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Mr Kudzai Mutisi, the German 'Economic wonder' after the WW2 had multiple favourable factors!

20 Mar 2024 at 20:53hrs | Views
I am writing this article as a reply to your article you wrote last week: My article is not in any way or form critiquing your own but including factors that must be known, but, however, adding to what you have already alluded eloquently. Implementation of your suggestions to Zimbabwe's economic recovery could be challenging, considering that Zimbabwe's historical, social, political, and cultural development has no relevance in relation to Germany historicity. It will not be possible to lift German social, political, economic, and cultural development past and present, and we model it to the economic recovery of Zimbabwe to replicate their success. By all account, you meant well. As someone who lived in East Germany for many years, I was one of them who were impressed by East German socialist economy that was inclusive, and pondered how we could replicate German socialist economic recovery to Zimbabwe's future development. I meant well too by dwelling into such ideals.

The defeat of Germany by allied forces and its recovery plans must be understood it its own context. To explain the "Miracle of the Rhein" it must be said that some sections of Western Allies never wanted Germany to rise to its former glories, but to subject it into an agrarian state, evidenced by a Morgenthau Plan. However, USA wanted to see a successful West Germany in contrast to East Germany: West Berlin as its window dresser. So, the Morgenthau Plan was dismissed and was replaced by a Marshall Plan. Because all western countries suffered from post WW2 effects, the Marshall Plan was extended to western countries, excluding East Germany.

The success of West German economy did not take place in a vacuum. It was powered by several factors that Zimbabwe does not have. To replicate a German success under the current economic conditions in Zimbabwe is a pipe dream: pie in the sky: Almost impossible. Let's draw comparisons between West Germany as from 1949 and its economic and social development after the WW2 and Zimbabwe as from 1980 after independence so that we can sincerely establish your hypotheses in a better perspective, Mr. Mutisi. Historicity's of these two countries are light years apart.

Germany was defeated in WW2 and was split and shared between superpowers: USA, France, and "Great" Britain. The economic development of East and West Germany and their economic transformations were determined by the USSR on one hand and Western allies on the other hand. The German economic recovery started in 1923, before the WW2. Under Chancellor Stresemann, he chose powerful and fine-minded economists that planned and revived inflation by introducing a new currency called Rentenmark. That currency needed foreign direct investment that was to be pegged at gold value. This reform failed because countries that lost in WW1 demanded reparations that led to Germany government to start printing money to pay back their debtors.

However, this economic recovery punctuated by currency reforms was visited again after the WW2 when economists; Walter Eucken and Ludwig Erhard implemented ground taking reforms. Back then, the German government was not allowed to run its Reserve Bank, but by the USA and allies. They were not even allowed to produce military machines and weapons by the allies. They feared a Germany that would reindustrialize, overtake USA and Europe, and Germany will start another war again? However, the fear of Germany becoming a giant was evident in USA assistance to war-ravaged Germany. (This fear in USA government is still existent to this day: my opinion)

Yes, the Marshall Plan was a stroke of genius to the West German government back then given to it by the USA. It must be mentioned that Germany was given only 5% benevolence of the Marshall Plan revenues given to European countries. Germany was also not spared from the reparations despite the Marshall Plan by USA. The Marshall Plan enabled Germany to reconstruct its infrastructure, built houses, improved food securities, improved energy needs, and created employment opportunities. These developments were macro-managed by USA and the Western allies who wanted to see a new Germany as an economic unit and never beyond any form of industrial development that would surpass neighboring European countries, especially France and Great Britain. Germany had serious issues and challenging economic growth at the same time constrained in formidable development that would have quickly removed them from hunger and malnutrition and serious other social challenges.

Germany was to rebuild 98% of nation's destruction caused by the WW2. The Marshall Plan ignited the German economy because of several reasons:
 - Good political leadership and business law: Pro-market reforms  -  creation of a Deutsch Mark; a currency that was stable and reliable, restoring confidence in the economy, and it facilitated the growth of a consumer market.

 - Germany had already available qualified manpower such as engineers, scientists' researchers, agriculturalists, qualified civil servants that pushed the economy to dizzy heights - great success. They had first-class educational system, and apprenticeship programs for the skilled trades.
 - The work ethic was good for German economic growth: punctuality, hard work, honesty in their financial dealings with USA, and a propensity to follow orders: These were factors that ignited and exponentiated the economy.

 - When USA realized the success of the implementation of the Marshall Plan, they gave the German government a further 3 billion USD for further reconstruction of their infrastructure development, housing projects. In hindsight, USA's intention was more to outsmart the East German's slow development and reconstruction after the WW2. West Germany was a bulwark against communism.

 - The Marshall Plan injection of financial cash flows provided industrial raw material that spurred production and enabled the German government to make economic reforms thus resulting in economic recovery and path to self-sustaining. The once upon a time, a stagnant economy was catapult to a fully-fledged western standard economy.

 - The German government never spent much on defense as it was not, according to Potsdam agreement, allowed to produce or to build weaponry and machines of war. The fiscal cash flows were exclusively for economic recovery.

 - The contribution of guest-workers in the German economy that was boosted by their cheap labour must be mentioned in the same breath. Millions of guest-workers from Italy, Turkey, Jugoslavia contributed immensely to the German "Wirtschaftswunder".

 - Another key factor was the implementation of social market economy policies under the leadership of Ludwig Erhard, the Minister of Economics. Combine free-market capitalism with social policies to ensure a fair distribution of wealth: no lasses-faire capitalist economy, to ensure protection of workers from capitalist exploitation. The social market economy was modelled to promote competition and innovation, while also providing social security and welfare benefits to protect the most vulnerable in society. This approach was successful in creating a balance between economic growth and social stability, contributing significantly to the economic miracle.

 - the Korean War in the early 1950s also played a role in West Germany's economic recovery. It led to an increased demand for goods from Europe & USA, and West Germany, thereby Germany boosting its chain reactions of export industrial products leading to its rapid economic growth, with a GDP increasing by 8% a year between 1950 and 1960.

It is for this reason, the success of German economy after the WW2 cannot be articulated in a single story, but by several & diverse factors that contributed to Wirtschaftswunder. When USA realized the German positive economic growth, It stashed reparations costs by 50%, a bonus in their already successful booming economy. German infrastructure was repaired. Big companies such as BASF regathered their workforce producing chemicals, industrial material, industrial solutions, nutrition care and agricultural solutions.

Let's look at Zimbabwe's rise and fall and how it can replicate Germany's development after WW2. We should establish facts; whether it is possible for Zimbabwe to follow the path of West German economic growth since WW2 to get out of the economic deep end it finds itself in.

When Zanu PF and a highly educated President Robert Mugabe came into power in 1980, even President Nyerere of Tanzania commented highly about the jewel Zanu Pf had on its hands. "Don't lose it Bob". Nyerere advised. The Rhodesian dollar was stronger than the US$; they say. The national treasury was healthy; no domestic and foreign debt because Rhodesia was on international sanctions list back then.

Zimbabwe inherited from the colonialists an intact transport infrastructure; agriculture was producing surplus: a breadbasket of Africa. RR or Rhodesia Railways was good functional. The energy industry Risco, was powered by not only electricity from Kariba Dam, but was substituted by Bulawayo Power Station and other energy entities. The schools and hospitals that reached out to rural areas were first class maintained. Education was the cornerstone of development: However, African education was mostly to get administrative manpower that colonialists was comfortable to them to compliment the white administration of Rhodesia.  

Zimbabwean government inherited government companies such as Risco, RDMB, RGMB Dunlop, Lomagundi Copper Smelting Plant, Lancashire Smelting Plant; a subsidy of Risco Steels. Cold Storage Commission, Air Rhodesia, and several other industries that generated national revenues. Bulawayo was a manufacturing town. All these national industries were good functional when Zanu PF took over the government, immediate drivers of Rhodesia robust economy. The supply chains of these government entities again generated surplus revenues to maintain the government afloat: Yes, it was a racist regime of Ian Douglas Smith.

In sharp contrast to Germany whereby, immediately after the WW2, German citizens experienced a worthless currency and extreme hunger and malnutrition; Zimbabwe, had strong food securities. Nobody back then was starving and suffering from food insecurities. Zanu PF government failed to appreciate the jewel they inherited: Instead: typical of some African governments, looting started with the President who demanded to replace humble car that Smith used, to a Rolls Royce, brand new from the United Kingdom. From the looting that was already a scourge in the nation was nepotism that was rampant. Comrades from the liberation war were given posts far beyond their paygrade as payback from participating in the liberation struggle.
To his credit, Mugabe invited a formidable group of educated luminaries to be ministers in his first government, some of whom had reputable services in international institutions. To name a few; Ministers Zvobgo a lawyer graduate at Harvard University, Christopher Ishewokunze, a professor from the University of Zambia, Chidzero from the World Bank, Callistus Ndlovu, from the UN, Simba Makoni, a chemist PHD holder, Naomi Nhiwatiwa, a PHD graduate educationist: these chosen ministers were well placed to take on Zimbabwe to higher levels. They were to kick start a synergic economy post colonialism. Painfully, they started dying of accident deaths, undisclosed deaths, or they drank themselves alcoholic.
The early years after independence, Zimbabwe government was given financial assistance by the British government: according to the clause in the Lancaster agreement of 1979 that led to the independence of Zimbabwe, the British government of Margret Thatcher was to give millions in pound sterling yearly to Zimbabwean government as a corrective of land tenure act imbalances. Additionally, there were cash flows from international financial organisations, the World Bank, Paris Club, IMF, and separate western governments that signed bilateral fiscal agreements, injected large sums of money to Zimbabwe government. The outpouring of large sums of money to a government that did not know what to do with the jewel Zimbabwe, was meant to investing in social and economic development, instead, money was looted in millions by several ministers and civil servants in party and government of Zanu PF.

Press fast forward: Geo-politics changed. The Berlin Wall fell, Nelson Mandela came out of prison, leading to the independence of South Africa. Zimbabwe was no longer the focus of the west, but South Africa was then more interesting in its all-out transformations from apartheid to independence. The outpouring of money to Zimbabwe dwindled profoundly in the 1990s inviting the World Bank to introduce austerities to the Zimbabwean government: ESAP. The billions of cash given to Zimbabwean government had very little or nothing to show in terms of infrastructural development. Instead, Zimbabwe, unbeknown to knowledge of financial synergies, especially coming from international money lenders, they accrued staggering domestic and foreign debt impossible to manage it. Implementation of ESAP meant millions of workers became redundant, were out of employment.
To Mugabe's credit, the early years of independence, millions of young people received good education. However, the regression of Zimbabwean economy sent thousands and millions of young professionals and highly qualified Zimbabweans to the Diaspora. South Africa alone has 3 million migrants from Zimbabwe: registered and unregistered.

When the British government with Honorable Clare Short as Secretary for International Development 1997  -  2003 refused to make further payments to Zimbabwe in accordance with the Lancaster agreement of 1979, Mugabe's government was equal parts pick panic: the anger was larger than thunder and lightning. The British must be punished for refusing to pay their yearly dues, physical and expressively by taking away farms from white Zimbabwean population; an action that was self-destructive & self-defeating; Food securities were made possible by a white farming niche in the larger scheme of things. The Zimbabwe economy that was penned on agricultural production collapsed. Talk about cutting the nose to spite the face.

Zimbabwe never recovered from one economic malpractice to the next. The coup of 2017 made things worse. Mr. Mutisi, with this Zimbabwe economic historicity, how do we even envisage a Zimbabwe economy to transform using the German template of 1945 whose political, social, and economic transformation so light years apart? You mentioned a fine economist of the moulds of Ludwig Erhardt, a German minister; it is his ordo liberalism that transformed German economy from the ashes of WW2 to a today's German world class, one of the finest economies in the world.

Critique to African governments: me included, we seriously lack management skills and discipline. We do not respect national revenues meant to uplift the common good. President Mugabe was a graduated economist. Not Constantine Chiwenga, but Mugabe should have known what it means to symphony diamond cash revenues of a staggering US$15 billion to foreign banks. We have more than US$30 billion debt that must be paid. If it's not paid today, our children and children's children must pay it in full plus interests and interest's interests that will have accrued with time. In a nutshell, there are no favourable factors on the ground today in Zimbabwe that can replicate German economic transformation to match the German wonder economy.

I hasten to say something about German reparation debt, despite being the world's best economy in the EURO zone and beyond. So far, the German government has managed to pay survivors of Holocaust about US$80 billion dollars and is still paying US$1.20 billion a year to all survivors of holocaust wherever they might be, globally. Again Germany, signing the Versailles Treaty, demands that Germany must make reparations in the form of German coal proceeds to France, Belgium, and Luxembourg for 10 years for each country. I believe it is still being paid to date. I can see this coming in Africa: The International AID to Africa will be paid back somehow or other: that means even in kind. Zambia defaulted paying China its debt repayment scheme. They then asked the government of Zambia to give up the airport as repayment: Kenneth Kaunda International Airport. The TAZARA Railway line built in the 1970s, built by the Chinese has not been paid off.

Despite its reparation debts, Germany remains a huge economy today and the biggest one in the eurozone. Are you sure Zimbabwe can replicate this German's larger than life economic development?

Source - Nomazulu Thata
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