World economies (part 2) - Selected European economies
European economies - introduction
Europe is a continent with an incredibly colorful history. It is a region of contrasts and similarities - also in economic terms. This is where capitalism was born, taking the place of feudalism. Thus, the Old Continent - as before in history many times - imposed the direction of development on the world. Today, it has already lost its primacy in this field, as new concepts are born more often in other parts of the globe. Nevertheless, Europe cannot take away the merits related to the integration idea. The European Union - among many other, equally important goals - strives to level out economic differences within itself. This approach, on the one hand, results from social democratic ideals (representatives of this trend have always had a huge impact on the EU), and on the other hand, from the awareness that not only a united, but also evenly prosperous continent is a guarantee of peace. In addition, there was a need to compete with an extremely strong entity, which is undoubtedly the United States. No single country can match America's GDP in isolation, but when all Member States are combined, the difference becomes minimal.
Looking down on the Old Continent, it is worth considering why such great differences in the economic development of individual countries came from. On the one hand, we have rich Germany, Great Britain and France, and on the other, the poverty of Macedonia, Moldova and Albania. The list also includes seemingly wealthy countries - such as Spain, Italy and Greece - whose fragile foundations and nightmarish shortcomings in management were revealed with the outbreak of the global crisis. Somewhere in the middle there are countries - nomen omen - of Central Europe, such as Poland, the Czech Republic and Hungary, which cannot be included in the group of the poor, but are not yet included in the classification of the richest entities.
European economies - Poland
The delay of the latter group, through which it has to chase the rest of the world, is mainly due to historical factors. In the case of Poland, it can be said that backwardness has its source in the 17th and 18th centuries, when the nobility had the greatest impact on the functioning of the state. Selfishness, adventurism and the lack of attention to the general interest ultimately led to the partitions of 1772, 1793 and 1795. When capitalism was developing in Western countries, and the rule was ruled by absolute rulers or wisely controlled by parliament kings, nobility in the vast territorially Polish-Lithuanian Commonwealth she made her own farm out of the state, while maintaining a comfortable feudal system, focused on the maximum exploitation of peasants. To see how harmful this phenomenon was, it is enough to recall the history of the Cossack rebellions. These proud people wanted to fight alongside Poles, not to do serfdom for the benefit of local magnates. In the end, this powerful and magnificent Commonwealth fell prey to three neighboring powers - it is worth knowing that none of the aggressors had a ruler as politically weak as the Polish kings at that time. Stanisław Poniatowski may have been a great patron of the arts and contributed to the cultural development of the country, but he was a hopeless monarch.
Another economic catastrophe that befell Poland was World War II. After regaining independence in 1918, the authorities of the reborn state faced an extremely difficult task - to merge the areas of the former three partitions. It can be said that this has been achieved, but one cannot idealize those times. Contemporary countrymen developed a strange tendency to glorify everything related to the Second Polish Republic. It seems that, on the one hand, it is nostalgia, on the other, ignorance, and on the third - a by-product of communist propaganda, which tried her best to disgust Poles during the pre-war period. It is worth knowing that the Second Polish Republic was a very poor country, socially stratified and with a high level of illiteracy.
The political system was also - euphemistically speaking - not the best. Until 1926, Poland was destabilized by the so-called parliamentocracy. The violent conflicts between the groups prevented a well-targeted government. In addition, the head was raised by the demon of nationalism in the form of the National Democracy and paramilitary militants such as the ONR. The Second Republic was disgraced with the murder of the first president in the history of the country, Gabriel Narutowicz. He had to die at the hands of a nationalist fanatic, because he was elected by the votes of national minorities (in the Second Polish Republic they constituted about of the population). The bench ghettos and the numerus clausus rules for Jewish students were also a disgrace. After the May coup in 1926, Poland transformed into an authoritarian state, ruled by the clique of Marshal Piłsudski. After his death in 1935, the country fell into an increasing decline, one of the causes of the September defeat four years later.
The war completely devastated Poland, and post-war geopolitical systems stripped it of huge tracts of land. In addition, the country fell into the zone of Soviet influence, which strongly influenced the economic backwardness. Naturally, there were also advantages of communist rule - electrification, industrialization, elimination of illiteracy, land reform - but the statistics mercilessly show that the economic balance turned out to be grossly negative. Again, Poland must chase the West - in view of the slowdown in developed countries in recent years, this task is becoming easier and easier. Our country, apart from economic strength, still lacks the right mentality. It is not without reason that we have the highest percentage of the so-called junk contracts.
There is a lack of understanding of the concept of citizenship and the common good, there is anesthesia and nightmarish selfishness. Taxes are seen as intrusive obstacles, not as a tool of social policy (equalizing inequalities, helping the excluded) and a necessary contribution to a common budget that finances things beneficial for everyone. Observing the disgusting reports about "tax optimization", that is, to put it bluntly, the transfer of fiscal obligations of Polish companies to Cyprus and Saudi Arabia, you can ask yourself: will the Cypriot fire brigade come to help when a fire breaks out in a shop / factory of such a company? Will the Saudi police intervene in the event of theft or assault? Polish business still has a lot to learn before it can reach Western standards.
European economies - Germany
Historical outline - past centuries
It can be said that the driving force of the German economy from the Middle Ages upwards were cities ruled by the guilds of wealthy merchants. The pattern of urban placement has penetrated into other countries, including Poland, which proves its success. The wealth of German cities was largely due to the existence of the Hanseatic League, i.e. a trade union linking, among others, Lubeka, Szczecin, Kraków, Gdańsk, Toruń, Dortmund, Cologne and Riga. Religion, and more specifically Protestantism, which promotes the ethos of hard work, also has merit in the economic boom.
The discovery of large coal deposits (including the Saar basin), wise politics and favorable tariffs resulting from the existence of the Customs Union made Germany quickly catch up with the leaders of the most industrialized countries. Agriculture also experienced a renaissance - Germany achieved the position of the largest food producer in 1914, on the eve of the Great War. In the second half of the nineteenth century, the country struggled with the outflow of labor to the United States, which was tempted by high wages and the American myth "From rags to riches to millionaire". What was supposed to persuade people
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Online advice for businessesto stay in Germany was the concept of the welfare state developed by Bismarck. The US at that time did not guarantee any solutions of this type. And the iron chancellor introduced social and pension insurance, a complete novelty.
Consequences of World War II
Hitler's party, the NSDAP, had the word "socialist" in its name, and for this reason many people - even the educated ones - fall into a meaning trap, placing the Nazis on the left side of the political scene. This is a big mistake. It is true that the economic policy of the Nazis contained many solutions classified as left-wing (public works, high state spending, nationalization), but Nazism can by no means be called socialism. At the heart of the latter is freedom and equality for everyone, regardless of class or background. Hitler, on the other hand, subordinated everything to a mystical nation, each element of the system was to contribute to the development of the master race. Both the good of an individual and the economy had to be subordinated to the will of the leader, which was an alleged reflection of the will of the nation. This is socialism in completely arbitrary, author's understanding of Hitler, with the concepts of Karl Marx (whose teachings the Führer rejected) which have little in common. It's as if we consider North Korea a democratic country just because it has “democratic” in its name.
After Hitler's fall, the country was totally devastated. Allied carpet raids devastated the largest cities and strained industrial powers. The Soviet invasion from the east left a burnt earth behind. The blow for Germany also came from the commander himself, who - by striving for theatrical gestures straight from Wagner's operas - gave the order to destroy what the Allies had not yet managed to destroy. Fortunately, this one of the last decrees of the losing Fuhrer was not consistently followed - many sober-minded military and civil commanders openly disregarded it.
Germany lost not only the lands it had conquered before and during the war, but also the territories that had been within the state's borders for centuries. Szczecin, Wrocław, Legnica, Zielona Góra and many other smaller towns and villages Germania lost as a result of the Yalta and Potsdam Agreements. Prussia with its capital in Königsberg, which was annexed to the Soviet Union and still forms an exclave known as the Kaliningrad District, was also lost. The truncated Germany was divided into spheres of influence - Soviet in the east and English, American and French (a curiosity indeed!) In the west. What was left of German industry was systematically dismantled and exported to the victorious countries, and painful restrictions were imposed on production.
Thus, the image of a demolished and humiliated state emerges from the above information. How did it happen that Germany experienced an economic miracle after World War II and is today a global economic power, ranking fourth in the world in terms of GDP?
The Marshall Plan
Hitler's rise to power was caused primarily by the outbreak of resentment in the Weimar Republic, which arose as a result of the great war reparations imposed on Germany and the Great Depression, which had a particularly strong impact on the well-being of citizens. As you know, widespread poverty fuels radical moods and raises to a pedestal those who propose miracle cures for the present situation. This was not understood by the leaders of the winning coalition who humiliated the defeated Germans in Versailles in 1919. They also did not see the fact that a global economy is developing in front of their eyes, in which the economic systems of individual countries are strongly interconnected. It was a natural instinct to demand revenge against the ringleaders of the Great War - a very short-sighted decision in the long run. In the last years of another world conflict, when the defeat of the Axis was a doomed, the opinion again began to appear among Allied decision-makers that Germany must be suppressed and deprived of the possibility of reconstruction forever. Henry Morgenthau, the US Treasury Secretary, even presented the concept of transforming the former Third Reich into an agricultural country. His plan also included the partition of Germany by its neighbors and
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Online advice for businessesdividing the remainder into two countries. This idea fully corresponded to the mood of the time, focused on revenge on such a beastly nation. Despite this, it was rejected by President Roosevelt - eventually Germany was divided into four spheres of influence, which over time turned into two hostile states.
The Americans - and in particular General George Marshall, first the secretary of state, then the treasury - noted that an economically strong Europe that would not succumb to Moscow's influence could only be created with the participation of a reborn Germany. They also saw the necessity of unification actions in the area of the Old Continent, which could remove the specter of future armed conflicts. Such was the conclusion of a report by former US President Herbert Hoover, who was Truman's special envoy in post-war Germany. Therefore, a few years after the war, the European Reconstruction Plan (the so-called Marshall Plan) began to be implemented, i.e. rich economic aid for the ruined countries of the region. The largest beneficiaries of the support were Great Britain and France. Nearly $ 1.5 billion (about $ 9 billion at the current rate) went to Germany.
There is no shortage of controversy in the literature related to the influence of the Marshall Plan on the dynamic development of Germany at the turn of the 1940s and 1950s. economic policy pushed the country forward. Other skeptical researchers say the injection of American cash and credit was just one spark that spurred this defeated nation to develop. Uncritical apologists for the free market even point to the alleged harmfulness of the Marshall Plan, which was based on central planning and external subsidies. It is therefore difficult to clearly define the extent to which the US aid contributed to the post-war economic boom in Germany. In my opinion, the amount of money that flows into Germany is irrelevant (less than the reparations paid by this state) - the moral significance of such support is more important. Here is a murderous country not demolished, depopulated and humiliated. On the contrary - you reach out to him. The process of deindustrialization of Germany - supported and carried out mainly by France, which is burning with revenge - is halted. Thanks to the United States, the idea of unification is reviving on the Old Continent, which in the next decades becomes the foundation of the European Economic Community and the European Union today.
In post-war Germany, the Christian Democrats led by the charismatic chancellor Konrad Adenaur were in the lead. Throughout all the years of his rule, the seat of the minister of economy was occupied by the eminent economist Ludwig Erhard, who popularized the concept of the social market economy. It is a third way - somewhere between socialism and capitalism. Combining recognition of the power of the free market with the alleviation of social inequalities through income redistribution, decent workers' rights and public consultation. The state - unlike in the concepts of liberals - is not to play the role of a night watchman, with minimal impact on the economic situation. On the contrary - in the social market economy, the state simultaneously stimulates economic growth and improves the living conditions of people. This solution perfectly fit into the post-war realities, becoming a standard recognized even today. It is enough to look at the present (ruled by the CDU) Germany or France - an extensive social network, universal health service and union consultations are already permanent elements of these countries' systems.
The social market economy was established on the basis of the experience of the Weimar Republic and the Third Reich. Pure American-style capitalism combined with poverty after World War I and the world crisis brought Hitler to power, who built a militarized state of relative prosperity, but unable to survive without the conquest and exploitation of the annexed territories. Therefore, it was necessary to find a new solution that would guarantee both sustainable development and social security of the society, which would translate into peace and lack of obedience to radicals. Was it the social market economy that brought Germany a great recovery? In part, yes, although this is only one of the sources of this success - we should also mention Erhard's courageous decisions (currency reform and price liberalization), a financial injection from the Marshall Plan, great diligence of German workers and favorable events (the Korean war).
After the Second World War, Germany, once again in its history, ceased to exist as a single state. The eastern part - the German Democratic Republic - was ruled by the communist party, while the western part - the Federal Republic of Germany - after the merger of the occupation zones, became a free, democratic state in which for many years the cards were handed out by the Christian Democrats (CDU). This division was intensified by the intensification of the Cold War - the symbol of the worst period of the struggle of two powers (the USSR and the USA) for influence was the Berlin Wall, which divided the capital of the GDR into two parts. On the wave of democratic transformations in Europe - initiated by Poland and the famous Round Table - the East German regime fell apart and the country was to become one again. The process of consolidation - in principle to this day - was very difficult, as there were huge differences in the economy and mentality between Germany and the GDR. So far, Germany has pumped EUR 2 trillion into the eastern federal states, and their backwardness is clearly visible.
European economies - Scandinavian countries
The Scandinavian countries, apart from their geographical proximity, have a surprising number of related characteristics. Denmark, Finland, Sweden, Norway - all of these countries have highly developed social assistance. All of them rank sensational in the world in terms of the Gini index, which measures economic inequality. Each of them has a low poverty rate and high GDP per capita. All Scandinavian countries are characterized by a high level of democracy development - reduction of discrimination, democratization of various areas of life, broad unionization of the economy.Moreover, in all four there is a great paradox - despite economic regulations and welfare state, these countries are characterized by very competitive economies and one of the highest indicators of economic freedom in the world. It can be said that Scandinavia is a unique region of the world where strictly socialist solutions function in capitalist systems - and work perfectly, much better than in any "purely socialist" country.
What made the adoption of such a model? Certainly the geographic location that influenced Sweden and Norway would stay away from the turmoil of war. Raw materials also mean a lot - gas, oil, metal ores and wood (Ikea comes from Sweden). In Norway, there is even a special fund that accumulates profits from oil exports - this money is to secure the pension system and serve new generations. This is an example of great forward thinking, as the Norwegians are well aware that in a few decades their drilling rigs in the North Sea will become barren. This is a similar path to the one taken by the United Arab Emirates - they are investing heavily in the development of new technologies and the construction of tourist infrastructure.