Скачать или смотреть Why Is East Germany So Different From West?

Thumbs up if you liked it, Subscribe if you loved it and I'll see you in the next one, Obrigado :)

The ghost of the Berlin Wall lives on 30 years after its collapse. It sweeps through the statistics on immigrant populations (higher in the west) and on poverty, pensioners and electoral support for the Left Party Die Linke and for far-right parties (all higher in the east). Persistent east-west division intersects with class divides, as well as historical and present forms of institutional racism. This provides the backdrop for the particular success of far-right parties in Germany’s eastern provinces.

In the years that followed unification, eastern Germany slipped from being one of the most industrialised regions of Europe to one of the least. Average productivity had long been lower than in the west. In 1945 the zone that became the German Democratic Republic (GDR) was occupied by a weak and war-ravaged superpower, the Soviet Union, which plundered its industries and infrastructure.

In contrast, the Federal Republic of Germany (FRG) was pulled into the US sphere, with its much larger markets. It benefited from immigration flows – including from the GDR – and from self-reinforcing logics of agglomeration, whereby increased investments attract further capital and skilled workers, and so on in a virtuous circle.

The GDR also suffered from the general crises of the Soviet bloc. The Soviet system that took shape in 1928 had enabled Russia, an abysmally poor society, to industrialise rapidly during the interwar era. But with globalisation from the 1960s onward, Soviet bloc enterprises were handicapped by their weaker ability to internationalise sales and operations. In the 1980s, crisis hit the region and the Soviet bloc’s trade networks collapsed.

Economic divide
On unification, the conservative government of Helmut Kohl set the exchange rate of the Ostmark to the Deutschmark at 1:1 – a 300-400% increase in the value of the Ostmark. Profitability for eastern firms could be maintained only if costs were reduced accordingly, but this was impossible given that all other input prices and overheads were themselves subject to the revaluation. No enterprise could withstand that shock unaided.

The Kohl government of the early 1990s adopted a blasé attitude to deindustrialisation in the east. It set up an agency, the Treuhandanstalt (nicknamed the “Handover Agency”) that oversaw the fire-sale privatisation of eastern enterprises and land – including the sacrifice of perfectly viable firms. The sell-off was accompanied by legal and illegal corruption and was heavily tilted to the interests of western businesses.

Beneath the German flag-waving, the pickings of unification were taken by the largely western rich. Overall, only 5% of Treuhandanstalt businesses were sold to easterners, 85% to westerners. Germany’s economic divide resumed, with senior management and the bulk of high-value activities located in the west.

The “great handover” combined with agglomeration logics to ensure that Germany’s western states attracted the bulk of capital and skilled migrants – this expanded local markets and, in turn, attracted further investment and immigration. Meanwhile, the declining regions of the east experienced emigration and stagnation, depopulated ghost towns and the wholesale demolition of housing.

Stuttering attempts to close the gap
The German government attempted to counter this east-west divide in two main ways but both also reinforced underlying differences. One was the construction of the east as a low-wage territory and neoliberal testing ground. In a bid to attract investment, employers were encouraged to experiment with practices that the stronger trade unions in the west would block. National collective bargaining agreements were ripped up in the east. This undermined workers’ strength and morale throughout Germany, but the extremes were in the east, particularly in Saxony, which suffers Germany’s highest rate of circumvention of collective agreements.

The other was state expenditure. “Solidarity” transfers of wealth from west to east were very substantial. This helped salaries and per capita GDP in the former east rise to around 80% of the west in the early 2000s. But the gap has stuck at roughly that level ever since, and is predicted to continue or even widen.

West-east transfers are rather like giving fish to someone after taking their fishing rod. Because most of the east’s assets were appropriated by western interests, much of Germany’s transfer spending goes from western taxpayers to the east, then boomerangs back in the shape of rent and profits. To this extent, the transfer is from western workers to western proprietors, recycled through eastern infrastructure projects and welfare recipients.

------------
Lusitano Store: https://shop.spreadshirt.co.uk/lusita...


Intro Music:    • Chinggis khaanii Magtaal - Batzorig Vaanchig  

Select video clips courtesy of Pexels