NCPA - National Center for Policy Analysis

Bandow Opinion: Most "Marshall Plans" Fail

June 3, 1997

Seeking to evoke the perceived success of the first Marshall Plan in rebuilding Europe after World War II, politicians have fallen into the habit of characterizing any big overseas aid program -- and even some mammoth domestic spending schemes -- as another "Marshall Plan."

Critics say their efforts have been exercises in marketing failures as successes.

  • Between 1948 and 1951, the first Marshall Plan cost about $13 billion -- or about $90 billion in today's dollars.
  • Since World War II, the U.S. alone has poured out $1 trillion -- in today's dollars -- in aid to countries around the world.
  • According to the United Nations, 70 aid-recipient countries are poorer today than in 1980, and 43 are worse off than in 1970.
  • Over the last 30 years, the U.S. has spent the 1997 equivalent of about $6 trillion to fight domestic poverty -- but the poverty rate remains largely unchanged.

A number of economists cite evidence that Europe rebuilt after World War II through reform of economic policies, rather than because of Marshall Plan assistance -- with America's contribution never exceeding 5 percent of the GDP of recipient nations.

They claim that receipt of the aid did not track with economic recovery rates.

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, elected a Labor government and performed most poorly.

Source: Doug Bandow (Cato Institute), "A Look Behind the Marshall Plan Mythology," Investor's Business Daily, June 3, 1997.


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