Where Are You General Marshall?

In June 1948, Europe still lay in the shambles of WWII and the US government was still at sea, having long prepared for war with no real plan of what to do after to help put the world back on its feet.

General Marshall, who had helped steer FDR and then Truman in planning the whole military effort, was invited to Harvard to give the commencement address and to receive an honorary degree for his amazing service.

His speech, which initially went largely unnoticed, reviewed the state of the world (mostly rubble) and concluded that if the US hoped to win the peace, the best plan was to start by putting all of Europe back together with a major rebuilding program.

He did not proclaim any plan as such, but he laid out the facts and scored a bull’s eye with the idea that the US could not afford to assume that Europe could take care of itself alone, as we had with dire results after WWI.

Within weeks of his commencement address, the nation realized that Marshall had outdone himself, and spoken essential wisdom. Hence, his ideas became known as the Marshall Plan, and he now is regarded by many as the wisest man of the 20th Century.

Our current ‘war’ is of a very different sort from World War II. The mal-distribution of global wealth has created a world of haves and have-nots that underlies much of modern anxiety about the state of affairs in the world.

The imbalance underlies resentment of refugees, or even ordinary immigrants and people seeking asylum (they’re taking ‘our’ jobs). It engenders a lack of confidence in institutions, which seem to stand by idly for the most part. And it provides the flame for the tinderbox of hatred, prejudice and religious fervor that seeds both domestic and foreign terrorism.

It is not too soon for a modern day Marshall to help us think through a strategy to help put the world back on a path to peace, prosperity and good will among most people.

Yes, that is a tall order. But without sensible goals and plans it probably is not possible.

The basic issue is that the allocation of resources/wealth among the global population of about 7 billion people is more visibly out of kilter perhaps than ever before. Take the US distribution as exhibit A.

Trends In Family Wealth_1989-2013

Source: Congressional Budget Office, “Trends in Family Wealth, 1989-2013

The Center on Budget and Policy Priorities reports that “the share of wealth held by the top 1 percent rose from just under 30% in 1989 to nearly 49% in 2016, while the share held by the bottom 90 percent fell from 33% to less than 23% over the same period.”

That has resulted in several different kinds of pressures and conflicts, with little or no strategy to address the problem. The basic pressure conflict is between haves and have nots. That appears in many forms: taxation; education and all forms of opportunity.

These disparities are most apparent in migration patterns. Overpopulation around the world tends to create incentives to leave – a lack of safety, education, health and welfare naturally encourages people to seek out new opportunities.

The richer countries, which in the past relied on inward migration for growth and innovation, are increasingly pulling up their ladders to ‘protect’ the folks already in their tree house.

Another consequence of inequitable wealth distribution among people and countries is isolationist trade policies. The disparate distribution of wealth creates disparities in the distribution of work and resources which, in turn, often leads to quotas and tariffs. Which, in turn, lead to retaliation and, if left to fester, in turn leads to trade wars. Contrary to recent assertions, there simply are no winners in these disputes.

As these factors and pressures drift around the globe they create political conditions that are destabilizing and frequently lead to challenging the status quo of democratic and authoritarian governance alike.

That is where we are today.

The United States, Europe, Asia, Russia and even China are all feeling some internal, change oriented political pressures to address the external pressures bearing on them because of the global destabilization of migration and resource distribution.

What might be done globally to address these problems?

One possibility is a global fund to assist supporting living standards around the globe, addressing the human and financial issues in such a way as to rectify the consequences of some of the imbalances we have been discussing.

Such a fund could be managed, perhaps like the World Bank, for the purpose of reducing the pressures and incentives in given countries to abuse existing imbalances to the disadvantage of neighboring countries.

A fund that assessed, say, $25 for every person in a developed country and $1 per person in developing countries would generate $60 billion annually (the U.S. share would be roughly $8 billion – pocket change in our $3 trillion budget). Add in a 1% assessment on all global exports and imports and you get an additional $159 billion for a total of almost $220 billion.

That’s roughly 8 times what the U.S. currently spends on foreign aid annually.  And while it won’t make everyone wealthy, $220 billion could begin to reduce some of the pain in the world and ease some pressures that threaten to boil over into chaos or worse.

The money, admittedly, is likely to be the easy part. Left unanswered at the moment is how and where to spend it, and who decides.

I already have some ideas indicated by World Bank history. If any reader has any bright ideas I will be more than happy to see them and, if used, will give appropriate credit if the source wishes.

Stay tuned!

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