Speculative Musings

The End of the Marshall Plan

General George C. Marshall, Author of the European Recovery Plan after World War II

I don’t usually do political commentary. I know it can roil even the staunchest of readers against an author, but after seeing today’s headlines and tweets from our Commander in Chief, I was so taken aback, that I had to say something. Which honestly, is a bit surprising if you know me. There’s been so many assaults on what I hold dear about America that maybe I just didn’t know where to begin.

This has been a trying 6 months for scientists. The assault on climate science has been really difficult to watch. It’s also been trying as someone who has family members on Medicare and Medicaid to watch the current plans to repeal such expansion. I have family members who will likely die due to lack of care by the time this is all said and done. These family members are all Republicans, btw. But there’s a part of me that understands the Republican mindset. Smaller government. Fiscal responsibility. Finding ways to have maximum impact with minimal spending. I get that. It’s part of each of our everyday financing, and it makes sense for our households.

But it doesn’t work for long term planning. When you are budgeting for a country’s future, especially a country that is interested in maintaining its position as a superpower, infrastructure and education are everything. Next comes healthcare, imo, but let’s stay off that subject for a moment and focus on the two things that I think everyone can agree on. Roads help commerce. Shipping aids an economy. Education creates opportunities for not just cultural expansion but more importantly research that can open up new economic opportunities. All of these are usually internally focused.

But infrastructure, education and healthcare are also important for your allies. Allies are strategic, not just in warfare, but also in economics and future prosperity. There are many strategies for how you might use allies, even how you might keep allies down to improve your own situation (e.g., keeping an ally as a buffer against a major enemy). However, there are major advantages to a plan that produces a prosperous stable ally who can contribute economically, scholastically, and politically to your overall vision.

The Marshall Plan was necessary to help us rebuild Europe in order to foster U.S. economic and military interests after World War II.

For decades, ever since the end of World War II, we have had such a synergistic relationship with Western Europe. If you are a history buff, you probably understand how amazing that outcome is, considering where all of Europe was at the end of World War II. The war had touched every country in Europe. The extermination of whole populations, especially in Eastern Europe. Infrastructure in Germany absolute ravaged. We bombed the absolute hell out of that country. Anything standing was seen as a challenge. Any resistance was squashed with clusters of bombs.

A lesser country would have left the smoldering ruin that was there and used Germany as a buffer ally. Sort of like China treated northern tribes against Mongolian hordes for centuries. But that’s not what the United States did. Instead, we instituted what became known as the Marshall Plan (also called the European Recovery Program). The U.S. invested 13B dollars in 1948 (approximately 130B dollars in today’s money) into restoring Europe. We wanted strong allies, not weak buffer allies. We wanted democratic players in Europe. We wanted Germany and other countries to participate in capitalism, to enhance our own infrastructure and prosperity through the bolstering of an old enemy into a new, strong ally. Trade barriers were lowered. Goods flowed between both continents. New businesses emerged.

This wasn’t an easy decision. It was an extremely hard decision. How hard is it to be magnanimous to a defeated enemy? Think about it. Millions of fathers and sons had been killed. Loss was everywhere. Revenge is a natural emotion, but Marshall had different plans. On June 5, 1947, he delivered a speech at Harvard that outlined exactly what Germany and Europe needed and why it was America, not Russia or Eastern Europe or China or anyone else, that needed to be there.

The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down. … Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all. It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health to the world, without which there can be no political stability and no assured peace. Our policy is not directed against any country, but against hunger, poverty, desperation and chaos. Any government that is willing to assist in recovery will find full co-operation on the part of the USA. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.

Prosperity was everywhere for decades, and the results were astounding. We took an entire continent operating at 83% of agricultural capacity, 88% of industrial capacity, and 59% of export capacity of its 1938 numbers and we supercharged the recovery. The famines of the post war were eliminated by 1950. By 1952, agricultural and industrial capacity increased by 35%, despite France’s requirement that German industrial productivity be reduced by 50% and maximum steel production set to 25% of its pre-war levels to prevent any future German invasion. The fact that Germany was even able to compete in a car market when restrictions championed by France forced it to operate at 10% of the automotive levels of pre-war Germany was remarkable. It spoke to the ingenuity and industriousness of the German people and the intellectual currency of the U.S. in supporting them. All of Western Europe blossomed.

France received 2.29B. Germany 1.45B. England 3.30B. Italy 1.20B. 2 enemies and 2 allies became our staunchest allies, and the beacon of democracy and capitalism shown brightly for decades, despite the Cold War. Our economy, aided by strong markets for import and export goods, blossoms more than ever before. We have more than just dead buffer allies between the U.S. and the U.S.S.R. We have an amazing environment to develop as a superpower. Our allies go to war in Korea, Vietnam, Iraq, Afghanistan, etc. whenever we ask them to. They pay it forward in a big way, even if they don’t agree with some of the demagoguery that happens in the cult of personalities that we have in the U.S.

Flash forward to Tuesday, May 29th, 2017. Trump has just lambasted the NATO alliance, demanding that the NATO countries finally pay their fair share. He literally labels them “bad” to their faces, both publicly and privately. On Tuesday, he tweets an official rebuke of Germany.

We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change. –Trump

So, what is Germany’s contribution to NATO?

While it is true that the U.S. contributes 72% of the overall defense expenditures represented in the NATO portfolio, this is mainly because so much of our annual budget is tied up into defense spending. The direct money funded to NATO operation is broken down as 22% from the U.S. and 15% from Germany. This includes “15 percent of the civil and military budgets and NATO’s security investment program for 2016 and 2017. France and the UK, the third and fourth-largest contributors, trail behind Washington and Berlin, providing 10.6 and 9.8 percent of the cost-sharing budgets and programs, respectively.”.

What other assistance is Germany currently providing the U.S.’s policy focuses? Berlin is maintaining a force of 980 in Afghanistan for the war efforts there. They have aided the U.S. with significant forces in Afghanistan for over a decade with virtually no benefit to themselves. 550 soldiers to the continued peacekeeping force in Kosovo. Germany had more than 6,500 soldiers involved in the Kosovo missions during the active war there. 450 soldiers deployed to Lithuania as part of the ongoing aggression in the Ukraine.

So where does the President’s current declaration come from?

In 2006, the NATO countries made a pledge to try to push member defense spending from current levels to 2% of their GDP. In 2014, they finalized this pledge into a more formal pledge to hit the target by 2024. Of those countries, four of them (Poland, the UK, Turkey, and Estonia) are operating at that level (7 years early). Germany is at 1.2%. The U.S. spends 3.6% of its GDP on defense.

There seems to be a major disconnect between what the President thinks NATO does and what it actually does. NATO is essentially a manifestation of a reciprocal alliance that was made possible by the Marshall Plan. Our President appears to misunderstand that relationship and the benefit our economy and military objectives have seen from NATO countries. As evidenced by his Tweet on March 10, 2017, in which he said:

Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel. Nevertheless, Germany owes…vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!

Despite these obvious strong-arm tactics, our allies have remained strong, taken the brow-beatings, and pushed onward. But two days ago, the entire tenor of European deference and reverence for the U.S. changed. After Trump’s first international visit, in which he literally pushed world leaders aside so he could be front-and-center and harangued European leaders on trade deficits, and publicly humiliated multiple countries, Germany’s Angela Merkel finally broke the happy facade and admitted: “The times in which we could completely depend on others are on the way out. I’ve experienced that in the last few days”.

As a longtime history buff who has been reading WWII books since I was a young teenager and has watched hundreds of WWII documentaries at this point, this entire chain of events is disturbing. Many of my family members have been stationed in Germany (one of the contributions of Germany to NATO is providing access to bases throughout Germany for intelligence, stationing, and exercises). A few years ago, I visited Germany and saw the bombed out churches that still stand in Berlin as reminders of how far the people have come (and how effective the Marshall Plan and infrastructure spending in allies is).

Isolationism, nationalism and strong words are what caused the problems that led to both WWI and WWII. I thought everyone else learned those lessons in World History in grade school, but we seem to have come full circle. If we reject our allies, they start looking for someone else, and the 13B (130B) initial investment of the Marshall Plan and the trillions of dollars spent since then in trade, education, infrastructure, etc. with Europe are lost. And what exactly are we asking for here?

Germany to spend 1% more of its GDP immediately instead of by 2024 on its OWN defense? This is not a contribution to NATO. It’s already paying for 15% of NATO’s expenses, as a good ally should. More trade? Germany currently imports $80B goods from the U.S., 2nd most in Europe behind only the U.K. It currently exports over $140B to the U.S. But the U.S. is also no longer manufacturing most goods. We aren’t exporting as much as we used to because we are now outsourcing most of our manufacturing and industry and focusing instead on other industries. Germany, on the other hand, has always been an industrial country that has focused on manufacturing and exports.

Does our President think that we are suddenly, as a country, going to export 60B more goods to Germany? Where would that come from? Why would they buy that? The low tarrifs of NATO and NAFTA work both ways. We are already making our goods inexpensive at our market prices for Germany to import (and 80B is a lot of money). This trade deficit also counts Germany automotive plan production in the U.S. as an import, despite the fact that the product is made in the U.S., because the company is headquartered overseas and overall profits flow there. And this is where the main deficit exists, in automative sales. 1/3 of the German exports to the U.S. are the 1.3M cars that Americans buy from German companies every year.

So, what is the idea here? Stop Americans from buying German cars by making them into new enemies due to Americans wanting to buy more German goods? How American is that? Is that how capitalism works?

This Presidential election was amazing to watch. So is the aftermath, and at this point, I can’t help but think of the ongoing crisis as such. The optimistic person in me says to not worry: that our allies will recommit to us once Trump changes his tone or a new President is elected who understands the benefits of the Marshall Plan and our ongoing mutual relationship in trade deals and NATO. But there’s another part of me that worries that the End of the Marshall Plan romance with Europe is coming to a close, and that America will be the worse for it. I love living here. I’m a proud citizen of the U.S., but I’m very worried about the direction we’re going right now. If it’s not an assault on our liberties and division of our people, it’s an assault and division of our allies. And it’s coming from the top down, which is even more disturbing.

The optimist inside of me is still winning out. I still hope for the best. I don’t even know how I would plan for the worst here. We currently have a group of supercarriers stationed off a nuclear state (North Korea) right now, and a single nuclear warhead on our continent would wipe out 3M+ from the fallout alone, especially if it hits almost anywhere in California. Same situation on the East Coast. It feels like we’re moving perilously close to the end of the stabilization we’ve seen since the end of WWII and especially the end of the Cold War. Where do we go from here?

I’m an author who loves to immerse myself in fantasy worlds. So, in a way, I understand the chilling effect of fantasizing about a world where Europe and the U.S. are no longer strong allies and where NATO is dissolved. But that doesn’t mean I want to live in that world. Let’s leave that to alternative histories. You know? Fictions! Pretty please!