This piece on the growing recognition of the need for Thatcherite reforms in Germany, prompted one of our correspondents, John Perry, to ask if the BBC or Labour MP Gisela Stuart knew their German history. The story says:
“Ms Stuart suggested that the liberal economic policies pursued in the 1960s by chancellor Ludwig Erhard might be one solution”
As our correspondent observes, Erhard’s reforms did indeed trigger the “German economic miracle”.
IN 1948.
This from The Freeman, journal of the Advocates for Self-Government:
Erhard plowed ahead. He knew his history: more than 2,000 years of price and wage controls have always resulted in economic chaos. Not only do price and wage controls destroy incentives, Erhard pointed out, but they almost always transfer wealth from hard-working, patriotic citizens into the hands of cynics, bureaucrats, and those favored by the government […] Taking the country by surprise, Erhard went on the air on a Sunday night in June 1948 […] most of Germany’s wage and price controls would be dropped. First, controls would end on a wide range of consumer goods. Within six months, controls on food would be dropped. […] Almost immediately, the German economy sprang to life. The unemployed went back to work, food reappeared on store shelves, and the legendary productivity of the German people was unleashed. Within two years, industrial
output trebled. By the early 1960s, Germany was the third greatest economic power in the world.
Since the 1960s, Germany has turned away from Erhard’s free market policies. Many German young people missed the significance of Erhard’s reforms […] After achieving wealth and leisure time by pursuing free market policies, a new generation of social engineers has devised schemes to divide the wealth, disregarding how that wealth was created. Intellectuals provided moral support for the move toward socialism, even though the very leisure they used to undermine capitalism was itself the result of capitalism. The process is still going on.
Mr Perry writes:
Is it beyond the ability of the BBC to get its facts right? The entire thrust of German policy since the 60s has been towards a corporate state. Far from introducing “liberal” policies, the German state has been destroying the engine of wealth creation, piece by piece, for over 40 years.
I must add something on my own account. I initially misunderstood this story because I thought the BBC were using “liberal” in the way they usually use it, i.e. socialist. I was wrong. They were, for once, using it to mean what it meant for generations before the word was stolen by those who wanted to co-opt its positive connotations for policies that were the very opposite of what classical liberals advocated. Let us hope that this is the start of a great BBC campaign to restore the word to its original meaning. – NS
UPDATE: Having checked that there was no objection I have now updated this post to include our correspondent’s name. Please note that our general policy is go by the way you sign yourself in the body of the email. We will err on the side of caution with unsigned emails – even if the “Details” field does indicate the name.