How Anti-Semitism Costs the Economy

(upbeat music) Narrator: You probably learned in high school about the Black Death. That’s the epidemic that killed almost half the population of medieval Europe. When the epidemic struck, people didn’t know what had hit them. Some blamed constellations of the stars, but many blamed Jews, whom they said had been poisoning their wells. That resulted in pogroms—massacres of Jews. 

You might think that those events happened 700 years ago and are very much confined to the past, but two economists have found a link between the anti-Semitism of the Middle Ages and what happened in Europe in the 20th century. (graphic displays the names and affiliations of the researchers: “Hans-Joachim Voth, University of Zurich” and “Nico Voigtlander, UCLA”) 

Let’s look at two German cities, Würzburg and Aachen. They’re similar in size and demographics. Back in the 1300s, there was a pogrom of Jews in Würzburg, but there was no pogrom in Aachen. Let’s fast-forward to the 1920s. The residents of Würzburg wrote a lot of anti-Semitic letters to their local Nazi newspaper, while the residents of Aachen wrote less than half as many. In 1928, 6 percent of Würzburg’s residents voted for the Nazi Party, but in Aachen it was only 1 percent. 

Looking at the data, the researchers find that anti-Semitism can linger around for centuries. Over time, Jews in Europe developed a reputation for being moneylenders and bankers. Even Shakespeare developed his character of Shylock, a vindictive, moneylending Jew at a time where there were no Jews actually living in England. This reputation contributed to the image of Jews as greedy and gluttonous, and that impression persisted until the 20th century, and to some extent still continues today. 

Researchers have analyzed what that means for areas that have historically seen episodes of anti-Semitism. They find that Germans in these areas don’t trust the stock market as much as other Germans do. They don’t trust banks. They prefer to keep their money in cash. They’re less likely to have a mortgage. What’s more, anti-Semitism can devastate the middle class. Think about what happened during the Holocaust when the Nazis removed large numbers of Jews from the areas they controlled. That created a massive economic and social shock in those regions. A group of three researchers looked at cities in the former Soviet Union that were occupied by the Nazis during the Second World War. They found that the cities where the Jews were most persecuted in that period have lower-than-average wages today. 

Two economists have found the Nazi policy of removing Jewish teachers resulted in schoolchildren in Germany having, on average, six months less education. In cities that had larger populations of Jews, schoolchildren ended up with even less. That led to a big education gap in those areas, which meant that local Germans were much less likely to finish high school or go to college. The brain drain didn’t stop there. A whole generation of scientists fled Nazi Germany, which, according to one economist, hurt the German universities more than the bombs ever did. The scientists who stayed in Germany on average became less productive because many of them had lost their coauthors. Some of those scientists who had escaped, many of them going to the United States, won Nobel Prizes. And they ultimately went on to develop the atomic bomb. 

Of course, Jews are not the only group that people have blamed for society’s woes. Today’s rhetoric is a good example of that. Anti-immigrant and ultranationalist groups are making political headway around the world. The politics of intolerance and the politics of prejudice seem to be getting noisier and noisier. So if we’re looking for a way to turn down the volume, maybe we should consider the historical data.