The Stahl Plan, Part 2
"Absolutely not."
"Pardon?"
"It is a fundamentally flawed plan from the very beginning."
As soon as we met, Keynes flatly rejected my ambitious Stahl Plan.
Wait, this wasn't how it was supposed to go. I was already in a bad mood because it felt like the Stahl Plan and the Vienna System were on the verge of collapsing... Hearing Keynes's stiff tone only made me feel more petulant.
"Why?"
"In the short term, you might seize political and economic hegemony. But in the long term, Austria will go completely bankrupt."
"It might be bad in the long term, but in the long run, we are all dead."
"Could you please stop with the 'long run' nonsense?! Where on earth did you even hear that?"
In the end, Keynes snapped. He seemed to be muttering something like "fucking..." under his breath... What was wrong with him? Did he just have a fight with his wife or something?
"I thought you would like it, Professor Keynes..."
"Cut the crap! I swear to God, if those words ever come out of my mouth, I will jump naked into the River Thames!"
Did I just erase one of Keynes's most famous quotes from history?
"Please calm down and explain why it won't work. The credibility of our currency is guaranteed, so why can't the Krone become the global reserve currency?"
"Grrr...!"
Keynes grit his teeth again, but he let out a long sigh, swallowed his rage, and began to explain calmly. I had met plenty of lunatics in my life, but this was my first time dealing with someone who had such severe anger management issues.
"First of all, does the Austro-Hungarian Empire produce oil, or anything of the sort?"
"We do have oil fields in Galicia. We account for about five percent of global production."
"That is nowhere near enough! Surely you must have felt it yourself, Vice Chairman Stahl? You can't even properly meet your own domestic demand."
He was saying that we needed as much oil as the Middle East to even begin executing my plan. And oil was actually the better part of the equation. When it came to coal and iron, we were honestly lagging behind Britain and Germany.
"Think about it. Even if you import it from the Ottomans or elsewhere, the cost of this aid will double at the very least. And... what if Germany needs oil? But Austria can't supply it?"
"Then they would have to import it from the Ottomans or Russia."
"That is exactly the problem!"
Keynes explained it step-by-step. The oil fields in Austrian Galicia couldn't even cover our domestic consumption. So what would happen? Germany would have to negotiate with the Ottoman Empire for oil. But Germany had received a massive amount of Krone aid, which was convertible to gold. In that case?
"Germany will immediately convert their Krones into gold. And then they will take that gold straight to the Ottomans."
"..."
"In the short term, it's fine. Austria is a financial superpower now, after all. Your financial prestige will soar to the heavens. But... how long can you sustain this?"
Of course, the reason the United States could pull off the Marshall Plan was simply because they were the United States. I knew this well. But... I thought we were at least on par with the Soviet Union. Granted, in terms of relative productivity, we were a hundred times better off than the post-war Soviet Union. But the Soviets didn't really need factories. Why? Because they held a monopoly over the energy supply of the entire European continent. Yes. The problem was energy!
Hearing my realization, Keynes shook his head.
"Energy is not the only problem."
"Pardon?"
"Of course, the lack of energy has reduced productivity. But... your absolute productivity itself is... ambiguous. It's not at a level that can support such a system."
"What? We own at least half of the factories in Europe, don't we?"
Keynes shook his head.
"Austria cannot even handle the demand of the German state alone."
Demand had suddenly skyrocketed. But there weren't enough goods to sell. Naturally, goods became scarce. Following that basic principle, prices were bound to rise.
"Has no one ever explained such a simple principle to you?"
I glanced over at the economic bureaucrats. The economic officials of our empire looked as if they had been struck on the head with a sledgehammer.
"I-it was that simple?!"
"N-no, I thought the Vice Chairman already knew that!"
"..."
Keynes, grasping the gist of why this had happened, let out a deep sigh. ...I hadn't been this embarrassed since arriving in Europe. My face flushed red, and I couldn't bring myself to look up.
"That's not all. Right now, Germany is completely ruined, so even if they receive massive aid, they will buy goods from Austria. But what happens when time passes?"
Listening to Keynes's explanation, I thought of the relationship between South Korea and China. After Deng Xiaoping's reform and opening-up, the Korean economy grew tremendously alongside the Chinese economy. Massive investments and endless exports! China is vast, and its population is enormous. What happens if you sell just one roll of toilet paper to each of the 1.3 billion people? Even assuming a profit of only ten won per roll, that's a staggering thirteen billion won in profit. Where else in the world could you find such a crazy market?
"The Austrian government will be thrilled. The trade balance will record endless surpluses. But... you'll start to feel like something is missing, won't you? You'll think, 'If the economy of those poor Germans grows further, they'll buy even more of our goods.' This assumption itself is correct. ...To be honest, considering Vice Chairman Stahl's level of economic knowledge, I'm almost impressed. It borders on genius."
I had finally received my first compliment from Keynes! Only then did my flushed face return to its normal color... but Keynes immediately roared.
"But the Austro-Hungarian Empire can never pull this off! Maybe if you were the United States! At the very least, you would need to be like the Ottoman Empire. Even if you can't sell manufactured goods, you can sell an infinite amount of oil."
And so, South Korea happily continued its economic growth. But... at some point, that dynamic completely reversed. China began producing its own toilet paper and socks! At first, it was fine. In fact, it was better. Now China would buy ships, TVs, and computers. But then... China started manufacturing its own ships, TVs, and computers. And they did it even cheaper than Korea. What happens then? Korea goes belly up, that's what.
"The problem doesn't end there. This is an extreme example, of course. The German Empire won't emerge as a competitor in every single industry of the Austro-Hungarian Empire. The economy doesn't work that way. The real issue is... even so, the power dynamic between buyer and seller will be reversed."
"Why?"
"Because at that point, Austria's exports will become dependent on Germany."
I swallowed hard. To use South Korea as an example again, it relied on China for over thirty percent of its trade. But what if China threw a political tantrum and blocked exports? At that very moment, disaster would strike the Korean economy. Of course, Korea and China were an extreme example. But the Austro-Hungarian Empire and the German Empire were similar, differing only in degree. The United States would never lose its productive edge to another country, no matter what. And even if they did, they could just sell oil.
"Do you understand now? Just how insane of a plan you drew up, Vice Chairman Stahl?"
"...Thank you. We will scrap the current plan."
I looked at the economic bureaucrats, only to see them hanging their heads in shame, and let out a heavy sigh. It had been nearly ten years since I became the supreme authority of the empire. During that time, I had experienced nothing but success, and after going through several purges... before I knew it, only yes-men remained around me. Who was I to blame? I only wished a figure like Keynes could stay by my side for a long time.
"Yes. Then... what kind of system should we adopt to at least maintain economic hegemony over the victorious nations?"
"...There are many ways, but I must be going now."
"What?!"
Watching Keynes pack his things and stand up, I hurriedly grabbed his wrist.
"Where are you going?!"
"I must bring Professor Wittgenstein back to Cambridge. Besides... Vienna has truly beautiful palaces. I plan to do some sightseeing."
"N-no, I mean... are you really leaving just like this?!"
"Yes. I have pointed out all the flaws in your plan, Vice Chairman. No need to pay me."
Keynes seemed to have absolutely no lingering attachments as he prepared to leave. I hurriedly tried to block his path, but he remained completely unmoved.
"How can you leave like this?! The empire still faces many problems. Without you, Professor, our economy might collapse!"
"Vice Chairman. I am an Englishman. Furthermore, I am a professor at Cambridge. I wouldn't want to offer advice even if you offered me ten million gold coins."
"Then why did you bother coming to Austria in the first place?"
"Because I feared that if things continued this way, the global economy would collapse, leading to another war. Now that I've explained it and you've grasped reality, a major catastrophe shouldn't happen. Figure out the rest on your own."
Recruiting talent often came with these kinds of headaches. Even if I tried to recruit Einstein to build a nuclear bomb, he would never agree to come. There was a reason I had gone out of my way to make an impression on Marie Curie. At any rate, geniuses had their own stubborn pride, allowing them to easily brush off the pleas of a genius chemist like me. As for Hitler and Stalin... well, they were mad for power, which made them easy to recruit.
"Well then, I shall take my leave..."
Ah, was I really going to let Keynes walk away like this? It was too much of a waste. It wasn't easy to find a genius of Keynes's caliber in this era. Of course, I couldn't keep him forever. Eventually, I would have to find other competent economic bureaucrats. As he said, before being a politician or a bureaucrat, he was an Englishman and a professor. Still, I wanted to wring out at least an improved version of the Stahl Plan. I racked my brain. Tempting him with money or power was out of the question... and appealing to world peace would only earn me a snort of derision. Using my brother-in-law would probably just make him angrier. Then, I recalled Keynes's anger management issues. Every time someone asked an absurd question, he reacted as if a grave threat to world peace had emerged. What if I exploited that?
"In that case... I suppose I'll have to improve the plan myself."
Hearing those words, Keynes paused in his tracks. Seizing the opportunity, I pressed on.
"If it's too difficult to secure economic hegemony solely through the power of our empire, then Germany, our empire, and the Ottoman Empire can just share a single common currency!"
"..."
"We can go beyond a common market and achieve complete economic integration. Of course, the three nations will coordinate and run their monetary policies together."
Recalling the EU, which had spectacularly crashed and burned in my original history, I first needled Keynes with it. I could see his mouth twitching, but he somehow managed to hold it in. His pace had slowed, but he was still heading toward the exit. Damn, does Keynes actually think a Eurozone-style system is acceptable?! Well, I suppose so. Although it was a structure where only Germany enjoyed a trade surplus, it also succeeded in giving weaker nations the same level of credibility as Germany. It had its pros and cons. Should I say something even more absurd?
"Should we start by raising interest rates? Wouldn't that curb the exploding demand? It would also keep inflation in check."
Twitch.
"After all, isn't this a situation where demand has increased but there is no supply? In a state of war, we can ultimately control aggregate demand while still reaping the benefits of economic stimulus. Maybe we should keep provoking international tensions? And while we're at it, we can siphon off the Ottomans' oil..."
Tremble, tremble.
"If the money supply increases, we can just carry out a currency reform every single time..."
This was the Stahl-style method of "Three Visits to the Thatch Cottage"! In the end, Keynes let out a heavy sigh and turned back to face me. Whew, thank goodness we didn't have to go as far as the Great Leap Forward.
"What on earth are you doing?!"
I smiled. He had taken the bait; now it was time to drive it home.
"I'm showing you what could happen if you aren't here, Professor Keynes. Honestly, most of the people around me are either fools who spout lazy nonsense like 'just leave it to the free market,' or they are Marxists. Am I wrong?"
"..."
"The primary causes of war may be emotion and hatred, but at their root lies economic imbalance. A depression breeds hordes of fanatics who believe in things like nationalist revolutionary ideologies."
Thud. Finally, Keynes slumped back into his seat.
"To what extent can we cooperate with the Ottomans?"
