Re: ECON: Dutch Miracle or Dutch Disease?

Arjen Kamphuis (
Fri, 19 Sep 1997 15:15:27 +0200

Sorry Max, my granfathers ghost will come and haunt me if I don't do this...

Max More wrote:
>I think it was Arjen who was claiming that Holland was the best
>performing economy in Europe. Well...

Ahem, that's not precisely what I said I: (check the post if you want)

->Holland is now the most healty economy of the EC, and one of the
->best coutry's in the world to invest in, because of it's,
->stability according to a recent survey.

Performance (growth) is one of the measuraments of an economy. As I also
stated in the same mail that we sometimes lack a bit in innovation (here we
can learn from the US). If you want raw growth: go to some Asian country,
or Ukraine.
be ready to pull out fast though, if something goes wrong. If you want
stable, sustainable, long term growth; then look to us. It's a matter of

>>One of the most important statistics that
>>government's publish is the unemployment
>>rate. Many in and out of government use it
>>to determine how well the government is
>>doing, an economic feedback loop of sorts.
>>Just like many statistics, however, this statistic
>>can be manipulated as easily as play-doh.

I can't argue here in as there are three kind of lies:
nasty lies, sweet lies and statistics ;-)
This works both ways of course.

>>Due to its rather low official unemployment rate,
>>Continental European statesmen are looking
>>towards the Netherlands for guidance on how
>>to achieve social security and economic growth
>>at the same time. Hans Tietmeyer, President of
>>Bundesbank calls the Netherlands, "the model
>>country, the example of the continent."
>>Wolfgang Schauble, the parliamentary leader
>>of the German Christian Democrats says that,
>>"the Dutch appear, after 15 years, to have largely
>>succeeded in reforming their economic system
>>without forfeiting the solidarity which is
>>characteristic of their society."

This method of cooperation between workers and employers is reffered to as
the "Polder model". A 'polder' is an area of land gained by putting a dike
around it and pumping all the water out. About 60% of Dutch landsurface is
polder (below sea-level). Solidarity has been one af the cornerstones of
all our social and economic policy-making for 50 years. It is supported by
the vast majority of the population.

>>Sorry Wolfgang, but appearances are often deceiving.
>>The wage bargaining system created 15 years
>>ago in the Netherlands has created relative
>>labor peace -- proportionally the Netherlands
>>loses less days each year to strikes than any
>>other Western country -- but what it hasn't achieved
>>is economic growth. Don't get us wrong, the
>>thought of workers and managers holding hands
>>and going shoulder to shoulder towards
>>economic growth is an appealing idea, especially
>>after the major hassles created by the UPS strike.
>>The Dutch model, however, simply doesn't work.

It doesn't? Jeez. Then why is the current governement able to lower defecit
spending, reduce the national debt, raise expenditure on health- and
elderlycare, environment and various other fields and *still* able to lower
taxes by a significant margin *in the same year* (!!).
If this is 'not working', then I'll have a 'not working' system any day of
the week. ;-) thankyouverymuch.

>>According to the OECD, the broad unemployment
>>rate in the Netherlands is 27.1% of the people who
>>are of working age. Broad unemployment is defined
>>as people of working age who live off welfare benefits
>>or receive some subsidized employment. The
>>number of people who are officially ill and drawing
>>disability benefit or are on sick leave outnumber those
>>that are officially unemployed. The Dutch labor
>>participation rate is only 62.4%, as compared to
>>68.8% in Germany, 73.7% in the UK, and 77.3% in
>>the US. Dick Horringa, a Dutch consultant, compares
>>this phenomenon with what happened in the former
>>Communist states, which also had low official
>>unemployment yet high broad unemployment.

Being called Dick in holland can be bad, being called 'Dick' an
english-speaking country must be horrible ;-)
(sorry that's just for the 'commie' reference)

Seriouly though: FACT is that Holland is, at this point, the *only* country
(aside from Luxemburg) that can live up to the economic demands to
participate in a common Eropean currency. The UK can't, Germany can't,
France is in big trouble. Note that the demands were agreed on by *all*

We have a relative low work-participation, this is true. As the article
states however the 27.1% figure includes anyone who has a subsidized job.
What's a subsidized job? All civil servants? People receiving an small
income for doing governement-subsidized socialwork? Maybe the entire Dutch
agricultural sector, that's as heavely subsidised as anywhere in Europe. Or
the Dutch avaition-industry, also heavily supported by the state through
special tax-laws (just like in most country's BTW).

About 3.3 million people do paid-work in Holland (if we convert eveything
to 40hrs/week), out of 15 million. The rest of the population is in
school/university, retired and not working for medical reasons (we have
very strict laws on that). About 300.000 are unemployed in the classical
sense, this figure is dropping.

Since solidarity is so important here it's not a problem if few people work
as long as those few people generate sufficiant means for everybody to live
That they do, average-income maybe lower than in the US. But it's not like
we're poor.

>>Perhaps Continental policy-makers should stop
>>looking for some hybrid "third way" that allows them
>>to avoid free-market reforms and simply do what
>>needs to be done to promote long-term economic
>>growth. Not using fake numbers would be a good start.

Yeah yeah! That's it! stop looking for alternative solutions! that'll never
get us anywhere! Just run along with some other economic model that
messed-up most the *other* European economies! Privitase everything like
they did in England. God beware if we ever have to acknowledge that maybe
there are workable alternatives to a total free market, that'll be the day.
No, we'll just say some stuff about unemployment and deny any other
inconvienient economic indicators (such as defecit spending, national debt,
inflation, interest-rates and average income).

I realize that it's not a good thing to say 'It's so great here' 'bout your
own country all the time so after having corrected some *factually* wrong
statements I'll do some 'ol fashion complaing:
- There's a lot of dog-crap everywhere, I step in it all the time. It's a
- You can never find a parking space (I hear - I do not own a car yet ;-)
- It's too crowded! 1000 persons per sq Km (average).
- The trains are often late, and the cofee they serve sucks too!
- And we still have slow Net-connections...

So you see: it ain't paradise (we'll keep trying though).

Back to work on the Dutch Alcor branch.



Arjen Kamphuis | In matters of style, swim with the current. | In matters of principal, stand like a rock.
- Thomas Jefferson