The Marshall Plan

Wednesday, May 18, 2011

As economist Tyler Cowen has noted, the countries that received the most Marshall Plan money (allies Britain, Sweden, and Greece) grew the slowest between 1947 and 1955, while those that received the least money (axis powers Germany, Austria, and Italy) grew the most.

The Marshall Plan Myth, Jeffrey Tucker, September 1997, http://mises.org/freemarket_detail.aspx?control=120 (http://www.gmu.edu/centers/publicchoice/faculty%20pages/Tyler/Marshall_Plan.pdf).

U.S. assistance never exceeded 5% of the GDP of the recipient nations... Moreover, receipt of aid did not track with economic recovery. France, Germany and Italy began to grow before the onset of the Marshall Plan, while Austria and Greece expanded slowly until near the program's end. Great Britain, the largest aid recipient, performed most poorly.

The Marshall Plan may have been a generous act, but that doesn't mean it spurred Europe's recovery. The real lesson of the Marshall Plan is that entrepreneurial culture, legal stability and free markets are necessary for economic success. Liberty, not money, is the key to prosperity.

Since World War II the U.S. alone has provided $1 trillion (in current dollars) in foreign aid to countries around the world. The result? According to the United Nations, 70 countries, aid recipients all, are poorer today than in 1980. An incredible 43 are worse off than in 1970.

After the fall of the Berlin Wall, Germany launched its own massive Marshall Plan to rebuild the formerly Communist East. Bonn has spent about $600 billion since 1990; private firms, in response to special government incentives, have invested another $500 billion. The result is mass unemployment and underemployment, low productivity, uncompetitive industry, minimal growth and de facto bankruptcy.

Over the last 30 years, the U.S. has spent about $6 trillion (in today's dollars) to fight poverty. Yet the poverty rate remains largely unchanged, while families and communities have imploded.

A Look Behind The Marshall Plan Mythology, Doug Bandow, Cato Institute, http://www.cato.org/pubdisplay.php?pubid=6138.