On estimating the warmaking potential of the world's regions

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: On estimating the warmaking potential of the world's regions

Post by RichTO90 » 08 Feb 2015 01:18

Guaporense wrote: (1) Germany (1940-1944) --------- 4,565,592 tons (avr. weight 15.12 kg)
(2) United States (1940-1945) ---- 3,168,279 tons (avr. weight 14.96 kg)
No, U.S. War Department production by weight for "guns and mortars" was 5,014,582 short tons.
Note: Here I only had German data by caliber for 301.9 million rounds, so this is a lower bound estimate. The composition of German and American production was very similar: for example, 105 mm numbered 117 million rounds in German production out of 302 million, 84 million rounds in American out of 211 million. Russian was lighter, I think that British composition, given similar levels of industrialization, was like German and American figures.
Again, no, U.S. War Department production of 105mm was 295.252 million rounds for M2 and M2A1 and 7.920 for M3.

You really need to find better data; conclusions drawn from data that varies by 39% from reality might tend to call your conclusions into question.

Worse, given that the correct data were given to you five years ago and that you yet persist on using that incorrect data, not only your conclusions can be drawn into question, but also your... :roll:

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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 08 Feb 2015 22:59

South wrote:Good morning Guaporense,

Are you saying or suggesting that "China...truly backward...agricultural subsistence [economy], incapable of mobilizing their resources for total war..." ?

Chinese resources were mobilized ............ for a civil war. There was more than 1 government involved in this. As an aside, WWII was ongoing in China prior to Poland and Pearl Harbor. Origin reference points can be 18 Sep 31 ("Mukden Incident") or the 1937 Nanking attacks. The mobilization(s) occured in the referenced agricultural subsistence economy, accepting ongoing improvements such as new air fields and roads.

For background, see:

THE ORIGINS OF CHINESE BOLSHEVISM, Michael Y.L. Luk, ISBN: 0-19-584209-X, 1990.

I believe mobilizations can be accomplished even in destitute economies.

Warm regards,

Bob
Actually you are wrong, in it's civil war China wasn't able to mobilize it's resources in proportion to total output compared to industrialized countries.

A good measure of the economy's capability for mobilization is the size of the army relative to total population:

France (1940): 5 million soldiers/42 million inhabitants (12%)
Germany (1943): 9.5 million soldiers/81 million inhabitants (12%)
USSR (1943): 12 million soldiers/130 million inhabitants (9%)
UK (1944): 5 million soldiers/48 million inhabitants (10%)
China (1948): 6.5 million soldiers/550 million inhabitants (1.1%)*

*June 1948 strength: 3,650,000 men for Republic of China, 2,800,000 men for People's Republic of China.

China in the civil war could mobilize only 1% of it's population, industrialized countries can mobilize 10 times the share. That's because the proportion of output that can be mobilized for war is much higher in industrialized countries, in China 90% of output was self sufficient agricultural products. You cannot recruit too many peasants because the population starves. So it's accurate to say that China could only mobilize perhaps 5% of it's national product, while Japan could mobilize 50%. Explaining why China's large PPP GDP couldn't be converted into fighting power.

Ancient and Medieval empires had similar degrees of mobilization as China in the civil war, or maybe higher. For instance, the Roman Empire under Hadrian had a peacetime standing armed forces of 450,000 men out of a estimated population of 70 million (0.6%). In the Punic Wars the Roman Republic and Carthage managed to mobilize much more than 1% of their populations (Rome mobilized an army estimated at around 5% of Italy's population at the time Hannibal was invading).
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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 09 Feb 2015 07:22

Germany versus Russia

While surviving Barbarossa, the odds of Russia were really bad in January 1942. Before the war, Germany and Russia were similar in relative economic size by PPP and official exchange rates, Germany's data is for 1939 and USSR's data is for 1940, in 1990 international dollars and current dollars, respectively:

------------------- (PPP) ------- Official exchange rates
Germany -------- 428,750 --- 51,600
USSR ------------- 420,091 --- 50,600

Apparently, an even matched fight in economic resources, though it doesn't take into account the higher level of industrialization in Germany's case. However, that wasn't the situation of the Eastern front during the war: Germany's resources expanded greatly while the USSR's resources declined.

By January 1942, the 1939 GDP figures (1938 for Romania, 1937 for Czechoslovakia) of the territories controlled by Germany and her satellites versus the 1939 GDP of the territories controlled by the USSR were the following (including Yugoslavia and Greece into Germany's directly controlled territories part besides the countries included in the block I named "Grossraum"):

Axis total ---------------------------------------------- 1,295,852
--- Germany (directly controlled territories) ------- 921,233
--- Italy -------------------------------------------------- 154,470
--- Occupied USSR -------------------------------------- 151,430
--- Hungary ---------------------------------------------- 26,184
--- Romania ---------------------------------------------- 19,375
--- Bulgaria ----------------------------------------------- 10,599
---- Finland ----------------------------------------------- 12,561

Soviet Union ---------------------------------------------- 268,660

So Axis total economic superiority against the Soviet Union was in the order of 5 to 1. In terms of industrial resources was similar: total steel production in Axis controlled Europe was 4.5 times larger than Soviet output in 1942, the difference in coal output was even larger, about 7 times, though the USSR had more oil which partially compensated for the difference: total fossil fuel energy consumption was still 6 times larger in the German controlled territories alone.

The steel allocation also was similar: Germany alone allocated in 1944 about 3 times more steel monthly to war production than the Soviet Union did, in 1942 and 1943 the difference was even greater because of lower Soviet output of rolled metals (in 3rd quarter 1944, German rolled steel allocation was: 913,150 tons a month (ammunition was 445,000 tons), Soviet monthly average for 1944 was 299,170 tons a month (ammunition was 107,217
tons). Lend-Lease helped a little though: in total the Allies delivered about 110 billion 1990 dollars of supplies to the USSR (that's 17 billion 1945 dollars), over a 4 year period or 28 billion dollars a year, boosting total Soviet resources by 10%, still the difference in PPP GDP was similar to Japan/USA, using 1939 figures in 1990 PPP dollars, even including Lend-Lease resources:

USA -------------- 862,995
Japan ------------ 166,506

The situation was critical for the Allies: if the USSR collapsed, the Allies would have probably lost the war. Nothing suggested in late 1941 that the Soviet Union would have survived, well, it's casualty figures were enormously larger than German losses for a reason. German combat effectiveness superiority can only explain a fraction of that difference, most of the difference was in the difference in per capita firepower: the German field army was less than two thirds of the size of the USSR's while artillery ammunition production was 3 times larger, implying in a 5 times per capita supply of artillery ammunition. Also, notice that if the USSR lost and it's European parts were incorporated as part of Germany's sphere of power (and considering the degree of taxation of France, Germany's potential economic resources would increase in proportion), the aggregate PPP economic size of the territories with per capita income above 2,000 dollars would be:

Axis total -------- 1,535,376
----- Germany -------- 428,750
----- USSR ------------- 300,000 (European parts)*
----- France ----------- 200,840
----- Japan ------------ 166,506
----- Italy -------------- 154,470
----- Poland ------------- 67,788
----- Netherlands ------- 48,687
----- Belgium ----------- 43,216
----- Czechoslovakia --- 31,578 (3/4 of the 1937 estimate, 1/4 was in Sudetenland)
----- Hungary ----------- 26,184
----- Denmark ----------- 22,803
----- Greece ------------- 18,875
----- Norway ------------- 13,118
----- Finland ------------- 12,561

Allied total --------- 1,269,960
----- USA ---------------- 862,995
----- UK ----------------- 300,539
----- Canada ------------ 55,167
----- Australia ---------- 40,749
----- New Zealand ----- 10,510

*Siberia had about 60 million inhabitants, out of the 198 million living in the USSR in 1940, so 70% of it's economic potential would fall in German hands. Notice that Germany taxed France to a greater proportion than itself following occupation. In fact, in purely fiscal terms, in 1942-43 fiscal year, German tax revenues were 46.4 billion RM, revenues from occupied territories were 22 billion RM and debt emissions were 55.6 billion RM.

So, if Germany wins in the Eastern front, the Allied economic superiority disappears (even if we adjust US GDP by the Great Depression, though most Axis territories were still affected by the Great Depression in 1939 in terms of lost trend growth). The United Kingdom probably wouldn't have survived surrounded by a hostile continent with a GDP over four times larger than itself, similar degree of difference of economic resources as between Japan and the United States.
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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 09 Feb 2015 07:56

The Economic Irrelevance of India

According to Maddison's estimates, India was by far the most important territory of the British Empire. It's GDP was 5 times that of Canada and slightly larger than France. Let's see how relevant that estimate is in actual terms, using 1939 fiscal year (april-march) government budget data and official exchange rates, in millions of current (1939) dollars (source: World Economic Survey 1942-44):

United Kingdom
Gov. expenditures -- 9,520
---- military --------- 5,705
Revenues ------------- 5,660
National income ----- 28,000

Germany
Gov. expenditures -- 17,943
---- military --------- ca. 14,000
Revenues ------------- 9,430
National income ----- 51,600

India
Gov. expenditures --- 435
---- military ---------- 168
British imperial tax -- 114
Revenues -------------- 403

The money India sent to the UK was less than 1% of Germany's military expenditures and about the same size as the UK's government expenditures. India's economic contribution to the war was completely insignificant.

India's PPP GDP was huge because it had 350 million inhabitants in 1939, and these people had to eat hence it's GDP can be estimated as the cost of feeding 350 million people plus a tiny surplus output. India's government revenues were 7.1% of the UK's, that means we can estimate India's GDP that did not become agricultural subsistence at 21 billion 1990 dollars, while 235 billion dollars was agricultural output for self consumption. Hence, about 90% of India's GDP was subsistence agriculture. Notice that in China the proportion was probably similar considering that they were able to mobilize only 1/11th of the manpower that an industrialized country like Germany or France could.

Notice that Canada actually had larger government revenues than India in 1939, even though it's GDP was estimated at 1/5 of India. Would be nice to do an analysis of government revenues in other countries as well.
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Re: On estimating the warmaking potential of the world's regions

Post by Gooner1 » 09 Feb 2015 15:20

Guaporense wrote:
Anyway, in 1942, at the turning point of the war, these were the 1939 PPP GDP's in 1990 dollars of the regions controlled by each coalition were:

Allies ---------------- 1,538,650
----- USA ------------ 862,995
----- UK ------------- 300,539
----- USSR ----------- 268,660 (reduced by 37% due to Barbarossa)*
----- Canada -------- 55,167
----- Australia ------ 40,749
----- New Zealand -- 10,510

Axis -------------------- 1,386,806
----- Germany -------- 428,750
----- France ----------- 200,840
----- Japan ------------ 166,506
----- Italy -------------- 154,470
----- USSR -------------- 151,430 (areas under German occupation)*
----- Poland ------------- 67,788
----- Netherlands ------- 48,687
----- Belgium ----------- 43,216
----- Czechoslovakia --- 31,578 (3/4 of the 1937 estimate, 1/4 was in Sudetenland)
----- Hungary ----------- 26,184
----- Denmark ----------- 22,803
----- Greece ------------- 18,875
----- Norway ------------- 13,118
----- Finland ------------- 12,561
Uh, why are you using Maddison's GDP estimates for 1939 for 1942, why don't you use his 1942 GDP estimates for, uh, 1942?

http://www.ggdc.net/maddison/maddison-project/home.htm

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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 10 Feb 2015 06:19

Two reasons:

1 - Because wartime GDP numbers are problematic. US GDP figures, for instance, are based on the department of commerce 1980 estimates, which are extremely problematic. They show US GDP doubling from 1939 to 1944, that's ludicrous for a 5 year period. The doubling is due to the fact that prices of munitions were much higher than price of civilian goods in 1980. So just reallocating labor from civilian to the military increased measured GDP, an obvious massive statistical distortion.

GDP overall, is a figure that makes more sense in peacetime, since it measures total market value of output produced, output directed at satisfaction of consumer preferences. In wartime resources are redirected from it's normal use to the military. Prices times quantity cease to be a good measure of economic output because the things produced change: how can you say the US economy grew if output of everything it used to produce collapsed (i.e. consumer goods), while the stuff it was doing in 1944 were pretty much only aircraft, ships, tanks and bombs, things which were not a significant part of the 1939 economy?

2 - Because I wanted to compare the economic potential under control by each coalition and not the historical output.

1 and 2 are related though. Countries that focused more on producing munitions (such as the US) managed to get more distortion in their GDP measure, Germany did not focus much on producing munitions, as result it's "armaments miracle" had small aggregate effects on the measure of GNP (though the 15% increase in German GNP from 1939 to 1943 was also perhaps mostly statistical distortion as well).
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Re: On estimating the warmaking potential of the world's regions

Post by Gooner1 » 10 Feb 2015 14:53

Guaporense wrote:Two reasons:

1 - Because wartime GDP numbers are problematic. US GDP figures, for instance, are based on the department of commerce 1980 estimates, which are extremely problematic. They show US GDP doubling from 1939 to 1944, that's ludicrous for a 5 year period. The doubling is due to the fact that prices of munitions were much higher than price of civilian goods in 1980. So just reallocating labor from civilian to the military increased measured GDP, an obvious massive statistical distortion.
I am sure the US did not wait until 1980 to start calculating its GDP

US historical GDP calculator here http://www.measuringworth.com/usgdp/#
Sources and techniques used here http://www.measuringworth.com/usgdp/sourcegdp.php

How did the US economy double in size? Well I guess more people working more hours for more money more efficiently would account for it quite satisfactorily.
GDP overall, is a figure that makes more sense in peacetime, since it measures total market value of output produced, output directed at satisfaction of consumer preferences. In wartime resources are redirected from it's normal use to the military. Prices times quantity cease to be a good measure of economic output because the things produced change: how can you say the US economy grew if output of everything it used to produce collapsed (i.e. consumer goods), while the stuff it was doing in 1944 were pretty much only aircraft, ships, tanks and bombs, things which were not a significant part of the 1939 economy?
Because everything the US produced in 1944 was priced in dollars, same as in 1939?
BTW Germany in 1939 was in no way, shape or form a normal peacetime economy.
2 - Because I wanted to compare the economic potential under control by each coalition and not the historical output.
Yes that is what I thought you wanted. It conveniently ignores that the countries and areas that Germany conquered to 1942 did not become their allies and that economies experienced drastic declines, in no small part due to the German policies of theft and pillage.

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Re: On estimating the warmaking potential of the world's regions

Post by RichTO90 » 10 Feb 2015 15:03

Gooner1 wrote:Yes that is what I thought you wanted. It conveniently ignores that the countries and areas that Germany conquered to 1942 did not become their allies and that economies experienced drastic declines, in no small part due to the German policies of theft and pillage.
Not to mention that those economies also required resources. Which became more than a bit problematic when the Allied blockade took effect. Because, oddly enough, no one has yet managed to show where "market forces" managed to defeat a 5" naval rifle when it came to running the blockade... :roll: Never mind that all that wonderful "warmaking potential" the Germans "acquired" in Europe then competed for the same resources. :roll: Then again, this "economist" appears to believe that "warmaking potential" is a product of unicorns, ponies, and patty-cake wishes... :roll:

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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 11 Feb 2015 08:49

Gooner1 wrote:How did the US economy double in size? Well I guess more people working more hours for more money more efficiently would account for it quite satisfactorily.
There was a 20% increase in civilian employment in the US from 1939 to 1944. This increase was made of up workers with lack of experience and human capital (women, mostly), investment to GDP ratio was also very small, hence we would expect a reduction in productivity with this 20% increase in employment. Number of hours worked also increased though. Overall the best estimate we have is Kuznetz shown a growth of about 30% over the period, an estimate consistent with the facts which is the one I used.

I am extremely well acquainted with all the several different estimates of US GDP variation during the war, I know of half a dozen. They are all very problematic. Madison's estimate is the one based on the 1980 prices made in 1990 by the department of commerce, which shows the greatest variation in output and is the most distorted one.

I quote: http://www.independent.org/newsroom/article.asp?id=138

"Table 2. REAL GROSS NATIONAL PRODUCT, 1939-1949
(index numbers, 1939 = 100)
Commerce Kuznets
Year Estimate of
1975 Estimate of
1990 Kendrick Wartime Revised Variant III GNP*
1939 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1940 108.5 107.9 109.7 109.3 109.0 109.0 108.7
1941 125.9 126.9 128.7 125.9 121.8 121.7 119.4
1942 142.2 150.8 145.5 131.9 126.5 118.2 108.4
1943 161.0 178.1 160.6 148.6 132.5 117.6 102.2
1944 172.5 192.7 172.4 135.8 122.1 105.4
1945 169.6 189.1 171.3 139.4 125.6 114.3
1946 149.3 153.1 156.7 151.0 146.5 144.8
1947 148.0 148.9 153.4 154.5 148.0 147.3
1948 154.6 154.7 160.0 155.5 153.1 152.3
1949 154.8 154.8 156.9 152.6 148.5 147.5
Sources: Column 1 was computed from data in U.S. Bureau of the Census, Historical Statistics, p. 224 (series F-3); column 2 from data in U. S. Council of Economic Advisers, Annual Report, p. 296; column 3 from data in Kendrick, Productivity Trends, pp. 291-92 (national security variant); column 4 from data in Kuznets, National Product in Wartime, p. 89 (Variant a); column 5 from data in Kuznets, “Long-Term Changes,” p. 40; and column 6 from data in Kuznets, Capital, p. 487. GNP* is equal to Kuznets’s variant III minus gross war construction and durable munitions and was computed form data in Kendrick, Productivity Trends, pp. 291-92."

"By contrast, Simon Kuznets, a pioneer in national income accounting, expressed many concerns. In National Product in Wartime Kuznets noted that national income accountants must make definite assumptions about “the purpose, value, and scope of economic activity.” He observed that “a major war magnifies these conceptual difficulties, raising questions concerning the ends economic activity is made to pursue; and “the distinction between intermediate and final products.” Moreover, “war and peace type products . . . cannot be added into a national product total until the differences in the valuation due to differences in the institutional mechanisms that determine their respective market prices are corrected for.” During the war Kuznets constructed several alternative series, one of which appears in Table 2, column 4. Its values for 1942 and 1943 are substantially lower than those in columns 1, 2, and 3, in part because Kuznets used preliminary nominal data as well as different deflators for expenditure on munitions.11

After the war Kuznets refined his estimates, producing a series (Table 2, column 5) that differs substantially from the standard series “partly because of the allowance for overpricing of certain types of war production, partly because of the exclusion of nondurable war output (essentially pay and subsistence of armed forces).” Contrasting his estimate and that of the Commerce Department, he found the latter “difficult to accept” because it made too little correction for actual inflation during the war years and did not deal satisfactorily with the decline in the relative prices of munitions during the war.12 Kuznets’s refined estimates follow a completely different profile for the 1940s. Most notable is that whereas the Commerce Department’s latest estimate of real GNP drops precipitously in 1946 and remains at that low level for the rest of the decade, Kuznets’s estimate increases in 1946 by about 8 percent, then rises slightly higher during the next three years.

Kuznets might have made an even greater adjustment, deleting all war outlays. Although computing GNP in this way now seems highly unorthodox, a strong argument can be offered for it, and Kuznets considered it seriously.13 The crucial question: does war spending purchase a final good and hence belong in GNP, or an intermediate good and hence not belong?"

from: http://www.independent.org/newsroom/article.asp?id=138

This criticism also applies to the GNP figures of all countries involved in the war. The weapons miracle in Germany's case is a smaller magnitude case of the same type of statistical distortion as these super inflated US GNP figures.
GDP overall, is a figure that makes more sense in peacetime, since it measures total market value of output produced, output directed at satisfaction of consumer preferences. In wartime resources are redirected from it's normal use to the military. Prices times quantity cease to be a good measure of economic output because the things produced change: how can you say the US economy grew if output of everything it used to produce collapsed (i.e. consumer goods), while the stuff it was doing in 1944 were pretty much only aircraft, ships, tanks and bombs, things which were not a significant part of the 1939 economy?
Because everything the US produced in 1944 was priced in dollars, same as in 1939?
BTW Germany in 1939 was in no way, shape or form a normal peacetime economy.
Military expenditures Germany in 1939 were about 15% of GNP. That's a similar rate as the US during the Korean war, not enough to seriously distort the calculation. By 1943-44, military expenditures were 50-60% of GNP in all belligerent countries. Much higher levels of distortion certainly.

The problem is that military "goods" are not priced in the market, they are not part of the civilian economy and are not made to satisfy consumer preferences. Hence wartime figures are more problematic, so I used peacetime figures, however, it's true that in 1939, Germany, UK, France and the Soviet Union were already spending a huge amount of money on the military. Same for the US during the cold war.

Another problem is the reduction in production cost of munitions relative to civilian goods, suppose the following:

In 1939 there are 2 goods: apples and bombers and 100 workers, 99 workers employed in producing apples producing 99,000 apples a year, 1 worker employed in producing bombers, producing 1 bomber a year, at a price of 1,000 apples. Suppose the economy mobilizes for war in 1940, half the workers in the apple sector go to the bomber sector, employment in apples falls to 50 workers, production of apples fall to 50,000 apples while employment production of bombers increase to 50 workers and thanks to economies of scale, productivity in bomber production doubles and output of bombers if 100 bombers, 2 bombers per worker. Price of bomber falls to 500 apples. Hence, measured at prices of 1939, output in 1940 was 150,000 over 100,000 in 1939, hence output was 50% higher than in 1939, but measured at prices of 1940, output was 99,500 in 1939 and 100,000 in 1940, an increase of 0.5%.

See the difficulties in measuring that? US output increased a lot if we use prices of 1939, it did not increase much if we use prices of 1945, when production costs of anything military related were a fraction of 1939 costs. A shift to a war economy will always lead to inflated estimates of output using pre-war prices. The estimates of the department of commerce are even worse because they use prices from 1980 to compute GDP in the 1940's, which was the estimate Madison used in his dataset. A clear problem there. German manufacturing output reportedly doubled from 1936 to 1943, but much of this growth was also distortion.

Also, the Soviet Union had a degree of government control over economic activity that even peacetime estimates of GNP are problematic, since most output was not produced for the private consumers. Overall, it's much more difficult to measure wartime GNP than peacetime.
2 - Because I wanted to compare the economic potential under control by each coalition and not the historical output.
Yes that is what I thought you wanted. It conveniently ignores that the countries and areas that Germany conquered to 1942 did not become their allies and that economies experienced drastic declines, in no small part due to the German policies of theft and pillage.
Which means that those were stupid policies. Yes, they did not become allies but their entire economic potential was under the control of the German government, France paid 40-50% of it's entire GNP to Germany, more than the taxation rate inside Germany itself. In effect the country's border expanded and it "assimilated" other countries. There is essentially no difference between taxing occupied territories and "traditional" territories, it's just a state expanding it's sphere of control.

Also, there is not essential difference between taxation and pillage. Taxation is a more civilized form of pillage, both are essentially the same phenomena: a state confiscating property of individuals. The way the German government pillaged occupied territories was a very stupid way of raising resources.

States are not countries, they are organizations based on organized violence that confiscate the output inside the territories they control. German government increased the amount of resources under their control several times during the war. That explains how Germany was able to spend 500 billion RM (in 1938 prices) over a GNP of 102 billion RM in 1938. Much higher rates of military expenditure relative to GNP than those of other belligerent countries and in 1943-44, Germany was spending 125-150 billion RM over a GNP of 160 billion RM, all thanks to revenues from occupied territories and utilization of the European financial system. This explains how Germany was able to spend as much as the US in the war, even though their initial resources were much smaller:

German military outlays in 1938 RM: 500 billion, 5 times gross national product in 1938.
US military outlays in 1940 dollars: 190 billion, 1.9 times gross national product in 1940.

This discrepancy can be explained by the fact that Germany itself was only 40% of the GNP of the areas they controlled after the Battle of France.
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Re: On estimating the warmaking potential of the world's regions

Post by Gooner1 » 11 Feb 2015 13:01

Guaporense wrote:
There was a 20% increase in civilian employment in the US from 1939 to 1944. This increase was made of up workers with lack of experience and human capital (women, mostly), investment to GDP ratio was also very small, hence we would expect a reduction in productivity with this 20% increase in employment. Number of hours worked also increased though.
Who is this 'we'? I am familiar enough with British military output in the war to know there was a huge increase in productivity. Reasons are pretty obvious - economies of scale in production, design simplifications and workers simply becoming more efficient as they become experienced in their jobs.
I am extremely well acquainted with all the several different estimates of US GDP variation during the war, I know of half a dozen. They are all very problematic.
Economists not agreeing, well who'd have thought it? But I don't get what you're trying to prove. The enormous military output of the US between 1941-45 is a fact, not an accountancy trick.
Kuznets might have made an even greater adjustment, deleting all war outlays. Although computing GNP in this way now seems highly unorthodox, a strong argument can be offered for it, and Kuznets considered it seriously.13 The crucial question: does war spending purchase a final good and hence belong in GNP, or an intermediate good and hence not belong?"
Hmm ... yes accountancy .. on the whole though I think it was a good thing that the US was dropping bombs on Nazi Germany and not fridges or vacuum cleaners.
Military expenditures Germany in 1939 were about 15% of GNP. That's a similar rate as the US during the Korean war, not enough to seriously distort the calculation.
Germany's military expenditures as a percentage of GDP hit 23.5% in 1938 already.
http://www.ibiblio.org/hyperwar/UN/UK/U ... .html#cn26
Which means that those were stupid policies. Yes, they did not become allies but their entire economic potential was under the control of the German government,
Not really, as has been mentioned the occupied countries also became suhject to blockade, starving them of necessary raw materials, plus the problem of uh, unmotivated workers.

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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 13 Feb 2015 03:14

On GDP controlled by each coalition in 1942, I quote The Economics of WW2, using slightly different sources, page. 6:

"In other words, by 1942 the Axis powers were no longer economically inferior to the Allies and were more or less on equal terms in overall GDP of 1938."

But then he goes on to say that output in conquered territories collapsed and output in unconquered territories rose so that they were screwed. But the fact is that they couldn't predict that before.
Last edited by Guaporense on 13 Feb 2015 03:25, edited 1 time in total.
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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 13 Feb 2015 03:24

Gooner1 wrote:
Guaporense wrote:
There was a 20% increase in civilian employment in the US from 1939 to 1944. This increase was made of up workers with lack of experience and human capital (women, mostly), investment to GDP ratio was also very small, hence we would expect a reduction in productivity with this 20% increase in employment. Number of hours worked also increased though.
Who is this 'we'? I am familiar enough with British military output in the war to know there was a huge increase in productivity. Reasons are pretty obvious - economies of scale in production, design simplifications and workers simply becoming more efficient as they become experienced in their jobs.
You mean productivity in the military goods sector. In the economy overall, not really, long term economic productivity increases on average at 1.5% a year in industrialized countries. Productivity in military goods sector increased in all nations during the war because they did not have large military sectors before the war (or after) so that when you put millions of workers into these industries they learn how to produce armaments and supplies for the armed forces.
I am extremely well acquainted with all the several different estimates of US GDP variation during the war, I know of half a dozen. They are all very problematic.
Economists not agreeing, well who'd have thought it? But I don't get what you're trying to prove. The enormous military output of the US between 1941-45 is a fact, not an accountancy trick.
The US GDP was already the world's largest in 1939 (and was the world's largest since the late 19th century). What happened is that this enormous civilian goods economy converted it's economic potential into war material. You don't need to conjecture a doubling of US GDP to explain it, pre-war economic size already explains it:

--------- Aircraft output ----- 1939 GDP
US ----- 300,000 -------------- 860,000
UK ---- 130,000 -------------- 300,000
USSR -- 150,000 ------------- 430,000
Japan -- 65,000 ------------- 166,000

For Germany, aircraft was certainly a much smaller proportion of military outlays than other great powers.

I am saying is that it's problematic to measure wartime GDP, one of the reasons why I did not use 1942 GDP figures (and Maddison's figures for the US are the most distorted).
Kuznets might have made an even greater adjustment, deleting all war outlays. Although computing GNP in this way now seems highly unorthodox, a strong argument can be offered for it, and Kuznets considered it seriously.13 The crucial question: does war spending purchase a final good and hence belong in GNP, or an intermediate good and hence not belong?"
Hmm ... yes accountancy .. on the whole though I think it was a good thing that the US was dropping bombs on Nazi Germany and not fridges or vacuum cleaners.
Those bombs did not really help much in winning the war. Mostly in causing civilian suffering and the deaths of a hundred thousand airmen. Allied manpower was more important in defeating Germany, specially in the Eastern front. Even though they lost 5 men per each German casualty, the USSR was able to replace it's losses to a greater degree and win the war. Despite their economic inferiority (even though they had significant lend-lease supplies), they won the war. Economic superiority does not explain the outcome of the Eastern front, hence, the outcome of the war.
Military expenditures Germany in 1939 were about 15% of GNP. That's a similar rate as the US during the Korean war, not enough to seriously distort the calculation.
Germany's military expenditures as a percentage of GDP hit 23.5% in 1938 already.
http://www.ibiblio.org/hyperwar/UN/UK/U ... .html#cn26
That's an old source. There are several different estimates of proportion of pre-war military expenditures. The estimate I cited is from Klein, Germany's Economic Preparations for War, who estimated military outlays of 19 billion RM, or 15% of the GDP in 1939.
Which means that those were stupid policies. Yes, they did not become allies but their entire economic potential was under the control of the German government,
Not really, as has been mentioned the occupied countries also became suhject to blockade, starving them of necessary raw materials, plus the problem of uh, unmotivated workers.
The blockade was only over the ocean and the conquest could be used to create a free-trade zone in continental Europe, which would perhaps more than compensate the loss of trade opportunities outside of Europe. And the workers were not unmotivated to be alive: you can tax the GDP of occupied countries and use the money to PURCHASE the output of the industries of those countries. That was exactly what Germany did.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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Re: On estimating the warmaking potential of the world's regions

Post by Gooner1 » 13 Feb 2015 11:47

Guaporense wrote:
The US GDP was already the world's largest in 1939 (and was the world's largest since the late 19th century). What happened is that this enormous civilian goods economy converted it's economic potential into war material. You don't need to conjecture a doubling of US GDP to explain it, pre-war economic size already explains it:
Yet the US in 1939 still had 9.5 million unemployed or 17% percent of the labour force. What was the unemployment rate in Germany at the time? Yet you want to use 1939 as some sort of baseline comparison?!
Those bombs did not really help much in winning the war. Mostly in causing civilian suffering and the deaths of a hundred thousand airmen
:roll:
That's an old source. There are several different estimates of proportion of pre-war military expenditures. The estimate I cited is from Klein, Germany's Economic Preparations for War, who estimated military outlays of 19 billion RM, or 15% of the GDP in 1939.
Yes, it is an old source. Klein's figure if it relates to the calendar year '39 seems doubtful. Germany was at war for a third of it.
Mark Harrison gives for "National utilization of resources supplied to the war effort, regardless of origin:" for Germany for 1939 25% of Net National Product and 17% for 1938.
For the UK the equivalent years were 16% and 7%.
The blockade was only over the ocean and the conquest could be used to create a free-trade zone in continental Europe, which would perhaps more than compensate the loss of trade opportunities outside of Europe.
And what about raw materials? Europe was quite poor for raw materials. It still is.
And the workers were not unmotivated to be alive: you can tax the GDP of occupied countries and use the money to PURCHASE the output of the industries of those countries. That was exactly what Germany did.
The reality is that after German conquest the GDP and output of the occupied nations plummeted.

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Re: On estimating the warmaking potential of the world's regions

Post by DarthMaur » 21 Feb 2015 21:35

Guaporense wrote:Several articles and books on economic history. Life expectancy in India and China was around 24 years by the turn of the 20th century. Russia was 32 years, increasing to around 45 by 1940.

This is an interesting table of life expectancy around the world by the early 1950's (life expectancy in Eastern Europe increased a lot between 1935 to 1955):

Image

Also, see page 6 of this: http://www.ipss.go.jp/seminar/j/seminar ... m/john.pdf
Thanks. I would expect the number in 1939 to be closer to 1950 than to 1900 (turn of the century), though. That is why i asked in first place, it looked surprising to me since 25 is typical for pre-transition population, and India/China populations were experiencing it already by 1939.

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Re: On estimating the warmaking potential of the world's regions

Post by Guaporense » 02 Jun 2015 19:24

RichTO90 wrote:You really need to find better data; conclusions drawn from data that varies by 39% from reality might tend to call your conclusions into question.
That data only includes selected types of ammunition and not includes mortar nor ammunition not delivered to the army (probably a significant fraction of US ammunition production was delivered to allies). The data I used is from a book that you recommended, including only artillery ammunition delivered to the US army.

For example, in aircraft we have a similar discrepancy with US output being 300,000 units but the US army received "only" 230,000 units.
Worse, given that the correct data were given to you five years ago and that you yet persist on using that incorrect data, not only your conclusions can be drawn into question, but also your... :roll:
Thing is, there are two "models" of WW2:

1. Poor third world country, Germany, declares war on all the most powerful industrial economies on the planet and naturally loses faced with enormous material superiority.

2. The Axis and Allied powers controlled territories of similar economic potential, it was only thanks to the heroic resistance of the USSR and the UK plus the fast and efficient mobilization of the US that the outcome was decided.

I find the second model much more interesting than the first, which is very poor and refuted by the data. In fact, I also believed in the first model 5 years ago, until I read Wages of Destruction and found out that after the battle of France, that the Nazis controlled territories with 3 times the GDP of pre-war Germany, it's true the combined economies of US+UK+USSR were 4 times larger than Germany's, it's also true that taking into account the territories allied to Germany or under Nazi control (either annexed territory or occupied territory, they are both the same from a economic/industrial point of view) this difference vanishes, given that the margin of error of these historical GDP estimates means that given the territories controlled by each faction in 1942, their pre-war GDP was about the same.

When I believed in the first model I didn't read much about WW2 because I always regarded the outcome as a given. However, after noticing the vast economic resources under Germany's control, the war became much more interesting and the decisions of the Nazi leadership became much more rational in the end as well: Germany invaded the USSR because, well, the territories under German control had 2.5 times the GDP/industrial capacity of the USSR and had the best army in the world, hence, victory appeared to be very probable. Also it appears very difficult for even the US+British empire alliance to invade continental Europe, considering the economic and manpower resources of continental Europe were similar in magnitude to those of the US+British empire. Allied victory was thanks to a combination of factors, a combination which enabled the Allies to eventually prevail against forces which appeared to be irresistible in 1940. Very heroic and dramatic indeed, not the boring story told by modern politically correct but scientifically corrupt: stupid and poor Germany tried to take on forces much greater than their own and naturally lost. :D
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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