Imperial Valley press., 1938-12-04
An Economists S
Viewpoint
BY John T. Flynn
BY JOHN L. FLYNN

NEA Service staff correspondent
Editors Note: John I. Flynn,
noted economist, will replace
Rodney butcher as columnist in
this space until a successor to
butcher, who died recently of a
heart attack in his Washington
office. is chosen. Flynn's first
column follows:
NEW YORK.-One of the ques-
tions most often asked about Ger
many is, How long can the Nazi
regime last?" 1t is a question, of
course, which has two aspects
economic and political.
First, the economic. Economists
have predicted that Germany, run
ming in violation of most economic
laws, would crack up sooner than
this. Without an adequate gold
reserve. with foreign trade ruth
lessly cut, with capital investments
drying up. how does she manage
to operate?
The answer is reasonably plain.
In 1888 Germany found herself in
much the same position as we
found ourselves. Hitler came into
power about the time Roosevelt
did. Both adopted the plan OF
raising funds by heavy borrow
ings. In six years Roosevelt bor-
rowed nearly 20 billion dollars;
Hitler borrowed 10 billion. This
latter figure is a minimum esti-
mate. 1t may be as high as l2l@
billion. This is an enormous fig
ure fer Germany -proportionately
greater than the United States. OF
course this has supplied and con-
tinues to supply continuous flow
OF fresh funds into the economic
system.
But Hitler and Roosevelt adopted
very different financial plans from
this point on. Hitler pegged both
prices and wages at the point at
which he found them in 1888.
ROOSEVELT announced his intention
of doing everything in his power
to raise both prices and wages.
Then Hitler proceeded to tax. He
taxed everybody, from the lowest
workman to the richest capitalist.
He literally drained everyone. Thus,
when Roosevelt borrowed billion
and spent it, it went into private
hands and remained there. When
he wanted to spend more money
he had to borrow another billion.
When Hitler borrowed billion 1t
went into private hands and there
he Immediately recaptured it by
means of drastic taxation so that
he got it back and had it to spend
again.
We need pursue the comparison
no further. Hitler thus kept the
spending power OF the people at
the lowest point by keeping wages
down, but he spread the income
over a larger number of people.
Soon there were no unemployed
because all had wordsworth III
the armament plants supported by
this enormous borrowing and tax
alton.
But these people have little to
spend even out OF their low wages
and high profits, because the gov
eminent withdraWs it all from
them by taxes. All this requires
an immense amount of regulation
of the minutest variety.
But one effect of this is slowly
to dry up all capital investment.
And as investment comes to an
end the government must step in
to supply its place by government
supported industries. The effect
of this will be gradually to ex-
tinguish the capitalist system en-
tirely and thus what started out
TO be a last-ditch fight to save
capitalism, ends by growing into a
collectivist state. But it is a COL
collectivist state built upon the
complete appropriation of the cap
italist and middle classes without
correspondingly emancipating the
worker. 1t has in it the seeds of
disintegration not only because of
its economic weaknesses, but be-
cause of it's political weaknesses,
for presently all classes will op-
pose it.
On the purely political side, the
regime is founded on violence
and scarcity. The scarcity is
bound to increase and, with it, the
o.iScontent The German is a per-
son accustomed TO a better life.
unlike the Russian who never had
anything. The German stomach
becomes a factor in the equation.
But also the men at the top in
evitably will fall out. Already
there has been one falling out and
cne bloody purge. There will be
others. No revolutionary regime
based on brutal violence has ever
escaped the quarrels of the leaders.
These two factors, plus the
spiritual forces at Work-the re-
sentiment o. Catholics and large
number of Protestants, added 10
the economic factors-makes the
crack-up of the regime inevitable.
No one, of course, can put his
finger on the date of the crack.
But il must come.