Enlightened Self Interest

The Marshall Plan was the most effective example of assistance in history, so successful, in fact, that governments ever since have tried to emulate it. But the model was less appropriate in many other situation. Decision makers often drew the wrong lessons and did not understand the reasons why subsequent efforts in development were often less successful.

It is not hyperbole to say that w/o the Marshall Plan we would not have the world we have today and very likely the world would have been much worse. It is hard today to think back to 1947. We look back optimistically only because we know how the story unfolded. At the time, it looked very grim. Virtually the entire world was impoverished. The most advanced and prosperous countries in the world were in ruins. People were starving. It looked like another war was imminent. Many intelligent people thought that only choices were between starvation and some form of authoritarian or even communist government.

The United States, however, was stronger than ever. In 1947, the U.S. alone produced more than HALF of the total world GDP. Some Americans advocated retreating into fortress America, or at least the Western Hemisphere. But instead foresighted American leaders did something unique. After past wars, the victors looted the vanquished and impoverished them. That is what the Soviets did where the Red Army ruled. The U.S., however GAVE resources to both former allies and enemies. Our leaders understood that a prosperous world is a safer world. Americans understood that the free market is not a zero sum game, that when others get richer, we get richer.

If the Marshall Plan was unique, it also came at a unique time in history. As mentioned above, the U.S. was predominant. At no time ever before, and probably never again, has any country produced half the world GDP. Beyond that, Western Europeans could see the alternative – the Soviet Union. Finally, Europe was being REBUILT not built. The most important factor was Europe’s human capital. When supplied with the tools, they could develop. If we take the “teach to fish” paradigm, Europeans were already fine fishermen; we just needed to supply the equipment.

The Marshall Plan also came with lots of strings and supports. Recipient countries were expected to develop market economies and allow reasonably free trade. In addition, the U.S. supplied security through its own forces and with NATO a few years later. Security always comes before development. The U.S. security umbrella protected W. Europe from communism, but it also protected them from each other. The French and the Germans had a long history of strife and hatred. Until that time, Europeans most often met on battlefields. A bayonet was a weapon with a European on both ends. American troops provided the guarantee that Europe never enjoyed before. They could concentrate on peaceful pursuits and not fear the imminent invasions by their neighbors. W/o the U.S. and w/o NATO, there could have been no EU. And U.S. forces built and rebuilt much of the continent’s infrastructure and U.S. military spending remained an important part of European economies for the next fifty years.

So we can say the Marshall Plan worked. But it worked in a unique context. Subsequent attempts to reproduce the Marshall Plan have worked less well. Just as NATO, the most successful alliance of democracies in history, worked better than its “knock offs” such as Seato or Cento (which most people have never heard of).

Can a Marshall Plan work today? No. The world has developed well beyond that sort of thing and we no longer have a large area to rebuild. The closest situation to the post war world was when the former Warsaw Pact was freed from communism. Damage from communism is like a slow motion war. When burden of communism was lifted, countries such as Poland, Czech Republic and the Baltics quickly responded. By that time, however, capital was much more readily available. They got no Marshall Plan. E. Germany got lots of aid from W Germany. Whether or not that was such a good idea is debatable.

We can take lessons from the Marshall Plan, however. Aid w/o the requirement that governments be well run and market based is a waste of money. If may even be pernicious, since it enables kleptocrats. The Millennium Challenge takes some of the good parts of the Marshall Plan. By requiring good government and free markets, it give aid a chance to do good.

We can look back at the Marshall Plan and take pride in this remarkable piece of enlightened self interests. It was essential to today’s prosperity.

George C Marshall was a great man. We shall not soon see his like again.

Posted by Jack at June 5, 2007 10:14 PM
Comments
Comment #222384

Jack
Yreah right. And if the Marshel plan had included the Soviet Union we might have saved about how much? 5-6 trillion dollars? A good plan but short sited.

Posted by: BillS at June 5, 2007 10:37 PM
Comment #222386

Jack, I think part of the problem with the wars today is the people. Those who were the victors and losers in WWII knew that they had to work together to try and make a better world.
Today in Iraq, the people(Iraqis) do not care to make it better for the whole, just for themselves. Old disagreements are as valid today to them as they were centuries ago. Our time no matter how long we are there(hopefully not much longer), will not make a difference. It is going to take more then a generation to see that working against each other is a dead end.

Yes General George Marshall was a great man, unfortunately the one that might have come close is no longer in the public eye(General Powell)

Posted by: KT at June 5, 2007 10:41 PM
Comment #222388

BillS

We offered the plan to the Soviets. Stalin refused and did not allow the E. Europeans to take part. He was an evil man.

I think the plan was very far sighted. It is largely responsible for our post war prosperity. Europe was really going down the tubes.

KT

I do not think it would have worked out so well w/o the Soviet enemy. The Germans had such fear of the Soviets that they were willing to work with us.

WWII was also much more destructive than the Iraq war. Germany was leveled. There were no alternatives.

Posted by: Jack at June 5, 2007 11:07 PM
Comment #222392

jack, To bad we didnt do a Marshall Plan in Iraq after victory was declared. The whole neocon thing in Iraq sorta shows us how truely great the WWII generation actually was, as well as how shallow our own generation is when compared to them.

Posted by: j2t2 at June 5, 2007 11:41 PM
Comment #222402

j2t2

Iraq was a very different situation. As I explained above, the Marshall Plan worked for some very unique reasons.

We did invest a lot in Iraq, proportionally about as much as Marshall Plan aid. The big differece was that in Europe, the recipients used the resources to build. In Iraq, we faced Al Queda and Baathists whose GOAL was to create chaos and poverty.

Beyond that, Iraq is a situation of building, not rebuilding. The war did little to destroy Iraqi infrastructure. It was not in place before. In Europe you could rebuild the factory and the skilled labor force could work again. In Iraq, you have to build a factory AND train the workers and build the relationships.

This problem is not unique to Iraq. In fact it has been the curse of aid since the Marshall Plan. As I explained above, others sought to copy the Marshall Plan and apply it to other situations. I repeat, the Marshall Plan was a rebuilding of already successful advanced society. Subsquent aid programs were usually attempts at development.

Think of the analogy if you have a successful doctor whose practice is destroyed by an unexpected fire. If you give him a grant to rebuild his practice, you can reasonalby expect he will be successful again in a short time. Now take a HS drop out with no work record. If you give him a grant to build a practice, how successful do you think he is likely to be?

Europe in 1947 was a rebuilding. Many subsequent aid operations, including Iraq, were building operations. The key to success, as we saw in W. Europe in 1947 and E. Europe in 1989, is human capital and all those relationships that go with it.

As I wrote above, if we take the “teach to fish” paradigm, Europeans were already fine fishermen; we just needed to supply the equipment. In many other cases, the recipients are often unsure where the river is.

Posted by: Jack at June 6, 2007 7:54 AM
Comment #222440

The Japanese and Germans had non-religious and homogenous ethnic populations when they were defeated. These were to primary factors in the success of the Marshall Plan. We overwhelmingly defeated their militaries, and that was another vital ingredient. When defeated, the people, of one mind sought one thing only, restoration, and there were no other options being offered by the U.S. which, had demonstrated the ability and will to annihilate them with atomic weapons if they did not cooperate.

These were the unique circumstances that permitted the Marshall Plan to work without ongoing guerilla aftermath, without insurrection, without internal civil strife, and without idealogical martyrs to continue a resistance movement. That whole set of circumstances have never been repeated since WWII.

The ingredients again were:

1) singular ethnic society not defined by religion

2) secular government and military

3) complete and total defeat of that government, society, and military leaving no recourse for the vanquished.

Posted by: David R. Remer at June 6, 2007 4:28 PM
Comment #222442

Jack,

WWII was also much more destructive than the Iraq war. Germany was leveled. There were no alternatives.

WWII is so far (let’s cross our collective fingers it will last long) unique in scale of actual destruction of whole nations infrastructure. No debate there.

Don’t also forget that WWII end marks the begin of US vs Soviets bipolar world, and the plan was also used as the centerpiece in the new doctrine of containment.

We did invest a lot in Iraq, proportionally about as much as Marshall Plan aid. The big differece was that in Europe, the recipients used the resources to build. In Iraq, we faced Al Queda and Baathists whose GOAL was to create chaos and poverty.

*And* private contractors whose goals are (still) to suck as much as possible american taxpayers’s dollars sent in Iraq. Add to those the usual corruption people, and you get Wastefull Iraq Money Plan, aka WIMP.

Beyond that, Iraq is a situation of building, not rebuilding. The war did little to destroy Iraqi infrastructure. It was not in place before. In Europe you could rebuild the factory and the skilled labor force could work again. In Iraq, you have to build a factory AND train the workers and build the relationships.

Oh please. Iraqis had the highest education level of the whole area before. The power and water grid today is lower that it used to be before the war. Hospitals were better equipped than they are now. It’s not hidden knowledge. Sure, Iraq wasn’t comparable to a top advanced society, but it wasn’t either the medieval country you’re claiming it was.

Calling Iraq post-war “building” a nation, not “rebuilding” a nation (your country invaded, not freed, as iraqis “welcome” has proved), is trying to spin reality and quite insulting iraqis themselves.

The reality is rebuilding a nation without succeefully secure it first is pointless.
Something that has been forgotten by Bushies and could have been learn from Marshall too.

Seems that having a Plan is not enough for its success. One should have a Marshall-like brain for that. That’s called being foresighted. A synonym of actual leadership.

Posted by: Philippe Houdoin at June 6, 2007 4:44 PM
Comment #222496

Phillippe

The Iraqis had high education levels for the region, but the Arab region has the lowest education levels of any large part of the earth. After WWII Germany and France had nearly 100% literacy rates. UNESCO estimates Iraq at less than 60%. France & Germany had the experience of first class universities and world class industries. Iraq, none of these things. It is not an insult to Iraqis to point this out.

I agree that security comes before development. I wrote that in my post. Unfortunately, we have been unable to establish security. Maybe if Iraq had been destroyed as much as Germany it would be more peaceful now, but that is a heck of a price to pay.

Posted by: Jack at June 6, 2007 11:25 PM
Comment #222514
The Iraqis had high education levels for the region, but the Arab region has the lowest education levels of any large part of the earth.

True. And thanks to 4 years of chronic insecurity since invasion, Iraqis have rejoined their arab neighboors lower education level.

This level have to be REbuild, not build. It will start to be true building, not rebuilding, only when pre-war levels will be reached. Which are not yet, sadly.

It is not an insult to Iraqis to point this out.

No. The insult is failing to drive them back to their previous level. And the gift, after, will be to drive them higher.

Maybe if Iraq had been destroyed as much as Germany it would be more peaceful now, but that is a heck of a price to pay.

Maybe if Iraq had NOT been invaded in the first place for unfounded fears and cynical ideology, it would be more peaceful now, for a far lower price to pay (neocons’s ego may have been wounded, though).

Posted by: Philippe Houdoin at June 7, 2007 5:32 AM
Comment #222517

Phillippe

I would do things differently if we could do them over again. But ousting Saddam was a good thing. Think of the chonology of events. The sectarian violence was provoked by Al Qaeda. It was their strategy. I regret we could not stop them.

Posted by: Jack at June 7, 2007 7:36 AM
Comment #222551

In the chronology of events, the sectarian violence, instrumented by Al Quaeda or not, was VERY predictible. Everybody knowing something about Iraq had warned the Bush administration about it. But they did nothing to avoid it.

Worst, they did very bad moves that help it. Allowed the ali-baba lootings, while securing nothing except Oil Minister. Fired every Bathists from army, aka fired *all* the army exactly when you need one to secure the country. Lost moral high ground with Abu “no more torture chamber” Graib. Burnt civilians with white phosporus. Failed since 4 years to rebuild infrastructures to their previous level.

They just didn’t have *any* plan, beside let’s topple Saddam. Unfortunatly, they didn’t stop right after that goal was achieved, the only one that could be viewed today as a victory.

And sadly, Al Quaeda did a way better job at planing Iraq War than the White House. Still true, I fear.

Posted by: Philippe Houdoin at June 7, 2007 3:08 PM
Comment #222580

Jack, The plan in Iraq was to plunder oil and the American taxpayer’s pockets by giving Cheneys no bid contracts to Halliburton and crew. So unlike the Marshall Plan. Take over factories businesses and such but dont allow the Iraqui’s to run it. So unlike the Marshall Plan.

The sad thing is Bush, Cheney and crew couldnt even do that right. That Jack is my point about the generational differences.

Posted by: j2t2 at June 7, 2007 9:09 PM
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