The American WW2 Economic Puzzle

Discussions on the economic history of the nations taking part in WW2, from the recovery after the depression until the economy at war.
Richard Anderson
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Re: The American WW2 Economic Puzzle

Post by Richard Anderson » 29 Sep 2016 18:17

Stiltzkin wrote:
I didn't know US training standard decreased.
That is only for a fraction of the USMC.
Recruit training for the USMC was 8 weeks prewar, 4 weeks September 1939-January 1940, 6 weeks January-May 1940, 7 weeks May 1940-January 1942, 5 weeks January 1942, 6 weeks in February 1942, 7 weeks March 1942-early 1944, and then 8 weeks until the end of the war. Advanced training continued after that.

U.S. Army "basic" training consisted of four weeks of "basic" and nine weeks of "specialty" training throughout the war.

USAAF pilot cadets received 205 to 225 hours of flight training before earning their wings and then another 100 or more hours in advanced training prior to combat.

I'm not sure how that demonstrates that US training standards decreased during the war?
"Is all this pretentious pseudo intellectual citing of sources REALLY necessary? It gets in the way of a good, spirited debate, destroys the cadence." POD, 6 October 2018

John T
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Re: The American WW2 Economic Puzzle

Post by John T » 29 Sep 2016 21:11

Richard Anderson wrote: Cost of a M4 in 1945 c. $55,000.
...
Cost of a Ford Standard Tudor Sedan (V-8) in 1939 $681.
So given inflation 1939 to 1945, we'll get a price of 881
according to http://inflationdata.com/Inflation/Infl ... ulator.asp

Thus the tank costs 60 times as much in 1945.
I'm kind of disapointed Guaporense, as I thought macro was your stronger side...
Guaporense wrote:
Guaporense wrote:
Guaporense wrote:
John T wrote:
Guaporense wrote: Well, it shows how inefficient the production of tanks was: the cost of producing a tank was much, much, much higher than the cost of producing the same weight in terms of civilian cars. Even though the cost of producing a Sherman tank should have been lower than civilian cars on a per ton basis due to it's massive bulk.
IT SHOULD ??
AS you obviously do not know anything about production, why do you bother to write so much on this forum regarding maters you have not the slightest unerstanding of?
You could start to note the difference between how to press steel to make the body of a car with how you make the glacis o a tank.
So you would think that single detail would certainly imply that the cost of production per ton will always be higher for tanks?
One single detail that you have to manipulate parts 100 times as heavy, and multiple times as hard to cut than mild steel.
Yet, if you have hundreds of times of more smaller parts will, logically, take up much more labor to cut and mold than a huge block. Hence, by logic, 100 cars should be harder to make than 1 tank. Why 1 tank costs more? Corruption, inefficiency and low scale of production.
By logic has nothing to do with your deam based rhetorics.
And we talk about 60 tanks not 100, your starts 40% off and keep going in the tangent direction of reality.

what precision is needed to make a tank gun, could it affect price ?
A large part of the material used to build a tank, at least the armour and main gun, are made of harder materials than the tools used to produce a normal car (in 1940) , could it affect price ?

and you explains it with corruption and inefficiency?
The scale were not low per production unit, but the write-off's were more or less direct as US-government paid significant part of the factories.
(if not all of it)

Guaporense wrote:
Guaporense wrote: (4) the good old factor of corruption is nearly always involved in government operations.
In Brazil for shure.

/John T
In all countries and governments corruption and bureaucracy hamper efficiency in government business.
I live my professional life in a country placed no 3 in TI and you in a country at 76:th place.
http://www.transparency.org/cpi2015#results-table
Might affect your assumptions on how the world works.

Cheers
/John

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Re: The American WW2 Economic Puzzle

Post by Guaporense » 13 Aug 2017 00:48

John T wrote:Thus the tank costs 60 times as much in 1945.
I'm kind of disapointed Guaporense, as I thought macro was your stronger side...

So you would think that single detail would certainly imply that the cost of production per ton will always be higher for tanks?


By logic has nothing to do with your deam based rhetorics.
And we talk about 60 tanks not 100, your starts 40% off and keep going in the tangent direction of reality.

what precision is needed to make a tank gun, could it affect price ?
A large part of the material used to build a tank, at least the armour and main gun, are made of harder materials than the tools used to produce a normal car (in 1940) , could it affect price ?

and you explains it with corruption and inefficiency?
The scale were not low per production unit, but the write-off's were more or less direct as US-government paid significant part of the factories.
(if not all of it)

I live my professional life in a country placed no 3 in TI and you in a country at 76:th place.
http://www.transparency.org/cpi2015#results-table
Might affect your assumptions on how the world works.

Cheers
/John
I wonder how the moderators allowed this?

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Calling a person incompetent in his profession and saying comes from a corrupt country and so thinks corruption is normal is both a personal insult and a national insult. In multiple violation of forum rules.
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Re: The American WW2 Economic Puzzle

Post by David Thompson » 13 Aug 2017 02:43

Guaporense -- After quoting John T, you asked:
I wonder how the moderators allowed this?
and remarked:
Calling a person incompetent in his profession and saying comes from a corrupt country and so thinks corruption is normal is both a personal insult and a national insult. In multiple violation of forum rules.

No one called you incompetent; your argument speaks for itself. There is no violation of the forum rules where a poster points out the flaws in an argument and the evidence to the contrary, and leaves it at that, which is what John T has done.

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Re: The American WW2 Economic Puzzle

Post by Guaporense » 13 Aug 2017 18:28

No, he didnt point to flaws in an argument that he did not understant and did not try to understand. But that is irrelevant. It is obvious that he is insulting me and my country.

Ok, I will do the same now: Maybe you don't see the insult because people from your country eat so much fat that it clogs the arteries in the brain. Which causes cognitive impairment. :milwink: I guess it is hard for your kind to do this kind of job.

:welcome:
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Re: The American WW2 Economic Puzzle

Post by Rob Stuart » 13 Aug 2017 20:48

:milsmile:
Guaporense wrote:No, he didnt point to flaws in an argument that he did not understant and did not try to understand. But that is irrelevant. It is obvious that he is insulting me and my country.:
Yes, he did point to flaws in your argument. It's more a case that you don't understand his counterargument than that he doesn't understand your argument. It's just plain wrong to argue that M4s cost more per ton than civilian cars due to corruption, and you've offered no evidence at all to support this suggestion. (Saying that "In all countries and governments corruption and bureaucracy hamper efficiency in government business" does not constitute evidence that M4 production in the US in WW2 was effected by corruption to any degree.)

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Re: The American WW2 Economic Puzzle

Post by David Thompson » 14 Aug 2017 01:39

Guaporense -- You wrote:
Maybe you don't see the insult because people from your country eat so much fat that it clogs the arteries in the brain. Which causes cognitive impairment. :milwink: I guess it is hard for your kind to do this kind of job.

:welcome:
You seem to have missed the fact that you and I post from the same location -- the USA ("people from your country eat so much fat. . . ."). Please don't let it go to your head when posting. ("it clogs the arteries in the brain. Which causes cognitive impairment.")

You also wrote:
I guess it is hard for your kind to do this kind of job.
Not really. After 15 or so years here on the staff and as a moderator, I'm used to dealing with all types of people.

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Re: The American WW2 Economic Puzzle

Post by Guaporense » 15 Aug 2017 05:41

Yes but I am not from your country. You can post from the same country and yet not be from that coutry. That is because people can move from one country to another.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Re: The American WW2 Economic Puzzle

Post by David Thompson » 15 Aug 2017 14:20

Let's get back on the topic -- American WW2 Economic Puzzle.

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Re: The American WW2 Economic Puzzle

Post by Guaporense » 18 Aug 2017 05:23

One Interesting thing is that when I searched for historical German national accounts I found exactly the same puzzle as I noticed between WW1 and WW2 for France/US.

Ritsch and Spoerer (1995) estimated German GNP at 1913 prices as the following:

1913 - 56,618 million RM
1914 - 52,275 million RM
1915 - 48,022 million RM
1916 - 45,797 million RM
1917 - 44,698 million RM
1918 - 38,688 million RM

1937 - 70,361 million RM
1938 - 77,076 million RM
1939 - 91,635 million RM
1940 - 106,403 million RM
1941 - 121,557 million RM
1942 - 128,426 million RM
1943 - 136,628 million RM

GDP grew by 94% in WW2 up to 1943 from 1937 levels but collapsed by 29% in WW1 from 1913 to 1918. Why such massive discrepancy? It's even bigger than the US's discrepancy, as according to estimates by Kuznets or War Production Board, US GDP grew by about 35% to 51% during WW2 by 1944 from 1937 levels.

One thing is that in WW2, German territory massively expanded and it's population increased from 68 million to 99 million (including 8 million imported labor units). Another thing, however, is that in WW2, Germany did the same as the US: Germany froze prices in WW2, as result prices FELL during WW2: the prince index was at 126.0 in 1937 and it feel to 120.2 by 1943. While in WW1, Germany's price index rose 57% by 1917 from 1913 levels. In other words, in WW2 the price control was so complete that it erased the possibility that prices could adjust to the new conditions of supply and demand, instead goods were rationed while the nominal GDP increased a lot (thanks to inflation), which meant that GDP growth was inflated during WW2.

This lead to many weird conclusions, in WW1, for instance, productivity per hour worked in industry decreased 35% in Germany from 1913 to 1918. While in Germany from 1938 to 1944, productivity per hour worked in industry increased a lot (even with bombings and shortages of raw materials). But the fact might probably be that in WW2 all these increases in productivity were purely artificial results due to inflated production indexes since prices couldn't adjust to real economic conditions.

Looking at these figures one might wonder how Germany lost WW2 considering it's GDP doubled from 1937 levels while the USSRs GDP declined massively from it's 1937 levels after Barbarossa: USSR's GDP declined from 250 billion rubles at 1937 prices in 1940 to 175 billion rubles by 1943, due to the territory lost in Barbarossa. Since GDP in 1937 at the USSR was about 230 billion rubles at 1937 prices and in 1937 it's GDP was similar level to Germany's (at around 3.8-3.9 billion 1905 British pounds), so Germany's GDP in 1943 was like about 450 billion rubles or nearly 3 times the USSR's GDP, adding the GDP of occupied territories I arrived at a figure of about 650 billion rubles for Germany + occupied Europe, or 4 times the USSR's (similar ratio to Maddison's estimates for 1939 I posted earlier).

However, in WW2, since most economies adopted prize freezing policies, estimated GDP (or industrial production) figures did not reflect real output. Hence, for estimates during the course of WW2 all countries' GDPs are probably plain wrong. This includes the US, UK, Germany and perhaps Japan. The USSR's estimates (which show a collapse of 35% from 1940 to 1942) are perhaps more realistic since they were made by Harrison using physical output data only, so their quality is probably much higher.
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Re: The American WW2 Economic Puzzle

Post by Guaporense » 19 Aug 2017 03:46

One way to test the validity of GDP estimates might be to compare physical production with GDP figures. In China today people tend to compare rail-freight volumes or electricity consumption figures with reported GDP figures to test whether official growth figures are consistent (sometimes they are not, it's true that Chinese growth figures from the 1980's, 1990's and early 2000's tended to overestimate real growth rates, Maddison himself made substantial modifications to his estimated Chinese growth rates from 1978 to 2003, from the official levels of 9.2% to a more realistic grow rate of 7.8%).

Let's do that with coal production for Germany, which was the basic energy resource (>90% of German energy consumption was in terms of coal), hence it's strongly correlated with economic activity.

Thousand tons coal (converted into black coal equivalent for brown coal and others)

1913 -- 277,342
1914 -- 245,331
1915 -- 234,816
1916 -- 253,350
1917 -- 263,200
------------------
1938 -- 240,300
1939 -- 267,700
1940 -- 315,500
1941 -- 317,900
1942 -- 340,400
1943 -- 347,600

So:

- From 1913 to 1917, coal output decreased by 5%, while GNP decreased by 21%.
- From 1938 to 1943, coal output increased by 45% while GNP increased by 77%.

Therefore, relative coal output was 145/95 = 152% in WW2 versus WW1. Therefore, it's true that the German economy performed better in WW2 than in WW1 (mainly thanks to the incorporation of territories plus much more imported labor in WW2 (8 million versus 1.8 million in WW1)). Also note that German coal/steel output fluctuated wildly in WW1, that was because they were learning how to manage a war economy, in WW2 they already knew how to do that so coal output didn't decrease.

But the relative GDP ratio was 177/79 = 225%, much higher than the relative coal ratio (47% higher). This suggests that GDP in WW2 was probably overestimated relative to WW1. It makes sense for coal output to be higher in wartime than in peacetime since war related industries tend to be more energy intensive so it's natural that coal output should be relatively higher than GDP in wartime and not the other way around. That is, if coal output in WW2 increased by 45%, then real GDP increased LESS than 45% and not 77%.

Similar kind of distortion appears when we look at the US coal output. US coal output (minus coal used to produce coke) was 323,202 thousand tons in 1937 and increased to 433,297 tons in 1943, an increase of 34%, while estimated GDP figures show a larger increase (around 35% to 68% depending on the estimate used). Similarly to Germany's case we have a distortion (inflation) in GDP estimation due to wartime price controls.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

Tomg44
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Re: The American WW2 Economic Puzzle

Post by Tomg44 » 20 Aug 2017 10:42

Hi Gauporense,

You might find it helpful to investigate the role of "War Bonds" in the management of the US economy during the war.

You could start here.
http://www.u-s-history.com/pages/h1682.html

You might also look here.
https://www.youtube.com/results?search_ ... +bonds+ww2

And here.
https://www.google.com.au/search?q=war+ ... 96&bih=766

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Re: The American WW2 Economic Puzzle

Post by ljadw » 20 Aug 2017 12:49

Guaporense wrote:One way to test the validity of GDP estimates might be to compare physical production with GDP figures. In China today people tend to compare rail-freight volumes or electricity consumption figures with reported GDP figures to test whether official growth figures are consistent (sometimes they are not, it's true that Chinese growth figures from the 1980's, 1990's and early 2000's tended to overestimate real growth rates, Maddison himself made substantial modifications to his estimated Chinese growth rates from 1978 to 2003, from the official levels of 9.2% to a more realistic grow rate of 7.8%).

Let's do that with coal production for Germany, which was the basic energy resource (>90% of German energy consumption was in terms of coal), hence it's strongly correlated with economic activity.

Thousand tons coal (converted into black coal equivalent for brown coal and others)

1913 -- 277,342
1914 -- 245,331
1915 -- 234,816
1916 -- 253,350
1917 -- 263,200
------------------
1938 -- 240,300
1939 -- 267,700
1940 -- 315,500
1941 -- 317,900
1942 -- 340,400
1943 -- 347,600

So:

- From 1913 to 1917, coal output decreased by 5%, while GNP decreased by 21%.
- From 1938 to 1943, coal output increased by 45% while GNP increased by 77%.

Therefore, relative coal output was 145/95 = 152% in WW2 versus WW1. Therefore, it's true that the German economy performed better in WW2 than in WW1 (mainly thanks to the incorporation of territories plus much more imported labor in WW2 (8 million versus 1.8 million in WW1)). Also note that German coal/steel output fluctuated wildly in WW1, that was because they were learning how to manage a war economy, in WW2 they already knew how to do that so coal output didn't decrease.

But the relative GDP ratio was 177/79 = 225%, much higher than the relative coal ratio (47% higher). This suggests that GDP in WW2 was probably overestimated relative to WW1. It makes sense for coal output to be higher in wartime than in peacetime since war related industries tend to be more energy intensive so it's natural that coal output should be relatively higher than GDP in wartime and not the other way around. That is, if coal output in WW2 increased by 45%, then real GDP increased LESS than 45% and not 77%.

Similar kind of distortion appears when we look at the US coal output. US coal output (minus coal used to produce coke) was 323,202 thousand tons in 1937 and increased to 433,297 tons in 1943, an increase of 34%, while estimated GDP figures show a larger increase (around 35% to 68% depending on the estimate used). Similarly to Germany's case we have a distortion (inflation) in GDP estimation due to wartime price controls.
1) The coal production figures are questionable,the same for the conversion of black coal in brown coal:Mierzejewski;using primary German sources, gives other figures

2) The increase of 45 % is not correct :from Mierzejewski :

Hard coal in 39/40 (Protectorate included ) :214, 581,OOO. In 43/44 :278,111 : this is an increase of some 30 %


Brown coal 39/40 (without Protectorate,but the brown coal production in the protectorate was insignifiant):211,606,000. In 1943/44 (without the Protectorate )252,488,which is an increase of 20 %



3 ) MOST important, figures of production only give a total distorted picture of the situation, as coal that was not transported, was useless ,and the Reichsbahn/Inland waterways did not succeed into transporting more coal :example : the inland waterways moved in 1940/41 34,234 million ton (hard and brown coal),in 43/44 only 30,182 million ton .

For the last 5 months of 1944 there was an estimated hard coal deficit caused by shipping difficulties (RB,inland waterways) of 26,3 million ton .

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Re: The American WW2 Economic Puzzle

Post by Guaporense » 21 Aug 2017 07:02

Tomg44 wrote:Hi Gauporense,

You might find it helpful to investigate the role of "War Bonds" in the management of the US economy during the war.

You could start here.
http://www.u-s-history.com/pages/h1682.html

You might also look here.
https://www.youtube.com/results?search_ ... +bonds+ww2

And here.
https://www.google.com.au/search?q=war+ ... 96&bih=766
These are off topic though.

The puzzle is not restricted to the US, it's why in WW2 GDP grew so much in Germany, US, Japan, UK while in WW1, GDP collapsed in Germany, France, Austria-Hungary, etc. It's a WW2 GDP puzzle.

The puzzle is resolved by the fact that GDP did not grow actually in WW2 as much as it is claimed: physical output measures show that GDP growth during WW2 was an statistical illusion.
Last edited by Guaporense on 21 Aug 2017 07:06, edited 2 times in total.
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Re: The American WW2 Economic Puzzle

Post by Guaporense » 21 Aug 2017 07:04

ljadw wrote:1) The coal production figures are questionable,the same for the conversion of black coal in brown coal:Mierzejewski;using primary German sources, gives other figures

2) The increase of 45 % is not correct :from Mierzejewski :

Hard coal in 39/40 (Protectorate included ) :214, 581,OOO. In 43/44 :278,111 : this is an increase of some 30 %


Brown coal 39/40 (without Protectorate,but the brown coal production in the protectorate was insignifiant):211,606,000. In 1943/44 (without the Protectorate )252,488,which is an increase of 20 %
I compared figures of pre-war Germany in 1938 with Germany in 1943 with all annexations.
3 ) MOST important, figures of production only give a total distorted picture of the situation, as coal that was not transported, was useless ,and the Reichsbahn/Inland waterways did not succeed into transporting more coal :example : the inland waterways moved in 1940/41 34,234 million ton (hard and brown coal),in 43/44 only 30,182 million ton .

For the last 5 months of 1944 there was an estimated hard coal deficit caused by shipping difficulties (RB,inland waterways) of 26,3 million ton .
That is in late 1944. Before late 1944 the German coal economy was working fine.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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