Read the following which can be found on EBSCO:
Title:
Promises Made, Promises Broken: A Political Economic Perspective on German Unification.
Authors:
Hefeker, CarstenWunner, Norbert
Source:
German Politics; Apr2003, Vol. 12 Issue 1, p109-134, 26p
What is the thesis of the article? Do you agree/disagree? How much blame should be placed on the shoulders of individual East Germans?
7 comments:
The thesis of this article is essentially that the East German economy has floundered since unification for two reasons: the unfavorable policies of West German politicians which were designed to please the electorate of West Germany rather than serve the people of East Germany; and the unions and labor organizations of West Germany inadvertently creating a lack of jobs in the East. Heffeker and Wunner argue that the policies of West German politicians represented the interests of West Germans first and foremost. They describe a political agenda in which East Germany should be helped, but not at the expense of West Germans. This policy manifested itself in things like West German businesses quickly dominating the competition in East Germany, and the 2 to 1 exchange rate for West German and East German currency. They also argue that unions and labor organization contributed to the economic crisis in a major way. By pushing for increased wages and benefits in East Germany, West German labor unions prevented companies from moving there. This prevented growth in the region.
I agree with these assessments made by Heffeker and Wunner. If German politicians had really had the best interests of East Germans at heart, they would have prevented West German businesses from sweeping in and taking control of the East German economy. They should have been trying to help grow business in East Germany by giving money to East German businesses and by using taxes to make it more costly for West German businesses to move in. These would have allowed East German businesses to catch up. Instead, they feared the competition and what it would do to the West German economy. I also agree with the second part of their thesis. East Germany could have had a large number of jobs move in because of the low wages and taxes necessary to manufacture their, but West German union leaders effectively ended that by demanding high wages and benefits for their East German counterparts. This made East Germany a much less attractive place to have a business and left many unemployed. Unemployment was definitely a huge factor in the economic crisis in East Germany.
I think that very little blame can be placed on the shoulders of East Germans. The economic problems that they had were not their fault; they were simply the result of the type of government which was forced upon them for over 40 years. They didn’t choose to be a Soviet satellite state, so how can you hold them responsible? Even after unification, they had little control over their own destinies; West German organizations and businesses essentially dictated the economic conditions in East Germany. So the blame cannot be placed on individual East Germans, but on the inept political leadership they were subjected to.
In “Promises Made, Promises Broken: A Political Economic Perspective on German Unification,” authors Carsten Hefeker and Norbert Wunner present their argument of the failed attempt of German Unification based on its economic status largely attributed to poor decision in policies and conflicting objectives of the West. Their final conclusion drawn is the problem lies within political disagreements and inconsistent circulation of monetary wealth. Their lengthy thesis is stated as “We argue that a number of policy mistakes based in the desire of the then government to maintain electoral support is responsible for this. In addition, the behavior of West German labor market participants is held responsible for the dismal record of unemployment in East Germany. Hence, political and distributional conflicts lie at the root of the still present East German Problem.”
After having read the article and analyzed the arguments presented, I agree with the final conclusions drawn. Their central argument for the problem in the East is a result of the West having the majority control within the electorate. This was justified with the idea of unification mostly benefiting East Germany, so in hopes to compromise with the West, they were allowed dominate power in the votes that would decide the fate of East Germany. Since the West had dominant control, they logically sought to protect their own interests by instigating the high wage system in hopes of alleviating competition between the two.
This proved fatal to the East German economy as high wages undermined the low productivity level accompanied by increased unemployment and the high taxes tipped over to the West German side whom had hoped to avoid being targeted for the unification funding. The conversion rate of 1:1 and 2:1 didn’t help either, which made any hopes of long term economic stability in the East virtually impossible. This followed by the political leaders refusing to alter this inevitable degeneration of the East to win the favor of the population and win the election proved to be the final vital component to the downfall of the East. Just these few decisions, disregarding the others, would completely justify Hefeker’s and Wunner’s argument of “political and distributional conflicts [lying] at the root of the still present East German Problem.”
Perhaps I may be too lenient, but I don’t think any blame should be placed on individual East Germans. I find this a particularly odd question to ask since reading this article would make anyone unfamiliar with this topic biased to support the East Germans anyway since Hefeker and Wunner argue to put the blame on the West Germans in their thesis. So, as a result of having read this biased article, I put the blame on the West Germans rather than the East. Although it is the East Germans’ fault to an extent for nearing the brink of an economic collapse, based on the “unique situation” as stated in the article, I find them unable to blame because what they did in their circumstance was merely the human thing to do. They did not seem to be the ringleaders in this game of economics; rather, it seemed to have been the West in control.
While the East celebrated in the unification of Germany and dreamt of the future “flourishing landscapes” promised to them by Chancellor Helmut Kohl, the West had the opposite attitude and could have only thought of the East as a bothersome child that they must raise to reach adulthood like their self. As a result, unification was never a primary goal of the West whom were already at a state of both social and economic prosperity, so downfall of East Germany is primarily attributed to the West when they started to exploit the benefits of a unified Germany with little to no expense on their part. The less significant secondary factor that blame may be pinned on would be the political leaders that thought as politicians and not as economists which resulted in the ultimate collapse of unified Germany’s financial state.
The essential thesis of this article is that a series of mistakes made by both political and economic factions led to a decline in the Eastern Germany economy. With the border between the east and west suddenly gone, there was little choice but to immediately unify the two parts of Germany. In doing so, those who were responsible for this unification attempted to have, as the author puts it, a “big bang” effect where all of the free market institutions were thrust upon the East Germans, who had until then been under a completely centralized economy.
Based upon the information presented in the article, I would agree with his arguments for why the East German economy has declined following unification. One of the first mistakes made was the attempt to raise wages of East Germans to levels equal to or above those in the West. While this would work in a strong economy, the author provides data in the form of a chart that shows that the production of East Germany was less than half of that in the West, yet the investments made buy East Germans were more almost double of those in the West. Therefore, the East German economy was essentially being flooded with money that was unsupported by the amount it was producing. Another large mistake was to allow the West German union’s full control of the economic union between the East and West. With this kind of control, those in the West inevitably displayed a level of corruption in their handling of the unification. The main interests of these West German institutions were the preserve the status quo in the West and prevent an overflow of the problems in the East (which occurred anyways). With this control, there was a wage flood into the East that discouraged out-sourcing to cheaper workers so that jobs would remain in the West and also a privatization policy was put in place such that the way enterprises were handed over to private owners allowed for such instability in the property that it was unsafe for those in the West to invest in it. A third mistake that was made during the unification process was to quickly institute the welfare state programs that were already in existence in Western Germany. This quickly sucked a lot of the money out of East Germany and in turn allowed for excessive benefits programs and exceedingly high taxes. In the end, the main reason that many of East Germany’s firms remained open was that billions and billions of D-Mark’s were poured into East Germany from the West in an attempt to make good on the false promise made by the West of making East Germany just as successful as West Germany.
As was stated above and as the article proves, much of the economic crisis that occurred after unification was the result of mistakes in policy made by those who were out of the control of the individual East Germans. One may blame individual East Germans for allowing such policies to ruin their economy, but when one realizes how they would perceive the situation, it is unlikely that they would try to resist something that they thought would bring them good. Initially, East Germans would have seen much higher wages and an initial improvement in living standards as well as increased social benefits, especially in the unemployment sector. It was not until some time after the unification process occurred that the decline in the economy was evident, and this there would be no reason for the individual East German business owner to resist such policies.
This article addresses the reasons behind the hardships of Germany, including their troubled economy and poor attempt to unify both East and West into one. The thesis that is presented is that political policies established in an attempt to unify all of Germany were the cause for economic and social problems.
I agree with this thesis. The evidence that is supplied in this document fully covers the “how” and “ why” on how political decisions could be the reason for Germany’s many problems in the unification process. Individuals don’t control how the economy is set up and how jobs and the workforce is run. The government and their political policies determine and monitor a country’s econimical and financial stance. Individuals can’t be blamed for a broken down economy and high unemployment rates. Chancellor Kohl’s rapid set-up of a market economy was the start of East Germany’s many economic problems. Other political policies that were intended to contirbute to the unification of Germany; but backfired included the tax burden in West Germany, the increase of social security contributions, and the public debt that resulted from the transfer of goods to East Germany. Had these political policies not been established to begin with, the economic crisis wouldn’t be so catastrophic to all of Germany. Also, along with the authors of this article, I agree that the attempt for a common currency and wage policy was a major factor that contirbuted to the failing economy.
I don’t think that the individuals of East Germany should receive all the blame for the destruction of the economy, but more of the government should take the blame. For example, it was Chancellor Kohl who made the rapid transition from a socialist rule to the market economy. Although it was a success and secured the Chancellor’s spot for re-election, it was all too fast for a still developing country. Also, in one of his promises, which entailed “flourishing landscapes” and living standards comparable to West Germany, Kohl is the one telling the people of his promise and of how it will be of no cost to West Germany. It was not the individuals putting forth the plans and setting out to accomplish them, which ultimately in the end turned out to be a harsh reality; but more of the individuals who made up the government.
The government of not only East Germany, but also West Germany should have the blame. Both governments established political policies that were intended to help unify and improve Germany and its’ economy, but resulted in a disaster. I believe the evidence clearly points to the government of East Germany because like any other country, they are the main form of power and control. They are the ones who make policies and plan them out. The mistake that the government made in all of this was that the unification process was not planned out with the help of economists. Unlike economists, politicians did not have a good handle on what they were doing, how to go about doing it, and the effects their policies would have in the future. When it comes to preserving a country and maintaining a successful economy, it is not merely up to the individuals, but is the responsibility of a government to ensure that a country is run smoothly.
In the article Promises Made, Promises Broken: A Political Economic Perspective on German Unification, Hefeker and Wunner argue that the weakness of the East German economy after the fall of the Berlin Wall was because of a series of poor policy mistakes made with the idea of benefiting West Germany in mind. I agree with this thesis. Rather than concentrating on benefiting East Germany, many of the politicians concentrated mainly on assimilating Eastern Germany into Western Germany’s status quo while not burdening West Germany in order to gain popularity. Another reason for the weakness seen in East Germany is the conversion of wage levels at a 1:1 rate. This huge jump in wages for the East Germans greatly outstripped the productivity levels, and as a result unemployment rose, lowering the standard of living.
In addition to this, I believe that West Germany pushed too hard for the unification of the two Germanys. In pushing for Eastern Germany to modernize and catch up to Western Germany, Western Germany bombarded Eastern Germany with factories and the new ‘Western’ way of life. In doing this, the already existing factories in Eastern Germany were forced to compete with the powerful and established factories of Western Germany. In order to remedy this, the government decided to change and raise the conversion rate, to 2:1. This only worsened the economic situation of Eastern Germany, inflating the East German economy up to 400%. This would of course, create serious problems for East Germany.
As it can be seen, the individuals of Eastern Germany cannot be blamed for the failure (but at the same time, success?) of the merging of Eastern and Western Germany. It is because of the politicians of Western Germany’s preoccupation with making themselves look good in the eyes of their fellow West German citizens. By focusing on attempting to unite the two Germanys without any repercussions for Western Germany, many bad political choices were made. The problem of inflation in the Eastern German economy because of the conversion rates made it useless, and only served to make the lives of the Eastern German people harder. Much of the blame belongs on the shoulders of the politicians of Western Germany.
At the fall of the Berlin wall, the chancellor of Germany assured the people the unification of East and West Germany would be quick and efficient. However, he was wrong, for East Germany was not able to fully recover and did not achieve the “flourishing landscape” that he had hoped. The thesis of this article states the reason that East Germany’s economy was not as successful as West Germany’s after the wall fell due to the unions and labor organizations formed in West Germany causing a lack of jobs in the East, and also policies of politicians in the West that were unfavorable to the East. The article leads me to believe that these politicians in the West were to blame for Germany not reaching the chancellor’s goal. They focused too much on benefiting the West in order to gain support, and made a series of poorly made political decisions. It was not just one bad decision by these politicians, but many that lead East Germany to what it is today, for example a bad conversion rate of new currency in a country who was already in huge debt, facing international financial struggles. Overall, it was indeed the West that is to blame as they were the political majority.
The thesis of this article is that, contrary to the hopes of the early 90's, East Germany never really achieved a flourishing, stable economy. The authors suggest various reasons for this economic shortfall, namely citing German political policies following the unification, and the failure of these policies to fully comprehend the enormous implications of reuniting a state that had been socialist and economically unstable for almost 50 years with its thriving, capitalistic counterpart. On the surface, it appeared that West Germany, the more advanced and stable of the two states, would have gained less from unification than East Germany. Therefore, in an effort to appease West German citizens, the government often made policy decisions that benefited the West, when it was East Germany that truly needed the government assistance. In effect, East Germany was being bombarded by West German economic policies (i.e. full-fledged capitalism), and without the necessary help to integrate these ideas, the East German economy had a difficult time absorbing capitalism in order to truly flourish.
I think that this is a very logically, clear thesis that the authors did a good job supporting. Although I do think that the East German economy has been significantly better off since the integration of capitalism, it is clear that the fantastic hopes of economic perfection held by some Germans early on have never panned out as expected. I think the idea that the East German economy was not in a condition to simply absorb western capitalism is a very logical conclusion. Although I came away from the article a little unclear about exactly what the government could have done better to ease this transition, I agree that government policies can be held responsible for some of the disparity between East German hopes and economic reality. I do not think that any blame should be put on the shoulders of individual East Germans. Any part that they might have had in hindering economic unification would merely have been a result of spending half a lifetime accustomed to socialist/communist ideals, and once again the burden should have fallen on the government to help educate the population and integrate new ideas. However, I think that the vast majority of the economic problems the region has experienced can be blamed on neither the citizens nor the government, but on the simple fact that the reunification of such vastly different states could not possibly have been accomplished without some economic backlash.
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