Tuesday, December 30, 2014

Communism Pretty Much Sucks

A couple of statistics about Germany:

Among more than 600 members of management and supervisory boards at Germany’s 30 largest companies, fewer than a dozen lived in the German Democratic Republic when the Berlin Wall fell on Nov. 9, 1989. Many of them are politicians or labor union officials, not executives.
That is 2% of the nation's executives from an area that makes up around 20% of the population.
The rapid productivity gains eastern workers made after reunification have stalled: they are still only 76% as productive as western ones. That is partly because the east German economy is concentrated in less productive industries, like construction and agriculture. But even in others, like finance, eastern workers have made smaller productivity gains than westerners.
Unless there were major regional economic  differences between the east and west of Germany before World War 2, and as far as I'm aware the east wasn't considered notably poorer, it illustrates just how much an atrocious political idea can deplete the human capital of a country. That the legacy of communism is still so pronounced more than 25 years after it collapsed is a pretty damning indictment of the system.


Kaffeesachse said...

Prior to WW1 the Kingdom of Saxony (comprising a major chunk of what became the Soviet occupation zone at the end of WW2; capital city Dresden) was the most urbanised and densely populated state in the German Reich, and punched far above its geographical weight in the economic, artistic and academic spheres. It was a cautiously liberal constitutional monarchy with a booming economy, strong cultural ties to Austria (an old ally against the Prussians) and a prominent place in the old Anglo-German culture that perished in 1914. Socialism was wildly popular, despite / because of the kingdom's wealth and moderation. Saxons used to be stereotyped by other (generally less prosperous) Germans as cosy, elaborately polite coffee-drinking shopkeepers with comical accents.

Conversely the Duchies of Mecklenburg-Strelitz and Mecklenburg-Schwerin (also parts of the post-1945 Soviet zone) were near-feudal rural backwaters (traditionally allied with Prussia) that were steadily losing population to the USA, Saxony and other more modern German states before WW1.

Ross said...

Thanks for that. I've tried to get a sense of what the regional differences in Germany were before, but the multitude of different states that existed pre-unification make it very hard to get a clear picture of- at least with the amount of time I've spent looking it.

Umbongo said...

Today I went to the exhibition at the British Museum: Germany - Memories of a Nation. One statistic remains in my mind: 15 years after WW2 which reduced Germany to rubble, by sheer hard work and utilising Marshall Aid to rebuild its industry (rather than splurging it on domestic consumption as did the then Labour government here) Western Germany's share of the world's industrial production was around 15%. Neil MacGregor (who wrote the book and created the radio programme on which the exhibition is based) observes that in 1960 bomb sites were still a fairly common sight in the UK; not, however, in West Germany.

It seems that socialism of the national variety is not as damaging to human capital as the socialism of the international type beloved by the BBC and Miliband's father (and presumably Miliband himself). Analogously, Chile which was on the verge of ruin at the conclusion of Allende's regime prospered after the "Chicago Boys" were given their head by Pinochet.

Thinking aloud: it will be interesting to see how (and if) Cuba recovers from the ruin inflicted by the Castro regime. On that tack, it will be just as interesting to see whether Russia will ever be able to create wealth a la West Germany rather than emulate the primitive economies of the Middle East and Africa by surviving through the export of raw materials which it digs or drills up.

Ross said...

As well as Cuba and Russia, one I'd be interested in seeing if it could transition itself is North Korea. I suspect immediate reunification with the south would be impossible for at least a couple of decades just because of how backwards it will be.