J. Bradford DeLong's Blog, page 321

Martin Sandbu: The devastating cost of central banks��� c...

Martin Sandbu: The devastating cost of central banks��� caution: "Timidity on monetary policy since 2008 has been as costly as the financial crisis...

...For years, central bankers have fretted about being ready to ���normalise��� monetary policy, a term whose main function has been to make a shift to monetary contraction in crisis-scarred economies sound responsible rather than risky. Their common concern has been that, without a timely contraction in monetary conditions, economies would overheat. The characteristics of growth beyond capacity���unsustainably high employment; inflation exceeding and potentially accelerating above target���would then be hard to rein in.

Ten years on, we know how wrong this was. Overheating is nowhere to be seen. In the US, the furthest ahead in the cycle, employers keep adding jobs without having to increase wages much. While unemployment has been at record lows for a long time, labour force participation remains below its historical peak even adjusting for demographic change. The growth spurt that followed Donald Trump���s huge tax cuts suggests that the economy can absorb a chunky aggregate demand stimulus.... The error is this: if major economies are only now returning to full capacity, then central banks could safely have accelerated demand growth aggressively to close these output gaps much earlier. Once this mistake is acknowledged, the devastating cost comes into relief. For example, assume that the average output gap over the decade was 2 per cent of economic activity at full capacity. Halving this by boosting demand more and earlier would have saved 10 per cent of annual gross domestic product. That is enormous ��� and more than the immediate loss of GDP in the 2008-9 recession. Still, this probably underestimates the damage. Many major economies remain some 15 per cent below the pre-crisis GDP trend....

Central bankers��� caution may have cost more in lost livelihoods than the recklessness of private bankers. Keep this firmly in mind during the Lehman anniversary...

#shouldread

Project MUSE: Reviews in American History: "Helps scholar...

Project MUSE: Reviews in American History: "Helps scholars and students of American history stay up to date in their discipline...

...Each issue presents in-depth reviews of more than twenty of the newest books in American history. Retrospective essays examining landmark works by major historians are also regularly featured. The journal covers all areas of American history including cultural history, intellectual history, political history and philosophy, religion, social history, gender, sexuality, popular culture, law, military history, and economics. Readers can expect continued coverage of both traditional and new subjects of American history, always blending the recognition of recent developments with the ongoing importance of the core matters of the field...

#shouldread

What Is the Proper Role of Weblogs in the 2020s?: I Asked My Readers, and They Have Said...

Comments of the Day:

Ezra Klein... was reminiscing about the early days of blogging and how that compares to the new, more popular formats, like Twitter. He made a good case. Twitter is more about talking to those who already agree with you and you really don't expect the person you're "responding" to in your tweets to engage with you. Blogs were often (though hardly always) intended to substantively engage with people you disagree with with the intention, or at least the hope, that that person will actually take what you say seriously and respond in a serious, substantive manner.... I do miss that meatier aspect of blogs, even if they didn't necessarily lead to energetic dialogues between people of differing viewpoints. At least they offered more of a possibility of that happening. So what I would suggest is: use the blog to create energetic dialogues between people of differing viewpoints. It could be used for, oh how could I describe it, maybe "Socratic" dialogues, but between real people even if they're not as witty as the pseudo-Greeks who occasionally pop up on "Grasping Reality".... And that's my what is old is new again idea!

The role of weblogs in the 2020's will ideally be: -to be independent; -to bring one's own expertise to bear on both the matters of the day, and what one's own thinking has deemed important regardless of how popular the subject; -to bring one's readers' attention to the words of others, which seem important to you; -to persist and be brave. We are in "interesting times" which show every sign of growing ever more "interesting" (in the sense of the Chinese curse). All of these qualities and more will be needed. In my opinion you do an amazing job of all the above.

With [respect to]... 2021-2, though not beyond.... Democrats have one realistic chance to save the country in the next generation.... The inherent bias in the Senate and the EC make it very difficult for the Dems to win the presidency and both Houses of Congress for more than 2 years at a time. The demographic projections make the Senate more and more of a stretch as we get closer to, say, 2040. That means that IF (it's a big if) the Dems succeed in 2020, they will have to accomplish perhaps more than any Congress in history in order to (a) preserve a democratic system; (b) fix the structural problems in the economy such as wealth distribution, SS, and healthcare, including Medicare; and (c) do what can be done at this late date to ameliorate global warming. Legal blogs are already discussing what can/should be done for (a). What economists need to do is outline the basic ideas for (b) and (c) now, and over the next 2 years begin to develop actual bills for presentation to Congress in January 2021. Your blog seems like a good space to begin the process...

The pressing problem... is in finding a solution to the trust problem. How do we trust the sources of information that we consume? People with expertise in an area have all experienced the Murray-Gellman Amnesia effect. Large numbers of people have never experienced this and thus do not understand the need to question what they read/listen too. At present the only place one can really get to the truth of the matter, so to speak, is by reading blogs of knowledgeable people. The role of trusted blogs in the future will be as a check on government/corporate/powerful interest group propaganda. I wish Apple News would be Apple Blogs.... Read what experts have to say about a topic who are from the given field.... In the era of advertainment and stealth ���news��� stories that are really press releases we should abandon the association between news and accuracy. I don���t know how one will be able to monetize this. I don���t know how to get people to realize that the Murray-Gellman Amnesia effect is real or how to solve the trust problem. With the rise of Facebook, Google, and Twitter the swaying of public opinion on a grand (global?) level is easy. People are easy to manipulate. Without trusted information being readily available we might as well abandon democracy and institute a governing AI...

Since the Daily Illuminator launched in 1994, the blog has been a website which: - is focused on publishing short essays; - can be moved to a new host or domain as needed; - is as visible to search engines as the blogger wants it to be; - is skilling not deskilling (learning basic HTML, CSS, and how to get a host and a domain name is useful for anything you want to do on the Internet, mastering the platform of the week just lets you use that platform until they change the interface); - is not prestigious, but can be influential...

Focus on the future, particularly the economic impacts of artificial intelligence, machine learning, big data, etc.... You show yourself as sympathetic to Hayek's criticism of central planning as lacking the analytic and informational firepower to manage an economy as well as distributed decision making (somewhat glibly equated with capitalism.) Surely it has occurred to you that this criticism may have been accurate in the first half of the 20th century, but not necessarily forever. A new era is obviously coming on fast.... The question is going to be, who will this new technological/economic/political system benefit? Will it be society as a whole? Or will we turn out to suffer some kind of dystopian arrangement for the benefit of the few? What principles should guide people in setting up and regulating such a system to steer things towards the utopian and away from the dystopian? I see very little genuinely insightful discussion of these issues���and hardly any discussion of them among economists. This is an area in which I believe you could make a serious contribution...

#blogs
#publicsphere
#internet
#commentsoftheday

Economics Gone Right: Some Fairly-Recent Must- and Should-Reads

Cosma Shalizi (2012): In Soviet Union, Optimization Problem Solves You: "There���s lots to say about Red Plenty as a work of literature; I won���t do so.... Both neo-classical and Austrian economists make a fetish (in several senses) of markets and market prices. That this is crazy is reflected in the fact that even under capitalism, immense areas of the economy are not coordinated through the market..

The extremely wise Randall Munroe on the proper visual display of geographic quantitative information: Randall Munroe: xkcd: 2016 Election Map: "I like the idea of cartograms (distorted population maps), but I feel like in practice they often end up being the worst of both worlds���not great for showing geography OR counting people. And on top of that, they have all the problems of a chloro... chorophl... chloropet... map with areas colored in...

Kevin O'Rourke (2013): Why economics needs economic history: "In a recent Humanitas Lecture in Oxford, Stan Fischer said that 'I think I���ve learned as much from studying the history of central banking as I have from knowing the theory of central banking and I advise all of you who want to be central bankers to read the history books'...

I would say: "policy was fantastic between Lehman and the trough, grossly subpar after the trough, and ���if you believe the Fed���criminally negligent before Lehman": Niccola Gennaioli and Andrei Shleifer: A Crisis of Beliefs: Investor Psychology and Financial Fragility: "Instability from Beliefs...

The key to a well-functioning society is feedback: the market economy is truly excellent at feedback���at identifying what is going wrong to the people who can take action to correct it: Cosma Shalizi (2012): In Soviet Union, Optimization Problem Solves You: "There���s lots to say about Red Plenty as a work of literature; I won���t do so.... The first of the two political problems. The objective function in the plan is an expression of values or preferences, and people have different preferences. How are these to be reconciled?...

I am swinging toward thinking that disequilibrium foundations of equilibrium economics is the only useful macro theory standing: Seppo Honkapohja and Kaushik Mitra: Price Level Targeting with Evolving Credibility: "We examine global dynamics under learning in a nonlinear New Keynesian model when monetary policy uses price-level targeting and compare it to inflation targeting...

Hoisted from teh Archives: James Scott and Friedrich Hayek

A brilliant 10 minute talk on economics as it really is���or should be: Trevon Logan: Ohio State University Masterminds: "Think of the first questions you ask someone when you meet them: 'What do you do?'...

Paul Krugman (2013): Macrofoundations: "Macro is the only reason anyone listens to all those microeconomists who think they���re being rigorous...

Paul Krugman: Uses and Abuses of Economic Formalism: "Gruen... really, really doesn���t like the formalization of economies of scale and imperfect competition in trade that went along with the rise of the 'new trade theory'...

An enormous amount that I think is right here. And I bunch I think is wrong. And now I have laid down a marker that I have to write down what I think is wrong here, which I will... someday... in my copious spare time But what is right: Miles Kimball: On Teaching and Learning Macroeconomics: "Many... important ideas are missing from most macroeconomic textbooks.... Here are some... I consider so important that I teach them in class

From the University of Oregon, Mark Thoma's Economists' View continues to be the single best link aggregator in economic policy and theoretical economics: read him...

If you do not make the Economic Policy Institute one of your trusted information intermediaries, you are doing it wrong. Badly wrong.

Noah Smith: Supply and Demand Does a Poor Job of Explaining Depressed Wages: "The standard framework that economists traditionally used to understand job markets is just supply and demand...

Kevin Bryan: The 2018 John Bates Clark: Parag Pathak: "Consider the old 'Boston mechanism'.... Everyone would be allocated their first choice if possible...

An interesting example of non-representative firm macro: Ernesto Pasten, Raphael Schoenle, and Michael Weber: Price rigidities and the granular origins of aggregate fluctuations: "We study the aggregate implications of sectoral shocks in a multi-sector New Keynesian model...

Lane Kenworthy: Soci 109: Analysis of Sociological Data (2015): "This course introduces you to techniques and software for analyzing quantitative social science data...

Drew Conway (2013): The Data Science Venn Diagram: "The primary colors of data: hacking skills, math and stats knowledge, and substantive expertise...

Robert Waldmann: A Comment on the Return of ���It���s Baaaack���: "Twenty years ago, Paul Krugman warned that the liquidity trap was not just an issue in the economic history of the 30s...

Tim Taylor: Some Thoughts About Economic Exposition in Math and Words: "[Paul Romer's] notion that math is 'both more precise and more opaque' than words is an insight worth keeping...

Paul Krugman: It���s Baaack, Twenty Years Later: "In early 1998 I set out to reassure myself... to show that if Japan was having troubles, it was simply because the Bank of Japan wasn���t trying hard enough...

Mark Thoma: Economist's View: Links for 02-19-18

But are we sure that our debts are in dollars? Would we k...

But are we sure that our debts are in dollars? Would we know it if the big New York banks had been trying to boost their earnings by selling unhedged dollar puts, in the (probably correct) belief that if they all do this together they do not have a problem, the rest of us have a problem?: Paul Krugman: Opinion | Partying Like It���s 1998 - The New York Times: "Those of us who devoted a lot of time to understanding the Asian financial crisis two decades ago were wondering whether Turkey was going to stage a re-enactment. Sure enough...

...Start with a country that, for whatever reason, became a favorite of foreign lenders, and experienced a large inflow of foreign capital... denominated in foreign currency.... The party comes to an end. It doesn���t matter much what causes a ���sudden stop��� in foreign lending... domestic events... a rise in U.S. interest rates... a crisis in another country investors see as... similar.... foreign debt has made your economy vulnerable to a death spiral. Loss of confidence causes your currency to drop; this makes it harder to repay debts in foreign currency; this hurts the real economy and further reduces confidence, leading to a further decline in your currency; and so on. The result is that foreign debt explodes as a share of GDP....

How does such a crisis end? If there is no effective policy response... the currency drops and debt... balloons until everyone who can go bankrupt, does. At that point the weak currency fuels an export boom, and the economy starts a recovery built around huge trade surpluses.... Is there any way to short-circuit this doom loop? Yes... short-run heterodoxy and credible assurances of a longer-run return to orthodoxy... temporary capital controls... repudiation of some [odious] foreign-currency debt... a fiscally sustainable regime once the crisis is over. If all goes well, confidence will gradually return, and you���ll eventually be able to remove the capital controls. Malaysia did this in 1998; South Korea, with U.S. aid, effectively did something like it at the same time, by pressuring banks into maintaining their short-term credit lines. A decade later, Iceland did very well with a combination of capital controls and debt repudiation....

You need a government that is both flexible and responsible, not to mention technically competent enough to implement special measures and honest enough to carry out that implementation without massive corruption. That, unfortunately, doesn���t sound like Erdogan���s Turkey. Of course, it doesn���t sound like Trump���s America, either. So it���s a good thing our debts are in dollars.

#shouldread

Ten Years and One Month Ago at Grasping Reality: July 12-14, 2008

BBC Reality TV?: Andrew Samwick: "A News Program or Reality TV? | Capital Gains and Games: I agree with Stan���this post by Brad DeLong about his appearance opposite Grover Norquist on a BBC 'news' program is a classic.�� If Norquist is the BBC's idea of a right-of-center expert on the challenges facing Fannie Mae and Freddie Mac and the implications of those challenges for federal policy, then the BBC does not qualify as a news organization.�� And as a result I care as much for its continued existence as I do any other reality TV program, which is not much at all..."

Richard Milhous NixonRick Perlstein's Nixonland is an even better book about Richard Nixon and the Nixonland we live in than Garry Wills's Nixon Agonistes.... For the first time, I think I understand how Nixon could win so much and yet wind up such a loser: his entire strategy was to win by making himself the oppressed loser and the spokesman for all the other oppressed losers--which meant that the more he won, the more he saw himself as and became a loser, until in the end he lost absolutely everything. And made the Republican Party the world's biggest loser as well...

McCain: Phil Gramm and Fred Malek: McCain Throws Phil Gramm Off the Train/Under the Bus/Over the Side.... But the Infamous Dog-Roasting Jew-Counter Fred Malek Is Still in the Boat/on the Bus/Riding the Caboose...

Tim Lee Reviews Brink Lindsey's "The Age of Abundance": You know, The American Scene is like the love child of National Review and Partisan Review in their heydays--except, that is, for the fact that The American Scene is really good...

Paul Mason's Primer on Fannie Mae and Freddie MacThis is good: "Paul Mason's blog.... The panic on Friday about the two US mortgage giants, Fannie Mae and Freddie Mac, is followed by the collapse of California's IndyMac, a regional mortgage lender.... Fannie and Freddie were sustained by one of those necessary fictions that underpin finance capitalism: that this $5 trillion was not really guaranteed by the US government at all. Now that fiction is collapsing (every step of the financial crisis has destroyed a necessary financial fiction) we are confronted with the emergence of something very strange: a state backed financial capitalism.... All over the word, slowly but surely, the state is becoming exposed to the debts and liabilities of the finance system..."

Washington Post Death Spiral Watch: This is the kind of thing they want us to pay to read?: "Hummer, How We Need Thee: Matthew DeBord: When General Motors announced that it would subject its Hummer division to what in the automotive business is known as a "review," you could hear the tree huggers, the unreconstructed hippies, the postmodern Greens, Al Gore's organic peanut gallery, every single customer at the Pasadena Whole Foods and the United Prius Owners of America shove aside their alfalfa sprouts and commence clapping.... It would be a mistake for GM, assisted by the raving grease-monkey CPAs of Citibank, to sell the brand to an upstart carmaker in India or China or to breed it as a hybrid, as some have suggested. GM desperately needs an obnoxious, attention-grabbing brand to keep from turning into a dreary shadow of its former self..."

Why Oh Why Can't We Have a Better Press Corps? (Young David Broder Chronicles Edition): From Rick Perlstein's Nixonland, describing Richard Nixon's 1966 barnstorming political tour: "Nixon still pleaded cloth-coated poverty when he wrote old associates.... He hit up the Republican National Committee for a free airplane because, he said, he would be working for the party���s sake, not his own. Fortunately for the other 1968 contenders, RNC chair Ray Bliss, who had a keen ear for bullshit, made him rent one.... His usual round of Lincoln���s-birthday Republican fund-raising dinners followed, run this year like a miniature presidential campaign: blocks of hotel rooms reserved for the press; mimeographed bullet points slipped under their doors; then on to the next city by Jetstar���the same plane 'in which James Bond was transported by the fabulous Pussy Galore in the movie version of Goldfinger', wrote an agog David Broder of the New York Times...

New Yorker Death Spiral Watch Rich Yeselson of Change to Win writes: "Here's the problem... the satirical thrust of the drawing is entirely dependent upon the viewer being hip to the fact that this, well, The New Yorker's cover. There is nothing, per se, about the drawing itself that cuts against the grain of a completely literalist interpretation of its depiction of the Obama's as terrorist. Anyone so prone to such an interpretation will see here a visual representation of their views. As art, the work is completely overdetermined by its cultural context.... So: That's bad satire. And, so, yeah���I blame the New Yorker for publishing bad satire..."

Paul Krugman on Fannie and Freddie The way Laura Tyson puts it, a mortgage packager and guarantor is almost surely a good thing--but the GSEs should never have been privatized in the first place. Organizations with great government privilege are government responsibility--and there is no way in which they should ever have been let loose from oversight and made responsible to their private shareholders alone...

The Law Is Strange From Sudeep Reddy: "The Federal Reserve Act���s Section 13(13)... allows the Fed to lend to any individual, partnership or corporation with collateral backed by U.S. government securities or securities issued by federal agencies. Fannie Mae and Freddie Mac debt is generally included in that latter category of safe holdings, even though it���s not directly guaranteed by the U.S. government..." Of course, the reason the Fed is contemplating this is that right now Fannie Mae and Freddie Mac debt is not regarded as "safe"���even though it is "safe" in normal times...

Why Oh Why Can't We Have Better Republican Candidates?: Douglas Holtz-Eakin's McCain Budget Plan: http://www.washingtonpost.com/wp-dyn/content/article/2008/07/13/AR2008071301643_pf.html Even the thoroughly-in-the-tank Washington Post editorial page of Fred Hiatt cannot swallow this, and barfs it up...

Barack Obama Health Reform Position There are three documents: http://www.barackobama.com/2007/05/29/cutting_costs_and_covering_ame.php http://www.barackobama.com/issues/pdf/HealthCareFullPlan.pdf http://www.barackobama.com/pdf/Obama08_HealthcareFAQ.pdf

Economist Death Spiral Watch Let's pull the plug there, and stop reading. Whatever John McCain's economic policies are, he is not a "champion of fiscal responsibility���perhaps he used to be, but he has flipped. John McCain's proposals take a budget that is projected to be in rough balance in 2013 according to the CBO baseline and transform it into a $700B deficit. Those plans are not those of a "champion of fiscal responsibility"���and the only people who would say they are are ones who are deliberately auditioning to be the star in a Clown Show. There are two theories for why the Economist���since it lacks bylines, we have to speak of it as a single entity���wants to star in a Clown Show these days: (1) They are simply bonkers... (2) They think that if they do not pretend to be bonkers, then rich Americans won't subscribe in sufficient numbers and they will have to shut down... I used to think (2), but this makes me think (1). What extra subscriptions can you gain by saying that John McCain is a "champion of fiscal responsibility"?...

#tenyearsagoongraspingreality
#hoistedfromthearchives

The empirical studies are finding more and more hysteresi...

The empirical studies are finding more and more hysteresis���more hysteresis in the sense of a persistent downward shadow cast by a recession than I would have believed likely. I keep hunting for something wrong with these studies. But there are too many of them. And they all���at least all those published that cross my desk���point in the same direction: Karl Walentin and Andreas Westermark: Stabilising the real economy increases average output: "DeLong and Summers (1989)... argue that (demand) stabilisation policies can affect the mean level of output and unemployment...

...Hysteresis induced by insider-outsider wage bargaining is probably the most long-standing theoretical argument why unemployment volatility can have long-term negative effects (Blanchard and Summers 1986). On the empirical side, it has long been well established that output volatility is bad for output growth. The seminal paper is Ramey and Ramey (1995).... Hassan and Mertens (2017) show that households��� expectational errors about future productivity increase equity risk-premia and thereby reduce output via lower investment. Dupraz et al. (2017) spell out how downward nominal wage rigidity in a search and matching framework implies that business cycles reduce output and increase unemployment if average inflation is low. The same end result is obtained by Den Haan and Sedlacek (2014) who show how limitations in contracts within an employer-employee relationship result in inefficient dissolution of matches due to business cycles.... Blanchard (2017) concludes that the most persuasive channel through which business cycles persistently affect potential output, and thereby generate hysteresis, is through workers becoming less employable..... Walentin and Westermark 2018... show that business cycles substantially reduce the level of employment and output in a labour market search model with learning on-the-job and skill loss when unemployed.... Quantitatively the effects we find are large. In particular, business cycle variation in unemployment reduces average output by 1.5%.... Recent advances in economic modelling tilts the policy conclusion towards stabilising the real economy more than previous research has motivated...

#shouldread

John R. Boyd (1995): The Essence of Winning and Losing: ...

John R. Boyd (1995): The Essence of Winning and Losing:

#shouldread

People are not effective price-sensitive consumers for he...

People are not effective price-sensitive consumers for health insurance. We can argue why they are not. But first we need to admit that we are not: Zarek C. Brot-Goldberg, Amitabh Chandra, Benjamin R. Handel, and Jonathan T. Kolstad: What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics: "We leverage a natural experiment at a large self-insured firm that required all of its employees to switch... to a nonlinear, high-deductible plan...

...The switch caused a spending reduction between 11.8% and 13.8% of total firm-wide health spending.... Spending reductions are entirely due to outright reductions in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible coverage. Consumers reduce quantities across the spectrum of health care services, including potentially valuable care (e.g., preventive services) and potentially wasteful care (e.g., imaging services).... Consumers respond heavily to spot prices at the time of care, reducing their spending by 42% when under the deductible, conditional on their true expected end-of-year price and their prior year end-of-year marginal price. There is no evidence of learning to respond to the true shadow price in the second year post-switch...

#shouldread
#healthcare

Weekend Reading: Stephen Fritz on Robert Citino's "Death Death of the Wehrmacht: The German Campaigns of 1942"

Stephen Fritz (2008): On Citino, 'Death of the Wehrmacht: The German Campaigns of 1942': "Continuing his examination of the German way of war, Robert Citino has produced a cogently argued, clearly written book in which he asserts that the German defeat in World War II was as much conceptual as it was material...

...Given its geographical position and limited resource base, according to Citino, first Prussian, then German leaders learned that in order to survive a world of hostile enemies, wars had to be short, sharp, and decisive. Consequently, German military doctrine placed great emphasis on operational factors, to the detriment of prosaic material and logistical considerations. German planners thus concentrated their efforts on designing elegant operational schemes to achieve victory, while their opposite numbers in the enemy states tediously mobilized economic resources.

As a result, Germany found itself dangerously dependent on maneuver for success, since it consistently lacked the firepower and material resources necessary for decisive victory. When it worked, as in 1870-71, the triumph was glittering and spectacular; when it failed, as in 1941-42, the defeat was total and ruinous. It seemed for Germany that war was always all or nothing; its dependence on operational doctrine left it little room for any alternative outcome.

After a short introduction in which he deftly summarizes Prussian/German military doctrine, Citino makes it clear that, based on its history, the operational situation facing German leaders after 1941 was neither unique nor particularly worrisome. The fact that Germany found itself surrounded by enemies that substantially outnumbered it and had access to vastly greater economic resources was nothing new in German military history. Indeed, graduates of the Kriegsakademie knew what to do, since precisely this scenario formed the basis of their operational studies. The lesson of German history screamed one thing: attack and land a crushing blow against a single opponent to shatter the enemy coalition.

Citino asserts that the weakness of this approach had already manifested itself by the end of 1941. Given their emphasis on operational concerns, German military planners were in a sort of conceptual prison, one in which they thought very little about strategic concerns, but focused almost exclusively on operational victories. The weakness of this approach lay in the lack of any exit strategy. If maneuver and a war of movement failed to yield a quick strategic victory, the only option left to German leaders seemed to be more of the same: keep winning operational triumphs in the hope that they would eventually lead to overall success. Therefore, as Citino notes wryly, by 1941, "the Wehrmacht... had conquered itself into a strategic impasse" (pp. 33-34).

Just as significantly, these dazzling successes of 1939-41, whether in Poland, Scandinavia, France, or the Balkans, while not achieving any decisive results, had left the Wehrmacht dangerously overextended. Much to German dismay, the pattern established in the first two years of the war held fast in the second half of 1941. Once again, the Germans won brilliant battles of maneuver and encirclement but to no avail; the Soviets stubbornly refused to give up.

More ominously, although they lent themselves to spectacular headlines and brilliant weekly newsreels, these encirclement battles proved to be grinding, grueling, costly affairs that began the process of gutting the Wehrmacht. As Citino points out, "[t]he Wehrmacht's losses in men and material, even in victory, were far heavier than they had been in previous campaigns" (p. 42). Indeed, one might note that the German army actually suffered more combat deaths in July 1941 than in the crisis months of December 1941 or January-February 1942. For a military organization not keen on logistics or economic mobilization under the best of circumstances, these losses proved beyond capacity for replacement. From the summer of 1941, the German army consistently ran short on crucial supplies necessary to sustain an all-out war effort.

Although the grim, dogged Soviet resistance was primarily responsible for preventing the Germans from converting operational triumphs into decisive victory, another problem had emerged that would plague the Germans in 1942: a lack of clear focus on the major strategic goals of the Barbarossa campaign. For a country that lacked sufficient resources in the first place, the failure to prioritize key aims on the Eastern Front risked a serious dispersal of effort that could only undermine the larger goal of a quick victory. In a further bitter twist, the conflict between Adolf Hitler and his military leaders put another cherished German military tradition into question: the independence of army commanders in the field. Although the Germans survived the Soviet counterattack before Moscow and the savage winter of 1941-42, the experience both reinforced and undermined key German ideas on how to make war.

As German leaders pondered the military situation in the early spring of 1942, Citino raises one of the most puzzling questions of World War II: given the fact that their armies occupied much of Europe, why did the Germans fail to mobilize resources on a scale similar to their enemies? Unfortunately, although he poses the question, Citino doesn't provide any answers. This omission does not so much point to a failure on his part as illustrate a limitation inherent in operational military history: the focus must remain on the battlefield. And here, Citino once again proves adept in his analysis of operational factors. Although the German gaze remained squarely on the Soviet Union, at this point Citino shifts the strategic focus of his book to the desert war in North Africa. Admittedly a side show in terms of sheer numbers, the North African campaign nonetheless confronted the Germans with the troubling reminder that although they barely had strength enough to fight in one theater at a time, they now faced the reality of having to conduct operations simultaneously in a number of far-flung areas. This dispersal of energies, in turn, presented problems of both a command and logistical nature.

In North Africa, of course, Erwin Rommel invoked the traditional independence of the field commander to violate orders on a consistent basis. Even as he was embarrassing his opponents with his operational and tactical brilliance, however, he lacked sufficient logistical support to achieve anything like a decisive strategic victory. In a reprise of the Russian campaign of 1941, every German victory in North Africa simply led to a strategic impasse that the Germans could not resolve.

In similar fashion, when faced with the dilemma of what to do in Russia after the blitzkrieg had failed, German planners came to the only conclusion possible given their history, training, and assumptions: launch another blitzkrieg campaign. In arriving at this decision, army leaders reinforced their tradition. As Citino also notes, though, in terms of the operational plan for 1942 they departed significantly from tradition and past practices: it was to be an exceedingly complex operation based on a series of sequential actions directed from the top with little decision-making freedom accorded field commanders. Success was assured only if the enemy cooperated once again in his destruction.

The plan, Operation Blue, began to fall apart almost immediately, a consequence of both German and Soviet actions. Here, the experience of 1941 proved significant. Determined to avoid the operational chaos of the latter stages of the 1941 campaign and faced with insufficient economic and military resources (shortages in the Luftwaffe proved especially limiting), German planners now aimed not to pull off deep battles of encirclement, but instead to rely on Soviet forces staying in place and conduct a rolling series of shallow encirclements. In the event, whether from sheer panic or because of a Soviet decision to withdraw into the vast expanse of southern Russia, the initial German thrusts in the summer of 1942, while conquering much territory, netted few prisoners. The Wehrmacht found itself punching air. Rather than striking in depth to the east and trapping large Soviet formations against the natural line of the Volga, the Germans found themselves sliding ineffectually to the south in an operation that stretched their supply lines to the breaking point. Almost from the beginning, the Soviet retreat threatened to render the operational plan for 1942 pointless.

This operational problem concealed a larger dilemma. Hitler's goal for the war against the Soviet Union had always been the annexation of Lebensraum, but how was it to be achieved? The Germans barely had the resources to conquer European Russia, let alone the entire Soviet Union. Now that the Red Army had learned not to let itself be trapped in encirclement battles, destruction of the enemy forces proved beyond German capabilities. As the situation in North Africa demonstrated, the USSR's western allies were steadily amassing economic and military resources for use against Germany. For their part, the Germans found themselves increasingly dependent on their allies, Italy, Rumania, and Hungary, nations that could marshal far few resources than those of the western allies.

Hitler further compounded this increasingly unfavorable situation with his impatience and impetuosity: splitting the already over-stretched German forces, demanding that they conduct operations simultaneously that had been planned sequentially, and ignoring the threatening situation on the exposed German flanks. Once again, the Germans confronted their basic dilemma, how to do more with less. As Citino stresses repeatedly, the Germans had enough strength to win on the operational level, but failed to translate these gains this into strategic victory. This quandary simply grew with increasing German success on the battlefield, as scarce resources had to be dispensed over a wider area. To Citino, this conundrum reflects the basic German way of war itself, a conceptual framework based on historical experience that, limited in its focus to operational details, by definition could not devise an alternative approach if operational success failed to bring a swift strategic victory.

Viewed from the present perspective, in light of our awareness of the chronic German deficiencies of men and material, the outcome seems almost inevitable: the turning points at Stalingrad and El Alamein, then the grinding down of German resistance over the next three years. Citino resists that temptation, instead soberly reminding us that "the most shocking aspect of 1942... is how absurdly close the Wehrmacht came to taking not one but all of its objectives for 1942" (p. 306). Citino is correct in this judgment, and he both affirms and raises some questions about his thesis.

As Richard Overy has demonstrated, the outcome of World War II hinged on the cumulative effect of narrow victories in a few key areas that eventually produced an overwhelming allied triumph. Once of these key areas was economic mobilization, where the Germans failed to convert the resources of occupied Europe into sufficient military strength. Did this failure occur because, as Citino would argue, the German leadership simply did not concern itself with non-military factors, being focused exclusively on operational matters and thus blind to the obvious flaws in their method? Or, as others might argue, was it the result of the chronic institutional Darwinism and inefficiency of the Nazi bureaucracy, the racist and exploitative nature of the German occupation, the burdens produced by trying simultaneously to fight a military war and a war against the Jews, or simply the ultimately limitless aims of Hitler?

As with all good interpretative histories, Citino forces the reader to think about his assertions. Was the German failure in Russia in 1941 the result of an exclusive emphasis on operational thinking, or a consequence of a poor operational plan, one with no clearly defined focus upon which the Germans could concentrate resources? How great a role did key operational decisions play in the German defeats of 1941 and 1942? Did the Germans over-extend themselves before Moscow in 1941 because of blind operational thinking or because of recent historical memories (the Marne in September 1914) of a strategic victory thrown away because of a failure of effort at the last minute?

As Citino notes of German actions in Russia in 1942, "the operational plans for the summer offensive were in many ways a departure from past military practice" (p. 157). Indeed, in terms of preparation and assembly of forces, Operation Blue marked, according to Citino, "a remarkable break with the past" (p. 158). Does this information suggest, then, that the Germans might have been successful if they had maintained their operational traditions? Or, was the departure from customary practice itself the result of the failure of operational thinking? German commanders' loss of decision-making autonomy in the field also constituted a key sub-theme of 1942, and again represented a significant departure from German war-making custom. With less interference from above and more freedom on the ground, could the defeat of 1942 been turned into an operational victory?

Robert Citino has produced an outstanding work of operational military history, a book that combines exhaustive research with a clear, well-argued thesis. Indeed, many of the endnotes read like mini-historiograpical essays; here Citino discusses interpretative controversies surrounding many key assertions in the book. His assessment of the 1942 German campaign in the Soviet Union is especially noteworthy, not simply in its discussion of the operational details, but the manner in which he demonstrates that a unique way of fighting, the German way of war, died in the steppes of southern Russia. With better decision-making and operational plans, could the Germans have fared better in Russia in 1942? The answer is almost certainly yes. Would such victories have changed the outcome of the war? Given the enormous economic potential of the United States and its development of the atomic bomb, the answer is almost certainly no.

Citation: Stephen G. Fritz. "Review of Citino, Robert M., Death of the Wehrmacht: The German Campaigns of 1942". H-German, H-Net Reviews. March, 2008. URL: http://www.h-net.org/reviews/showrev.php?id=14333

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