Post-COVID, Is China Only Country with Enough Reserves to Lend ?

On 3 April 1948, three years after the WWII ended, President Truman signed the Economic Recovery Act of 1948. It came to be known as the Marshall Plan, named after Secretary of State George Marshall, who, in 1947, proposed that the United States provide economic assistance to restore the economic infrastructure of post-war Europe.

By most accounts, the Marshall Plan played a definitive role in the reconstruction of Europe, with far-reaching consequences, not the least of which, arguably, was greater growth and prosperity for both the United States and Western Europe for much of the 20th century.

With the global economy gasping for breath in the wake of the COVID-19 pandemic, talks of a reconstruction plan to resuscitate flailing economies are beginning to surface, a conversation around the Marshall Plan being invoked in many quarters.

But is it an apposite approach to the current crisis that has already lopped off a substantial percent of the global GDP?

How Will a ‘Marshall-esque Plan’ Pan Out Post Corona?

The global, not to mention the European, economy, is a vastly different construct from nearly 75 years ago.

How will a 2020 Marshall-esque Plan pan out? Who will fund and lead the reconstruction this time around, in a debt-laden world with governments struggling to keep economies from failing?

Who has the reserves and wherewithal to lead an international reconstruction? And then, what will be reconstructed? The Marshall Plan has been called no less than the “most unsordid act in history” by Churchill, and alternatively, an act of the most enlightened self-interest in history. The plan was both. The American commitment to the rebuilding of Europe is believed to have sprung both from altruism, and also from self interest – during the reconstruction, the plan’s annual funding represented 13 percent of the American budget, of which more than two-thirds went to American businesses dealing with the Europeans.

The spirit of the plan was however best captured in the words of George Marshall himself: ‘Aside from the demoralising 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 in the world, without which there can be no political stability and no assured peace.’