David R. Henderson  

Central Planning in World War II

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In my Veteans Day tribute to economist Richard Timberlake yesterday, I highlighted his experiences in World War II as a pilot of a B-17 bomber. I didn't mention his economic insights in his book, They Never Saw Me Then, because that was not my focus.

Still, he did present some interesting thoughts about central planning, both in pilot training and in the allocation of gasoline.

On pilot training, Timberlake writes:

I found out many decades later that this kind of output [3,000 pilots a month] turned into "overproduction." When no market forces are present to allocate resources, and production is a result of command decisions, specialized resources may be used in most unspecialized ways. As a plethora of pilot trainees congested the training fields a few months later, cadets who had expected to get flight training were suddenly grounded and told that they had no future as pilots in the Air Force. Many of them were reassigned to other services, and others found themselves doing menial ground duty chores simply because the need for their services as pilots had gone to zero.

On gasoline, he wrote:

Then, the unbelievable happened. With enemy forces in full retreat, Patton's tanks ran out of gas near the French-German border! The German armies then had a chance to regroup and reorganize their defenses. What a debacle of misallocated resources! With the gas that 1,500 B-17s used on one mission--approximately 3,000,000 gallons, Patton's tanks with [Omar] Bradley's armies could have ended the war in the next few weeks. Where were the Services of Supply when we needed them? Had it been their tails that were on the line, Patton would have had his gas. But the breakthrough stalled at the German border, and the war lasted nine more hellish months.

Note his exquisite combination of numeracy, economic analysis of incentives, and outrage. His whole book is like that.

After my piece appeared yesterday, Dick, who earned his Ph.D. as a dissertation student of Milton Friedman in the 1950s, wrote me. Among other things, he stated:

By the way, I gave Milton F. a copy of the book a few years before he died, and he replied that he it was a "page turner that he could not put down." Boy, do we need him now.

Amen.


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COMMENTS (9 to date)
mjh writes:

I work in IT and have done so since 1990. In those 18+ years, I have had at least 8 different jobs (counting the consulting job as only 1). This is fairly common amongst my peers. One of the patterns that we've noticed is this: as soon as you leave, you will be blamed for everything that's wrong in the organization you left. Even things that you didn't touch. When this happens, I see it as a measure of what I was able to do. The more I get blamed the more I actually accomplished.

I assume that's the same with Milton Friedman. Now that he's gone, he can't put up a counter argument to his detractors, hence it's easier to blame him. I attribute the common blaming of Milton Friedman for today's problems as a proxy for how much he accomplished. Were Friedman still here today, it wouldn't reduce the blame. It'd just put it off until his inevitable departure.

$0.02.

David R. Henderson writes:

Dear mjh,
What is Milton being blamed for? I saw Krugman's hit piece about a year ago and I've seen Naomi Klein's stuff that shows a total lack of understanding of Friedman. Is that what you have in mind or is there something I've missed?
David

Herbert writes:

While I appreciate his ability to put a economics spin on war-time supplies I dont see how he could have concluded that the failures were solely because of planned economy.
I also fail to see how market forces could have even operated in a war economy in that time period without all that technology.

Jacob Oost writes:

Herb, he's just pointing out how resources are misallocated without a price system. Demand can't express itself, planners are forced to use their very limited knowledge to make decisions, resulting in too much of one thing and not enough of another. I don't think he's suggesting that war can be directed by market forces. See The Road to Serfdom for an excellent description of the difference between centrally planning a war and centrally planning an economy.

BTW, Sowell argues that because the Japanese kamikazed their most experienced pilots, they weren't making the best use of scarce human capital and knowledge, whereas the US pulled its experienced pilots out to train the newbies, and that was a major factor in deciding the victor.

Was this book his source?

Steve Sailer writes:

Having spent 18 years in the marketing research industry, I can assure you that resources get misallocated within corporations all the time. For example, consider the hundreds of billions wasted in the 1990s laying redundant fiber optic cable.

Actually, resources get allocated reasonably efficiently in wartime (relative to the enormous degree of uncertainty -- the fog of war) because people are trying harder than in peacetime because the cost of failure is so high. War is a very competitive market.

DanT writes:

"Then, the unbelievable happened. With enemy forces in full retreat, Patton's tanks ran out of gas near the French-German border!"

That's the sad result of the liberation of Paris.

General Eisenhauer knew gasoline was the only critical factor in pushing the main German force out of France and over the Rhine river. Twice a day, he was handed a piece of paper with a number on it: as long as the number was positive, the Germans woud be pushed back.

After the Normandy invasion, Charles DeGaulle insisted on liberating Paris, which was not in the allied war plans until after pushing the main German force over the Rhine. Those forces took the gasoline needed by Patton's tanks. After the liberation of Paris, Eisenhauer's number went negative.

Eisenhauer didn't celebrate the liberation of Paris.

You may direct your outrage directly upon DeGaulle.

For the true story, read "Is Paris Burning" by Dominique Lapierre and Larry Collins.

Bill writes:

I agree with Steve. Also, if there were more price signals in war, then the 1 million dollar per month salary demanded by the troops would probably leave little money left over to pay for gas.

As an aside, private companies have not been able to take over whole countries and kill millions of people as efficiently as governments since the late 1700s, when the East India Company took over India, Belgium and British rubber concerns took over Congo and killed 12 million people in the process, much of which just for the fun of it, the Dole Pinnaple company invaded and took over Hawaii, and sugar and cotton planters invaded large territories in the Americas while enslaving millions. If governments were to become as weak as they were back then, as you seem to suggest would be a good thing, though, then empirical evidence indicates huge corporate atrocities could once again make a come back and give the astronomical government atrocities committed to date some serious competition.

Jacob Oost writes:

That wasn't market behavior--if anything it was central planning (by an unimpeded firm in this case rather than a government). In a market economy nobody can go pillaging and raping totally unimpeded. In a place with an established government that protects peoples' rights, that type of thing shouldn't happen.

PrestoPundit writes:

Why do we need Friedman?

We have Greg Mankiw.

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