Dutch King Declares End of Welfare State

King Willem-Alexander
King Willem-Alexander

When we found out (hat-tip Seth G.) that Willem-Alexander, king of Holland since only April 30 of this year, had declared “the end of the welfare state” (as reported in The Independent), even as the Dutch government is handing down highly unpopular austerity policies, we wondered first of all whether he really had to make his statements from that throne, and second whether he was just pissed off because so many people had called for his own welfare checks, I mean state salary (originally slated to be around £850K/year) should be slashed by at least two thirds (also according to The Independent).  We asked economist Marjolein van der Veen, who covered Dutch resistance to austerity for D&S back in May/June 2012 (and on alternatives to austerity for Greece in this year’s May/June issue), what she thought about the king’s pronouncements. Here’s what she had to say.  –Chris Sturr

On September 17 the new Dutch king gave the annual speech announcing the government’s plans for the upcoming year. In his speech, he declared the end of the traditional welfare state of the 20th century. The Dutch welfare state as we knew it no longer fits with the times, he declared, given the contemporary challenges of an aging society and globalization, as well as structural problems with the high indebtedness of the government and households and the tenuous position of the banks. Everyone who can, should take care of themselves, and the government should only be there for those who cannot do so. He called for a “participation” society, in which individuals should participate in taking care of their families (e.g. children and the elderly) and their communities.

The timing of the king’s declaration is stunning. Five years into the worst economic crisis since the Great Depression of the 1930s, the Dutch government is engaging in even more austerity, with spending cuts of 6 billion euros in the upcoming year. Unemployment is projected to rise further, to 7.5% by conservative estimates, and nearly 10% according to other projections. Inflation has risen to some 3%, thanks in part to a hike in the sales tax last year, as well as rising rents and health care costs. GDP fell by 1.5% in 2013, and is projected to nudge barely into positive territory to 0.5% in 2014. Meanwhile, purchasing power is expected to fall by 1.25%, while civil servants face more wage freezes. The austerity-induced recessionary conditions is not helping the government’s budget situation, with the government budget deficit projected to rise next year to 3.3% of GDP, and debt to 76.3% of GDP.

One would think that in the midst of an economic crisis that ordinary people had no role in making, the last thing called for is a “participation society” (or in this case, what amounts to a “you’re on your own society”). During the last Great Depression of the 1930s, it was precisely during the crisis that the government stepped in to provide a cushion to those facing unemployment and dropping incomes due to the collapse of banks and businesses. But the Netherlands has been among the forefront calling on other countries throughout Europe to engage in austerity, and to hold to the Maastricht rules keeping government budget deficits to 3% of GDP. Dutch policymakers seem oblivious to the fact that these rules were formulated during the bubble years of the 1990s, and they remain obsessed with sticking to them even during the worst economic crisis since the Great Depression.

Calling for more austerity at this time, while dismantling the traditional welfare state, may be like shouting “fire” in a crowded theater. Assuming the audience is awake (and not in a Rip van Winkle slumber), the effects of these policies may ignite social upheaval. The danger is that the anger of ordinary people may be tapped by the far-right PVV politician Geert Wilders, who has been touring the country in an anti-austerity campaign. The PVV party currently leads in opinion polls, while the parties of the governing coalition are at all-time lows. On September 21, Wilders organized a demonstration in The Hague to protest austerity. About 1 – 2,000 people showed up. The socialists, currently second in the opinion polls, also held an anti-austerity demonstration on the same day in Amsterdam, with at least 5,000 in attendance. Among the speakers at the Amsterdam rally were representatives from the 50+ party and the Green Left party. While Wilders’ animus currently is against austerity and “Europe,” his former anti-immigrant politics lie just below the surface. Just as the refugee crisis from Syria is worsening, the Dutch government recently decided to accept a mere 250 Syrian asylum seekers above the usual quota. The Netherlands could accept a much larger number of asylum seekers and immigrants, but is plagued by a racist and xenophobic climate cultivated by the likes of Wilders. We can expect Wilders to continue to play his blame game, targeting scapegoats – “Europe” today, immigrants tomorrow — for the economic hard times.

Meanwhile, what the Dutch should understand is that this is a constructed crisis, not one entirely due to forces beyond control (whether from an aging society, or from globalization). Three decades of neoliberal policies — with financial deregulation, casino economics, and bubbles that went bust — led to a huge financial crisis and subsequent bailouts of major Dutch banks. Most recently, in February 2013 SNS Reaal (the 4th most systemically important Dutch bank) was bailed out to the tune of 3.7 billion euros. While the King calls for an end to the traditional welfare state for ordinary people, the Dutch banks can continue to receive their corporate welfare checks.

Nor do the military corporations face cutbacks in their welfare. It was recently announced that the Dutch government will go ahead with its purchase of 37 Joint Strike Fighter planes, at a cost of at least 4.5 billion euros (almost the size of the current austerity budget cuts). The purchase of these planes (whose costs are way over budget) is a boon to the US military company Lockheed Martin. Meanwhile, government spending cutbacks may lead to the lay-off of about 50,000 home health care workers. The burden of caring for the elderly and disabled will fall more heavily on private households (and most likely women), a key aspect of this new “participation” society.

And nothing is currently being done to raise taxes from those entities able to pay more. For instance, little is being done to end the status of the Netherlands as a tax haven for multinational corporations, who set up “mailbox” sites here to take advantage of minimal corporate tax rates. And less we forget, the Netherlands is also home to one of the most profitable corporations on the planet – the Shell oil company, whose profits last year alone were $26.6 billion, according to Forbes. Needless to say, the current government budget “crisis” could easily be ameliorated by cutting corporate welfare spending (i.e. on the Joint Strike Fighter plane) and raising taxes on multinational corporations.

The end of the welfare state that the King is calling for is a transformation from a traditional European-style welfare state comprised of universal programs that all households have access to (no matter their income), to one more like the US in which welfare is provided only to those households whose income falls below a threshold level. But as we have seen in the US, this needs-based welfare-state construction leads to the ultimate unraveling and dismantling of welfare programs. In Europe, middle class households still have access to affordable public education, health care, and decent unemployment benefits, things that have virtually disappeared in the US and have contributed to the collapse of the US middle class.

While a strong case can be made for preserving the traditional European welfare state, perhaps the discussion should also move in new directions. Perhaps we need to clarify that the Dutch currently have a capitalist welfare state, and may want to redesign it into a non-capitalist form. Perhaps the Dutch would like to expand the concept of the “participation” society beyond the realm of caring labor in households and communities, and into the terrain of firms and workplaces, to allow for workers and ordinary citizens to participate in the governance of corporations. Perhaps workers and ordinary citizens would like to participate in making decisions that are currently being made by just a select few sitting on the corporate boards of directors, for instance deciding on how Shell’s $26 billion in profits will be spent. Perhaps we can imagine new forms of the welfare state and participation society, different from the ones we commonly know.

One thought on “Dutch King Declares End of Welfare State”

  1. What Marjolein van der Veen said is a joke… economist? Or a communist?

    If they scrap capitalist aspect of their state, it will turn into Cuba in 5 years time, and the economic conditions of today would seem like paradise.

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