The Awful Results of Central Planning

We’re here in Israel at the invitation of a dear reader. Originally from Baltimore, our dear reader now makes his home in the Promised Land.

“How did you end up here?” we wanted to know.

“A long story of failures…” was the answer.

“I was a failure in college so I dropped out and went to Wall Street. A friend and I started an investment fund… this was back in the 60s. We had a total of $175,000 under management. Can you imagine? That’s not even a respectable bonus these days. But a lot of funds were small back then. And we didn’t even take a salary for managing it. Just 15% of the profit. Still, believe it or not, we did pretty well.

“But then I got tired of managing money. So, I looked for someone to take it over… someone to manage it for me. But that was a failure too… my partner refused. So, I put it with a new guy… someone nobody had ever heard of… a guy by the name of Warren Buffett.”

You can see why he went to the Promised Land.

The rest is history.

Speaking of which, Israel has as much history as anywhere on earth. That too is a long record of confrontations and disasters… war… temple destruction… captivity. The Jews must be God’s chosen people; he seems to have singled them out to give them a hard time.

Probably the most dramatic and deadliest episode in the entire 4,000-year history of the Jews happened during the lifetimes of many readers. Adolf Hitler set out to annihilate all the Jews in Europe. And he came pretty close to success.

We have grown up with the story of the Holocaust. When we were babes in arms, the full horror of the concentration camps and gas chambers was revealed in the press.

America had a different meaning back then. It stood shoulder to shoulder with Jews, because Jews were the underdogs. They needed a big brother to look out for them. Then, during the Cold War, the US… and Israel… stood for freedom… for decency… for allowing people to do what they want to do and be what they want to be without the crushing weight of an all-powerful state on their backs.

Guy Sayer was a soldier in the German army in WWII who spent years fighting on the eastern front. In his book, The Forgotten Soldier, he tells how he would never have considered surrendering to the Soviets.

Being taken prisoner by the Soviets was a death sentence. (The Germans gave the same treatment to Soviet prisoners of war.) But when he was transferred to the western front, he surrendered to the Americans the first chance he got. He knew the war was lost. And he believed the Americans would treat him decently. He was right.

Those days are gone. After waterboarding, drones and presidential assassinations, who believes the Yanks are any more decent than anyone else?

Nuremburg prosecutors had their work cut out for them. Leading Nazis were arguably “just following orders” or even “just obeying the law”. After all, they wrote the law.

In order to hang Frick and Frank and the others, prosecutors had to stretch the law – charging the condemned men with “crimes against peace”… waging “aggressive wars” or committing “crimes against humanity”.

Of course, you could have strung up a half a dozen American presidents on those crimes… Lincoln, Teddy Roosevelt, George W Bush… and most recently Barack Obama himself.

But Bush’s and Obama’s crimes are nothing compared to those of Hitler and Himmler. Bush and Obama killed a few thousand – most of them innocent people – but Hitler and Himmler set out to kill millions.

And while they went to great lengths to kill Jews – even damaging their own war efforts, by diverting valuable resources from the army – they killed even more by going to no lengths at all. Soviet prisoners of war were left without food or shelter.

In the first months of Operation Barbarossa, the Germans captured 3.3 million Soviet soldiers. Six months later only 1.1 million were still alive, with only 400,000 fit for labour.

Of course, this was not by chance or by incompetence. It takes central planning to achieve a result so stunningly awful. The Germans had a plan: the Hunger Plan. The idea was de-populate the regions taken over by the Wehrmacht so that German farmers could re-settle the land.

Hitler gave Americans credit for the idea. He spoke of the entire campaign as though it was the same as the American settlement of the West. “The Volga is like the Mississippi”, he explained. “We’re now going to settle the lands beyond it.”

But if you’re going to settle a new territory, you have to first empty it of its existing inhabitants. Which is what the US Cavalry… smallpox… and land-hungry pioneers did west of the Mississippi. In Poland and the Soviet Union it was the Wehrmacht and the ‘Hunger Plan’.

Food was already running out in Germany itself, as early as 1941, thanks to the Nazis’ disastrous farm policies.

“If anyone goes hungry, it won’t be us”, was Hitler’s reply. He told his henchmen to take food away from the Ukrainians, Poles, Russians, and the French. Each local area commander was given targets for how much food he needed to confiscate and ship back to Germany.

The German military commander of France judged the target so ludicrous he simply ignored it. But the Nazis in the east were driven not only to deliver grain to the Germans but also to deprive it from the local population. Doing so, the plan called for as many as 30 million Poles, Ukrainians and Russians to starve to death.

The Hunger Plan was never put fully into practice. It was impossible to cut off the black market and starve the cities completely. Still, millions starved – especially those whose access to the rest of the world, and to markets, had been restricted, notably Soviet prisoners and Jews.


Bill Bonner
for Markets and Money

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30-08-2012 – Greg Canavan

Why You’ll Never Change Our Mind About Inflation
29-08-2012 – Nick Hubble

The Make Believe World of Economists, Continued…
28-08-2012 – Bill Bonner

Iron Ore, a Love Story
27-08-2012 – Dan Denning

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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