MISUNDERSTANDING THE MARSHALL PLAN

THOMAS SOWELL

June 12, 1997

The 50th anniversary of the Marshall Plan was guaranteed to bring out of the woodwork all the shallow and noisy people who think that government programs are the answer to all problems. These people include one of the shallowest and noisiest of them all, Julianne Malveaux of "U.S.A. Today" and assorted talk shows. According to Ms. Malveaux, we should "try to transform nations the way we did with the Marshall Plan."

We can also "replicate the Marshall Plan at home" in our inner cities. This mindset shows a complete ignorance or disregard of history. A hundred years before the Marshall Plan, John Stuart Mill pointed out that nations often have apparently miraculous recoveries from the devastations of war because the physical destruction did not include destruction of the skills, experience and aptitudes which built the physical things in the first place. In short, what is crucial is the "human capital" needed to build or rebuild the physical things. What the Marshall Plan did was to help feed and house people in Western Europe until they could rebuild -- using the "human capital" that they already had and which had built Western Europe into one of the leading industrial regions of the world in the first place.

Where that "human capital" does not exist, you can pour untold billions down a bottomless pit without making a dent in the problem. Nothing has been more common in Third World countries than rusting machinery from the industrial world, whether left over from the days of colonialism or built with foreign aid from the West. As John Stuart Mill saw in the 19th century, it is not the physical capital but the human capital that is crucial. The same thing was true even further back in history, when the Romans pulled out of Britain in the 5th century, leaving intact a physical infrastructure which they had built -- but which the British, at that juncture in history, did not have the human capital to maintain.

Buildings and roads fell into disrepair and, in some places, forests and wildness began to grow back into what had been human settlements under the Romans. None of this is hard to understand from an intellectual point of view. What is hard is to give up the emotionally satisfying vision of moral melodrama that holds such fascination for sophomores of all ages, including Ms. Malveaux. According to this moral melodrama, the poor are poor because of what the rich have taken from them. Hence all the heady talk about "liberation" and various esoteric theories of "exploitation." According to Malveaux, Africa's downfall "was European colonialism." If this were to be taken as a serious statement to be tested against the facts, it would immediately collapse like a house of cards.

So would most other exploitation theories. If Europeans made Africa poor, then the departure of these Europeans, as African nations emerged into independence in the 1960s, should have led to rising standards of living. Tragically, in most of sub-Saharan Africa, standards of living were lower 20 years after the imperialists were gone. In Central Asia likewise, freedom from Russian domination after the break-up of the Soviet Union did not bring rising standards of living but falling standards of living. Most of the scientific, technological, and managerial skills in Central Asia did not belong to Central Asians but primarily to Russians.

Similar results are seen, again and again, when various minority groups who are supposed to be "exploiting" others are expelled from countries around the world. In medieval Europe, Jews were expelled from a number of countries where they were accused of exploiting the gentiles. But, after they left, prices and interest rates tended to rise. Exploitation does take place and oppression still more so. But they seldom explain either the wealth of the wealthy or the poverty of the poor. Spain, for example, exploited the Western Hemisphere and its people mercilessly for centuries. But after the gold and silver ran out and the Indians died off, Spain had very little to show for it and has remained one of the poorer countries in Europe.

It not only failed to develop its own human capital, it expelled minorities whose human capital had contributed to the Spanish economy, including both the Jews and the Moors. Although human capital fits the facts better than moral melodrama, it presents no sweeping solutions for politicians to offer and no heady feeling of superiority for the intelligentsia. So look for more calls for more Marshall Plans.

COPYRIGHT 1997 CREATORS SYNDICATE, INC.