Ww2 Economic Boom For The Us -- Why?

[Arian]

An anomaly in that the movements of private consumption & GDP were in opposite directions by huge amounts - twice. Given his credentials, I'm sure Professor Bohanon understands that, but has chosen to write for his audience, & not worry about precision. It doesn't change the facts: production for & consumption by the armed forces were real. They displaced production for & consumption by the civilian population during the war, thus causing what would have looked like terrible US economic performance from 1940 to 1944 if only civilian consumption had been counted: an apparent depression, while tens of thousands of tanks, hundreds of thousands of aircraft, millions of infantry weapons, billions of shells & bullets, thousands of ships etc. poured out of the supposedly moribund US economy.

 

We all know that's a false impression & in reality the US economy was in its biggest ever boom up to 1944, but if we imagine a boom at the end of the war, we're imagining the mirror image of that imaginary wartime stagnation at best, & depression at worst. The economy as a whole really did go into a depression from 1945 to 1947 (growth resumed in 1948), but nobody (except a lot of women put out of work to make way for returning ex-servicemen) noticed because civilian production was going up fast (while military production slumped), & they had their wartime savings which suddenly they had things to buy with, so even for them it wasn't too bad.

 

Even some civilian production slumped at the end of the war. Cargo ships, for example. With nobody working hard to sink them & military transport needs shrunk immensely, the huge fleet of Liberty ships built by the USA in the greatest ever feat of shipbuilding was more than anyone really needed, & the shipyards built to build them had little to do. Several yards closed immediately, some hung on for a while, much reduced. One, for example, lay idle until 1947, when it became a shipbreakers & scrap yard. I'm sure Professor Bohanon would agree that was a real loss of production.

 

You're right, which brings up the question, how does one define an "economic boom"? Making lots of tanks and shells and driving up GDP, is pretty irrelevant by most other measures of performance. While everyone wants to take credit for the post-war "boom" (higher growth lets call it); every political or ideological or interest group wants to say that it was their emergence or their ideas that did it, a few things do stand out as being radically different post-WW2:

 

1) Productivity growth reached its height. I'm talking about TFP and labor productivity, and productivity here is not caused by more workers or labor participation rates. Productivity would have increased because during the war new organizational and management and production methods were developed. New technologies and innovations that were radically different from the past, did emerge during this period.

 

2) Tariffs, barriers to trade, and probably more importantly the abandonment of the gold standard. Tariff rates globally collapsed to their lowest rates in history. No gold standard made trade and national accounting and exchange rates easier. Post WW2 global trade was growing at ~8%/year, the highest growth rate ever. Prior to WW2 global trade had collapsed since ~1920.

 

3) Energy? Per capita consumption of energy really shot up post WW2. Maybe, cheaper and more abundant sources. Its probably tied to the two above, however.

 

4) Consumer consumption shot up. People moving to the suburbs, whole new industries and technologies. Also tied to the 3 above, as excess capacity from WW2 meant huge economies of scale. While the US was already very advanced in consumer consumption compared to the rest of the world (heck even by the 1920s, 50% of Americans owned cars, which is pretty impressive), economies of scale were very different post WW2.

 

TFP growth, much higher economies of scale, higher global demand and easier trade. These seem as rather obvious candidates. New energy sources may be something in here too, and all of this would translate into higher consumer consumption. All the rest are probably insignificant, I think. Unions, strikes etc., I'd argue the reverse. Unionization rates skyrocketed through the 1930s, and then collapsed post WW2.

Edited February 12, 2016 by Arian

[richard g]

It did not take long for the US, once they had entered WW2, to start using their industrial might to use what they were best at to attempt to control what their allies produced. A good example of this is the Sherman tank which they tried to in effect to use to reduce the capacity of their Western allies to make such vehicles by pushing Shermans as the tank to have, providing it was US spec. In other words, leave tank manufacturing to the US, you go and so something else. The more specialising, the greater the volume the more profit. Same but different with aircraft, the US had such a capacity to produce multiple quality aircraft that other countries, which already had been scratching to catch up and supply suitable aircraft under wartime conditions, were overwhelmed.

 

Being in the privileged position of not being directly threatened, being able to learn in the calm of relative peace, gave the US an advantage which they were able to exploit primarily because they had the industry which did everything and was able to turn it's talents to making the equipment of war with the same efficiency they had done in previously making vacuum cleaners and tractors. Once the war ended, with industry in good financial shape the US was able to switch over to peace time production of consumer goods all ready for those who had saved up during the war and were ready to let loose on the consumption front. Being basically self sufficient meant there were no shortages once industry began to crank up for peace time.

[Richard Lindquist]

It did not take long for the US, once they had entered WW2, to start using their industrial might to use what they were best at to attempt to control what their allies produced. A good example of this is the Sherman tank which they tried to in effect to use to reduce the capacity of their Western allies to make such vehicles by pushing Shermans as the tank to have, providing it was US spec. In other words, leave tank manufacturing to the US, you go and so something else. The more specialising, the greater the volume the more profit. Same but different with aircraft, the US had such a capacity to produce multiple quality aircraft that other countries, which already had been scratching to catch up and supply suitable aircraft under wartime conditions, were overwhelmed.

 

Being in the privileged position of not being directly threatened, being able to learn in the calm of relative peace, gave the US an advantage which they were able to exploit primarily because they had the industry which did everything and was able to turn it's talents to making the equipment of war with the same efficiency they had done in previously making vacuum cleaners and tractors. Once the war ended, with industry in good financial shape the US was able to switch over to peace time production of consumer goods all ready for those who had saved up during the war and were ready to let loose on the consumption front. Being basically self sufficient meant there were no shortages once industry began to crank up for peace time.

The UK didn't have to take Shermans. They had a lot of excess Covenanters for their troops.

[swerve]

Very funny.

[Rich]

The UK didn't have to take Shermans. They had a lot of excess Covenanters for their troops.

 

 

 

Yes, they did, but not for the silly conspiratorial reason invoked by richard g. The British simply didn't have the ability to build sufficient sufficiently good enough tanks when they needed to have them. See Benjamin Coombes' British Tank Production and the War Economy, 1939-1945.

Edited February 12, 2016 by Rich

[alejandro_]

Same but different with aircraft, the US had such a capacity to produce multiple quality aircraft that other countries, which already had been scratching to catch up and supply suitable aircraft under wartime conditions, were overwhelmed.

 

It is not like if UK did not produce any 4 engined bommbers. RAF received 7,000 Lancaster, +6,000 Halifax and 2,000 Short Stirling during WW2.

[rmgill]

On the flip side, it's a good thing the UK Tank Board didn't standardize all production with the Covenanter design.

[swerve]

 

The UK didn't have to take Shermans. They had a lot of excess Covenanters for their troops.

 

 

Yes, they did, but not for the silly conspiratorial reason invoked by richard g. The British simply didn't have the ability to build sufficient sufficiently good enough tanks when they needed to have them. See Benjamin Coombes' British Tank Production and the War Economy, 1939-1945.

Oh, they could have done better. For example, they could've taken the companies with experience in building tanks by the scruffs of their metaphorical necks & given 'em a good shake, along with the army, & had 'em come up with a couple of half decent tank designs that could be mass-produced. Also, they could have not tried getting firms which had no knowledge of fighting vehicles to come up with their own designs (the Covenanter - aaarrrgghhh!), & instead got 'em to build the previously mentioned designs. Even sticking to the designs we had, a couple of thousand extra Valentines or Crusaders would have been much more useful than the bloody awful Covenanters, & a far more sensible use of the production facilities of LMS. Discarding the cruiser/infantry tank distinction & building a general-purpose tank with production farmed out to every plant that could make parts or fix 'em together would have been better still.

 

We'd still have been short of tanks able to face the Wehrmacht, though, & been very grateful for any that the USA could provide.

[swerve]

Curse that software glitch.

Edited February 12, 2016 by swerve

[Arian]

 

 

Yes, they did, but not for the silly conspiratorial reason invoked by richard g.

 

I don't see any conspiratorial reasons there. He's talking about specialization and comparative advantage. The US had a massive comparative advantage in many things, and which it specialized in, to the benefit of all the allies. But more so than tanks or planes, its main comparative advantage was in all the supplies a military needs, and which US production probably accounted for the majority used not just by the Western allies, but USSR too.

 

The allies overall would have done even better had they followed his advise to a greater degree.

 

 

 

Oh, they could have done better. For example, they could've taken the companies with experience in building tanks by the scruffs of their metaphorical necks & given 'em a good shake, along with the army, & had 'em come up with a couple of half decent tank designs that could be mass-produced. Also, they could have not tried getting firms which had no knowledge of fighting vehicles to come up with their own designs (the Covenanter - aaarrrgghhh!), & instead got 'em to build the previously mentioned designs. Even sticking to the designs we had, a couple of thousand extra Valentines or Crusaders would have been much more useful than the bloody awful Covenanters, & a far more sensible use of the production facilities of LMS. Discarding the cruiser/infantry tank distinction & building a general-purpose tank with production farmed out to every plant that could make parts or fix 'em together would have been better still.

 

Ie UK was pretty terrible at economies of scale, which is hard to achieve if you're producing 6 different types of redundant tanks.

[rmgill]

Valentines were constrained by turret ring diameter were they not? Turret size too. With a 6 pounder they were quite cramped. Something larger was needed.

While Vickers was one of the established firms and they did well too. Conversely, LMS/English Electric and Leylands didn't do so well with the A13 and were positively awful with the Covenanter. BRCW didn't do very well all with their development compromises on the A38 Valiant.

As to industrial concerns that hadn't done tanks, Vauxhall did quite well with the Cromwell and the Churchill.
Cromwell lead to Comets which were quite good. And that lead to Centurion.

Robotham, who'd not worked on tanks did quite well on his development of the Meteor.

Edited February 13, 2016 by rmgill

[a77]

booms bost themselves, more peopel want to buy products, factories employ more people, more peopel have money and want to buy products.

[swerve]

 

 

Oh, they could have done better. For example, they could've taken the companies with experience in building tanks by the scruffs of their metaphorical necks & given 'em a good shake, along with the army, & had 'em come up with a couple of half decent tank designs that could be mass-produced. Also, they could have not tried getting firms which had no knowledge of fighting vehicles to come up with their own designs (the Covenanter - aaarrrgghhh!), & instead got 'em to build the previously mentioned designs. Even sticking to the designs we had, a couple of thousand extra Valentines or Crusaders would have been much more useful than the bloody awful Covenanters, & a far more sensible use of the production facilities of LMS. Discarding the cruiser/infantry tank distinction & building a general-purpose tank with production farmed out to every plant that could make parts or fix 'em together would have been better still.

 

Ie UK was pretty terrible at economies of scale, which is hard to achieve if you're producing 6 different types of redundant tanks.

 

Yes. Which is why I said we could have done better by not doing that.

[swerve]

Valentines were constrained by turret ring diameter were they not? Turret size too. With a 6 pounder they were quite cramped. Something larger was needed.

 

While Vickers was one of the established firms and they did well too. Conversely, LMS/English Electric and Leylands didn't do so well with the A13 and were positively awful with the Covenanter. BRCW didn't do very well all with their development compromises on the A38 Valiant.

 

As to industrial concerns that hadn't done tanks, Vauxhall did quite well with the Cromwell and the Churchill.

Cromwell lead to Comets which were quite good. And that lead to Centurion.

 

Robotham, who'd not worked on tanks did quite well on his development of the Meteor.

 

 

Agreed, I painted with too broad a brush on the matter of new/old designers. The railway firms seem to have been particularly poor (but sometimes good at manufacturing).

 

Certainly something bigger than Valentine was needed, but Covenanter wasn't it. Not usefully bigger & never really worked. I can't imagine anyone not preferring the same number of Valentines, while designers were freed up to work on a bigger successor with a bigger turret ring..

[Richard Lindquist]

 

Valentines were constrained by turret ring diameter were they not? Turret size too. With a 6 pounder they were quite cramped. Something larger was needed.

 

While Vickers was one of the established firms and they did well too. Conversely, LMS/English Electric and Leylands didn't do so well with the A13 and were positively awful with the Covenanter. BRCW didn't do very well all with their development compromises on the A38 Valiant.

 

As to industrial concerns that hadn't done tanks, Vauxhall did quite well with the Cromwell and the Churchill.

Cromwell lead to Comets which were quite good. And that lead to Centurion.

 

Robotham, who'd not worked on tanks did quite well on his development of the Meteor.

 

 

Agreed, I painted with too broad a brush on the matter of new/old designers. The railway firms seem to have been particularly poor (but sometimes good at manufacturing).

 

Certainly something bigger than Valentine was needed, but Covenanter wasn't it. Not usefully bigger & never really worked. I can't imagine anyone not preferring the same number of Valentines, while designers were freed up to work on a bigger successor with a bigger turret ring..

 

Wasn't Valentine an infantry tank and Covenanter a cruiser?

 

The US worked around the turret ring problem by quickly fielding the M3 Grant as an interim while the Sherman with the larger turret ring was being designed and engineered.

[Arian]

booms bost themselves, more peopel want to buy products, factories employ more people, more peopel have money and want to buy products.

 

That's not what was happening during WW2, however. Neither the money nor any consumer products were available for people at that time. Afterwards, yes, but only after production was allowed to shift to civilian needs. The question is, did the WW2 period have some positive effects which led to the greater economic growth post-WW2. The answer is probably yes, but not in isolation form all else that was going on in the world.

[swerve]

 

Certainly something bigger than Valentine was needed, but Covenanter wasn't it. Not usefully bigger & never really worked. I can't imagine anyone not preferring the same number of Valentines, while designers were freed up to work on a bigger successor with a bigger turret ring..

 

Wasn't Valentine an infantry tank and Covenanter a cruiser?

 

Yes, but given the choice between tanks which worked & tanks which didn't, the difference between infantry (i.e. relatively slow & well-armoured) & cruiser (relatively fast & lightly armoured) tanks wasn't really important. One was useful, the other wasn't. They both had the same gun initially.

[bojan]

Anyway, average combat speed for Valentine was only IIRC 3km/h less than for early T-34s.

[Markus Becker]

 

 

Yes, but given the choice between tanks which worked & tanks which didn't, the difference between infantry (i.e. relatively slow & well-armoured) & cruiser (relatively fast & lightly armoured) tanks wasn't really important. One was useful, the other wasn't. They both had the same gun initially.

Speaking of differences. Didn't one of the pre war cruisers have the running gear and thus the low speed of an infantry tank?

 

edit: Three curses for the mobile Internet!

Edited February 21, 2016 by Markus Becker

[Markus Becker]

double

Edited February 21, 2016 by Markus Becker

[bojan]

 

Speaking of differences. Didn't one of the pre war cruisers have the running gear and thus the low speed of an infantry tank?

 

edit: Three curses for the mobile Internet!

 

A10.

[BillB]

Dunno if it's come up already, but a colleague ferreting about in the Soviet archives a while back discovered that the Sovs employed a lot of the Valentines we supplied them with as driver training vehicles. Apparently the engines, transmissions & running gear were considered far too reliable & robust to be expended on the battlefield and driver training was considered a far more efficient use of such high quality assets.

 

BillB

[Ivanhoe]

Good Lord, people! We were having a good economics debate and you drag it into the mud of AFVs? Where do you think you are?

[ickysdad]

maybe they controlled resources around the world because they had such a large economy? I don't see that as pillage and plunder....In fact all that pillage and plunder you cite also rebuilt Europe and Japan...

[richard g]

This clicked the other day, way before Lend Lease GB had to pay cash for the equipment they bought from the US, so much in fact that they basically went broke. Now lets think about that. On the the one hand you have a country making big bucks out of another country that was desperately trying to survive and at the same time counter evil relevant to the entire world. And being assisted to the max by it's dominions as best they could but the US, nah, we'll take your money but otherwise no, political considerations you know.

 

Then we should look at the big post war picture to see how this panned out. GB basically worn out but still having to shoulder it's responsibilities like in Palestine while the US was playing it's world games which just happened to be in effect anti British. Not hard to work out from that how the US was in a prefect position post WW2 to virtually have and do whatever they wanted to. Considering the damage that the USSR had suffered with their resulting problems.