Wednesday, March 22, 2017

The Greatest Economic Policymaker Ever

Ludwig Erhard, the greatest economic policymaker ever.
In my post,  Your Chance to Run the Greek Economy, I wrote:
I would love to see an Austrian school economist infiltrate and get this position [in the Greek economic advisory council] and go full Ludwig Erhard.
A commenter responded to this with:
That person would be made into Moussaka by week's end.
Not if the policymaker was as skilled as Erhard.

I consider Erhard the greatest economic policymaker ever.  Not because he was a great economic theoretician. He wasn't a theoretician. And if you compare him against Ludwig von Mises or Murray Rothbard, he wasn't as consistent a free market advocate as they were. But he was principled, a strong free market advocate and always stuck to his principles.

Erhard is most well known for going up against Allied occupation leadership after World War 2 and lifting price controls---without authorization from anyone.

That move launched the German economic miracle and would have been enough of an accomplishment to consider him a great economic policymaker.

But Erhard was much more than a one move economist. Throughout his decades-long policy career, he stuck to his generally free market principles, even when it involved great personal risk.

When the Nazis were in power, he never joined the Nazi Party but when regional Nazi leaders sought economic advice, he provided his principled advice. But it was always about principle. He even contributed a chapter to a book that was a barely concealed critique of Nazi interventionist economic policy.

Most remarkable, he was close to the inner circle that plotted the July 1944 assassination attempt on Adolph Hitler.

One of his friends, Carl Goerdeler was a key plotter. Goerdeler had asked Erhard to write out what type of economic plan should be implemented after the assassination.

When the attempt failed, Erhard rushed home and destroyed incriminating papers, including all his correspondence with Goerdeler, and then hid out in a small village.

But despite Hitler ordering the death of near 5,000 people, i.e., anyone close to the plotters, Erhard somehow was able to emerge from hiding by the end of the year and continue his free market advocacy.

That's skill and stunning principle.

Erhard had a long career, after the war years and the American occupation years, serving in various economic advisory positions--often battling both the left and right interventionists at the same time.

He also went up against French President Charles DeGaulle on economic and foreign policy.

He didn't always win and sometimes compromised when he would get a good benefit but he was always advocating for free markets.

He was no modern day beltarian who found some technical reason to support an intervention. He was always for free markets and gave many, many speeches and radio interviews to support his views.

Somehow, he ended up his career as German chancellor. But he was no politician and didn't play political intrigue. He was eventually forced out. His strength was principled free market economic advocacy, not political leadership.

So no, a Ludwig Erhard-type would not end up moussaka in a week. The real problem is there aren't many Ludwig Erhard-types around.

He should be a role model for economic policymakers.

Alfred C. Mierzejweski has written a very important biography, Ludwig Erhard, A Biography. The book should be read by every economic policymaker and wannabe policymaker, perhaps it will provide the courage for some to be at least a tenth of the principled man that Erhard was and also provide lessons on how to navigate the policy landmines and stay relevant while being principled.

Robert Wenzel is Editor & Publisher of  EconomicPolicyJournal.com and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics and on LinkedIn. The Robert Wenzel podcast is on  iphone and stitcher.

Sources: Ludwig Erhard, A Biography and PBS

3 comments:

  1. Lol, well this is a pleasant surprise while sipping my morning coffee! Front-and-center thanks to my propensity to make jokes. Such is life. The following is my attempt to rebut a giant what-if scenario about a man so long-dead that even Vic Frankenstein couldn't jolt him back to life. Here goes...

    Erhard was great in restoring Germany's economy, but I'm not doubting HIS principle or skill. I'm doubting the populous and circumstances that would surround him. We're not talking about a beaten, bombed and bloodied demographic, thoroughly cowed by the ravages of war and regime, within a governmental vacuum. We're talking about Greeks, with their hands out, insisting they not lose all their government goodies - possessing an entrenched socialist mindset of instant gratification along with a fully operational government possessing an entrenched propaganda arm. I do not believe that the great, skilled Erhard would even get out of the gate. Within this thought experiment, I'm going to have to respectfully disagree.

    You know I'd be supportive of him, or ANYONE that might try. I just don't see it. Even in Venezuela, where things are seriously in disrepair, we have the swarming hangers-on willing to blame any vestige of the free market for the ills befalling them. Not all that surprising, given an historical understanding from works like Andrew D. White (Fiat Inflation of France) or Rothbard (Anabaptists of Muenster) and other examples.

    I suppose we could argue whether an Erhard could flourish within a current system with circumstances like that of post-war Germany's plight, but even then, after a century of indoctrination, would such a principled mind last, say, six months? A year? My apologies for broadening the debate, but isn't the idea of socialism to render the masses into a state of anarchy (not anarchism, the system) - a vacuum into which steps the authoritarian utopians? A majority of people have been "taught" that in NO WAY should free markets be given a chance. Such faith should be placed in the hands of the great minds of government; stewards of society with the requisite knowledge (and control) needed to guide mankind yadda yadda.

    This gets me back to one of my overarching thoughts on the matter - something that I've wondered for a long time now: just how bad do things have to get before free markets resume - if they ever do? Far worse than in Greece, I should think. Moussaka anyone?

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  2. Ludwig Erhard is an absolute Hero for me. Thanks for that great article with lots of info I didn't know so far!

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  3. Erdhard > Sir John James Cowperthwaite?

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