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Hitler's Germany held out against the inevitable defeat for six years, against a more formidable coalition than Germany faced in Wolrd War I. It scored greater successes militarily, and was far more cohesive politically, than Wilhelmine Germany. In so far as it was Hitler's creation, it's an achievement that testifies to considerable capacities. And he seems to have had a better nose than the generals on numerous occasions - in picking Manstein's plan against France, for instance, or in sensing that the Soviets had been underestimated in July 41. As for the movement of Manstein to Leningrad, that was the orginal OKH plan. The Germans were to weak to take the offensive in more than one place at a time, so Manstein's corps was slated to first take Sebastopol and then take Leningrad. The Soviets spoiled the latter by attacking in mid-August, and grinding down the divisions scheduled for the offensive in two months of very bloody fighting.
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I am interested in Bastiat's assertion that "“In a given country and at a given time, there is only a certain sum of available capital, and it is all placed somewhere.". This may be notionally true of physical capital at any single point of time (but this capital is always being created/destroyed/changed - it is actually more a process than a stock, so this may not be a good way to look at it). But it's surely not true of of money, or of debt - claims on the future. Surely one thing that marks boom times is a high demand for money capital to facilitate the creation of physical capital. I recall JK Galbraith pointing this out in looking at the 19th century American frontier. Or am I missing something?
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James Although Germany was not across the specifics of Pearl Harbor, it was was fully informed of the Japanese decision to go to war with the US and UK (and not to go to war with Russia), supported the first and accepted the second. And Germany was planning for an eventual war with the US (the Amerika bomber program for one, plans to occupy the Canaries and Azores for another). The idea was that the Japanese fleet would tie down the US fleet, so preventing US action in Europe until the Russians had been defeated. Germany could then turn west. So Germany needed to actively support Japan. It also needed Italian, Romanian and Hungarian support in the east - they contributed a third of the armies there in 42. Leaving the Japanese to fight alone was neither a military or a diplomatic option.
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Isolation was abandoned (as leading isolationists themselves recognised) with the passing of Lend-Lease in May 1941. And Lend-Lease was passed by a large majority, and with a high level of public support. So Roosevelt was hardly acting covertly - from May Allied warships were repaired in US ports, US supplies flowed to the UK and the Soviet Union, US planes flew against Germany. All definitely not neutral, and allowed by US law. And - known to Germany - US and UK held close staff talks, made plans etc. Hitler knew that US industrial might coupled with British Empire and Soviet manpower was a deadly combination. His only chance was to cut the flow, which demanded open warfare. This was also required by his diplomatic politics with Japan, Italy and others. So no choice really. Once you have a tiger by the tail, it does not matter which hand you hang on with.
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Bloix Point taken. I was genuinely asking - Ahamed may understand, but the bankers and the goldbugs are just as blind as ever.
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Why assume this is unusual.? Sure, there are lots of occasions when price responds to supply and demand, but there are lots when it doesn't - when there is informal or formal rationing, or some other factor (eg, delivery time, or quality) takes the hit. Sometimes this is because there are long-term relationships involved, or some basic sense of fairness, or because price changes would send the wrong signal. Price is just one piece of information, so relying only on it is a bit like having only one rule for driving.
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Cranky Observer Good question. Churchill and his colleagues in '39 and '40 had a good grounding in history, a good appreciation of their own strengths (Empire, navy, air defence, tacit ally in US, near universal detestation of nazism) and of their enemies' long-term weaknesses (diplomatic isolation, dispersion of strength, weak and vulnerable allies, exposure to latent Soviet and US strengths). Accordingly they played a long and fairly cautious game. By contrast, Germany, Japan and Italy measured the odds and then disregarded the answers because it was will that mattered.
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Does he go on to test this statement against, eg UK national accounts for the period? With occasional large deficits. Or against the US politicking over eay and hard money in the 19th century? Or does it just sit there - another fiat issuance?
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Isn't there an assumption here that the stock of money equals the stock of real things? I can't see that it does. Money is a representation - a picture - possibly of a real thing (or possibly not). The economy is people creating real things and turning some of them into money, but it is also people turning money into money, or money into real things (or, in the case of derivatives, turning money into money into money....). One can build up a lot of pictures that are believed to represent real things, until more than usual are found to be false - then it's suddenly a game of musical chairs with several chairs short. So the past matters, as people cling to (past) hopes and dreams, hold on to old "pictures" hoping that one day they will again equal real things, create more pictures along old lines and so on. In short, any human system will have enormous momentum, as various forms of memory are intrinsic to their functioning - not just overt individual memeories, but the memories embodied in things, organisations, habits...
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Noah Short answer is - they did (bows, crossbows, longbows, later muskets. Also field and fixed fortifications. See battles like Arsuf). But they were not the whole answer - the nomads are much more mobile, and their formations include some lancers and other heavy cavalry. So you need discipline and spearmen to keep them off, a network of lines, forts and patrols to keep them out, and an active diplomacy to prevent them aggregating. All expensive. But for most of history, the nomads were kept out - the great irruptions (Huns, Magyars, Turks, Mongols) are the exceptions, not the rule.
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If you want to see how World War II transformed outlooks, I recommend the film The Life and Times of Rosie the Riveter - interviews with women shipyard workers. No more saying "yes massa" after you've watched YOUR ship go down the ways.
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Vtcodger It was not the cold, nor a German lack of winter clothing (and lots of other things - like special lubricants), nor the transport, nor the Russians, but all four. While the Russians kept the level of fighting high, transport only sufficed to bring forward fuel and ammo - clothes and the rest were at the back of the queue. If the Russians denied Germans access to cities (and hence shelter), then the demand for winter gear was higher and casualties from living in the open were high (and equipments serviceability was low), so fighting efficiency declined, which made fuel and ammo even more critical, which... The real lesson is not in how to get out of the bear trap, but in not stepping on it in the first place.
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You might want to look at Jack Goldstone's work on Revolution and Rebellion in the Early Modern World. He looks at the way demographic impulses can intensify competition for the top jobs, increasing both rewards and turnover, while also driving (among other things) a scramble for qualifications. But note that this impulse is very much transmitted politically, and also relates to the real resource base.
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mcc With one double-tracked rail line for each army group, only just enough trucks to support the armoured forces (and then inadequately) and three diverging lines of advance, putting too many troops on to one axis is a recipe for a bigger traffic jam, not a faster advance. Add in the need to re-supply, the constant Soviet effort at attrition, and the need to clear flanks to avoid running out of infantry support, and an immediate advance on Moscow was not a realistic option. All these factors (except for the stubborn ferocity of Soviet resistance) were mostly foreseen (and glossed over) in the planning.
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Income inequality is only part of the picture. And transfers are of different kinds. Some relate to essential functions that the market does not perform at all or performs badly (such as providing the next generation or providing for the old or disabled). Some have the larger purposes of reducing poverty or inequality as such. And the difference between tax and transfer and a wage is that a wage is earned - it is seen to be a return for effort and skill, which belong to the person who gets it. A transfer belongs to the state, and the state can impose what conditions it likes. Bit like a coupon from a company store. So unemployment benefits (and increasingly others) come with all kinds of conditions - which have steadily become more onerous and petty over the years. So felt inequality, and the rough equality of relations between citizens essential to a democracy, is much better supported by a minimum wage than by tax and transfer. Examples are not hard to find.
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And the record of technocrats in supporting fair or even workable policies is so wonderful that we should not hesitate to resign the core business of politics to them. Right? After all, who gets what is just like plumbing, no?
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Well, economics could do what other disciplines dealing with very complex systems do - model some basic elements, test them, do some experiments, gather data, add some more elements, test again, stop every so often to check the whole for coherence, map and state as clearly as possible the current limits of knowledge. And match the process to the degree of change in the systems (eg, military theory, in which every solution generates new problems, is much more ad hoc than, say, climatology). So take BE seriously, and stop de-funding economic history. An alternative is to stick with arguing about slightly different basics for another century or so. The latter clearly pays better.
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and just how is a clam issued by a pharmacy different from a corporate bond, or my IOU, or any other transferable debt? All money is debt - it's just that that backed by the government is more trusted.
Toggle Commented Aug 28, 2011 on Money Creation at Economist's View
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Yes - a lot of military equipment illustrates the point. I had another thought - any complex industrial product involves lots of planning. the "market" gets to judge only on the totality of the finished product, and design issues may only be a small part of the overall outcome. Bit like evolution - if you get eaten it doesn't matter to you if it's because of a (genetic) design defect or bad luck or accident. Which is why geneticists think in terms of gene frequency over a population, not in terms of individuals. Which makes market judgement of large-scale industrial production very different from judgement about, for example, the local baker's loaves of bread.
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I've spent a lot of time cursing the people who designed cars (like my old Mini - the radiator cowling screws could only be reached by a trained octopus, and you had to remove the cowling to do almost anything to the car). But there are interesting packages of design - eg Russian design is often excellent - simple, ingenious, but has to work around poor materials and a slapdash attitude to assembly. German design tends to the overcomplicated - stretches the technical limits. Many Japanese things reflect the input of the shop floor, while British things tend to be designed in isolation from it (and are poorer for it). There are, presumably, complex and persistent social structures behind all this. But it doesn't get the bitch bolts off.
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I think the authors are prisoners of a theoretical preconception about money. Empirically, money is a mixture of public and private debt - and always has been (it started as private debt, and more of it has become public over time). So of course this is money. And if it is more tightly regulated, private actors will find other ways to issue debt as money. Which is not to say regulation is bad - at least this large sector would then be better money than it is at present, and so less liable to spill over into the public domain.
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Interesting. I take it that Canadian probate law is much the same as Australia's or Britain's? IE that only estates above a certain size required probate? If so, the probated only figures for 1892 are probably more reflective of the actual distribution of wealth. Poorer people - and this would include many small farmers and similar - probably did not bother (I know my small-holder ancestors did not). This is one perspective. Another would be the social one - that many of the welfare state initiatives mentioned did not so much redistribute wealth as redistribute the power associated with it. The citizen who can rely on a pension, knows that unemployment assistance is available, is a member of a union, and need not fear that sickness will leave him or her destitute is in a very different position vis-a-vis the wealthy than one without these protections. This is reflected in the economy in confidence, in types of manufacture and consumption and in policy. One might also note that markets do tend - unless continually corrected - to concentrate wealth (see, eg, that astonishing concentration of land ownership in the UK in the heyday of the UK upper classes around 1850). What would the figures look like without government intervention? Pakistan perhaps?
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Didn't Keynes remark that financial speculation was not an exercise in guessing some objective fact, but guessing what other people would guess (or guessing what other people would guess that people would guess....and so on)? An inherently uncertain and shifting process. The scene changes as the major players - bond dealers, private banks, central banks, governments act on the guesses about other guesses, which in turn....In short, there are no equilibria, just pauses while people catch up with the state of play or gather the resources to make the next bet. Add in slow diffusion of understanding about the actual state of play, aversion to abandoning one's current plans, need to convince internal audiences before acting, deliberate misinformation and so on - why would you expect things to be smooth or quick? As to the underlying trend, the drivers may not be economic at all, and are certainly a mix of politics, demography, resource availability and much else as well. Why should appreciation of these trends be universal, quick or complete? In other words, a multi-party strategic game. Clauswitz had some good things to say about these before Keynes.
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This is Hitler being sensible in recognising that the German economy was overstretched, and that manpower needed to be returned to industry as soon as practicable. Also that digesting the eastern territories would take time.
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There's an interesting and instructive contrast between the almost immediate assistance (delivered at great cost) to Soviet Russia from the UK and US, and Hitler's relations with his fellow Axis members. The latter was pretty much always "Germany first".
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