why we desperately need another George C. Marshall

John Winfrey

Economist

WHY WE DESPERATELY NEED ANOTHER GEORGE C MARSHALL

Most Americans are alarmed at how dysfunctional and inept our government has been during the self-imposed Great Recession. Yes, we need George C. Marshall to lift our vision and somehow circumvent the bipartisan squabbling in Congress. The political gamesmanship must be put aside just long enough for them to carry out the simple task of meeting their most basic responsibility: creating economic stability and providing adequate job opportunities. It is not that our leaders do not know how to accomplish the task; they do, but they insist on putting their political agenda first.

A quick look at our history actually reveals that our democracy is very fragile. Our present predicament is the norm rather than the exception. Our divisions of power can make bipartisan cooperation difficult to attain. And that makes Marshall’s accomplishments seem all the more miraculous.

The times when the so-called Greatest Generation came of age were much more severe and chaotic than those we face now. Those who endured the Great Depression and World War II had already seen World War I and the Roaring Twenties. And yet in the midst of the Great Depression they chose to sing: “We will face unafraid the plans that we’ve made.”

Very simply, our nation’s reliance on the self-equilibrating mechanisms of a free market, laissez-faire capitalism was a mistake. The Great Depression put our democracy in grave danger, especially alongside the assumed success of both communism and fascism.

President Roosevelt was determined to save our market economy by whatever means necessary. The first order of business was to reorganize and regulate our financial and investment markets. The second order of business was to stimulate the economy, to create jobs, so as to provide demand for the products of our manufacturers. The result, a “mixed economy,” features free markets augmented by government where markets fail.

The fact that Roosevelt’s New Deal rescued the economy did little to endear him to his political enemies: During the 1936 reelection campaign, Roosevelt acknowledged the hatred of his political enemies:

“For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.

I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.

The fact that Roosevelt was reelected did not protect him nor our economy from obstructionist politics designed to make his policies appear to fail. Thus, in the late 1930s arguments to “balance the budget” were used to reduce the stimulus. Consequently, the much feared “double dip” depression side-tracked the recovery. Indeed, a full recovery was delayed until the “mother” of all stimuli, World War II, turned the depression into full employment overnight.

The story of how Roosevelt chose George Marshall to be Army Chief of Staff is quite remarkable. Marshall’s reputation as an organizer and visionary and a person who spoke his mind had been growing steadily. In World War I Marshall was an aide to General William Sibert when the hastily formed First Division was sent to France. General Pershing was incensed with Sibert’s troops and berated him on several occasions, sometimes in front of his officers. Marshall approached Pershing and argued the case for what progress they were making under difficult circumstances. Instead of immediately firing Marshall, Pershing took notice and later made him an important part of his staff.

During the years between the wars, promotions were slow but Marshall distinguished himself in various ways, most particularly by reorganizing and teaching at the War College in Ft Benning. Over two hundred of his students became generals during World War II.

Once Marshall arrived in Washington in April 1938 promotions followed rapidly, from Assistant Chief of Staff War Plans Division to Acting Chief of Staff in July of 1939.

Roosevelt was not disappointed. Marshall immediately demonstrated the talents of a master negotiator. The skills were especially valuable in the obstructionist environment of Congressional party politics. Marshall was successful because he developed a reputation of being strictly non partisan.

Except for a few isolationists, most members of Congress realized that our nation was woefully unprepared for the war. Nevertheless, political gamesmanship dictated obstruction. Any legislation that might be interpreted as helping Roosevelt’s image as a leader was to be sabotaged. This quickly developed into a dangerous situation. It was at this point that Marshall’s reputation as non partisan began to pay off. Roosevelt, under advice by Henry Morgenthau, instructed that Marshall do all of the testifying for the legislation. Marshall recalled in interviews with his biographer, Forrest Pogue, in 1956: “If Republicans could assure their constituency that they were doing it on my suggestion, and not on Roosevelt’s suggestion, they could go ahead and back the thing.”

Marshall’s abilities to negotiate became legendary as he coordinated the war effort among generals such as Eisenhower and Bradley, on the one hand, but a wide range of forceful “personalities” on the other, such as: Patton, MacArthur, DeGaul, Stalin, and Montgomery.

And, of course, Churchill was a constant threat to any coordinated effort. At the same time, Marshall was expected to keep working his magic in Congress and our own war industry.

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Marshall’s crowning achievement, however, came after World War II and after his supposed retirement. Truman, his former Commander in Chief, called on him and he responded. His statesmanship was desperately needed as Secretary of State.

Before officially accepting the position Marshall publically announced that he would never run for elected office, and he would never accept a “draft.” Marshall was aware that his non partisan reputation would be more valuable than ever.

The plans for the European Recovery Program were proceeding and Marshall was one of several key players along with George Kennan and Will Clayton.

Marshall played key roles in dealing with the various governments involved and of course with public relations here and abroad. Although Truman aides had assumed the program would be called the Truman Plan, Truman himself began calling it the Marshall Plan. In assessing its passage Truman said to one of his aides, “Can you imagine its chances of passage in an election year in a Republican Congress if it is named for Truman and not Marshall?” (Pogue, Marshall: Statesman, New York, Penguin 1987, p. 236). `Thus, Marshall was chosen to take the major role in public relations and especially in dealing with Congress. He successfully overcame the stigma of cooperating with Truman. A crucial step was winning the support of Senate Chairman Arthur Vandenberg. The campaign began with Marshall’s famous speech at Harvard’s commencement on June 5, 1947, and continued with numerous public speeches and trips to Congress. Finally, the Marshall Plan was passed by the Senate and the House in March and April of 1948. The actual aid given was substantial: 13 billion, almost 3 percent of GNP.

 

As we know the Marshall Plan was a brilliant success. Historians and political scientists, rank it as our greatest ever public policy achievement. It accomplished a great humanitarian feat and furthered our own political and economic self-interests. It led to the containment of communism in Europe and laid the groundwork for the continuing cooperation in trade.

Now, over six decades later we Americans can congratulate ourselves on the great success of the Marshall Plan. It is regarded as the paradigm of generous foreign policy. It is credited with saving the economies and democracies of Europe from falling to communism. Generation after generation of Europeans continue to be grateful.

In hindsight we can’t imagine how our Congress could have brought itself to squander such an opportunity. But let’s not fool ourselves. Had the same plan been labeled the Truman Plan, it would never have passed. We must understand that Congress was, and still is, more about playing politics than doing what is best for America. An important part of the game is to obstruct the President in order to make him appear ineffective.

 

Our mixed economy requires that government use regulation and macroeconomic policy to keep our system of free markets on an even keel. One attribute of free markets is that they have self-regulating mechanisms. Competitive markets equate demand and supply and efficiently correct for short run fluctuations. But when more serious breakdowns occur, a downward spiral can occur that requires very aggressive macroeconomic policies to jump start the economy. Over the years these aggressive policies have been required several times. On every occasion the downward spiral has been arrested successfully

In the early 2000s new credit innovations along with a real estate boom and bust left banks, investment houses, and debt ridden consumers and businesses seriously overextended.

Economists of all persuasions recognized that drastic bailouts and stimuli were required if the worldwide financial institutions were to be salvaged. Those in leadership roles in the Federal Reserve and the Treasury admitted they had failed in their regulatory responsibilities and led the way in the recovery efforts.

It was a bipartisan effort. In the Administration and Congress as well as in the Federal Reserve, plans and legislation were prepared and passed. The first response to the bipartisan recovery efforts was very successful. But a funny thing happened on the way to full recovery. Barack Obama was elected president. And “poof,” basic economic theory went out the window and political gamesmanship again reared its ugly head. Obama’s first round of stimulus has been sabotaged in every way possible. Blackmail was introduced on the extension of tax cuts, unemployment benefits, payroll tax cuts and even the debt ceiling. The debt ceiling fiasco greatly damaged our reputation in a period when our trading partners around the world needed reassurance rather than uncertainty.

The Republican governors, not to be outdone, have refused to accept job creating stimulus funds, even those already designated for education programs, teachers, school buildings, roads, bridges, and public transportation. In South Carolina governor Nikki Haley refused transportation funds until the SCDOT informed her they would have to shut down their operations since the funds were already part of their budget. In the middle of a recession Republican governors are sabotaging the jobs stimulus and firing teachers and construction workers.

In his latest stimulus messages, President Obama could not resist quoting Mitch McConnell taunting: “ousting Barack Obama is my single most important goal.” Obama also pointed out that many of the stimulus programs were originally offered by Republicans. But of course that was back in the days of reasonable bipartisanship. Now the game is to stop Obama jobs programs at all costs. And the collateral damage is great; some 20 million families do not have adequate jobs. But will Obama’s appeal to Congress and to the public overcome political gamesmanship?

We desperately need another George C. Marshall