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Core elements of the Marshall Plan
The ‘Marshall Plan for Europe’ is borne out of the understanding that we need a political strategy that takes both short and long term growth into account. Therefore it is designed as an investment and development programme for a 10-year period (from 2013 to 2022). For this period DGB proposes a mix of institutional measures, direct public sector investment, investment grants for companies and incentives for consumer spending. The latter serve to combat the crisis in the short term. By contrast, public sector investment and investment grants take time to make an impact, but serve to safeguard long term growth and employment prospects by strengthening and promoting modern industries and services.
Beyond that, the ‘Marshall Plan’ will improve cooperation between European countries: Massive investments averaging €110 billion per year will be needed across Europe in order for the modernisation offensive to include the whole of the EU. This results in total annual financial requirements of, on average, €260 billion. This corresponds to just over 2 per cent of Europe’s Gross Domestic Product (GDP). Such an ambitious and long term investment programme cannot be shouldered by one country alone. To be precise, those countries currently in financial crisis will not be able to implement a modernisation initiative like this on their own. This is why we need joint efforts and new European institutions with stable and solid sources of finance.
Given the high investment required one could easily dismiss our plan as being unrealistic but it is important to keep in mind that the costs of stabilising the banking system have reached €2,000 billion. So why shouldn’t it be realistic, and much more promising, to mobilise about the same sum to invest into education, innovation and decent work in Europe over a period of several years?
Funding the Marshall Plan
The DGB proposes to set up a ‘European Future Fund’ to fund the ‘Marshall Plan’. In Western Europe, there is €27,000 billion in cash assets on the one hand and a shrinking number of secure and profitable investment opportunities on the other. This situation poses a major opportunity to use Europe’s available capital for investments in its future. To this end, the European Future Fund would issue interest-bearing bonds – like companies or governments. We refer to these bonds as ‘New Deal’ bonds.
The interest obligations, the cost of which the Future Fund itself would have to cover, could be funded from revenue from a Financial Transaction Tax (FTT) – a tax that will apply in particular to highly speculative financial transactions, thus burdening the very financial market players that were chiefly responsible for the biggest financial and economic crisis of the past 80 years.
The Future Fund would have to have sufficient equity when it is first set up. Up to now, it has been solely the taxpayers and workers who have borne the chief burden of overcoming the crisis. Now, therefore, it is time for the wealthy and rich to participate in once-off funding to provide capital for the Future Fund. For Germany, DGB proposes a once-off wealth levy of 3 per cent on all private assets in excess of €500,000 for single people and €1 million for married couples. The form that this levy would take has yet to be specified. The other EU countries should introduce comparable measures for the wealthy and rich.
As a new European institution, the European Future Fund should be under the strict control of the European Parliament. Following on from the proposals of nine Ministers for Foreign Affairs on the future of Europe, the European Parliament must approve all cash outflows from the Future Fund. The prerequisite for this is that the European Parliament is closely involved in all decision-making processes.
Macro-economic effects of the Marshall Plan
The DGB’s Marshall Plan contains decisive impetus for qualitative growth as well as decent jobs with a future. The proposed investments and investment subsidies of €260 billion annually comprise direct investment and investment grants of €160 billion and ten-year low-interest loans to private investors of €100 billion. This combination of long-term, low-interest loans and investment grants should kick-start additional private investment and thus promote wide-scale private modernisation measures. These in turn would lead to further private investment and annual additional growth impetus totalling €400 billion. This would correspond to additional growth impetus of more than 3 per cent of the EU’s GDP in 2011. This considerable growth dynamic would have positive spill-over effects for employment. Additionally an investment offensive in a fundamental overhaul of European national economies in terms of energy policy could yield between 9 and 11 million new full-time jobs in the long term. Our programme will benefit the EU countries significantly. The investments will not burden their budgets. Instead, they will receive additional impetus for growth and employment and can use this to generate significantly higher direct and indirect tax revenue from income tax, VAT, company and corporate taxes as well as social security contributions and to cut the cost of unemployment.
Europe’s future hinges on investments made in the present. Europe has all the resources it needs for this: We have to work together to combine these strengths and use them to transform our societies and to create a social Europe that might become a role model for other regions. We should also contribute to the debate on a global transformation in the style of the ‘Global Marshall Plan’ that has been discussed since 2003 in order to transform our societies for a better future with all social groups having a fair share of the wealth being produced.
The proposal for a ‘European Marshall Plan’ can be downloaded in English, French, Spanish, Italian and German.
English article © Social Europe