What Was So Great about the Marshall Plan?
In The New Yorker, Niall Ferguson reviews Greg Behrman's The Most Noble Adventure: The Marshall Plan and the Time When America Helped Save Europe and challenges the idea that the Marshall Plan, the U.S. post-war redevelopment plan for Europe, was a panacea:
Under the Marshall Plan, grants and loans were received by sixteen different countries. Britain received more than twice the amount given to West Germany. Yet no European economy performed more dismally in the postwar period than Britain's. A crucial difference between the two was the success of the German currency reform of 1948, which saw the birth of the enormously successful Deutsche Mark, compared with the ephemeral stimulus of the British devaluation of 1949, the first of several vain attempts to revive the U.K. economy by cheapening exports.
Which isn't to say that Ferguson thinks the massive amounts of aid were a total bust:
To West Europeans struggling to make ends meet, [the Marshall Plan] was the most visible manifestation of American good will-and a mirror image of the Soviet policy of mulcting Eastern Europe. This, more than its macroeconomic impact, explains its endurance in the popular imagination.
Update: Here's a link (pdf) to Tyler Cowen's 1985 takedown of the Marshall Plan.
And while mentioning the Inner Economist, let me wish him and co-blogger Alex Tabbarok a belated fourth birthday. Their consistently great blog, Marginal Revolution, just celebrated its fourth year.