East Germany was widely cited as the most successful of the Warsaw Pact puppet states, the one whose industrious nature “made communism work.” That was never true, but East Germany did seem to function more efficiently than the rest of the bloc.
One reason: Coffee.
“In the fall of 1977 the Ministry for State Security, the Stasi, East Germany’s feared secret police, warned the government that the country was on the verge of revolt. The trust lost in this incident would never be restored.”
“From the beginning, East Germany did not have access to the same level of luxury goods as the non-Soviet bloc West. Immediately after the second World War and through the 1950s, the Soviet Union supplied most of the coffee in the German Democratic Republic.”
“As East Germany became more autarkic from the Soviet Union, so followed its need to supply coffee independently.”
“The average East German coffee household expenditure was twice the amount spent on shoes, and equal to the amount spent on furniture.”
“This accounted for 4% of all retail sales in the GDR. As the East German state attempted to gain coffee independence, they also pushed as a core part of East German identity. Coffee allowed workers to be more productive, which contributed to a more prosperous society while maintaining an aesthetic of an invigorated society.”
“There was a problem though: it was a scarce resource and it was expensive to import. But, because of its importance, the Socialist Unity Party (the SED, who were effectively the state) saw a bargain that could be had from it. By being able to provide a scarce resource, it gave them legitimacy. But to gain this legitimacy they were constantly fighting back against a black market.”
“Officially any interaction with the black market
was illegal. Unofficially everyone knew it existed, and the Socialist Unity Party wasn’t happy with it, but it offered a window into what scarce resources would engender support if they could provide them.”
“Even before the Cold War, coffee in Germany was scarce – the blends were often not real coffee but blends of varying quality. This continued on after the post-war division and a fight between the Socialist Unity Party and the people of East Germany. The SED wanted to be the ones to provide coffee – the public wanted more of it and at a better quality. Thus developed a black market that the SED was constantly trying to stay ahead of.”
“One of the reasons for the Berlin Wall was that the SED couldn’t regulate the black market. It allowed goods to flood in from the West they were trying to provide, while allowing goods from the East (with subsidized prices) to flow out.”
“But, by 1973, things in East Germany had stabilized and things were, well, good. At least according to the CIA.”
“The SED had achieved a Faustian bargain: A black market where people had to depend upon relationships with each other to get access to goods meant that the populace actively grew in solidarity with each other.”
“The average East German citizen was willing to deal with shortages because it was something everyone was enduring together. In short, East Germany had entered a period of political stability, with a relatively high standard of living, and the shortcomings of the system reinforced the ideals that the system preached.”
“Two events at the beginning of the 1970s shook the East German economy to its core: the 1973 oil shock, and a failed coffee crop in Brazil. These events compounded within the fragile East German economy: to import goods from the west (such as oil) they needed to use western currency. As the price of oil skyrocketed, so did the rate at which East Germany drained its reserves of Western currency.” This part I’m not so sure of. I believe that East Germany imported most (but not all) of its oil from the Soviet Union under the Comecon plan. Oil prices from that did increase, but not immediately.
“Luxury goods, like coffee, became prohibitively expensive in an economy planned out to the penny. Before the failed coffee crop, East Germany spent 150 million marks per year on coffee imports. After the crisis began, this number had skyrocketed to 700 million. The SED was faced with a dilemma: money for oil, or marks for mocha?”
“They attempted to split the difference. The only coffee imported would be the higher end blends that the party leadership used. Lower end brands were either eliminated completely, or the recipe adjusted to use less coffee. Further, certain blends would only be available in Intershops, which required the use of Western currency – which would help the state refill it’s currency coffers.”
“East Germans rejected the new coffee mixes in a way the state was not prepared for. In a report to SED leadership on September 1, 1977, the Ministry for State stated that, ‘the quality and price of [the new coffee mixes] are rejected by broad circles of the population.'”
“Complaints recorded by the Stasi included ‘critical indications of taste,’ and a first indication that the new mixes were unable to be processed to the ‘full filtering capability in household machines.’ The coffee mixes were breaking the machines.”
“The Stasi further expressed in this report that workers resented party officials requesting austerity for workers, while still importing ‘expensive Western cars for officials.'”
“Additionally, Stasi reports say that citizen did not believe the ‘information policy.’ Far from just rejecting the new coffee mixes, were rejecting the SED’s handling of the crisis.”
“By September 12, the frustration over austerity moved to unrest. A Stasi report stated that in discussions among workers, ‘skeptical, resigned, pessimistic and negative opinions up to aggressive arguments become clear.'”
“While blaming Western media for this development, the Stasi also states that there are rumors of ‘warning strikes.'” These strikes would demand wages be paid in Western currency so that they could shop at the Intershops.”
“In relation, the report states growing frustration with the expansion of Intershop stores, with the simultaneous ‘elimination of low-price coffees and the limited supply in restaurants.’
Workers also believed that the classless East German society was now stratified, with three distinct categories: those without western currency who would be forced to endure austerity, those with access to western currency who could shop at Intershops, and ‘privileged persons and high officials who…drove expensive Western cars and [weren’t] affected by austerity.'”
“These last two categories were contrasted with the common worker and pensioner who ‘have returned to the point where begging letters have been sent to [West Germany]’ for coffee.'”
They were even criticizing Party officials! “East Germany was on the precipice of a revolt.”
“The SED would finally act on 23 September to contain the growing unrest. The price of the lowest quality mixes was reduced, and a communication was published on the coffee shortage, explaining the reasoning behind austerity measures.”
East Germany also started sourcing coffee from Vietnam.
Eventually, of course, East Germany would cease to exist due to the “internal contradictions” of communism and because the Soviet Union could no longer afford to keep it’s foot on Eastern Europe’s neck.
Note: Bluehost has been dog slow for the last 24 hours. If this keeps up tomorrow I’ll try to go through the agonizing technical support process to do something about it…
Asianometry has an interesting video up about East Germany expensive, strenuous efforts to catch up to the west in semiconductor manufacturing technology.
Spoiler: They didn’t.
Some takeaways:
“In the late 1980s, the German Democratic Republic, or East Germany, went all in on the monumental task of domestic semiconductor production. This semiconductor obsession failed, and the billions of marks spent on it eventually bankrupted the country’s failing economy.” I think he oversells the role the semiconductor push had on bankrupting the economy; everything in late commie East Germany was failing (just like the rest of the Warsaw Pact), they suffered a credit crunch for investment due to tightened western restrictions, couldn’t export Soviet oil as profitably due to the Reagan/Saudi created oil glut, and also were running into hard currency shortages to but the components their manufacturing sector needed to keep exporting.
The East German Uprising of 1953 kicked off what would be a persistent, and ultimately existential problem, for the GDR: Emigration. Throughout its history, its best and smartest people consistently sought a way out to the West. To convince its people to stay, the SED [Sozialistische Einheitspartei Deutschlands, AKA Socialist Unity Party of Germany] promised a better future through the use of technology. More than the Soviets, East Germany leaned on information technology as a pathway towards economic vitality and a glorious socialist future. The Party’s elites saw themselves locked in a technology race with the capitalists to see who can build a better society. Leader Walter Ulbricht called for an “industrial transformation” with the ultimate aim of “catching up with and surpassing capitalism in terms of technology.” A thriving computer industry was crucial towards making this ideology work. And in order to produce these superior computers, East Germany needed to learn and master microelectronics technology.
“Less than four years after the Americans invented the germanium transistor, East Germany moved quickly to build their own line of first generation semiconductors. In 1952, development work began at the VEB Works for Electrical Components for Communications Technology, or WBN, in the town of Teltow near the city of Berlin. This put them about even with West Germany. The FRG’s first semiconductor factory came about in 1952, built by Siemens.” Indeed, this is very early to get into the semiconductor game. It wasn’t until 1957 that Fairchild Semiconductor, widely considered as Company Zero for America’s semiconductor industry, was founded.
“WBN suffered from a lack of cooperation between its industrial and academic sides. The production teams lacked discipline, hands-on experience, and did not appreciate the scale and difficulty of the task they were facing. In one incident, the team dumped hot ashes right outside a factory window where they were producing a pilot run of semiconductors.” Ouch! A very uncleanroom…
“The state failed to give their young semiconductor team the resources it should have gotten. Administration – their chief accountant, in particular – seemed to care very little for semiconductors. When the team asked for money to purchase felt slippers to prevent static charge buildup in the clean room, their chief accountant denied the request.”
The Soviets didn’t help. “Despite being the GDR’s primary political backer, the Soviets were strangely wary. In 1958, two WBN staff members traveled to the Soviet Union to do technical exchanges. A year later, they came back complaining of limited cooperation. Much of what the Soviets had developed was created for military use. Thusly, the Soviets were concerned that transferring that to the East Germans would leak via scientists defecting to the West.”
They tried to get information from the U.S., but Cold War tech transfer policies were already falling into place. They had better luck in the UK. “Through the contacts of Arthur Lewis, a British Labour Party politician, the delegation saw plants owned by British Philips, Siemens-Edison, and British-Thompson-Houston. The latter is a descendant of the Vickers Company that sold oil equipment to the Soviets in the early 1900s. Just thought that was a nice connection. This visit was very successful. The East Germans learned a whole lot about industrial level semiconductor manufacturing. They even managed to purchase equipment for low-frequency transistors, a trailing edge technology.”
Despite that, the gap grew wider: “In 1958, WBN produced 100,000 germanium diodes, transistors, and rectifiers. Worse yet, some 98% of what they produced eventually needed to be discarded throughout their entire working lives.” Classic commie quality. “That same year in 1958, the United States alone produced 27.8 million transistors. Two years later in 1960, the US grew that production capacity five times over to 131 million.”
“Erich Apel, head of the Economic Commission of the Central Committee Politburo and an economic reformer – wrote in late April 1959: ‘Compared to … the American, Japanese, and West German industry, we lie in a state of backwardness that can scarcely be estimated … this backwardness will not decrease through 1961 at least, but will instead grow. Another inspection in 1960 identified more items of backwardness in semiconductor production. Workers tended to use rules of thumb rather than their instruments to measure. The various factory lines did not cooperate with one another.”
“Interestingly, when reporting these results to the Economic Commission of the Central Committee Politburo, that inspector softened his results. In his notes to state authorities, he said the GDR was 5 to 6 years behind. But in his analysis to the more politically charged Economic Commission, he cut it in half, 3 to 4 years.” Commies always institute thermoclines of truth to avoid being purged.
The brain drain to the west continued. The solution: The Berlin Wall. “For semiconductors however, the Wall pinched off what little technology the GDR had imported from the West.” The solution was to suck up even more to the Soviets, and to spy harder.
In 1963, the aging Walter Ulbricht launched a new initiative – called the New Economy System of Planning – to bring more market elements to the GDR economy. Now industrial groups, not bureaucrats, can actually decide how money can be spent. The reform also elevated the status of technology sectors like semiconductor manufacturing in the economy. R&D spending increased by over a third from 1959 to 1963. In 1965, nearly 40% of the electronics that the GDR produced by value were semiconductors – 82 million marks out of 223 million marks in total. Four years later in 1969, that number grew four-fold. Many of these transistors went into new consumer technical goods like radios, TVs and fridges. In 1971, semiconductor production reached 535 million marks by value. That year, East Germany began producing their first integrated circuits, some 10 years after Texas Instruments did it.
“Strange inequalities in policy planning meant that color televisions were widely available, but consumer items like toothbrushes and toilet paper were in short supply.” Communist planning at its finest!
One day in 1967, the Minister of Electrical Engineering and Electronics showed up to an East German electronics firm with a suitcase full of integrated circuits from TI. He told them to copy them exactly. The Ministry for State Security – better known as the Stasi – had been engaged in scientific and technology espionage since the 1950s – mostly related to atomic engineering and other sciences. Then in 1969, the Stasi’s Scientific and Technical Sector was reorganized and expanded with the goal of acquiring military technologies. After Honecker came into power in 1971, the Stasi’s job shifted from acquiring scientific knowledge to specific technologies – mostly via informants in the West who found and handed the goods over to East Germany. One such informant was Hans Rehder, a physicist working for the West German firms Telefunken and AEG. He handed over technical secrets for over 28 years and was never caught.
“Western companies knew about this copying of course. In one famous example, a GDR chip analyst looking at a stolen chip from the US firm Digital Corporation saw a message n Russian, roughly translating to: ‘When do you want to stop to swipe. Own design is better.'”
Stasi intellectual theft kept them from falling further behind, but couldn’t close the gap. “Because the Stasi were spymasters not technical experts, they frequently asked for the wrong item. Their methods of laundering the technology before passing it on made it harder to understand how to use it. Tightening embargoes from the West also interfered with industrial development. Stolen Western products got progressively older and more expensive to acquire. The embargoes gave other countries the chance to scam the Stasi, adding mark-ups frequently in the range of 30% to 80% to even 100%. This drained the East Germans’ already limited R&D budgets.”
“The wholesale copying also undercut the country’s ability to export its goods abroad. The Stasi did not want other countries to see what they had managed to acquire. And had they tried anyway, sales would have been blocked on patent infringement grounds. And finally, semiconductors were getting to the point that East German technicians struggled to replicate them. As early as 1976, an IC’s physical form no longer yielded secrets on how to produce them.”
“In 1981, with the GDR still about 7-10 years behind the West in microelectronics development, Erich Honecker announced a ten-point program to produce the majority of its semiconductors domestically by 1985. The 1970s were rough years for the GDR. Tighter export bans. The Oil Crises of the 1970s. Heavy borrowing from the West. Declining productivity and worsening competitiveness. It was all weighing heavily – grinding the country’s economy to a halt. Gerhard Schürer, head of the State Planning Commission, convinced Honecker that investing in semiconductors would bring the country out of its economic morass.”
They even struck a deal with Toshiba.
In exchange for 25 million marks, Toshiba – a long running technology partner with the GDR – would furnish the GDR with designs for their 256 kilobyte memory chips along with instructions on how to produce them. At the time, 256-kilobyte was leading edge stuff. The GDR was still struggling to produce 64 kilobyte memory. This would have been a game-changer. But in 1987, Toshiba got caught selling submarine propeller equipment to the Soviet Union. Huge scandal back then. Afraid of getting caught again, Toshiba offered the Stasi a 95% refund to destroy the evidence. [Spy Gerhardt] Ronneberger agreed. So in July 1988, he got the money back and dissolved the chip designs in a vat of acid in front of Toshiba’s people. But never trust a spy! Those were just copies, produced for exactly that purpose.
Finally in September 1988, Zeiss General Director Wolfgang Biermann triumphantly presented Erich Honecker with the first samples of that 1 megabit chip – the U61000. Honecker said that the chips were “convincing proof that the GDR is maintaining its position as a developed industrial country.” This technical “triumph” was the bitterest of them all. In semiconductors, prototypes mean nothing. Production means everything. Dresden produced just 35,000 chips throughout the entirety of 1988 and 1989 with a yield of 20%.
To say this was “piss poor” would be an understatement. Those are ruinous, “fire everyone” numbers for actual semiconductor manufacturers.
They planned to scale up to 100,000 1 megabit chips each year. Toshiba alone produced that many in a single day. Two months later in November 1988, the leading edge moved once more. Toshiba began shipping its 4-megabit DRAM in high volume, seeking to produce a million chips a month by March 1989.
Then history happened. “By then, the East German economy was in shambles, scheduled to default on its debts by early 1990. It never even got there. In May 1989, Hungary opened its borders with Austria and East Germans swarmed through there en route to West Germany. Later in November 1989, a year after its one megabit technical triumph, the Berlin Wall fell.”
East Germany stole as many designs as they possibly could, but they couldn’t steal the intellectual expertise behind the numerous process tweaks, nor the furious swarm of technological innovation drive by Silicon Valley’s capitalist high risk/high reword startup culture that drove Moore’s Law for decades.
Top-down communist command economies never had a chance to keep up.
Greetings, and welcome to a Good Friday LinkSwarm! I had the day off, so I slept ridiculously late, which is why you’re getting this in the late afternoon evening.
1. $10 Billion to Create a ‘Civilian Climate Corp’
The Biden administration proposes spending $10 billion to create a “Civilian Climate Corp.” The White House claims that “This $10 billion investment will put a new, diverse generation of Americans to work conserving our public lands and waters, bolstering community resilience, and advancing environmental justice through a new Civilian Climate Corps.”
2. $20 Billion to ‘Advance Racial Equity and Environmental Justice’
The proposal sets aside a whopping $20 billion—more than the latest COVID package spent on vaccines—for “a new program that will reconnect neighborhoods cut off by historic investments and ensure new projects increase opportunity, advance racial equity and environmental justice, and promote affordable access.”
3. $175 Billion in Subsidies for Electric Vehicles
Electric vehicles: A technological novelty so good it won’t catch on without hundreds of billions in subsidies. At least, that’s apparently what the Biden administration thinks, as its infrastructure proposal earmarks a “$174 billion investment to win the electric vehicle market.”
The spending will take the form of manufacturing subsidies and consumer tax credits, which historically have benefitted wealthy families most. For comparison, the proposal carves out more for green energy goodies than it does on the total $115 billion to “modernize the bridges, highways, roads, and main streets that are in most critical need of repair.”
After Joe Biden’s performance last Thursday, every American should be demanding to talk to the manager. That’s because while President Joe Biden’s pathetic display during his “matinee” presser showed clearly that he is not in charge of our country, it also begged the obvious follow-up question not being asked by the 25 reporters in the room: If Joe Biden isn’t in charge of running our government, who is?
If you didn’t actually watch the press conference—and every American should-especially those who voted against Trump by voting for Biden because they’d thought he was an improvement—by now, you have doubtless read the accounts of the President’s cliff notes that included scripted talking points and photos of the journalists upon whom he was directed to call. His staff treated him in much the same way as does the family of someone in the early stages of dementia, where they put pictures on doors and cabinets as a reminder of what goes where.
If Joe Biden were my next-door neighbor, his condition could be described as sad, and he would be afforded every consideration and allowance possible for someone entering the final stage of the aging process. He is not, however, my next-door neighbor. He is supposed to be the President of the United States. His performance was mortifying. This is one of the most powerful men in the world. He controls our budget. He controls our military. He controls our nuclear weapons. What he clearly does not control is himself.
And if he isn’t in control of himself, then who is? Who is in charge?
Matt Taibbi: “Master List Of Official Russia Claims That Proved To Be Bogus”:
Update 3/21/21 “All 17 intelligence agencies,” October 19, 2016. Before the 2016 election, Hillary Clinton and others publicly stated that all 17 U.S. intelligence agencies backed an assessment that cyberattacks in 2016 came from the “highest levels of the Kremlin.” That was later corrected in congressional testimony to four agencies. It was actually a hand-picked team from three agencies, and the chief conclusion from that group came mainly from CIA chief John Brennan, who in his own book, “Undaunted,” published in 2020, revealed that he had overlooked dissenting analysis from two members of the working group. Brennan said he believed “the quality of the sources justified the high confidence,” but the Times and other outlets reported that Brennan was basing much of his confidence on a single human source in Russia whose information was allowed to bypass the normal vetting process….
So a story that began as an assessment on Russian interference agreed upon by “all seventeen agencies,” became four agencies, then it was a hand-picked group from three agencies dominated by the CIA director, who overrode dissenting analysts within the group, likely because of confidence in one human source.
There are twenty five entries on the list, and Taibbi admits he could have gone “on and on.”
The goal was to destroy dissidents and potential dissidents socially and emotionally without resorting to arrest and imprisonment. The Stasi collected information about the victim's private life, and proceeded to "disintegrate" their careers and their family and private life.
The goal was to destroy the reputation of the target and make him so preoccupied with his personal difficulties and emotional turmoil that he had no will to question the government of the DDR. It was done covertly, and often victims weren't believed even if they discovered it.
The results are in—and they overwhelmingly vindicate the free states over the authoritarian experiments. First, we saw that states with the harshest restrictions didn’t necessarily achieve the best COVID-19 death outcomes. Florida has fared far better than New York and New Jersey, for example, and multiple studies have found no correlation between lockdown stringency and death rates.
Yet lockdowns have come at an enormous economic and human cost. We’ve seen mental health problems and child suicide spikes, an increase in domestic violence, an uptick in drug overdoses, and much, much more. And, of course, the economic toll of shutting down businesses and criminalizing “non-essential” livelihoods has been devastating.
The national unemployment rate was a poor if not disastrous 6.2 percent in February. Yet the just-released state-level unemployment rates for last month show that the devastation hasn’t been equal across the board. New Labor Department data reveal that many free states have returned to nearly their pre-pandemic unemployment rates—while lockdown states dominate the wrong end of the list.
Why isn’t everyone in Texas dying? “The lockdowns have had no statistically observable effect on the virus trajectory and resulting severe outcomes. The open states have generally performed better, perhaps not because they are open but simply for reasons of demographics and seasonality. The closed states seem not to have achieved anything in terms of mitigation.”
Try to contain your shock, but Cruz Noguez, the mano owned the SUV involved in the carash that killed 13 illegal aliens, was a coyote.
Related: “Austin Resident Faces Life in Prison for Alleged Smuggling That Killed 8 Illegal Aliens.”
Prosecutors have also charged Austin resident Sebastian Tovar, age 24, with transporting illegal aliens resulting in death for an incident that killed eight people on March 15.
The U.S. Department of Justice (DOJ) said in a press release that a Texas Department of Public Safety (DPS) officer tried to stop Tovar, who led police on a 50-mile car chase.
“Traveling north into the southbound lane on Highway 277, Tovar collided with another vehicle head-on, resulting in the death of eight illegal aliens that had been in Tovar’s pickup truck,” the DOJ said. “The driver and passenger of the vehicle into which Tovar collided are hospitalized and in stable condition.”
The DOJ said that, after the incident, border patrol agents apprehended 12 illegal aliens, two of whom confessed to being connected to Tovar’s alleged smuggling activities.
The defendants in the March 4 incident are 28-year-old Isidro Rodriguez Jr. and 18-year-old Bianca Michelle Trujillo-Lopez. They face the possibility of life in federal prison if convicted.
The indictment charges Rodriguez and Trujillo-Lopez with illegal alien transportation resulting in death, illegal alien transportation resulting in serious bodily injury and placing lives in jeopardy, and two counts of conspiracy.
“Court records allege that on March 4, 2021, the defendants were traveling on FM 2523 near Del Rio when a Texas Department of Public Safety trooper attempted to stop them for speeding,” the DOJ said in a press release.
“The driver, Trujillo-Lopez, tried to outrun the trooper, at times reaching speeds over 120 miles per hour. She ultimately lost control of her vehicle and rolled it multiple times after missing a curve on the road.”
“Conservative Humorist Chad Prather Launches Campaign for Texas Governor.” He’s running against incumbent Governor Greg Abbott in the Republican primary. I can’t say that I’ve actually heard of Prather before (which would tend to bode ill for his chances), but he starts out with 196,000, which is more than a goodly number of Democratic Presidential candidates started out with. Of course, all of them lost too…
Dwight covers stopping the bleed, with a side order of Julia Child’s liver and a nice Chianti.
Review of Kong: Skull Island in advance of seeing Godzilla vs. Kong this weekend.
I still don’t feel like I have a good handle on the Tunisian Revolution yet. (Indeed, my fingers keep wanting to type “Tunesian,” which suggests a government based on iTunes…) Jihadi? Non-Jihadi? Both? (Probably the the last.) But the fact that the government-owned ISPs were running a massive “man in the middle” attack by capturing every password for Facebook (and what the Facebook team did about it, certainly suggests that the (semi-deposed) government were no angels. In fact, it brings back memories of East Germany, where Stasi monitoring stations were literally built right on top of telephone exchanges…
(And speaking of the Stasi, if you haven’t done so already, you should see The Lives of Others, one of the greatest films of the last decade…)