SP versus PvdA: How can the crisis be over, when the Netherlands has more than 600,000 unemployed?
SP versus PvdA: How can the crisis be over, when the Netherlands has more than 600,000 unemployed?
In the Dutch Senate the SP has clashed with the PvdA – the Labour Party - the centre-left component in a government headed by the centre-right VVD, over Labour’s claims that the crisis is now definitely behind us.
SP Senator Bastiaan van Apeldoorn, an internationally renowned academic in the field of international relations, led the attack on the PvdA’s false optimism, pointing to sky-high unemployment. Far from, as the PvdA claims, government policies bringing prosperity back to the country, ‘failing policies have left the Netherlands in crisis longer than necessary, and recovery is costing more than would have been necessary with better policies. The government claims the budget is now in good order. But a lot of people will be paying for the results for years yet.’
Below is a summary of Senator Van Apeldoorn’s contribution to the debate on the national budget for the coming year.
He began by saying that the government had realised in good time that “despite the light economic following wind, it would be difficult to present the national budget for 2016 as a budget to be celebrated” and recalled that “we are living in a time of multiple crises in Europe and beyond”, citing the recent attacks in Paris as the latest reminder that no-one is immune from terrifying violence.
“Hundreds of thousands have fled to Europe before the same sort of violence,” Van Apeldoorn continued. “Of course that brings tensions along with it.” Years of underinvestment in, for example, the building of social housing, would exacerbate these, while such a crisis should have been anticipated after years of military interventions. “We are all in agreement that reception facilities in the region must be improved” he said - and the SP’s view was that this would also demand serious investment. “But the refugees who reach our country must of course be adequately accommodated. This too costs money and in our view we can’t walk away from this and we must do what is needed. And this should not be at the expense of the development cooperation budget… “ Fortunately, a lot of good things are happening in relation to accommodating refugees, he noted, partly thanks to many thousands of volunteers. “Human dignity and solidarity are values which happily turn out to be deeply rooted in our society.”
Turning to the broader question of the government’s economic policy, he said that it was based on “the same short-sighted, pro-cyclical budgetary policy being pursued in the entire eurozone. The policy which has unnecessarily deepened and prolonged the eurocrisis and in countries such as Greece and Spain, deprived whole generations of their future and driven millions of households into abject poverty.”
If it’s true, he went on, that the Netherlands is now faring better than in recent years, it would in the SP’s judgement have escaped from the crisis more quickly and in a way which left it better, stronger, more social, had a more intelligent macro-economic policy been pursued.
Economic recovery had been unnecessarily delayed, and had taken longer than at any time since the Great Depression.
What Van Apeldoorn meant by ‘more social’, was reversing austerity policies which hit above all “people on lower incomes, amongst whom are the most vulnerable in our society” those “most dependent on a protective and caring state”, and had far less effect on those who can easily look out for themselves. It was true, he said “that things are going better in terms of GDP”, but things were not going better for example, for the 400,000 Dutch children living below the poverty line. The SP Senator asked the minister to tell him whether “he agrees with us that this isn’t acceptable in a rich country such as the Netherlands.”
Cuts had also been made, Van Apeldoorn pointed out, in the area of security and justice. What economic vision lay behind these policies, he wondered. In the light of this lack of any real vision, how sustainable was the restoration of economic growth in an economy dependent on exports to an uncertain world?
Two more things were missing from the government’s analysis. “Firstly, the SP Senate group fears that the government has underestimated the chances of the eurocrisis flaring up anew. This summer’s stranglehold ‘agreement’ means that social misery in Greece will continue. Many Greeks are now threatened with mass eviction, while understandably the Greek government has difficulties in implementing this and other parts of the Troika diktat. Along with this, a renewal of the Greek crisis is not improbable, all the more so because our own Central Planning Bureau recognises that it can’t be ruled out that yet more money will be needed. According to the CPB the risk to the Netherlands is small, due to the very limited significance of the Greek economy, but if the Grexit scenario comes closer once again, then the political crisis already taking the EU to the brink of the abyss threatens to become more acute, and deeper.
“Secondly, there’s the risk of a renewed general financial crisis. Economic growth cannot be sustainable without financial stability, and people’s livelihoods aren’t sufficiently guaranteed if there’s the danger of a financial crisis, and in the wake of that a recession, continually lying in wait. In order truly to be able to contain that danger we need a different kind of financial sector.”
Unfortunately, Van Apeldoorn said, the necessary radical structural reforms, such as dividing banks into smaller units, had been effectively ruled out under pressure from the banking lobby. “As a result of this, banks in the Netherlands, and in Europe, were still always ‘too big to fail’ and they threaten, in the context of the European Banking Union, only to get even bigger while the Dutch people have in the end to for if it all goes wrong.”
The SP Senator then turned his attention to the European Commission’s new plan for a capital market union, which, he said, made it look as if policy makers had learnt absolutely nothing from the crisis. The Commission was fully committed to precisely the policy agenda which had led to the biggest crisis since the war. This, he continued, forms part of the step-by-step plan which the minister – Finance Minister and Eurogroup ‘president’ Jeroen Dijsselbloem - had put into writing with four – yes four! – other ‘presidents’. “The so-called Five Presidents Report intends to give the EMU a stronger framework of governance and to make it robust for the future. The SP sees in these plans more than anything an intensification of the slice-by-slice action by which… powers are removed from the member states in the area of financial and social-economic policy and national democracy in relation to these important matters surreptitiously eroded. Meanwhile the structural problems of the eurozone and of the EMU go unsolved.”
Van Apeldoorn went on to speak about the IMF World Economic Outlook, which argues that the Netherlands needs to leave room in its budget for additional investment, a position with which the SP agrees, advocating increased investment in health care, education and social housing, as well as more ‘green’ investment, and the ‘greening’ of the tax system. The point of sustainable growth in the sense of ecologically responsible growth is that growth can never be a goal in itself. “But in a capitalist market economy, which we for the time being accept as a given, growth is necessary to maintain employment and a measure of economic stability and thereby guarantee people’s livelihoods,” he argued. The government’s economic reforms were not making significant inroads into unemployment. There were still more than 600,000 unemployed, and 270,000 of them were long-term unemployed, a figure which has grown greatly and continues to grow. “Once we had the goal of full employment, which in my recollection also formed part of the PvdA’s manifesto. Shouldn’t that…not also be this government’s aspiration?”
What has this government done about redistributing wealth, Van Apeldoorn wanted to know, when one of the stated spearheads of its policies was ‘fair shares’. “As I said earlier, growth in itself isn’t an end but a means. The end is prosperity and wellbeing for everyone. Redistribution is in this as important as growth. The question of allocation is, however, in the first place an international question. Global inequality remains extreme. Oxfam Novib has calculated that the 85 richest people in the world together own as much as the 3.5 billion poorest. Of course this cries out for redistribution. But what does this government do? Implements structural cutbacks of a billion a year from development cooperation. In the meantime the eurocrisis, and above all the crisis policy, has increased inequality throughout Europe.”
The Netherlands is no exception, he said, and this budget would make matters worse, increasing income differentials. Why were tax cuts not to a greater extent aimed at those on the lowest incomes and why wasn’t more done for those who of necessity could not participate in the labour process? The 10% richest people in the Netherlands possess two-thirds of the wealth and in that are richer than ever. “The wealth tax proposed by my party would be a good step towards reducing this inequality. The very rich dodge ten billion a year by using so-called mailbox companies.” Did the government have a plan to deal with this, Senator Van Apeldoorn wanted to know. And about tax avoidance by multinational corporations? What was happening about what the European Commission had decided were illegal state aids to Starbucks, the champion tax dodger? How did the Secretary of State come to the conclusion that everything was in order? And was the government now indeed going to recover that money, and is so when?
In conclusion, Bastiaan van Apeldoorn said that the government’s policies on growth were not sustainable, that unemployment remained far too high, and that when it came to its stated goal of ‘fair shares’, its performance was completely unsatisfactory. “The budget for 2016 won’t change these trends and in addition contains too few ideas for doing so in the longer term. It’s time for a real alternative.”