Post-Pandemic Rebuilding Calls for Different Kind of Marshall Plan

As cities, counties, states, and countries around the world begin reopening after a brutal two-and-a-half-month lockdown period, many of them are looking to history for examples of the massive capital investment that will be needed to reboot stalled economies. To no surprise, infrastructure investment is emerging as an important piece of the puzzle. 

One model that keeps emerging is the 1948 Marshall Plan, a program that sent $15 billion, approximately $160 billion today adjusted for inflation, to Europe to cover the cost of post-Second World War reconstruction. “The brainchild of U.S. Secretary of State George C. Marshall, for whom it was named, it was crafted as a four-year plan to reconstruct cities, industries and infrastructure heavily damaged during the war and to remove trade barriers between European neighbors—as well as foster commerce between those countries and the United States,” History.com recalls.

The early Cold War context gave the program a more complicated, nuanced purpose. But it was built largely on a pragmatic response to urgent humanitarian need.

“Many cities, including some of the leading industrial and cultural centers of Great Britain, France, Germany, Italy and Belgium, had been destroyed,” the site recalls. “Reports provided to Marshall suggested some regions of the continent were on the brink of famine because agricultural and other food production had been disrupted by the fighting.” And “the region’s transportation infrastructure—railways, roads, bridges and ports—had suffered extensive damage during air strikes, and the shipping fleets of many countries had been sunk.”

Replace “air strikes” with “decades of underfunding”, and the ravages of war with the sudden, unforeseen impacts of a rampaging novel coronavirus, and the parallel begins to make sense.

A Reconstruction Plan for Today

History.com acknowledges some lingering controversies over the economic impact of the Marshall Plan and the geopolitical motivations behind it. But none of that has stopped world leaders from invoking the program as a metaphor for the reinvestment countries need today.

“In this crisis, there can be no half-measures,” said European Commission President Ursula von der Leyen. “And that will be the case for years to come as we seek to lift our economy out of the crisis valley. To do this, we will need massive investment in the form of a Marshall Plan for Europe. And at the heart of it should lie a powerful new EU budget.”

“Fighting this coronavirus is like fighting a war. And to recover after that war, we will need to study the lessons of previous post-war reconstructions,” wrote Canadian economist Jim Stanford, director of the Centre for Future Work, in early April.

“Think of post-pandemic rebuilding like a modern Marshall Plan (replicating the enormous, government-funded effort to rebuild Western Europe after the Second World War). We’ll need a similar commitment to all-round reconstruction. We will need equally massive fiscal injections. And we will need a similar willingness to use tools of direct economic management and regulation—including public service, public ownership and planning—to make it all happen.”

Unlocking the Trillions

Stanford isn’t wrong—just as IBTTA has always, consistently supported public funding mechanisms like a more robust, inflation-proof gas tax, different countries will arrive at the levels of investment that make most sense in their post-COVID economic strategies.

But History.com also recounts that the Marshall Plan wasn’t the whole story. While countries that received U.S. aid surpassed their pre-war economic growth by 1952, the last year of the program, “the Marshall Plan accounted for less than three percent of the combined national incomes of the countries that received them”. Which shows that, then as now, there was no single, all-purpose solution to provide all the funding and investment the moment demanded.

Which brings us back to IBTTA’s mantra for user financing.

Before the pandemic, the world was already facing a multi-trillion-dollar infrastructure reconstruction deficit. We knew governments would need every tool in the funding and financing toolbox to get ahead of a challenge that had been accumulating for decades. Different countries had tried to fund ambitious infrastructure programs, with varying degrees of success, to begin clearing the backlog while simultaneously creating jobs and stimulating economies.

One of the many pretenses the pandemic has burned away is the notion that any of that work can be delayed any longer. The safety, efficiency, and environmental impacts of lagging infrastructure were massive before the pandemic. Now, the priority is to get tens of millions of people back to work. And tax dollars alone won’t be enough to get the job done.

In surface transportation, decision-makers can count on tolling and other forms of user financing to shoulder a share of the burden, to help a modern-day Marshall Plan cover more ground faster.