Be Wary of the Return of Big Government

Union Station Washington DC
South Front Entrance of Union Station in Washington DC, July 4, 2019 (Unsplash/Caleb Fisher)

Big government is back.

Massive rescue programs have prevented business failures and unemployment on the scale of the Great Depression, even though last year’s economic contraction was nearly as bad. The European Union agreed a €750 billion recovery fund, financed, for the first time, by EU-issued bonds. The money comes on top of national efforts. The United States Congress passed a $2.2 trillion stimulus, worth 10 percent of GDP, in March and added $484 billion in April. An additional $900 billion in relief was included in this year’s budget.

Joe Biden, the incoming American president, wants to spend $2 trillion more over the next four years to transition the United States to a greener economy and create a public health insurance program. Corporate tax would go up from 21 to 28 percent.

In Spain, a socialist government has introduced the biggest budget in Spanish history — partly to cope with the impact of coronavirus, but also to finance digitalization, electric cars, infrastructure, renewable energy and rural development. Taxes on income, sales and wealth are due to increase.

In the United Kingdom, the ruling Conservative Party is building more social housing and it might renationalize rail. Unlike during the last economic crisis, it does not propose to cut spending even though tax revenues are down.

Same in the Netherlands, where all the major parties agree the government needs to do more to reduce pollution and prevent people at the bottom of the social ladder from falling through the cracks.

I’m not opposed to more government per se. I’ve argued the United States should imitate policies in Northern Europe to improve child care, health care and housing.

But let’s be careful not to throw “more government” at every problem. Sometimes government is the problem. Read more “Be Wary of the Return of Big Government”

Dutch Christian Democrats Can’t Expect White Knight

Wopke Hoekstra
Dutch finance minister Wopke Hoekstra attends the state opening of parliament in The Hague, September 18, 2018 (Ministerie van Financiën/Valerie Kuypers)

Dutch finance minister Wopke Hoekstra is back in contention for the leadership of the country’s ruling Christian Democratic Appeal following the unexpected resignation of Hugo de Jonge.

Hopes are that Hoekstra will be able to succeed where the last three leaders of his party failed: to unseat the liberal Mark Rutte as prime minister.

The Christian Democrats are currently a junior party in Rutte’s third coalition government since 2010.

Elections are due in March. Read more “Dutch Christian Democrats Can’t Expect White Knight”

Consensus Among Major Dutch Political Parties

The Hague Netherlands
Dutch government buildings in The Hague, March 29, 2015 (Pixabay/Unsplash)

Earlier this month, I took an in-depth look at the draft election manifesto of the Netherlands’ ruling liberal party (VVD), which is likely to win the next election. (Disclosure: I’m a party member.)

Now that most other parties have released their manifestos as well, it’s possible to make a comparison. Read more “Consensus Among Major Dutch Political Parties”

Aruba, Curaçao Agree to Terms of Dutch Coronavirus Aid

Oranjestad Aruba
Aerial view of Oranjestad, Aruba (iStock/Darryl Brooks)

Aruba and Curaçao have agreed to liberalize their economies in order to qualify for continued financial support from the European Netherlands, without which the islands would almost certainly go bankrupt.

The coronavirus pandemic has brought tourism, on which the islands depend, close to a standstill.

Sint Maarten, the third autonomous Dutch island in the Caribbean, has yet to meet the terms of Dutch aid, which include cutting public-sector salaries by 12.5 to 25 percent. Read more “Aruba, Curaçao Agree to Terms of Dutch Coronavirus Aid”

Dutch Far-Right Forum for Democracy Implodes

Geert Wilders Thierry Baudet Mark Rutte
Dutch prime minister Mark Rutte answers questions from far-right politicians Geert Wilders and Thierry Baudet in parliament in The Hague, November 27, 2019 (ANP)

Sorry for the lack of new posts in recent weeks. I’ve moved back to the Netherlands from Barcelona and finding and furnishing an apartment has taken up most of my time.

Good news was awaiting me here, though. Forum for Democracy, a Putin-friendly, far-right upstart that only a year ago looked like a credible challenger to Prime Minister Mark Rutte’s center-right liberal party, is on the verge of collapse. Thierry Baudet, the party’s co-founder and leader, has stepped down.

Baudet — one of the few Donald Trump admirers in Dutch politics — broke with other party leaders to defend Forum’s youth wing, which for the second time this year was revealed to be a hotbed of far-right extremism. Het Parool of Amsterdam reported this weekend that multiple members had shared neo-Nazi content in the movement’s WhatsApp group.

In May, the party ejected three members for sharing similar content.

Baudet has winked at the alt-right with calls to defend “boreal” (northern) civilization from cosmopolitan liberal elites, who would “dilute” Dutch society by allowing immigration.

He claimed on Monday that the youth wing had been the victim of a “trial by media”. Read more “Dutch Far-Right Forum for Democracy Implodes”

Rutte’s Liberal Party Shifts to Center in Netherlands

Mark Rutte
Dutch prime minister Mark Rutte joins a debate in the European Parliament in Strasbourg, January 20, 2016 (European Parliament)

The Netherlands’ ruling liberal party has further moved to the center in its manifesto for the upcoming election, arguing that the coronavirus, climate change, American disengagement and instability in the European periphery call for a stronger state and a stronger EU.

It’s not sudden shift. The traditionally anti-statist and mildly Euroskeptic liberals have become more middle-of-the-road during the ten-year prime ministership of Mark Rutte, who will be seeking a fourth term in March.

They have overtaken their traditional rivals on the right, the Christian Democrats, who are polling at a mere 8-10 percent compared to 25-28 percent for the liberals — faraway in first place, but short of an absolute majority.

The manifesto therefore won’t be implemented in full, but it is telling the party is already signaling a willingness to move to the left in a future coalition.

The draft has yet to be approved by members. There are liberals who complain Rutte has been too willing to compromise with left-wing parties and left a space on the right for Forum for Democracy and Geert Wilders’ Freedom Party, which are polling at a combined 15-19 percent. But liberal rebellions against the party leadership are rare.

Here are the manifesto’s highlights. Read more “Rutte’s Liberal Party Shifts to Center in Netherlands”

Caribbean, European Netherlands Close In on Bailout Deal

The Hague Netherlands
Dutch government offices and parliament buildings in The Hague (iStock/Fotolupa)

Aruba, Curaçao and Sint Maarten are closing in on a deal with the European Netherlands for hundreds of millions of euros in support to cope with the impact of COVID-19.

The sticking point in negotiations has been the Netherlands’ insistence that Dutch officials would carry out and monitor economic reforms on which the bailout is conditioned; a demand Caribbean leaders argue is incompatible with their autonomy.

Prime Minister Eugene Rhuggenaath of Curaçao, the largest of the three self-governing islands, told lawmakers this week that a compromise is at hand.

The Dutch supervisors would remain, but any decisions they take that affect spending and taxes would need to be ratified by the island legislatures.

The government of Curaçao would also be consulted on the appointment of one of the three supervisors.

Antilliaans Dagblad reports that a majority of lawmakers on Curaçao could agree to those terms.

But Raymond Knops, the Dutch state secretary for the interior, sounded less optimistic on Tuesday, when he told parliamentarians in The Hague that the three islands are currently unable to “bear” their autonomy. Read more “Caribbean, European Netherlands Close In on Bailout Deal”

Dutch King Announces Borrowing, Investments to Weather COVID-19

Willem-Alexander of the Netherlands
King Willem-Alexander of the Netherlands reads out his annual speech from the throne in the Grote Kerk in The Hague, September 15 (Rijksoverheid)

The Netherlands’ ruling center-right coalition unveiled an expansionary budget on Tuesday, when King Willem-Alexander read out his annual speech from the throne to set out the government’s priorities for the next fiscal year.

Whereas the Dutch government, then also led by Mark Rutte, raised taxes and cut public spending during the last economic crisis to keep its budget deficit under the EU’s 3-percent ceiling, it now argues against austerity and is borrowing the equivalent of 7.2 percent of GDP (down from an earlier estimate of 8.7 percent).

Rutte argues the savings made in previous years allow the government to avoid cuts this time.

The Dutch economy is projected to shrink 5 percent this year as a result of COVID-19 and grow 3.5 percent next year, when unemployment would reach 545,000, or almost 6 percent. Debt as a share of GDP is projected to rise from 49 to 61 percent. Read more “Dutch King Announces Borrowing, Investments to Weather COVID-19”

Dutch Parties Take Risk Attacking Liberalism

Hugo de Jonge Mark Rutte
Dutch health minister Hugo de Jonge chats with Prime Minister Mark Rutte during the state opening of parliament in The Hague, September 16, 2019 (Ministerie van Financiën/Valerie Kuypers)

Dutch prime minister Mark Rutte has taken a hard line in Brussels on the conditions of coronavirus aid to Southern Europe, but at home his government has abandoned austerity without controversy.

During the last economic crisis, Rutte, who has led the liberal People’s Party for Freedom and Democracy since 2006, raised taxes and cut public spending to keep the Netherlands’ budget deficit under the EU’s 3-percent ceiling.

Now, when the economic contraction caused by COVID-19 is even more severe, he is borrowing €56 billion, or 7.2 percent of GDP. Debt as a share of economic output is projected to rise from 49 to 61 percent.

Statism is back in a country that is (or used to be) considered a champion of liberalization and free trade.

Rutte’s competitors spy an opportunity. Read more “Dutch Parties Take Risk Attacking Liberalism”

Dutch Caribbean Islands on the Brink

Willemstad Curaçao
View of Otrobanda from across the Saint Anna Bay in Willemstad, Curaçao (iStock/Flavio Vallenari)

Time is running out for the autonomous Dutch islands in the Caribbean to do a deal with their former colonizer.

Coronavirus has brought tourism, the mainstay of the island economies, close to a standstill. Tax revenue has dried up while unemployment has soared. Without support from the European Netherlands, the governments of Aruba, Curaçao and Sint Maarten will run out of money in weeks.

The Dutch are willing to help, but only if the islands accept temporary Dutch administrators to manage reforms. For most of the Caribbean politicians, this goes too far. Read more “Dutch Caribbean Islands on the Brink”