East Germany, circa 1985

Chris Bertram writes in the comments of MR:

As it happens I spent some time in East Germany in 1984.  As I
recall, it was then claimed that the per capita GDP was comparable to
that of the UK.  It was immediately obvious to me that the standard of
living for most people was far far lower.  But real problem with East
Germany was not its comparative level of economic development or the
level of health care its citizens could receive (rather good,
actually).  It was the fact that it was a police state where people were
denied the basic liberties.

Given them those liberties and I think you’ve achieved most of
what’s morally important.  If they then choose a policy of more leisure
and lower growth or the opposite … that’s up to them.  I don’t think
it matters, morally speaking, that they are poorer than Americans are.

I am genuinely puzzled by this.  I visited East Berlin — supposedly the showcase of the country – in 1985.  Let me try to sound as superficial as possible, in light of the extreme poverty in Africa.

The food was terrible.  The cars were a joke, if you even had one.  There were hardly shops to be found.  I had to spend 40 or so "Ostmarks" and literally could not find a single thing I wanted.  I bought a Stendahl book and left the rest of the money on a bench.  Few people had the means to travel, even if politics had permitted it.  I am skeptical about the health care though I will admit I am not informed.  Had the relatively productive people been free to leave, this all would have been much worse.  It should also be noted that the country was neither donating much to Africa, nor taking in many immigrants, and again that is not just because of the politics. 

Chris and I have a very different notion of what is morally important.  I don’t wish to force anyone to be richer than East Berlin circa 1985, but if you give them liberty, almost everyone will try to exceed that level, and not just by a little bit.

Comments

This whole discussion is interesting in light of the contemportary Right (in the U.S. anyway) and their advocacy for scaling back welfare statist policies on the grounds that the "poor", already have plenty to sustain themselves, possess luxury items like electric stoves, refrigerators, microwaves, televisions & even video game consoles at a rate similiar to their middle class counterparts, and far from having not enough to eat, are more likely to suffer from obesity than starvation.

Though I admittedly don't have data available; using the Daniel Davies test of whether we have achieved significant enough growth, the poor in the U.S. (who are predominantly African-American) don't appear to suffer disparaties of height or growth with their white counterparts.

So would the argument then be from the "stablized state" ists that poor blacks in America (who admittedly are wealthy by global standards) habe achieved sufficient wealth & economic growth?

Tyler, I stand by my comment. We agree that the standard of living was rather poor. But so much of the economic potential of the country had been directed into military production for decades, at the expense of consumers. If it hadn't been a police state, this wouldn't have been the case.

Try the following thought experiment. There must be some year in which the GDP per capita of the US reached the level that the DDR was at in the mid 1980s. I'm willing to bet that you will concede that it was possible for a typical American to lead a decent life in that year (whenever it was) and that in that year US citizens typically enjoyed a much higher standard of living than DDR citizens did in the mid 1980s.

I visited East Berlin in January 1990 and found the situation similar to
that described by Tyler. I remember going into a department store and not
seeing a single thing worth buying. The food, while ridiculously cheap, was
quite bad. The sense of being in a false economy was only heightened by the
money itself, whose coins felt more like plastic than metal. And let us not
forget that East Berlin was the country's showcase! I can only imagine what
things were like in some of the more rural parts of the country.

This has nothing to do with the fact that East Germany was a police state
and everything to do with how its economy was organized -- basically goods
were produced at the behest of central planners than what people actually
wanted or needed.

Professor Bertram's position is that the poverty of the East Germans he encountered .....was not "a real problem." Easy for him to say.

Why do so many kindly and thoughtful people on the left so cavalierly dismiss the economic needs and desires of those who live in distant lands? Many of my friends at the Unitarian Church suspect that the concern of "free-market types" for said poverty abroad is just a cover story for people who really want to de-unionize America and dismantle poverty programs here. And their fears are not totally unwarranted.

Nonetheless, they are left in the horrid position of arguing that localized differences in wealth are more important than global ones.... which, if you have lived a simple lifestyle in both first and third world locales is just laughable.

The difference between my beat up old truck and my neighbor's new Mercedes.... pales in comparison to the difference between either of us and someone who has no bike, no water buffalo and not enough food for both of their kids.

Sam Walton's model is liberating millions of Chinese and Vietnamese and East Germans from poverty every year....and yet my most liberal neighbors have signs in their yards that say LittletonAgainsWalmart. Go figure.

Hmm, let's see. I write:

"But the real problem with East Germany was not its comparative level of economic development or the level of health care its citizens could receive (rather good, actually)."

and David Meleney reads:

"Professor Bertram's position is that the poverty of the East Germans he encountered .....was not 'a real problem.'"

Remedial reading class needed?

Commenter Colin remarks:

"This has nothing to do with the fact that East Germany was a police state
and everything to do with how its economy was organized ...."

Maybe the fact that East Germany was a police state has some connection to how its economy was organized?

Maybe the fact that East Germany was a police state has some connection to how its economy was organized?

You have the order of the sentence reversed. It should read:

Maybe how East Germany's economy was organised has some connection to the fact that East Germany was a police state.

It's possible to have capitalism and a police state - Singapore, America in 25 years - but it's not possible to have communism and not have a police state.

- Josh

Chris wrote:

"But so much of the economic potential of the country had been directed into military production for decades, at the expense of consumers. If it hadn't been a police state, this wouldn't have been the case."

It wouldn't have mattered if everything would have been directed to
consumers -- because of the way the economy was organized no one knew how
to produce things consumers wanted.

Professor Bertram chastises me thusly:

"Hmm, let's see. I write:

"But the real problem with East Germany was not its comparative level of economic development or the level of health care its citizens could receive (rather good, actually)."

and David Meleney reads:

"Professor Bertram's position is that the poverty of the East Germans he encountered .....was not 'a real problem.'"

Remedial reading class needed?"

Having lived for short periods with poor people in the 2nd and 3rd worlds, I am awaiting an explanation of the difference between what Professor Bertram said and my paraphrase of his statement. Would you have been happy if I quoted "the real problem" rather than the inaccurate "a real problem"?

Awaiting remediation,
Dave Meleney

David Meleney. Your elementary comprehension failure has two parts: (1) To say that X is not “the problem† with respect to some question does not imply a denial that X is , unrestrictedly, “a problem†; (2) my comment concerned the level of economic development of the country and your reading of it concerned the poverty of its citizens. It is perfectly possible for one country to have a higher level of economic development than another country whilst its citizens are in greater poverty, because, e.g. of the diversion of productive resources to goals other than consumption.

Chris, the figure that you cite was the result of a) poor information and b) differing exchange rates used by the Soviet bloc analysts (they used an adjusted ppp measure, while the West German analysts used floating exchange rates) and c) a soaring dollar compared to the deutschmark. It was a bureaucratic snafu--not the considered opinion of the CIA that East Germany's GDP was higher than that of West Germany, although it has been erroneously so cited by journalists.

There was indeed a dramatic collapse in GDP in Eastern Germany, thanks to the shuttering of loss-making firms, as well as the slightly lunatic decision to peg Eastern German wages at Western levels. However, my understanding is that it was a decline from that 1/3rd . . . the Library of COngress COuntry Studies pegs East German 1991 output as low as 8% of West German output.

I want to thank Mr. Bertram for reminding me that animals who walk on all fours can still live satisfactory lives. Since I am too old to cease being a bi-ped, I commend his four-legged economic vision to the intrepid young who are looking for a beastly rewarding existence and a break from modern life. I have heard there are caravansaries around Humboldt California who embrace this vision. But I am not sure.

Chris Bertram and Jane Galt,

The Hoover numbers are after the fact estimates
of 1985 realities, using data not known in 1985.
It does not reflect the collapse.

The CIA never said DDR was higher than BDR,
but as of 1989 they were supposedly just about
equal in real per capita income.

The problem ex post was what Tyler and Chris both
saw, lousy quality. That is what lay behind the
sudden downgrading to 1/3 of real per capita income
once the Wall fell and the DDR economy was opened up
to the outside world. Nobody wanted those Trabants.
This was a much greater fall than the short, but
sharp, macro collapse in 1990.

This was a broader problem. The CIA was underestimating
real GDP for the whole Soviet bloc, not just the DDR,
which was pretty much at the top of that bloc. There
was much huffing and puffing after the fact about
the CIA overestimating Soviet GDP. Warren Nutter and
some others at U.Va. criticized the CIA's estimates,
but most believed them, and they were ideologically
convenient for those who wanted bigger defense budgets
to fight the scary USSR war machine.

Ironically, among those who believed the CIA numbers
were the Soviet central planners themselves. This is
the ultimate in Hayekian information problems: the
GOSPLAN's access to data within its own ministries
and society was so bad that it ended up using numbers
stolen from foreign intelligence agencies. The CIA
was not just fooling US policmakers, but the Soviets
themselves.

Professor Bertram:

I agree 100% with your points that lower, and even much lower GDP can be quite tolerable, and I have lived happily in Thailand and China quite simply. I wish more Americans (Brits too) recognized what you are saying here.

But I ask you to consider those folk you remember from your travels in East Germany†¦. to the extent they seemed less joyful was it partly because their lack of economic freedoms made them less the “author or their own life†?

And when you consider the amazing range of opportunities open to your children and mine†¦.would you for a second want our children to be stuck in an East German economy, even if they had the full range of civil liberties?

Dave

I would like to ask Professor Bertram if he personally lives at a higher or lower GDP/person than that of East Germany in 1985. If his GDP/person is higher, why is that the case? Why doesn't he take his own advice and live at a lower income level? Would he advise others to lower their incomes? Would he advise others to aspire to raise theirs?

Sadly for someone trying to be as clever as "Rue des Quatre Vents" is trying to be, the work in question was Rousseau's Discourse on Inequality and not the Social Contract.

"Given them those liberties and I think you've achieved most of what's morally important. If they then choose a policy of more leisure and lower growth or the opposite ... that's up to them. I don't think it matters, morally speaking, that they are poorer than Americans are."

"I find it very possible to imagine people living decent lives with free institutions at very much lower levels of per capita GDP than United States in 2006."

I agree with these statements by Chris. I am dense enough apparently to not understand the controversy here. freedom of opportunity is morally owed to everyone and there are a lot of happy people that are poorer than the average american. how is this controversial?

I (and many others writing here) chose a job in academics that was not my highest paying opportunity (in my case that would have been a Fed branch) in order to pursue what I felt would be a happier life.

There is very little doubt that the DDR sucked the biggest of all possible rocks in many many dimensions but wasn't the #1 problem there the lack of liberty?

Kevin

by the way, the term "third world" is pretty politically incorrect and insulting.

Doesn't the argument from consumer goods also mean that it would be preferable to abandon freedom for any system that delivers more consumer goods?

I lived in the People's Republic of Hungary for two years from 1987 to 1989, and pretty close to everything Tyler observed in East Germany was true in Budapest as well. But Chris Bertram's point was, I thought, well made. Ther people in the Hungarian countryside were, on the whole, poorer than the people in the city, but if I had been given a choice, I would gladly have lived in Dunaujvaros, a small town of mainly dirt roads about 50 miles south of Budapest, rather than on the banks of the Danube, where I actually was living. The only way to describe the difference is to say that there was a spiritual death about the biggest cities, a sort of resignation to not being able to make any important decisions, that existed in the city but much, much less in the country, where the land still had some rhythmic impact on people, where traditions were more important, where there was much less likelihood that some petty bureaucrat would get in your way.

Five years ago, when I returned, the city was only marginally richer - and the countryside barely richer at all - but the malaise had gone from there as well.

The key is the ability to CHOOSE into what one would like to direct one's efforts. One need not accumulate things to be successful. But one does need to be able to choose as widely as possible. Therein lies, to my mind, the greatest of communism's many failures.

I agree 100% with your points that lower, and even much lower GDP can be quite tolerable, and I have lived happily in Thailand and China quite simply.

I wonder. I understand that China has severe environmental problems, and that East Germany had severe environmental problems. And that there are roughly two ways to reduce environmental problems - reduce consumption (ie the Chinese and the East Germans would be even materially poorer than they are now/were then), or produce more efficiently using cleaner technologies, which results in, if the stats department is doing their job correctly, growth in GDP. (GDP should be something like, simplifying madly, "what we produced minus what it cost to produce it" if a country is producing the same amount at less cost then their GDP should go up).

Also, what's the quality of life like for disabled people in China, and what was it like for them in East Germany? Were they living decent full lives? How about respite care for carers? How about programmes to protect against sexual abuse? How about rehabilitation programmes and training programmes for people in prison? From my experience in NZ, even people who talk about one can live a perfectly decent life on much less income often favour lots of government programmes aimed at improving people's quality of life, which require material resources (eg making buildings wheelchair accessible). And there seems to be no end to such programmes. So in effect they are favouring more and more production.

The summer of '82 I toured Europe and went behind the Iron Curtain.

Hungary was a much livlier and colorful place than Czechloslovakia, it seems they were better able to (or had the extra 13 years) to adapt to the tanks rolling in. Prague was grim.

I spent 7/4 in Prague, trust me, we appreciated what we were missing back home.

--

Oh, criminey, the PC police don't like 3rd world????? People of a certain generation understand what it means.

---
-- If they then choose a policy of more leisure and lower growth or the opposite ... that's up to them. I don't think it matters, morally speaking, that they are poorer than Americans are.--

It matters to them, otherwise they wouldn't be so pissy to us - from a political standpoint.

Yugoslavia was going thru a coffee shortage and at the border, a 2-seat convertible was being searched, they found bags of coffee stuffed in the cavity where the hood rests when down. We were not allowed to take pictures, nor crossing any border. But I do have 2 shots of anti-American propaganda, 1 painted on the side of what I think was an apartment building.

Looking out at East Berlin from The Wall, one of my first impressions was it was very quiet and dirty.

As to living standards, don't forget, jeans - especially American jeans -- was a form of currency.

As to living on a lower GDP - if it's all you've ever known and don't know really anything else about the world, you think everyone lives like you. (Like the People Paradise of NorK - do you think most know how the SorKs, much less the rest of the world, lives?
--

Now, Russia c. 1998, you try living in a city of 1 million people which just had the hot water turned off for everyone for 1-2 weeks while they work on the pipes getting ready for winter. If you couldn't afford a speed heater, it was brisk.

It is worth noting that there were considerable differences
in both economic and political policies and atmospheres
across the old Communist world, despite all of them fundamentally
being one-party states without democracy. The comments above
about Hungary are notable, and after it abandoned central
planning and went to a form of (ulimately unsustainable) market
socialism, there were few lines in Hungary. There was political
repression, but people were no longer in concentration camps
or executed in mass numbers. There is a huge difference between
the USSR under Stalin or North Korea today, and Hungary of the
1970s and 1980s.

Regarding East Germany, it tended to be in the harder line and
more repressive camp of the Soviet bloc countries. The Stasi
were not nice. People did get shot trying to cross the Wall.
OTOH, East Germany had some real peculiarities
about their economy, most of which had little effect on the
populace, such as that the rail system remained owned by western
companies and that the DDR could export to the EEC through the
BDR, both of these reflecting an official desire to reunify
eventually.

Part of the decline in the DDR after the fall of the Wall was
that it had been the supplier of much high tech industry for the
CMEA countries, think Zeiss Optikal. Most of this took a huge
hit after those countries could buy from Japan and so forth.

I am actually doing a research project for an exam regarding the living conditions in eastern Germany before the wall fell. I just wanted to thank those who have contributed valuable information about their experiences there.

Kevin,

It's a little off topic, but I was offended by your comment about political correctness referencing to third world countries. That statement is the perfect stereotype of over exaggerating political correctness. It's like taking red and green napkins out of public schools during Christmas. What else would should we refer to third world countries as? Poor? Isn't that more offensive?
Assuming most of you are United States citizens, we should come to realize we have been driven into fear by political correctness. We are afraid of offending anyone, and it is unfortunately being held to such stringent detail, that if something even slightly offensive does happen it is blown way out of proportion. Many times it is by accident and individuals innocent of a true crime are punished. Our recent past has shown us that political correctness is also becoming a violation of our freedoms.
If you take any of my words into consideration, remember that political correctness is becoming more of a highly opinionated backlash. It's purpose is to counter what people think might be offending a given group of people, rather then to actually prevent offensive attacks on a given group. The keyword is think which infers it is their opinion and because of that overreaction is all to prevalent.

Um i am a college student who has to write a paper on the GDP difference of east and west germany and the quality of life. do you know where i can find any useful info at??

I'm a bit concerned by the willingness of MR posters to trade economic liberty for political liberty

Economic liberty and political liberty is one and the same. Liberal Democracy is simply not possible without a large relatively prosperous middle class. Democracy of any sort can't exist when means of production used in democratic exchange (printing presses, radio equipment) is controlled by the ruling party of the state.

Can anyone show me a country that has low economic liberty, but high political liberty? Anyone?

Everything is very open and very clear explanation of issues. was truly information. Your website is very useful. Thanks for sharing.

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