Averting the Nazi seizure of power: A counterfactual thought experiment

Christian Stögbauer and John Komlos

European Review of Economic History, 2004, vol. 8, issue 2, 173-199

Abstract: The Great Depression in Germany led to the radicalisation of the electorate, leading the country and then the world into the darkest days of Western civilization. Could it have been otherwise? This article explores whether the NSDAP takeover might have been averted with a fiscal policy that lowered the unemployment rate in those parts of Germany where their support rose most rapidly. A counterfactual simulation model based on estimates of the relationship between unemployment and the radical vote at the electoral district level provides a framework for considering how much lower unemployment would have to have been in those districts to prevent the NSDAP from becoming a formidable political force in Germany. Budget neutrality is maintained, so that the simulations do not depend on an expanded fiscal policy. The results indicate that such a policy could well have averted the NSDAP's seizure of power, and the catastrophe that followed in its wake.The only thing we owe history is to rewrite it.Oscar Wilde

Date: 2004
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