How come we remember the Marshall Plan of 1948-53 so much better than the Unrra plan of 1946-47? Were they not practically equal in relation to European GDP? Were they not both designed to offer relief and hope to a continent destroyed by war and devastated by post-war waves of migration?
If the action of UNRRA, the United Nations agency financed almost entirely by the United States, had a much more limited impact was for two reasons. The first was his purely caring nature. The second was its lack of time horizon (funds were rolled over every quarter and any time could be the last).
When the State Department, at the urging of Truman, began studying the Marshall Plan, it was immediately clear that aid to Europe should have a long horizon predefined right from the start, in order to give everyone a certain frame of reference. European political and social protagonists. It was also evident the need to design the plan with a precise strategy. It was a question of exploiting the solid monetary framework previously designed at Bretton Woods to encourage investment, relaunch international trade (which at the time was not an ideological petition of principle, but the fact that Europe no longer had a dollar to import capital goods and had just lost half the continent as an outlet for its products) and promote political and social stabilization, including the revival of white unions, which was an important part of the plan.
By the end of 1946 the European economic recovery was already over and the continent appeared on the brink of chaos. The nascent people's democracies in the East were launching their five-year plans and their dirigiste and statist model was also a strong temptation in the West. Although Yalta had partitioned spheres of influence, the western hold was not perceived as solid. No American private investor placed his capital in Europe, also because those who had done so after the Great War had lost half of it on average.
The Democrat Truman therefore had to work hard to convince Congress, which in the meantime had switched to the Republicans, to allocate $13 billion for the plan. Senator Taft, leader of the opposition, was an isolationist and advocated a return to a balanced budget. To convince him, Truman leveraged the Republicans of the Senate Foreign Affairs Committee, concerned about the communist threat.
Only 17 percent of the plan's funds went directly to investment, but investment was the pivot around which everything else revolved. The plan also had a component of conditionality, but never a punitive one. For every dollar of the plan, European governments had to put in another one and entrust its management to the United States. In the case of Great Britain, the second dollar was spent to repurchase government bonds on the market and reduce the debt, in the other countries investments prevailed and also for this reason Great Britain had the lowest growth rate of all during the life of the plan.
The quantification of the plan's effects has been debated by historians for decades. For some it was decisive, for others it was limited to making an important contribution to a recovery that would have taken place anyway. Seen today, the value of the plan was not in the dollars (3 percent of European GDP) but in the organicity and solidity of its design. With 13 billion in direct funding, much larger amounts of European and American private funds and energies were released, the political and social framework was consolidated and the foundations were laid for the economic miracles of the following years. In other words, a vicious circle began.
It would be nice if Europe today wanted to give itself a new Marshall Plan and it is disheartening that the few who talk about it do so in a low voice. There is in everyone the awareness that there is none so deaf as those who do not want to hear and if the deaf is Germany, there's no point in wasting time. Macron tried, but what we see at the moment is just the umpteenth re-edition of the comedy in which France asks for 100, Germany gives 10 and in the end it gets 1 (remember the Juncker plan?).
Yet a radical strategic rethinking of the European economic model will also have to be tackled (and even in a dramatically short time) if we want to prevent the dark clouds that are forming in our skies from turning into rain or storm. And the ECB seems to be aware of the fact that these clouds exist, if the facade optimism is followed, in a wholly inconsistent way, by increasingly Japanese monetary behavior (with real rates now projected to be even more negative than in Japan until the next decade).
Already ten years ago, Europe and China had the same problem, that of having economic systems based on exports. The Chinese leadership, more intelligent, flexible and enlightened, has always been fully aware of the fragility of a model of this type, pulled the strings for a few more years to sort out its things and then started a process of rebalancing from exports to consumption which reduced its current account surplus to a modest 1.2 percent.
Europe, on the other hand, has never raised the problem. In the Euro-German theological system, the fiscal surplus and the current account surplus are the redemption from original sin obtained with the sweat of the brow of work, thrift and competitiveness. Being a good in itself and not an instrument of economic policy, surpluses cannot be questioned, above all if, to do so, they are invariably vicious subjects who would like to spend more. The result is that the European current surplus, in relation to GDP, is three times that of China.
The problem is, to question it now is Trump, who wants to impose new tariffs on German cars and, in general, drastically reduce, by hook or by crook, the European surplus. Europe tried to react, first with contempt, which was useless, and then by studying duties to be imposed on America in retaliation. It is dangerous terrain because America, an importing country, can handle the escalation much better than Europe.
The trade war falls moreover in a politically sensitive moment. The anti-system forces are reaching an electoral strength that in some cases is even greater than that of communism in the immediate post-war period. The blow to growth that would result from a drop in European exports (which is now also feeling the effects of the barriers raised by China) would further strengthen these forces.
What to do then? Relaunch domestic consumption? It can be done, but it would not be the optimal solution. Better then to relaunch investments, obviously in deficit. A Marshall Plan that Europe gives to itself. Will Germany be able to overcome her taboos? Probably yes, but unfortunately we will have to wait for the water to rise in its throat, for growth to drop and for new elections to elect a different majority to the Bundestag.
In the meantime, the European stock exchanges will continue to perform less well than the American one even if the euro will remain weak. And on the other hand, we must not hope that the dollar will strengthen further, otherwise the joint pressure of the strong dollar, of rising rates and of profits which in a few months will begin to flatten out will risk putting even America, the support we all cling to.
