19 August 2012

The Magic of Laissez-faire

Occupied Ukraine — Romanian zone in yellow

An excerpt from Hitler's Empire: How the Nazis Ruled Europe (Mazower, 2008) regarding life in the Romanian occupation zone in the Ukraine:
"The Romanian administration's unrivaled venality did have some benefits. It allowed people to buy their way out of requisitioning, death sentences and forced labour duties. It also let people buy their way into business: abolishing price controls and distributing licenses to anyone who paid, the Romanians simply took their cut and stood back as individual enterprise galvanized the local economy. Looted property — especially Jewish — injected capital. In Odessa itself, new hairdressers, cafés, shops, taverns and movie theatres flourished. German visitors were astonished at the availability of food, the well-stocked restaurants, snack-bars and stands selling home-made jams, sweets and bread rolls, which stood in such sharp contrast with the misery in those parts of the Ukraine under their control. Here, for a brief moment between the early 1920s and the collapse of communism in 1989, the inhabitants of Odessa — in the midst of of total war and genocide — embraced capitalism.

In a way, it worked. After the spring of 1942 there was no food scarcity, and following that year's harvest there was, by the standards of the region, something approaching plenty: peasants and others with the access to the market prospered. Even German journalists were impressed. 'It was known everywhere that life in Transnistria was incomparably better than anywhere else in the occupied territories in Europe,' noted a young Russian black marketeer. Wading through the mud of a dirty northern Transnistrian town, he found

something which distinguished it from all the other towns of Russia and the Ukraine under German occupation: an abundance of food in the market... There was fat, so rare in the Ukraine. There was bacon, butter, vegetable oil, meat  — which we had almost forgotten existed: pork, chicken goose — and many other things that made our eyes pop. Moreover it was inexpensive. We bought a lot more than we needed, enough for a week."
Once again, it would seem the only thing needed for there to be abundance, is to leave people the hell alone, which is what Romanians in Ukraine did, provided they paid their bribes. In Pridnestrovie in 1942-44 it even worked to create a condition of plenty in the context of a ruthless occupation and disturbances associated with large-scale war.

Also another thing that is worth nothing, the episode is another example of the rule that anything positive that fuses with the state becomes negative and vice versa. Generally speaking you would value administrators with integrity more so than those without it, but when talk turns to state administrators that is not necessarily the case at all. Ukrainians under Romanian occupation would have fared far worse if Romanian officials took their duties more seriously and refused to lessen the harshness of the occupation regime in exchange for bribes ordinary Ukrainians could afford.

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