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Comment by scrod | Hacker News Reader

>West Germanys post-war 'economic miracle' was largely guided by Austrian school economic thinking, while East Germany went the other way.

One of the most predictable things about Austrian advocates is their inability to conceive of alternatives beyond some kind of cartoon-stereotype Soviet command-economy. You seem to be aware of social democracy, so you are knowingly assuming a false dichotomy to make your point. I'd say it's even more intellectually dishonest when one considers that no one ever argues for a centrally-planned economy. At the very best, such a comparison holds no value today in evaluating Austrian-school thinking.

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It's not my fault the East Germans chose the Soviet model so I hardly think it's fair to suggest I came up with a false dichotomy to prove a point.

One half of the country chose the soviet command economy model, the other half chose to pursue an Austrian model. One half did immeasurably better than the other half. Those are the facts.

You can compare and contrast post-war West Germany and Great Britain if you like - the latter made great strides towards a more socialist governance probably as a direct result of the largely increased Government functions during the war, and the rise of those who thought that centrally planned economies would do better.

The point of bringing up West Germany is that the country prospered as a result of the liberal economic policies introduced in the immediate post-war period, both absolutely and relative against their East German counterparts, although the differences were small in the early years. It would be foolish to suggest that this is entirely down to the policy choices - all growth from zero looks impressive - however, it certainly did no harm and a lot of good.

>One half of the country chose the soviet command economy model, the other half chose to pursue an Austrian model. One half did immeasurably better than the other half. Those are the facts.

That fact doesn't validate Austrian-school-thinking — merely that it worked better than Soviet central-planning given the global political and economic environment at the time, which says almost nothing. And even if you're arguing merely in favor of increased economic liberalization, this comparison still holds no value because social democracy has nothing to do with central planning! The points don't even exist along a linear axis — they are apples and oranges. The debate all over the world right now is about how best to implement social democracy, and comparing those two extreme economic philosophies doesn't contribute anything at all. To pretend it does is disingenuous.

The worst thing about right-wing followers of Austrian school thinking is that they refuse to consider the social outcomes when "market freedom" is taken too far; they are bent on destroying society as it exists and recreating a weak image of it inside their economic framework. Even von Hayek himself acknowledged the need for a basic social support system. This type of thinking is highly simplified, almost always ideologically-applied, and extremely toxic to our social fabric.

It also helped that a lot of money was poured into Western Germany with the Marshall plan while the Soviet Union took large parts of the industrial production machinery of Eastern Germany in retribution for the war.

The preconditions were so different I think the example doesn't really show anything.

The Marshall plan was a tiny drop in the ocean of capital needed to reconstruct the West German economy. At most you could consider it a bit of pump-priming.

The Marshall plan was also equally applied to other war-torn Western European nations which didn't experience the same growth.

I agree that you can't isolate a specific economic philosophy from the general population and culture - the German people have always been very engineering minded and hard working - but something very interesting happened to post-war Germany, and it's always a good idea to look at this (same as the Finnish school example) and see what might have contributed.

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