The efficacy of bombing in WWII has generated much debate. With use of the basic

Question

The efficacy of bombing in WWII has generated much debate. With use of the basic economic principles listed in CBB. Critically evaluate the theory and practice of strategic bombing. Critically evaluate any ethical issues surrounding strategic bombing. Answer sketch: theory: from CBB: "Strategic bombing is best defined as the use of air power to strike at the very foundation of an enemy's war effort- the production of war material, the economy as a whole, or the morale of the civilian population- rather than as a direct attack on the enemy's army or navy." This if successful would valid the need for land invasion. Implicit theory of economy: (1) interconnected web of activities full of critical components, e.g., ball bearings, oil, raw materials of all sorts; (2) enemy morale could be destroyed, so they would not be able/willing to work. Evaluation of this theory: except for production of pilots, principle of substitution was displayed as oil was made from coal, factory production dispersed geographicall, slave labor substituted for free workers. Evidence available at start: WWI. Spanish Civil War. Practice: poor results (weather, anti-aircraft defense, bombsights. pilot fear). But why did the belief in its efficacy persist? Agency problems (Generals have careers, that they have hitched to air war success, bomber crews "saw what they wanted to see" in their own reports of their efficacy of their raids). Diminishing returns.

Explanation / Answer

Dear sir/ madam,

This is a condition of externalities and social costs incurred during production.

Externalities- Externalities in consumption exist when the level of consumption of some good by one consumer has a direct efect on the welfare of another consumer, an effect which is not transmitted through the price mechanism, production externalities exist when the production activities of one firm directly affect the production activities of another firm. External economies of scale and diseconomies of scale are therefore particular cases of externalities in production. eg-

a) A, wanting privacy, builds a high fence, which reduces the sunshine through B's window.

b) A, in making a right turn on a busy road, causes a large traffic jam to build up behind him

Examples of production externalities are-

a)Firm A discharges effluent into a river, which greatly increase costs of Firm B downstream

b) Firm A sets up a training school for computer programmers , which increases the availibility of programmers to firm B.

There may also be mixed production / consumption externalities. eg-

a)Night flights by jets may cause residents in areas close to an airport to lose sleep

b)Holiday motorists may increase congestion on a highway and so increase costs for lorry drivers.

The essence of externalities, whether in production or consumption is that their costs or benefits are not reflected in market prices, so the decision of the consumer or firm creating the externalties on the scale of the externality- creating activity does not generally take its effect into account. Hence, since the time of Pigou, economists have argued that social welfare would be increased if the private consumption or production decision were modified so as to take the external effect into account. The means of doing this were traditionally held to be the imposition of taxes on activities which created losses in welfare or increases in costs, and payment of subsidies on activities which increased welfare or lowered costs. In practice, tax subsidy schemes rarely adopted. More frequently, externalities are uncorrected, or absolutely prohibited - right turns in certain streets, loss due to war, smoking in certain parts of the aircraft- or property rights are created and redress is possible through the courts. If these property rights are well defined and it is not too costly to do so, the parties to an externality situation may get together and bargain, thus in effect creating a market the absence of which initially gave rise to the externality.

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