How did Nazi fiscal policy work?

Please do not think I am trying to call anyone, or any advocate of active fiscal policy, a Nazi.  The point is that Nazi fiscal policy did drive a recovery in measured gdp, so it is worth knowing how and why.  Robert J. Gordon has some answers (NBER; I don’t see an ungated copy):

Tooze confirms previous findings that relatively little of the
expansion in public expenditures took the form of public works like the
autobahns, while over 80 percent consisted of spending for rearmament.
Abelshauser (1998, p. 169) calls this “military Keynesianism on a large
scale.”

Furthermore real wages were falling not rising:

The previous literature has emphasized the Nazi policy of holding down real wages as a contribution to the rapid expansion of employment, the opposite of the perverse wage†increasing policies of Roosevelt’s NRA. Indeed, Barkai shows that the share of German wage income in national product declined from 64 to 59 percent between 1932 and 1936, while the increase in profits was “quite spectacular” (p. 196). Likewise, Abelshauser (p. 148) reports that the income share of the bottom half of the income distribution fell from 25 to 18 percent between 1928 and 1936.

In other words, Nazi fiscal policy boosted measured gdp rather than driving a recovery with higher real standards of living.  Even putting the brutality of the Nazi regime aside, this should not count as an example of successful fiscal policy.  I’ll look at some other historical examples soon but — at the risk of sounding like a broken record — I wish to stress my conclusion that the evidence in favor of government spending as effective fiscal policy is weak.

Addendum: On fiscal policy more generally, Mark Thoma has many comments.

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