I recently read a book by Alexander Field. Economic impact of US mobilization into World War II. Field argues that, contrary to popular belief, wartime production significantly reduced the productivity of the U.S. economy and that the effects of the wartime economy continued to hamper the economy. Productivity Many years after the war ended. He makes a convincing argument, but what I found most interesting about the book is that he presents case studies of the pitfalls of top-down planning.
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Throughout this book, I continued to find surprising examples of planning decisions that defied all reason. For example, Allied military efforts were seriously hampered by a lack of landing craft, which were used to drop off soldiers and equipment directly to shores and beaches. Quoting Winston Churchill, Mr. Field said, „History has never taught me how the plans of two great empires, such as Britain and the United States, were so hindered and limited by a hundred or two particular ships.'' It will never be understood.”
Historians may have a hard time understanding it, but few economists will be surprised. The number and combination of ships to be built was determined centrally by the planners. Therefore, the results are only as good as the knowledge and assumptions that fit into the individual heads of the planners making the calls. And unfortunately, too few landing craft were built because planners deemed them unnecessary. „There was a lack of interest in the Navy because they thought they would have an operational port immediately after the first attack and could easily unload men and supplies,“ Field said. Many large-scale campaigns were canceled or significantly postponed because the planner simply did not know what type and amount of equipment would be optimal, and he had no way of knowing.
Another decision that was mind-boggling in retrospect concerned the very serious threat posed by the destruction of rubber. This is of great importance for military and civilian production. Most of the rubber was imported from Singapore and there was a real threat that the Japanese army would invade Singapore and cut off the rubber supply, which is exactly what happened. Although this possibility was well known in advance, it was dismissed as something worth worrying about, for no small reason. „Roosevelt himself seems to have believed that if war broke out in the Pacific, the Japanese military would be quickly defeated, and natural rubber reserves were in both rubber and rubber.'' Scrap rubber production activities led to imports. We may be able to survive a temporary interruption.''Therefore, no attention was paid to increasing reserve stocks of rubber.
Since this assumption did not hold, attempts were made to create a domestic synthetic rubber production program, along with strict rationing of rubber use in the United States. Field said the synthetic rubber project has been hailed by some as a „miracle.“ He has a rather bleak view. He says, „To describe something as miraculous is to suggest that we have witnessed an outcome that could not or could not have been reasonably anticipated or foreseen.“ . But after reviewing the actual record of the synthetic rubber program, Field argued that describing the program's performance as a „miracle“ was a backhanded compliment, saying, „What the United States has accomplished is what the United States has accomplished. It can only seem like a miracle if we have a poor view of it.“ U.S. war planning, organization, and engineering capabilities. One cannot both have a reasonable opinion about the latter and claim miracles. ” In the end, he concludes that the only miracle found was that “given the delays in project design and plant construction, it was a miracle that its implementation was not a lost battle.”
The terrible decisions made in the synthetic rubber program are too numerous to list here. Of particular interest, however, is the decision about which basic route to use to produce synthetic rubber. There were two different routes to the manufacturing process. One is petroleum-based and the other is based on plant-based alcohol. The chemistry, especially the alcohol pathway, has been understood for a long time. „The 51 government-owned plants had little early experience with many of the processes chosen, but based largely on European research, the chemistry with which rubber could be synthesized had been understood for at least 20 years,“ Field said. '' For example, „During World War I, the Soviet Union produced synthetic rubber from plant materials (primarily potatoes and wheat), and continued to do so during World War II.“ He also notes that he offered to share his experience, but his request was ignored.
Field compares what the historical record shows about the pros and cons of the alcohol and petroleum routes and concludes that the alcohol route makes much more sense. As an example: „This country had over 1.045 billion tons of grain inventories built up as a result of agricultural price support programs in the 1930s, and in fact, the surplus was spilling out of storage facilities. was available and the cost of its acquisition had already been incurred…At that historical moment, the cost of acquiring the raw material should be treated as sunk, and therefore its effective price was zero.'' Furthermore, “Substantial capacity for fermenting molasses remains idle…Idle molasses refining capacity could easily be repurposed to use grain as a feedstock.”
In addition to the case of alcohol, „the distillation sector of the alcohol industry had excess capacity that could be used to make alcohol from grain. Since distillation capacity for molasses and grain spirits was already available, its use It would be consistent with other war demands for equipment and construction labor.'' Another important point is that, unlike the use of oil, „manufacturing alcohol from plants could conflict with the needs of aviation fuel programs. „It's a low quality.“
Finally, „The alcohol route to produce butadiene has been successfully utilized for many years…while the oil-to-butadiene route has come with challenges that can slow production. In summary, the alcohol route is simpler, has considerable experience, raw material inputs are abundant, considerable refining capacity is already available, and if additional facilities are needed, they can be constructed more quickly with fewer capital requirements. or building supplies that were or were likely to be in short supply.”
You can probably guess what happened next. Planners decided to downplay the alcohol pathway and place great emphasis on the oil pathway (much to Standard Oil's delight), and the first round of the program „was Only 80,000 short tons of the 550,000 short tons of butadiene needed to produce the GR-S rubber were to be alcohol-based (i.e., dependent on butadiene made from alcohol). Furthermore, the alcohol was not derived from plants, but was entirely made from petroleum. Congress tried to correct the situation with the Rubber Supply Act of 1942, which refocused the country on alcohol rather than oil. However, FDR vetoed the law because he saw it as „a direct challenge to his authority, taking control away from the executive branch he had created.“
Undoubtedly, some of these decisions resulted in: corruption Or just incompetent. But there's also another factor that explains a significant part of the problem. I'll touch on this in my next post.