International

Today the Senate debated the government’s financial and economic record with Finance Minister Jeroen Dijsselbloem. SP Senator Bastiaan van Apeldoorn underlined during the debate that the one-sided focus of Prime Minister Mark Rutte’s second period of government on spending cuts and austerity has created a great deal of unnecessary damage to the economy and to society. With elections scheduled for next March, much of Van Apeldoorn’s speech focused on domestic issues, but the Senator placed these in the context of European Union austerity policies.

He began by accusing Dijsselbloem, who also acts as head of the Eurogroup, of using his expertise to conduct “in an extremely skilful way a policy which is totally wrong.“

Claims that the government had led the country out of the crisis were based on the fact that it had put the budget in order by reducing the deficit, “that totem pole around which the budget fetishists and those who support them continue to dance so ardently.” It was this fetish, he said, which meant that while the budget was in order, the economy and society were far from being so.

In the government’s own view, its policies “rest on three pillars: an ordered budget, sustainable growth and fair shares.” But he said, while “we are indeed heading for a balanced budget, that is not in itself an intelligent budgetary policy, and the other pillars of our economy remain weak.” Growth was fragile, and inequality was increasing. The major weak spot was the financial sector. But also, long-term unemployment was stubbornly high and poverty and inequality were on the rise. This was the price that has been paid for the balanced budget. “Consecutive mega-austerity packages have not only subjected the economy to torture and forced unemployment up still further, but have also reduced the quality of our society.”

Turning to the European Union, Van Apeldoorn said that “Dutch austerity policies must of course be seen in a European context,” as the government itself had said. “Yet austerity policies are not the solution but rather the problem! But also, even leaving aside the obsession at the European level with spending cuts, you’re left with an EMU that from the viewpoint of macro-economics and of democracy is complete rubbish, as Professor Stiglitz has comprehensively argued in his latest book.” Senator Van Apeldoorn noted that Dijsselbloem had recently debated the issue with the Nobel Laureate Stiglitz. How did the minister see the monetary union developing now, in the light of the Five Presidents’ Report? Did he support what it said in relation to strengthening the monetary union? “How do things actually stand regarding the implementation of this agenda? In what time frame does the minister consider that the flaws in the EMU, which are also recognised by him, must be repaired if a possibly fatal eurocrisis is to be prevented?

“One part of the construction which , according to the government, must underpin the euro is the banking union,” Van Apeldoorn continued. “How does the minister now look at the effectiveness of the banking union in the light of the renewed problems of the European banking sector, recently in particular of the Italian banks and of Deutsche Bank. The minister has always prized the banking union as a big step forward, because it would mean that the principle would now prevail that the public would no longer have to pay to save banks, but rather the shareholders and creditors. But is he still certain that in practice this will be held to fully? Or will we soon be seeing once again a bail-out instead of a bail-in?

“Now we’re going to get, if it’s up to the Commission and also this government, not only a European banking union but also a so-called capital market union. The Commission wants to see this newest union now, with support from this government, pushed through quickly. The capital market union should lead to a more efficient allocation of capital and improved diversification of risk.” The SP did not accept this. Rather, the party was asking itself “how much greater would the next financial crisis have to be before this minister abandons the dogma that more freedom of movement for capital leads to more efficiency. The opposite was, after all, demonstrated in 2008. Instead of risk diversification we saw how risks spread through the entire system, partly because of securitisations and other ‘financial weapons of mass destruction’ which the EU, with the enthusiastic support of this government, wants to promote in the framework of this capital market union. Perhaps the minister can explain why he thinks that what led to massive instability in the financial system in 2008 would now contribute to stable growth in Europe?

“The relationships between the real economy and the financial sector are still out of balance, and threaten with these new European initiatives to become even more so. This imbalance is one of the most important reasons that while it’s true that all of the lights of the Dutch economy appear to be on green, at the same time a bright orange warning light is burning, or at least should be burning.”

Returning to the domestic level, Van Apeldoorn noted that unemployment was indeed falling, and more quickly than had been expected, yet it was primarily through temporary jobs. Jobs in health care continued to decline. “It does not seem to me that these figures show a picture of sustainable growth, nor do they show that we are really investing in the quality of our society.”

In conclusion the Senator returned to his themes of growing poverty and inequality, and to the European Union. “Even the European Commission has now stated,” he pointed out, “that the Netherlands has more room for public investments than we make use of and is calling on the government to take up this space taking advantage of the fact that the Netherlands can now borrow money free of interest. According to a simulation by the Commission additional structural public investment of 1% of GDP would finance itself via higher growth. We know that the minister is someone who always takes recommendations extremely seriously. Indeed, the government is proud that it usually follows these closely.” Will this apply on this occasion?