” own or run doctor’s offices, medical groups and hospitals as, for example, does the National Health Service in England. In fact, no one has seriously proposed any substantial change in our private system of health care.

All that has been suggested is a small change our system of health insurance. And even that small suggestion is not for government ownership or the phase-out of private insurance. It’s just for a “public option,” i.e., a single government-run insurance program large enough to compete with private insurers and with a large enough pool of insureds to provide real and meaningful insurance, i.e., risk-sharing.

The same is true of banks. Even in the depths of the Crash of 2008, no one ever proposed nationalizing our banks, even the very ones whose greed and stupidity caused the financial meltdown. All that was proposed (and carried out) was temporary, market based financial investments. The government, which made the investments in order to keep the banks sound and solvent, explicitly disclaimed, or refused to exercise, the voting rights that, in our free-market economy, normally accompany ownership of common stock.

So where was the “socialism,” i.e., government ownership and control? Nowhere at all. There was partial, temporary, minority ownership, but no control. That is, there was not a bit of socialism. And now the banks have bought back the government’s investment and are entirely private again, as was the plan all along. To discern any “socialism” in these facts, you have to have a devious and creative mind.

So “socialism in America” is a complete and utter fiction, just like the Jews’ alleged undermining of pre-Nazi Germany. Not only that. Just as in Nazi Germany, the emotional purpose of the lie is to direct public anger away from the true causes of our problems and toward helpless scapegoats.

And who are the scapegoats? Today, in America, we call them “freeloaders.” They are vague phantoms, never explicitly identified, but hated and despised nonetheless. They include hapless welfare recipients and the unemployed.

Leave aside the (recent) fact that Bill Clinton, with bipartisan support, reformed our welfare system to reduce, if not eliminate, its abuse and use as a permanent crutch. On a numerical basis, welfare is a minuscule part of our national budget, utterly dwarfed by both our “defense” spending and spending on social security and Medicare, which support our middle class, not just the poor. What we give in welfare is an utterly negligible part of our national debt.

So analytically and numerically, scapegoating welfare recipients makes absolutely no sense. But it does emotionally and politically.

We all know who welfare recipients are, or at least are supposed to be. They are supposed to be minorities, especially African- and Hispanic-Americans. So how better to engender both conscious and subconscious hatred against minorities, including the President, than to blame welfare recipients for the higher taxes that the upper middle class now must pay to restore fiscal balance after a forty-year relative tax holiday?

Every American, whether native born or naturalized, knows deep down the racial and ethnic groups against which cries of “socialism,” “freeloading” and “income redistribution” are directed. They certainly aren’t middle-class whites.

So scapegoating in America today is not so different from scapegoating in Nazi Germany after all. It’s just more subtle and less “in your face,” reflecting the increased sophistication of modern Madison Avenue as compared to the old Nazi propaganda machine. And it’s evilly brilliant in one respect: because our President is himself half black, he can’t call out this evil publicly, lest he be accused of fomenting racial discord himself. (And hasn’t the right wing tried that one before?!)

Distinctions in America. Of course there are differences between American today and Nazi Germany. This is the twenty-first century, not the twentieth. We are analyzing America, not Germany. Our society today is much more diverse, tolerant and sophisticated, as a whole, and infinitely more democratic, than Germany’s a century ago.

Since history’s greatest war, we have been smart enough not to provoke war with any major power, including Russia and China—although sometimes it seems that we have picked fights with almost everyone else. As a result, we have not suffered the collective ostracism and economic sanctions of Germany after World War I. World War II left us the globe’s undisputed industrial leader, and we rode that lead to half a century of history’s greatest collective prosperity.

More important, our past intelligence and beneficence have earned us a reservoir of international good will, perhaps unprecedented in human history. We helped our allies beat back aggression in two world wars. With our Marshall Plan, we rebuilt Europe after the most terrible war and set our former enemies, Germany and Japan, back on the path to democracy and economic success. We started and hosted the United Nations in a (still vain) attempt to head off future wars. And we organized and hosted a passel of economic institutions, from the Bretton Woods conference to the World Bank and International Monetary Fund, to stabilize the global economy after terrible shocks, including the one we just caused.

Because of this goodwill, we do not have to fear the sort of international opprobrium and ostracism that Germany experienced after World War I. At least not yet.

But this international good will is as much a trap as a preventive. With all the animus against Germany after the first world war, the world should have been watching its armaments buildup like a hawk. Apparently only FDR and Churchill were. With our reservoir of international good will, no one is watching us. Therefore a Nazi-like putsch here might sneak up on the whole world unawares.

Anyway, are these distinctions decisive? From here and now, it’s hard to tell. Hitler screeched more and had far less polish. But, in substance, the mindless (and dangerous!) drivel of people like Rush Limbaugh, Glen Beck, Sarah Palin and Rick Perry are hard to distinguish from Hitler’s ranting. All were (and are) about little more than ignorant chest beating, alleged cultural superiority and entitlement, and blaming various scapegoats (including our President!) for our troubles.

The only salient distinctions are in the scapegoats. We purportedly scapegoat people by their supposed beliefs (“socialists”), not ethnicity, as befits the world’s most inclusive and tolerant society. And we so far have not scapegoated any major power, although some of our fringe groups—and even some of our presidential candidates—have come dangerously close with China.

The twenty-first century deserves, and the nuclear age demands, better and clearer thinking than that.

Conclusion: Precautions Needed. The analogy of the US today to Germany after World War I is not, thank God, entirely complete. The chance of something similar happening here is probably no more than 20%. But even that relatively small probability is unacceptable in a country with 10,000 nuclear weapons, which spends more on “defense” than the rest of the world combined.

We Yanks have to do better, and the rest of the world (especially our allies) has to help us sober up and face our own flaws squarely and boldly. A repeat of Nazi Germany in North America could easily cause the extinction of our species. We cannot let that happen.

And if you think that’s impossible, just read some of the semi-literate, angry tirades against our President, “socialists,” Europe and China in many on-line comments to any of our national media. All it would take is our native Brown Shirts rising from their present 15%-25% of our population to something resembling a majority.

That’s unlikely to happen but by no means impossible. And Fox is doing every thing it can, day after day, to bring Nazi Germany here to us in America. It’s so-called “pundits” even sound like bullies.

It’s therefore a good idea to think about precautions, before the number of Brown Shirts rises any further. In the next essay, I will discuss what some of those precautions might be.

How many good people of the last three generations would, in retrospect, have loved to have had Adolf Hitler in their sights and pulled the trigger? And how much better would it have been never to let Hitler get his demented hands on power at all?

The means of keeping such people out of high office have proliferated since Hitler’s day. They are far more powerful, varied and sophisticated. And the whole world can use them. If we all use them—and I mean all, everyone, worldwide—we might forestall the second coming of a monster who could end our collective existence. Wouldn’t that be worth changing business as usual just a little bit?

Footnote: The phrase “second coming” is unoriginal in this context. It’s the title of a famous poem by Yeats. In it, he expressed the helpless despair of an intellectual mourning what was probably the most senseless war (yet) in human history. The poem is short enough that everyone should read it, several times.

The poem’s most memorable sentence has become a sort of proverb: “The best lack all conviction, while the worst are full of passionate intensity.” Doesn’t it uncannily describe our own times, although written in 1919, nearly a century ago?

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  • At Tue May 01, 06:35:00 PM EDT, Anonymous Anonymous said…

    Brilliant stuff, Jay. Hope you are well ... I've been reading you, just have commented in awhile. Not much to add since I agree with everything you wrote, just hope that people will wake up to what is happening. I'm afraid they won't until there is a disaster/collapse, but the only thing we can do is put the information out there and keep trying.

    Hope spring is nice where you are at least....

    Doug in DC

  • At Tue Jun 26, 02:58:00 PM EDT, Blogger Jay Dratler, Jr., Ph.D., J.D. said…

    Dear Doug,

    Thanks again for your support, and my apologies for a very late posting of this comment. I've been preoccupied with personal matters, and your comment got lost in some spam and a few that seemed to require detailed replies.




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