The Marshall Plan: Drawing From the Lessons of History

Professor Galloway, LIV Golf & the Meaning of Marshall Plan Aid: Context from the Past

I need not tell you gentlemen that the world situation is very serious. That must be apparent to all intelligent people….

In considering the requirements for the rehabilitation of Europe the physical loss of life, the visible destruction of cities, factories, mines, and railroads was correctly estimated, but it has become obvious during recent months that this visible destruction was probably less serious than the dislocation of the entire fabric of European economy…

The farmer has always produced the foodstuffs to exchange with the city dweller for the other necessities of life. This division of labor is the basis of modern civilization. At the present time, it is threatened with breakdown.

The truth of the matter is that Europe’s requirements for the next 3 or 4 years of foreign food and other essential products – principally from America – are so much greater than her present ability to pay that she must have substantial additional help, or face economic, social, and political deterioration of a very grave character.

-Secretary of State George Marshall’s Speech on the European Recovery Program

Harvard University, June 5th, 1947[i]

These excerpts from George Marshall’s speech would quickly turn into a massive four-year economic aid program that would help rebuild the shattered ruins of post-WWII Europe. While historians hold various views regarding the United States’ motives, it seems reasonable to conclude that Western Europe’s reconstruction was due to parts of the Marshall Plan being successful.

What follows is an explanation of how current spending plans dwarf the funds used to rebuild Europe. Are investors paying attention?

NYU Stern Professor Scott Galloway posted a recent missive, The Mother of All Pivots, which was a healthy reminder of the magnitude of the secular forces underpinning the basic industries boom. No matter if you agree with him, Professor Galloway’s work is always chock-full of interesting data. His piece explains how Bahrain will be out of oil within this decade, Oman will see its reserves gone in two decades, and even the Kingdom’s reserves appear to be running low.

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The availability of easy oil appears to be on the decline.

Galloway’s piece discusses how this is creating a forced pivot by the Gulf states. The attempted entry into everything from soccer to golf and F1 Racing represent the early innings of a bigger game.

Saudi Arabia’s grand plan is to attract the ultra-wealthy to a “world” called NEOM.[ii] The primary characteristics, according to Galloway, appear to be low taxes, luxury amenities, and…24/7 surveillance. Let’s set aside any discussion of the ethics, efficacy, or politics of the strategies and just look at the numbers.

There is, apparently, no price too high for this massive pivot.

Qatar spent nearly 4x as much as the last seven World Cups combined to build the infrastructure required to host the World Cup.

Source: Scott Galloway, No Mercy, No Malice, “The Mother of All Pivots”

And the Saudi’s futuristic “sci-fi mega-city” NEOM has half a trillion dollars budgeted for construction. While the timeline is a bit longer, that is more than the entire Inflation Reduction Act.

KCR has written frequently about how in a world where budget deficits and market caps of individual companies are measured in trillions, it is easy to lose sight of the importance of numbers. How big is the Inflation Reduction Act? The Saudi’s NEOM project? How to get some context?