A Comparison of American and German economies in WW2

Discussions on the economic history of the nations taking part in WW2, from the recovery after the depression until the economy at war.
RichTO90
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Re: A Comparison of American and German economies in WW2

Post by RichTO90 » 13 Jan 2015 17:14

Guaporense wrote:Always with your personal insults.
Where did I insult you? You have mixed two different population measures - one very precise and one very broad, one from a complete and detailed census with very clear definitions and one from a secondary source without any clear understanding of what terms are used - and I pointed it out to you...for about the umpteenth time. That is a simple statement of fact and frustration, given that your posts seem bereft of the former.

So yes, given that you claim to be an economist, I am surprised that you do not seem to understand or care about such differences. In my experience, the econometricians I have worked with are very precise in their definitions and data sets.
I think you need to cite your source for 6.75 million family helpers. Because that would mean German paid agricultural labor force would be only ca. 4 million, which would be rather small.
Seriously? This from you? :roll:

British Bombing Survey Unit, The Strategic Air War Against Germany, 1939-1945, Chapter 15, pp. 79-84. Data sources were Kriegswirtschaftliche Kraeftebilanz, Statistisches Reichsamt Abt. VI

See especially the note to column (2) for Table 21 on page 80.

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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 13 Jan 2015 19:47

Solving the Machine Tool Puzzle

Germany had a greater supply of machine tools in 1939 than the US (or any other country), and for most of the war, until 1944-45, when US stock surpassed Germany's by a small margin. Why, despite the large difference in size of these economies? Simple, because in the late 1930's the metal working industries in Germany employed more workers than in the US, the German economy specialized in the field and even with the artificially overvalued mark they exported metal products. It's a myth that German industry used more machine tools because it was a "craft type of production" versus the mass production methods of the US, mainly because the US still used a lot of more traditional craft type of production and that German industry updated itself over the 30's to catch up to US machine tool technology, by the late 1930's, German machine tool stock was similar to the US in composition of types of machines, value of the capital stock besides quantity:

------------------------- Germany (1938 stock) ----- US (1940 stock) -------- USSR (1938)
Lathes -------------------- 303,884 --------------------- 235,235 -------------- 53,900
Presses -------------------- 189,111 -------------------- 185,633
Milling machines -------- 104,235 --------------------- 94,113
Production grinders ------ 45,831 --------------------- 56,823
Bending machines -------- 45,409 --------------------- 35,938
Gear-cutting machines -- 16,856 ---------------------- 20,753
Cutting-off machines ---- 44,068 ---------------------- 43,097
Welding and cutting
machines ------------------ 42,140 --------------------- 75,900
machine tools* ----------- 989,852 -------------------- 940,829
* including a couple more categories

The labor force employed in metal working industries in Germany (1938) case was 108% of US's (1940) case. Value of 1938 German machine tool stock was 101% of US's 1940 stock using 1942 German prices.

When the war started, the German labor force was drafted into the army so the labor force working in metal working did not increase much while in the US and the UK much of the labor force was mobilized into the metal working industries as they focused their resources on developing strategic bombing forces and building ships, partly to replace the merchant shipping losses to the U Boats.

Source: Tooze et al (2003)
Last edited by Guaporense on 13 Jan 2015 20:14, edited 1 time in total.
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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 13 Jan 2015 20:06

RichTO90 wrote:
Guaporense wrote:Always with your personal insults.
Where did I insult you? You have mixed two different population measures - one very precise and one very broad, one from a complete and detailed census with very clear definitions and one from a secondary source without any clear understanding of what terms are used - and I pointed it out to you...for about the umpteenth time.
No, I use both censuses definitions of civilian labor force. I wasn't aware that they included unpaid family helpers in the German data, a understandable mistake, if you recalculate it discounting the 6.75 million extra workers, the results don't change that much though now they become more believable, with the relative population sizes, given countries with similar levels of industrialization.

The PPP's were 1 RM = 0.37 dollars and 1 pound = 5.1 dollars. So total mass of wages in millions of 1935 dollars:

US ---------------- 40,707
Germany --------- 22,359
UK ---------------- 11,891

Populations:

US --------- 131 million
Germany - 79.3 million
UK -------- 48 million
So yes, given that you claim to be an economist, I am surprised that you do not seem to understand or care about such differences. In my experience, the econometricians I have worked with are very precise in their definitions and data sets.
1. I am not an econometrician, I am an economist (most of them are not econometrician), all my work up to now has been theoretical (game theory, search theory, general equilibrium, some heterodox stuff as well). I hate metrics.

Why did you work with econometricians? What are you exactly? (just curious)

2. This is not a published paper, if I was writing something to be published I would be more careful with the data to check out why Germany had such huge labor force. I suspected it was because it was in full employment with higher labor force participation of people between ages of 15-65.

3. Thanks for pointing out that mistake anyway. Though if you adopt this hostile posture you only reduce the willingness of others in learning from you.
I think you need to cite your source for 6.75 million family helpers. Because that would mean German paid agricultural labor force would be only ca. 4 million, which would be rather small.
Seriously? This from you? :roll:

British Bombing Survey Unit, The Strategic Air War Against Germany, 1939-1945, Chapter 15, pp. 79-84. Data sources were Kriegswirtschaftliche Kraeftebilanz, Statistisches Reichsamt Abt. VI

See especially the note to column (2) for Table 21 on page 80.
You should satisfy the ideal you expect from others. :D
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Re: A Comparison of American and German economies in WW2

Post by RichTO90 » 14 Jan 2015 01:49

Guaporense wrote:No, I use both censuses definitions of civilian labor force. I wasn't aware that they included unpaid family helpers in the German data, a understandable mistake, if you recalculate it discounting the 6.75 million extra workers, the results don't change that much though now they become more believable, with the relative population sizes, given countries with similar levels of industrialization.
Sigh..you "weren't aware"? Then why did you mention it? "also they counted the kids in families living in rural areas as part of the labor force"? And you were content with "unbelievable" figures that you generated yourself...until you were corrected with believable figures?

And yet you don't understand why so many have problems accepting your "data"? :roll:

BTW, no you did not use "both censuses defnitions of civilian labor force", since you very evidently were unaware what they were. And you still seem unaware that one data set is "employed" and the other is "work force" AKA "labor pool".
The PPP's were 1 RM = 0.37 dollars and 1 pound = 5.1 dollars. So total mass of wages in millions of 1935 dollars:
Source? Postwar estimates were 1 RM = USD 0.30-0.35 by 1939. See Office of the Assistant Chief of Staff, G-5 Division USFET, Information Branch, Weekly Information Bulletin No. 29 (February 1946), p. 5.
1. I am not an econometrician, I am an economist (most of them are not econometrician), all my work up to now has been theoretical (game theory, search theory, general equilibrium, some heterodox stuff as well). I hate metrics.
Too bad. The econometricians I have known make excellent analysts and don't treat data sets as something to be tortured to fit a theory.
Why did you work with econometricians? What are you exactly? (just curious)
Because one econometrician, who was studying the effects of weapons cost and weapons effectiveness in the USA during World War II asked me for research help. He was interested in how the U.S. government valued its troops lives by using evidence from dollar-fatality tradeoffs. Until recently he was Assistant Professor of Economics at Syracuse.

As for me, as I believe I have explained to you before, I am a historian and military operations research analyst, among other things, and am currently teaching critical thinking and structured analysis at a U.S. government agency. I have 27 years of professional experience in my field and have been published both commercially and professionally. Would you like a copy of my curriculum vitae? :roll:

JUST what are you exactly, aside from an economics student with a flexible attitude to facts and the use of data sets?
2. This is not a published paper, if I was writing something to be published I would be more careful with the data to check out why Germany had such huge labor force. I suspected it was because it was in full employment with higher labor force participation of people between ages of 15-65.
Yeah, you see that is where your problem is - you should always be careful with data. But you, very evidently, are not interested in that'
3. Thanks for pointing out that mistake anyway. Though if you adopt this hostile posture you only reduce the willingness of others in learning from you.
You are welcome, but it it isn't hostility, it is frustration at your unwillingness to learn and incorporate the corrections you have been given over the last five years.
You should satisfy the ideal you expect from others. :D
Seriously? From YOU? I established my bona fides here six years before you first showed up. I believe posters here are well aware that if I need to back up my statements with sourcing I am easily capable of it.

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Re: A Comparison of American and German economies in WW2

Post by RichTO90 » 14 Jan 2015 01:51

Guaporense wrote:Solving the Machine Tool Puzzle

Source: Tooze et al (2003)
You might want to look up Ristuccia and Tooze before you continue to wander down that path. The evidence of their comparative research into machine tool use in the German and American aircraft industry is interesting.

EDIT:

I just noticed you did find it...but evidently chose to ignore the more important aspects of the data and analysis Ristuccia and Tooze found.

BTW, (Tooze et al) is rather bad form when the authors are in fact Ristuccia and Tooze. 8O Who else besides Ristuccia do you think was an author and why do you not give his name? :roll:

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Re: A Comparison of American and German economies in WW2

Post by RichTO90 » 14 Jan 2015 18:55

Just to highlight exactly how this game gets played (and how readers in this forum also get played), here is the original text from Ristuccia and Tooze (2003), p. 2:

"For 1930, we find a remarkable similarity in machine to worker ratios between Germany and the United States. There are differences in certain key areas. However, the US stock of metal-working tools is not yet distinguished by a clear commitment to mass production technology. For the period after 1935, until the early 1940s, our data suggest a remarkable degree of convergence. The American stock stagnated. In some areas, there was disinvestment. And the average age of machinery rose dramatically. By contrast, Germany entered a period of rapid catch-up, which appears to have continued into the early years of the war. By 1940, German metal-working came close to matching its American counterpart in terms of the number of workers employed and the quantity and types of machines installed. German machines were, on average, far younger. This process of catching-up, however, was dramatically reversed during World War II. Over a period of no more than four years the American stock expanded by over eighty percent and growth was markedly concentrated in key categories of mass production equipment. It appears that it was only in this period that mass production machinery came to truly dominate US metal-working. German investment, albeit moving in the same direction, failed to match the new
intensity of American commitment to mass production in some key machinery classes."

And here is what it got transmogrified into:
Guaporense wrote:Solving the Machine Tool Puzzle

Germany had a greater supply of machine tools in 1939 than the US (or any other country), and for most of the war, until 1944-45, when US stock surpassed Germany's by a small margin. Why, despite the large difference in size of these economies? Simple, because in the late 1930's the metal working industries in Germany employed more workers than in the US, the German economy specialized in the field and even with the artificially overvalued mark they exported metal products. It's a myth that German industry used more machine tools because it was a "craft type of production" versus the mass production methods of the US, mainly because the US still used a lot of more traditional craft type of production and that German industry updated itself over the 30's to catch up to US machine tool technology, by the late 1930's, German machine tool stock was similar to the US in composition of types of machines, value of the capital stock besides quantity:
Further, note that this:
The labor force employed in metal working industries in Germany (1938) case was 108% of US's (1940) case. Value of 1938 German machine tool stock was 101% of US's 1940 stock using 1942 German prices.
Is actually a hack job done on the following data (Ristuccia and Tooze (2003) Table 2 Page 10):

Table 2: Estimated Machine to Labour Ratios (1930-1945)10

RATIOS FOR COMPARABLE SETS OF ...................................RATIO OF THE VALUE OF INSTALLED MACHINE TOOLS
MACHINE TOOLS EMPLOYED IN THE ...................................USING GERMAN 1942 PRICES
METAL-WORKING INDUSTRY

Germany1930/US1930 0.89...........................................0.78
Germany1938/US1940 1.02...........................................0.93
Germany1941/US1940 0.99...........................................0.92
Germany1945/US1945 1.48...........................................1.28
When the war started, the German labor force was drafted into the army so the labor force working in metal working did not increase much while in the US and the UK much of the labor force was mobilized into the metal working industries as they focused their resources on developing strategic bombing forces and building ships, partly to replace the merchant shipping losses to the U Boats.

Source: Tooze et al (2003)
Finally, note that this assessment, inferred to Tooze's (and Ristuccia's) paper is actually nowhere found in their analysis and is in fact yet another one of guaporenses' ill-founded assumptions. :roll:

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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 15 Jan 2015 18:06

RichTO90 wrote:
Guaporense wrote:No, I use both censuses definitions of civilian labor force. I wasn't aware that they included unpaid family helpers in the German data, a understandable mistake, if you recalculate it discounting the 6.75 million extra workers, the results don't change that much though now they become more believable, with the relative population sizes, given countries with similar levels of industrialization.
Sigh..you "weren't aware"? Then why did you mention it? "also they counted the kids in families living in rural areas as part of the labor force"? And you were content with "unbelievable" figures that you generated yourself...until you were corrected with believable figures?

And yet you don't understand why so many have problems accepting your "data"? :roll:
I did not know how many of these were kids so I couldn't correct it. So I became aware it was a lower quality data and I explained it.
BTW, no you did not use "both censuses defnitions of civilian labor force", since you very evidently were unaware what they were. And you still seem unaware that one data set is "employed" and the other is "work force" AKA "labor pool".
No, the 39 million number is employed. All the 3 numbers are the same category for the same year from the same book. I had no idea that all German employment force data for the period included nearly 7 million kids (which inflate all the labor force figures used all the time in this forum by several posters besides me).
The PPP's were 1 RM = 0.37 dollars and 1 pound = 5.1 dollars. So total mass of wages in millions of 1935 dollars:
Source? Postwar estimates were 1 RM = USD 0.30-0.35 by 1939. See Office of the Assistant Chief of Staff, G-5 Division USFET, Information Branch, Weekly Information Bulletin No. 29 (February 1946), p. 5.
I already explained how I came up with this number, I did a PPP using price data for 11 commodities. Also, US price data and wage data is from 1935, Germany price and wage data is from 1937. Only employment figures from 1939.
Why did you work with econometricians? What are you exactly? (just curious)
Because one econometrician, who was studying the effects of weapons cost and weapons effectiveness in the USA during World War II asked me for research help. He was interested in how the U.S. government valued its troops lives by using evidence from dollar-fatality tradeoffs. Until recently he was Assistant Professor of Economics at Syracuse.
I see.
As for me, as I believe I have explained to you before
You haven't.
I am a historian and military operations research analyst, among other things, and am currently teaching critical thinking and structured analysis at a U.S. government agency. I have 27 years of professional experience in my field and have been published both commercially and professionally. Would you like a copy of my curriculum vitae? :roll:

JUST what are you exactly, aside from an economics student with a flexible attitude to facts and the use of data sets?
Not a student anymore, I finished my MA 2 years ago.
2. This is not a published paper, if I was writing something to be published I would be more careful with the data to check out why Germany had such huge labor force. I suspected it was because it was in full employment with higher labor force participation of people between ages of 15-65.
Yeah, you see that is where your problem is - you should always be careful with data. But you, very evidently, are not interested in that'
I think I have been more careful now than I was in the past.
3. Thanks for pointing out that mistake anyway. Though if you adopt this hostile posture you only reduce the willingness of others in learning from you.
You are welcome, but it it isn't hostility, it is frustration at your unwillingness to learn and incorporate the corrections you have been given over the last five years.
You have been extremely hostile to me since you first answered a post of mine. This is extremely obvious and your denial of it is obviously part of it, if you were serious about it you should have apologized 5 years ago.
You should satisfy the ideal you expect from others. :D
Seriously? From YOU? I established my bona fides here six years before you first showed up. I believe posters here are well aware that if I need to back up my statements with sourcing I am easily capable of it.
So I also don't need to give sources.
Last edited by Guaporense on 16 Jan 2015 16:08, edited 3 times in total.
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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 15 Jan 2015 18:20

RichTO90 wrote:Just to highlight exactly how this game gets played (and how readers in this forum also get played), here is the original text from Ristuccia and Tooze (2003), p. 2:
It wasn't just quoting that paper.
When the war started, the German labor force was drafted into the army so the labor force working in metal working did not increase much while in the US and the UK much of the labor force was mobilized into the metal working industries as they focused their resources on developing strategic bombing forces and building ships, partly to replace the merchant shipping losses to the U Boats.

Source: Tooze et al (2003)
Finally, note that this assessment, inferred to Tooze's (and Ristuccia's) paper is actually nowhere found in their analysis and is in fact yet another one of guaporenses' ill-founded assumptions. :roll:
It's not inferred from that single paper.

Fact is that German economy specialized in machine tool using industries before the war, US and UK did not. So when war started their machine tool stock was much more intensively used during the war as they shifted their workforce to machine tool using industries due to their focus of their resources on production of aircraft and ships. Employment in the US in production of aircraft and ships was ca. 4 million in 1943, compared to 0.9 million in Germany.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Re: Ultimate Ammunition Table

Post by Guaporense » 17 Jan 2015 03:59

LWD wrote:Of course you are also rather ignoring the fact that the US ammunition production was limited not by production capablity but by percieved need.
I never did so. Production of everything is dictated by perceived need. This is obvious and I never had then intention of suggesting otherwise.

For instance, German aircraft production was always dictated by perceived need, for instance, given it worked as a tactical airforce and given the supply of aircraft fuel, output from 1940 to 1943 was adequate given army activity and losses (which were mostly due to accidents until late 1943). German fighter aircraft production exploded in 1944, with single engine aircraft at 3 times the level of 1943, despite extensive bombing, as a reflection of the perceived need to combat the strategic bombing effort of the western allies. But notice that a single engine fighter cost ca. 100,000 RM, while military expenditures in 1943 were 112 billion RM, over 1 million times that price. Germany did not produce heavy bombers because they never developed the doctrine in the first place, the cost of producing 15,000 heavy bombers (British level of production during the war) would be at. 7.5 billion RM, for instance, that's 1.5% of total German military outlays from 1939 to 1944.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 17 Jan 2015 07:17

Labor force in Specific Industries

Employment in metal working and basic metal industries in the US reached ca. 9 million workers in 1943-1944 against ca. 3 million in 1939 (source: Ristuccia, Tooze, 2003, figure 1). In Germany's case, metal working and basic metal employed 5.3 million workers in 06.1943 and 5.7 million workers in 06.1944 (1).

Germany's labor force

Employment in aircraft, shipbuilding and motor vehicles was:

------------------ 06.1943 ---------- 06.1944
Aircraft -------- 740 ---------------- 868
Automotive ---- 394 ---------------- 427
Shipbuilding --- 143 ---------------- 151
total ------------ 1,277 ------------- 1,446
(1)

Output was in millions 1941 RM per month (shipbuiding is the annual average, since building ships takes longer it's harder to measure on a monthly basis)

----------------------------- 06.1943 ----------- 06.1944
Aircraft --------------------- 926 -------------- 1,275
Aircraft (adjusted) -------- 617 -------------- 850
Automotive ----------------- 278 -------------- 368
Shipbuilding ---------------- 178 -------------- 164
total ------------------------- 1,073 ----------- 1,381
(1)

Aircraft production prices decreased by 1/3 from 1941 to 1943 as productivity increased (3), while in shipbuilding and automotive industries didn't change much (except tanks), so that I have adjusted it to 2/3 of the index level. Annualized output is 12.9 billion RM and 16.6 billion RM, or between 10,000 and 12,000 RM per worker. Well, in 1936, according to the census, manufacturing employed 5.96 million workers, producing 56.5 billion RM (vallued added 26.1 billion RM) (5), adding a 2.5% yearly gain in productivity (usual for Germany in the interwar years), 1944 we would expect average manufacturing workers to produce 11,500 RM per year (given the strong correlation between valued added and total sales).

US's labor force

I lack comparative data for US labor force in these industries but I have comparative data from (2), on employment in the aircraft airframe industry:

------------------ Germany/US
04.1943 ------ 373,000/1,084,000
04.1944 ------ 460,000/1,063,000

Considering in Germany's case employment in the whole aircraft industry was about 2 times those numbes, it suggests that US employment in aircraft industry was fluctuating around 2,150,000 from 04.1943 to 04.1944 (3 to 2.5 times Germany's). In terms of output we have the following data, from (4), in billions 1945 dollars:

---------------------- 1943 -------- 1944
aircraft ------------ 12.5 -------- 16.0
ships --------------- 12.5 -------- 13.4
motor vehicles --- 5.9 ---------- 5.0
total -------------- 30.9 --------- 34.4

Aircraft output was 44% of total over this 2 year period. If employment was proportional we would expect 4.9 million workers in these 3 industries, with around 1.8 million in shipbuilding and 0.9 million in the automotive industry. Or more than half of all metal working industry labor force. In Germany's case it was 24-25% of the labor force involved in this industry group.

Productivity

While micro level data appear to suggest that Germany's aircraft industry had higher levels of productivity, using aggregated data suggests otherwise. Maybe the data on the US airframe assembly was including more parts of the production process than the German data, maybe that specific part of the German production process , there is also the effects on strategic bombing and the general idleness of large fraction of the installed capacity of the German aircraft industry before 1944.

According to Rich's data, these were the outputs in combat aircraft in 1944:

Combat Aircraft Germany/USA
4-engine Bombers 518/16,331
2-engine bombers 5,041/18,672
1-engine bombers 909/8,614
2-engine fighters 3,066/4,733
1-engine Fighters 25,860/34,140

Prices in 1944 in the US were ca. 60,000 dollars for single engine fighters, 120,000 for two engine combat aircraft and 210,000 for four engine combat aircraft (reflecting reduced costs of scale). Multiplying these figures we arrive at 2.69 billion dollars for Germany and 8.80 billion dollars for the US. Employment in the aircraft industry was ca. 2,150,000 in the US and 0.84 in 02.1944, 0.847 in 04.1944, 0.868 in 06.1944 and 0.873 in 08.1944, on average 857,000 during the first 8 months of the year. So apparent productivity would be 3,140 dollars for Germany's and 4,100 dollars for the US's.

We, however, should correct this data by 2 effect: strategic bombing and spare parts. The USSBS estimated that strategic bombing reduced total output by 15,000 aircraft in 1944, from 55,000 aircraft to 40,000 aircraft, so German aircraft production without strategic bombing would been 37.5% higher. Second, spare parts were a larger proportion of US aircraft production in 1944 than in Germany (ca. 24% to Germany's 12%), total combat aircraft output hence was 11.73 billion dollars in the US's case, and Germany's case without strategic bombing would have been 4.20 billion dollars. Output per employee would be 4,900 dollars per worker in Germany's case and 5,460 dollars per worker in the US's case.

Notice that in 1939 it's estimated that 1 RM = 0.33 dollar, by 1945, US's accumulated inflation was ca. 55% over 1939's level (Friedman & Schwartz, 1963), so roughly 1 RM (1941) = 0.5 dollar (1945). Hence combined output in 1944 of shipbuilding, aircraft and motor vehicles was 69 billion RM in the US, employing 4.9 million workers in those industries (ca. 14,000 RM per worker), compared to annualized figures of 16.6 billion RM for Germany, employing 1.45 million workers (ca. 11,500 RM per worker). Productivity overall was lower in Germany but not by a factor as large as 50% of the US's case as estimated for the 1930's civilian goods manufacturing. The change appears to be of 2 factors:
1 - higher capital intensity in Germany's case, as Germany's machine tool stock was estimated to be 85% of the US's by the end of the war using 1942 German machine tool prices, but employment in metal working industries in Germany was ca. 60% of the US's in 43-44.
2 - aircraft, motor vehicles and shipbuilding were industries that greatly developed during the war, hence all countries had similar levels of technology and productivity. USSR's war related industries had much higher levels of productivity than their overall economy which was still mostly pre-industrial.

Overall, it appears that given basic metal and metal working industries employed 5.72 million workers in Germany and ca. 9 million in the US's, if aircraft, automotive and shipbuilding are representative (even though in Germany's case all the 4 combined had only 25% of the labor force) had representative levels of productivity (as it appear to be so, notice also that 11,500 RM would be projected outputs given 1936's average levels grew by 2.5% a year), in 1944 Germany's metal working would have produced 65,8 billion RM, while the US's, about 126 billion RM. Representative of the relative size of both economies, though Germany had greater capital stock per worker, the US is said to have high energy endowments (oil, wood, gas, hydroeletric, etc) which helped it's manufacturing to reach higher levels in productivity than Europe's (according to Broadberry) which allowed US manufacturing to be more productive. Today, since technology is relatively more important, manufacturing productivity in Europe, Japan and the US are at similar levels.

Sources:
(1)http://www.wwiiarchives.net/servlet/act ... ndex/149/0
(2)http://www.wwiiarchives.net/servlet/act ... ndex/150/0
(3)http://www.econ.yale.edu/growth_pdf/cdp905.pdf
(4)http://www.history.army.mil/html/books/ ... ub_1-7.pdf
(5)http://hi-stat.ier.hit-u.ac.jp/informat ... 92/HdJ.pdf
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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 19 Jan 2015 23:31

US vs Europe

While I remember some claiming that the US's economy was larger than Europe's (citing no source), it's relevant to take some historical notes. While I previously criticized Maddion's numbers (his figures for India and China), and there is significant abuse regarding his work (his estimates try to include non-marketable output, and since they are in PPP, tend to overestimate the economic size of developing countries, for instance, the USSR's GDP according to his estimate in 1938 was larger than Germany and the UK, while other estimates of industrial production put it lower, this is normal given the USSR was a developing country: a per capita PPP at 1/3 of the US's level will usually have a per capita market level around 20% of the US's, (it's the Balassa-Samuelson Effect, for instance, Mexico's PPP per capita income is 30% of the US in 2013, nominal income is 20%), similar adjustment puts the USSR's economy as of similar size as France's at ca. 200 billion 1990 dollars in 1938). Another problem with Maddison's data is that he uses the US GDP estimate made using 1980 prices, which generates massive distortion in war-time GDP growth for WW2 (more doubling from 1939 to 1944, growing at nearly 16% a year), Kuznet's more sober GDP estimate taking into account the natural decrease of munitions prices and the fact that they were subsidized by policy, put's US growth at 33% over the same period, at a considerable growth rate of 6% a year (much faster than historical average for the US of ca. 3% a year over the past 100 years).

According to Madison's data, relative GDPs in 1939 indexed by the US as 100 were (using Germany's per capita data (though in economics of WW2 they cite Madison including per capita data that's 2% higher than this) for the whole 79.3 million inhabitants since Madison's per capita estimate probably comes from national accounts which refer to the whole Germany at 1939 borders):
UK ---------- 34.83
Germany -- 49.66

My estimates using PPPs of consumption bundles and wage data yielded, variation of 10-15% though a bit more than I expected:
UK ---------- 29.21
Germany -- 55.92

I think Madison's numbers for Europe and the US (except the 1941-1945 period) are very good overall, though his numbers for developing countries (such as the USSR's) should be used with more caution before arriving at conclusions regarding warmaking potential due to the Balassa-Samuelson effect.

Anyway, US indexed by Europe (minus the USSR/Russian Empire territories, using 1940 data for 1939 in case of non-Russian Eastern Europe):

1913 ----- 53.05
1929 ----- 64.97
1939 ----- 55.02
1950 ----- 92.07

Before WW2v the US's economy fluctuated between half and 60% of Europe's size, peaking at 65% in 1929, at the apex of the American financial bubble of the 20's. Germany conquered/allied* to territories before invading the USSR, 72% of Europe's GDP (corresponding to 1939 numbers). Despite these massive resources at it's disposal, Germany failed to mobilize them into warmaking potential (Germany's wartime mobilization appears to be consistent with only pre-war Germany's resources) and managed to plunge the whole continent into a state of decadence and decline, 5 year after the war, US's GDP was 93%, and today, as of 2013, it is around 85%.

*effectively German protectorades.

The world was centered around Europe before WW2, while the US individually was larger than any singular European economy since the 1890's, since Europe was a whole was much larger (even though it occupies a smaller territory, about two thirds of the size of the continental US), it's influence was much greater and 90% of all nobel prizes in sciences were European before 1940.

Though, in the 1930's manufacturing productivity in the US was much higher than anywhere else in the world and out of proportion with per capita incomes. A strange fact indeed, Broadberry explains it partly as a result of higher energy endowments in the US (oil, natural gas, hydroeletric). Today that's not true, using labor costs, it appears US's levels of productivity are average among developed economies. It appears that as time when on energy became less important in today's high tech manufacturing.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Guaporense
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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 22 Jan 2015 02:11

After conquering France and the Low Countries in mid 1940, Germany controlled similar economic/industrial resources as the US, Germany further conquered a 100 million people in Eastern Europe in 1941, though mostly poor non-industrialized/half industrialized territories, which didn't increase Germany's potential resources in proportion to population but in GDP terms it was a 20% increase over this "Grossraum":

------------------GDP (PPP) ----- GDP (nominal) ----- Population ----- Per Capita Income ------ Coal output -------- Machine tool stock
"Grossraum" --- 869,339 -------- 82.2 billion ---------- 191,506 ------- 4,592 --------------------- 425,769 ------------ 944,527*
USA ------------ 862,995 -------- 90.5 billion ---------- 131,539 ------- 6,561 --------------------- 400,979 ------------ 896,035**

for sources, see "Estimating Warmaking Potential thread"

All numbers for 1939, except machine tools, 1938 for Germany only, 1940 for US.

In 1943, US's GDP increased, in 1990 dollars, to 1,171,861 millions (Kuznetz's estimate), however, while "Grossraum" GDP was apparently 664,728 millions, assuming occupied territories paid 45% of their GDP in occupation taxes (France paid in 1943, 55.5% of it's GDP to Germany, 36.9% in 1942, source: http://eml.berkeley.edu/~webfac/eicheng ... /white.pdf). German military expenditures were 72% of US's level in 1943 (using 2 1939 RM to 1 1945 dollar), partly due to the economic collapse of the Grossraum following Nazi economic policies, still degree of . In 1943, assuming average GDP growth rate of 2.5% a year, yields a GDP of 959,588 for the Grossraum, still 82% of US's level.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

RichTO90
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Re: A Comparison of American and German economies in WW2

Post by RichTO90 » 22 Jan 2015 02:27

Guaporense wrote:It's not inferred from that single paper.
Then perhaps you should isolate your assumptions and inferences from your data source so that it doesn't appear that your view is shared by your source.
Fact is that German economy specialized in machine tool using industries before the war, US and UK did not.
That is about as far from the facts determined by Ristuccia and Tooze as it is possible to get. They discovered that the fact is the Germans were behind at the start of the 1930's, but used the decade to catch up, which made their tool resources on a par with the U.S. in 1939...and also made it a younger resource. The trend then reversed during the war as Germany was unable to both maintain the rate of expansion in tools as well as the output of finished goods.
So when war started their machine tool stock was much more intensively used during the war as they shifted their workforce to machine tool using industries due to their focus of their resources on production of aircraft and ships.

Again, clarity is always helpful. Which "they" do you mean? Germany? Or the US and UK?
Employment in the US in production of aircraft and ships was ca. 4 million in 1943, compared to 0.9 million in Germany.
You say that like its a bad thing... :roll: And what was the production ratios produced between the U.S. and Germany?

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Re: A Comparison of American and German economies in WW2

Post by Guaporense » 22 Jan 2015 03:18

RichTO90 wrote:
Guaporense wrote:It's not inferred from that single paper.
Then perhaps you should isolate your assumptions and inferences from your data source so that it doesn't appear that your view is shared by your source.
Fact is that German economy specialized in machine tool using industries before the war, US and UK did not.
That is about as far from the facts determined by Ristuccia and Tooze as it is possible to get. They discovered that the fact is the Germans were behind at the start of the 1930's, but used the decade to catch up, which made their tool resources on a par with the U.S. in 1939...and also made it a younger resource. The trend then reversed during the war as Germany was unable to both maintain the rate of expansion in tools as well as the output of finished goods.
My point is that Germany had a much larger stock of machine tools in proportion to the size of the economy than the US because the proportion of the sector of machine tool using industries in Germany was similarly larger than the US's in terms proportion of total employment as well. Hence, the proportion of GNP generated in this sector was larger in Germany in the late 1930's compared to the US.

It's like why Japan in the 1990's, despite having a GDP about 55% of the US's during the decade, had larger electronic and metal-working industry. And I don't think Germany's metal working industry was larger than the US's in 1938-1939, because productivity was lower even though total employment was higher, it appears it was 3/4 of the US's in 1939 using indices based 1929 output and exchange rates (not manipulated by the Nazis).
So when war started their machine tool stock was much more intensively used during the war as they shifted their workforce to machine tool using industries due to their focus of their resources on production of aircraft and ships.

Again, clarity is always helpful. Which "they" do you mean? Germany? Or the US and UK?
Germany compared to UK and US. US and UK were similar in that employment in metal working industries rose dramatically and much faster than Germany's.
Employment in the US in production of aircraft and ships was ca. 4 million in 1943, compared to 0.9 million in Germany.
You say that like its a bad thing... :roll: And what was the production ratios produced between the U.S. and Germany?[/quote]

Aircraft and ships in 1943 was apparently 25 billion dollars, or 50 billion RM, compared to 10 billion RM for Germany, aircraft alone was 25 billion RM for the US in 1943, 32 billion in 1944, compared to 8 billion RM for Germany in 1943 and 10 billion in 1944, 57/18, around 3 times more. Though for ammunition the figures are much closer, at 22 billion RM for the US in 1943-44, same as for Germany.

Using the 1939 3 RM = 1 1939 dollar and the Friedman and Schwartz (1963) price index converting 1945 dollars to 1939 dollars.

What I find puzzling is the fact that Germany controlled a comparable economic potential as the US after defeating France (see that little table above) and despite taxing occupied territories as heavily as Germany itself they produced way less aircraft (naval vessels is easily explained by difference in military objectives). I explained that fact using two arguments:

1. The territories under German occupation suffered economic collapse, while the US as a whole grew, continental Europe GDP declined, by 1943, western continental Europe's GDP was ca. 60% of the US's, when it was nearly the same size in 1939.
2. Germany spend a smaller proportion of their resources on aircraft by virtue of different doctrines regarding airpower: US believe in airpower as a strategic weapon while German military used aircraft as support for ground forces. In 1943, German expenditures on aircraft were 8% of total military expenditures, compared to 16% in the US.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Re: A Comparison of American and German economies in WW2

Post by ljadw » 22 Jan 2015 07:29

1)I am not convinced at all by the use of billions of $ to prove a point

2) I am not convinced at al by the old claim that Germany used its aircraft as support for ground forces : one can easily reply that in 1943,German expenditures on aircraft were (only) 8 % of total military expenditures,because Germany was saddled up with a big land war,because the air defense (flak) claimed a lot of military expenditures .

3)Other point is that Guaporenses's continuous mixing of figures of peace and war economies is more than questionable .Exemple : "What I find puzzling is the fact that Germany controlled a comparable economic potential as the US after defeating France" and "the GDP of western continental Europe was nearly the same size of that of the US in 1939":1939 is not 1940.

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