Regulations, aka the Paper War

Lawrence H. White, in describing Germany’s economic recovery from World War II, cites the regulatory morass that had to be cut:

Unfortunately, occupation policy makers actually perpetuated the shortages by retaining the price controls the Nazi government had imposed before and during the war. Consumers and businessmen battled against the bureaucratic regime of controls and rationing in what the German economist Ludwig Erhard described as Der Papierkrieg—the paper war. Black markets were pervasive.

Germany’s new Social Democratic Party wanted to continue the controls and rationing, and some American advisers agreed, particularly John Kenneth Galbraith. Galbraith, an official of the U.S. State Department overseeing economic policy for occupied Germany and Japan, had been the U.S. price-control czar from 1941-1943; he completely dismissed the idea of reviving the German economy through decontrol.

I do not highlight this issue to make a comparison between Nazis in general and anyone else. The point is to highlight the regulations that politicians and government bureaucracies impose on the citizenry.  The regulations are a mechanism of control, their effects frustrate the citizenry in their efforts to look after themselves, and their incentive in creating black markets. Here.

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