Monday, December 17, 2012

ANTONY MUELLER: Does Europe Need a New Marshall Plan?

The beneficial effect of the Marshall Plan came not primarily from the transfer of funds, but from the conditions attached to receiving them. These conditions pushed the European towards open borders and free trade and did away with regime uncertainty. It was precisely because the Marshall program promoted the necessary structural reforms of the European countries that made the Plan effective. The proponents of a “New Marshall Plan” promote the exact opposite: they demand funds without condition in order to avoid structural reforms, to avoid the consolidation of government finances, and in order to cut welfare spending and regulation. They want to push European governments into an endless cycle of monetary and fiscal expansion and an unsustainable debt burden that will cripple these economies for decades to come. The true heirs of the Marshall Plan and promoters of prosperity are not those who call for an unconditional flow of resources from the North to the South, but those who condition such flows to structural reforms.