Tyler Cowen argues that "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." Maybe so. But the Nazi's did manage to boost real standards of living. They just used an armed Ponzi scheme rather than fiscal policy. This is a point made well Gotz Al's book Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State
. Aly argues that Hitler's war amounted to "a state-sponsored campaign of grand larceny," channeling the resources of murdered Jews and conquered lands into the German welfare state. Under the final prewar budget of Germany, the Jewish emigration tax and other anti-Jewish measures accounted for more than 9 percent of the country's total revenues. The Nazis liquidated Jewish properties and possessions, which were classified by the state as "abandoned assets" and became "property of the general government." And beyond assets such as businesses and homes, stolen goods of all kinds were redirected back to the German marketplace, creating a surplus of high-demand consumer items that stabilized prices during an economically uncertain moment of the war. The state, moreover, sold the confiscated possessions at bargain prices, creating a direct benefit for vast swaths of the German populace. Cowen notes that wage income fell during the war, but Aly's implication is that the purchasing power of the median german family went up -- and this was even truer given that so many men were at war, and so families were so much smaller.Conquered countries were forced to pay a yearly "contribution for military protection," as well as monthly bills for the services of the soldiers who were so kindly guarding their lands. Here, too, the scale of the thievery proved astonishing. One Reichsbank study estimated that the first year of occupation cost Holland 180 percent of its normal state revenues, Belgium 200 percent, France 211 percent, and Norway 242 percent. When this extortion proved insufficient, and fears of inflation emerged, the Germans began liquidating the assets of Jews in the occupied countries as well. Aly concludes:After every military victory, no matter how quick and relatively painless for German forces, the same problems with finances and food supplies kept cropping up ... [this] meant that the Nazi leaders had to push ahead with further military expansionism. Any hesitancy would have led to the end of the regime.
Put in more contemporary terms, Germany was dependent on there always being another sucker to invade, and when that proved unsustainable, they were left in bad shape indeed.
