Funny Money: Philanthropic Giving and the Money Illusion

This study argues that the size of philanthropic gifts is affected by donors’ perception of the value of their money. The essay examines aggregate giving to Bread for the World in former East Germany before and after two currency reforms and shows that decades of overvaluing the West German Deutschmark led East Germans to give less after the first currency reform while the second currency reform did not lead to such a drop off. The essay employs East German jokes to illustrate popular views of both East and West German currency that developed over time. It indicates that East Germans developed a perceived value of money separate from its real purchasing power, which affected their philanthropic donations. These findings are applicable to small and large philanthropic gifts, especially across currencies, as in international giving.

Soziale Marktwirtschaft damals und heute

The German currency reform on 20 June 1948, together with a comprehensive liberalization of prices as well as monopoly control formed the basis for the post-war West German economic miracle, which became the economic backbone of the European integration process. 70 years later, little remains of the basic principles of the social market economy. An increasingly expansive monetary policy of the European Central Bank undermines competition, growth and social cohesion in Europe, which puts political stability at risk. To ensure economic, political and social stability in Europe, a return to the principles of Walter Eucken und Ludwig Erhard is necessary.

Prefab Prevails

This chapter focuses on the prefab model, which was proposed by the Western allies in 1990. The United States and West Germany convincingly made the case for taking the West's prefabricated institutions, both for domestic order and international economic and military cooperation, and simply extending them eastward. This institutional-transfer model had the advantage of being quick, and dealing in known and successful commodities, such as the West German Basic Law, the West German currency (or DM), and the Article 5 mutual defense guarantee of NATO, to name a few. Indeed, the fact that both the European Community (EC) and the North Atlantic Treaty Organization (NATO) were structurally capable of expansion provided useful precedents. Ultimately, the prefab model was the one model that proposed to harmonize both domestic and international institutions in Eastern Europe to preset Western standards.