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Study: austerity helped the Nazis come to power

In 1930, the German government embarked on massive tax hikes and spending cuts.

Heinrich Himmler, Ernst Röhm, and Hermann Göring pose for a photo with the Nazi delegation to a meeting of the right-wing Harzburg Front, on October 11, 1931.
Heinrich Himmler (front row, third from left, in dark cap), Ernst Röhm (front row, fourth from left), Hermann Göring (front row, sixth from left, with medals and without hat), and other members of the Nazi delegation pose for a photo at a meeting of the right-wing Harzburg Front, on October 11, 1931.
Unknown/German Federal Archives
Dylan Matthews is a senior correspondent and head writer for Vox's Future Perfect section and has worked at Vox since 2014. He is particularly interested in global health and pandemic prevention, anti-poverty efforts, economic policy and theory, and conflicts about the right way to do philanthropy.

Thousands of historians, economists, sociologists, and other researchers have spent more than 80 years trying to make sense of the Nazi Party’s sudden rise to power.

The standard explanation is that German voters flocked to the party in Germany in 1932 and 1933 in response to the pain of the Great Depression, which conventional parties proved unable to end. But others have sought to explain Hitler’s coup, in whole or in part, by reference to German culture’s obsession with order and authority, to centuries of virulent German anti-Semitism, and to the popularity of local clubs like veteran associations, chess clubs, and choirs that the Nazis used to help recruit.

A new paper by a team of economic historians focuses on another culprit: austerity, and specifically the package of harsh spending cuts and tax hikes that Germany's conservative Chancellor Heinrich Brüning enacted from 1930 to 1932.

In the paper, released through the National Bureau of Economic Research, Gregori Galofré-Vilà of Bocconi University, Christopher M. Meissner of UC Davis, Martin McKee of the London School of Hygiene & Tropical Medicine, and David Stuckler at Bocconi are clear that they don’t think austerity tells the whole story. It’s one factor among many. But they think austerity helps fill in some gaps in the conventional, Great Depression-focused narrative of the rise of the Nazis.

The authors don’t think the Great Depression alone explains Nazism

There’s a hole in the traditional argument that the Great Depression explains the rise of the Nazis: Lots of other countries suffered during the Depression, too, without collapsing into totalitarian dictatorships.

“During the 1920s, there was no substantial difference in the economic performance of nations that, in the mid-1930s, were democratic regimes or dictatorships,” the authors note. “The depth of the depression was only slightly greater in Germany than in France or the Netherlands, and was even worse in Austria (and other eastern European nations) and the USA.” Of those countries, Austria also saw a radical right-wing dictatorship come to power under Engelbert Dollfuss, in 1932. But France, the Netherlands, and the US did not see radical right-wing parties take office.

Also troubling for the most simplistic economic explanation is the fact that unemployed people weren't particularly likely to vote for Nazis. The authors cite reams of research showing that the unemployed were likelier to vote for the Communists or the Social Democrats. “It was not that Hitler did not try to appeal the unemployed masses,” they note, “but rather that the Communist Party was perceived as the party that traditionally represented workers’ interests.”

One uniquely German factor that might help explain the Nazis' rise are the harsh war reparations, totaling 260 percent of Germany's 1913 GDP, that World War I's victors imposed under the Treaty of Versailles. As early as 1920, John Maynard Keynes was warning that the economic pain caused by forcing Germany to pay that debt could lead to the rise of a dictatorship.

But the authors note that Germany's debt was mostly not repaid; US President Herbert Hoover announced a moratorium on the payments in 1931, and then they were suspended by the Allies in the Lausanne Conference in 1932. They do not dismiss the idea that the reparations played a role, particularly after Brüning, in his role as chancellor, publicly denounced the reparations system in 1931, which led international capital markets to worry that Germany wouldn't repay its debts, and made it harder for the country to borrow. The authors just don’t think that it, and the Great Depression itself, are sufficient explanations.

Germany was the only major Western country implementing austerity

That's where austerity comes in. The scale of the cutback that Brüning enacted from 1930 to 1932 is truly staggering. The authors estimate that Brüning cut German government spending by about 15 percent, after inflation, from 1930 to 1932. He raised income taxes on high earners by an average of 10 percent, and slashed unemployment, pension, and welfare benefits.

The economic consequences were horrific. GDP fell by 15 percent, as did government revenue. Unemployment increased from 22.7 percent to 43.8 percent. Brüning came to be known as the “Hunger Chancellor.”

“Although Germany was not the only country hit by the Depression, it was the only major country to implement prolonged and deep austerity measures,” the authors write. Britain, by contrast, actually increased government spending during this period.

Galofré-Vilà, Meissner, McKee, and Stuckler are hardly the first people to tie the pain caused by austerity to the rise of the Nazis, but they’re among the few to have tried to quantify the effect. They first estimate the level of austerity in each state and district in Germany using each local area’s average tax rate. While Brüning’s government increased income taxes across the board, most income taxes were local, so the federal tax hikes resulted in different-sized tax hikes in different areas. And, the authors find, areas that saw bigger increases in their average tax rates also saw larger vote shares for the Nazi Party in the July 1932, November 1932, and March 1933 elections.

They find similar results if you define austerity as state and local spending cuts, or use a measure combining both spending cuts and changes in income or wage tax rates. "Regardless of how we measure austerity, the estimated association of austerity with the Nazi vote share is positive and statistically significant in most of the models considering the different elections between 1930 and 1933," they conclude.

According to one estimate, a 1 percent increase in spending cuts is associated with a 1.825 percentage point increase in the Nazi vote share. The results are even stronger if you look only at cuts to municipal pensions, unemployment support, and health care, and they hold up if you use Nazi party membership as the dependent variable, rather than Nazi vote share.

“At the upper end of these point estimates,” the authors write, “it is plausible to argue that the Nazis might never have achieved power in March 1933 since it would have required coalition partners to supply up to 11 percent of the votes.” In reality, after the March election (during which Hitler was already Chancellor) the Nazis maintained their coalition with the hard-right German National People's Party (Deutschnationale Volkspartei, or DNVP), which controlled about 8 percent of votes in the Reichstag.

The difference between being 8 percent short of a Reichstag majority and 11 percent short might not seem very large. And, to be sure, it’s possible Hitler would’ve been able to retain the chancellorship even if he had slightly fewer Reichstag seats. His rise to power was not purely electoral: the 1933 election was characterized by widespread violent intimidation, especially targeting Social Democrats and Communists, by Nazi militias.

At the time of the election, German President Paul von Hindenburg had already issued the Reichstag Fire Decree, giving Hitler vast powers to suppress dissent. He’d eventually use those powers to arrest all Communist and some Social Democratic members of the Reichstag, allowing, within weeks of the election, the passage of the Enabling Act and Germany’s all-out collapse into dictatorship. Perhaps Hitler could’ve used the same powers to seize control of the German state despite a lower vote total.

But the results are nonetheless a reminder of how shaky Hitler’s parliamentary coalition was, and how a vote swing of a few percentage points could have threatened to end his tenure as chancellor less than two months after it began.

Drawing inferences is hard, especially about other countries

So why did the Nazis, rather than the Communists or the Social Democrats, benefit from anti-austerity fervor? Well, for one thing, the Social Democrats were the junior partner to Brüning’s Centre Party in the governing coalition, and were punished for the pain of austerity accordingly. The Communists did pick up a lot of votes, particularly among the unemployed and working classes, at the same time that the Nazis were rising.

While the authors don't give a definitive answer, they note that the Nazis ran on an anti-austerity platform, complementing their hypernationalist and anti-Semitic themes. They promised tax breaks, to "maintain the social insurance system," to secure "a generous expansion of support for the aged," and to expand investment in highways.

This didn’t spark support for the Nazis among the unemployed and lower classes, who flocked to the Communists instead. But it did, the authors write, strike a chord “among middle- and upper-classes who, despite the depth of the Depression (i.e., after controlling for the level of output and employment) still had something to lose.” Moreover, these class segments might have resented that post-austerity, benefits were more tightly limited to the poor and unemployed. The middle and upper-classes were hurting as well, without much government support. The Nazis promised to change that for them.

As the study makes clear, austerity is one factor among many and not the primary cause of the surge in support for the Nazis. The magnitudes of the authors’ estimates are just not that high. And generalizing from the German case, support for radical right-wing movements in the present day sometimes arises out of deep austerity, but sometimes doesn’t. Greece’s depression and harsh austerity packages have helped the rise of the openly neo-Nazi Golden Dawn party, while Spain, which has also suffered through years of austerity, hasn’t had much far-right activity of which to speak.

Meanwhile, the US is the only major Western country in the past decade to have a right-wing populist head-of-government, a head-of-government elected following austerity measures like the sequester and return of the Bush tax cuts that were, in international perspective, rather mild.

But the paper is nonetheless a warning that austerity might, all else being equal, make it easier for radical right-wing politics to flourish. It might not be a sufficient or even a necessary condition. Yet it’s a factor worth examining more closely.

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