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Notes to myself, possibly of interest to others.
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Monday, September 20, 2010

The new extremeism

Lessons from the Great Depression, by Kevin O'Rourke: ...The 1920s had seen a gradual reconstruction of the international economy, and with it signs that Germany was being successfully reintegrated into the international community... The Nazis obtained just 2.6% of the vote in 1928.

Then, in late 1929, the Great Depression hit and everything fell apart. ... Optimism was replaced by a profound sense of insecurity. Inevitably, the extremist parties benefitted. In 1930 the Nazis increased their share of the vote to 18.3%, ...and the Weimar Republic was doomed.

The lesson was clear: states needed to provide their citizens with the security which the gold standard and the market system, left to their own devices, had so conspicuously failed to do. The alternative was nationalism in all its guises: economic nationalism at best, but potentially something much uglier and far more dangerous. And so the democracies of the postwar period became social democracies...

Over the past thirty years, a backlash has swept away much of this postwar political consensus...

Thankfully, the ... reflationary policies adopted in 2009 are the main reason we avoided a second Great Depression. However, ...Our Great Recession has strengthened the political extremes...

From Mark Thoma (who supplied the above):
With the success of the Tea Party lately, I've found myself wondering if we are headed toward a period of extremism and where that might lead us.

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