Crisis, what crisis?
by
Marcel Van Silfhout |
Country’s social welfare system might be a good model for the US
In these days of bad tidings, what more can one do than just to live on? Most headlines of last week were all about the same: ‘Dutch economy has shrunk by 4.5 percent in the first three months of 2009.’ The Netherlands’ national statistics office CBS reported that “it is the worst shrinkage since World War II.” Exports and investments were hit even harder: they fell by 10 per cent. And, the consumption levels had gone down. In other words: the effects of global credit squeeze are deepening within the society. But the odd thing is how come the crisis in Holland still doesn’t feel like a crisis?
The credit crunch has hit Germany and The Netherlands hardest in Europe. Both economies are highly dependent on exports. That makes Holland and Germany more vulnerable than other European countries. Until recently the consumption levels were reasonably good and they had kept the economy in shape. But that scenario has changed now. In the last three months there has been little movement of kitchen ware, furniture, cars, electronic goods and luxury items in the market. Consumer goods sales have gone down. And, very few people are going on holidays. At the same time, it is reported, people are saving their money. So, finally the crisis has entered the life of ordinary people. However, it seems there is no panic at all. It’s a kind of soberness and cautiousness.
According to Professor Jan Willem Velthuijsen of the University of Groningen, The Netherlands has lost 325 billion euro due to global financial meltdown. “That makes an average loss of 26,000 euro per person over 20 years old since the beginning of the economic crisis,” the economics professor stated in the Dutch newspaper NRC Handelsblad.
Prof. Velthuijsen says people who have just retired or are about to retire — 15 to 20 per cent of the Dutch population — are most affected by the crisis. This segment of the population has invested heavily in the share market which dropped by almost 50 per cent. And the loss in their pension is about 20 per cent. The painful fact for those people is that age is not in their favour to recoup their losses.
However, according to Prof. Velthuijsen, the loss in purchasing power has had only a limited effect on consumption in the Netherlands: 300 euro per year. That’s all. To put it other way, to describe the effects of the shrinkage, the Dutch are back to the economic level of 2005. Well, how bad it was to live in 2005? Nevertheless, what is consoling to the Dutch is for some countries the effect is even worse. The average Brit has lost almost 50,000 euro since the beginning of the crisis.
Remarkably, there haven’t been many mass redundancies so far. Holland hasn’t seen people protesting on streets like in France. Those who have lost their jobs are Poles and other workers from eastern Europe. They have gone back home. Since Dutch job losses are few, there is relative calm in the country. There may be another explanation. American writer Russel Shorto, who lives in Amsterdam, wrote an article in The New York Times Magazine titled ‘Going Dutch.’ Shorto has started loving the Dutch social welfare system and stated that it might be a good model for the Americans to study. He says that he admires the quality of life in Holland. The European-style social welfare systems might be seen by many Americans as a kind of awful communist socialism, Shorto has understood it better. Various entities in The Netherlands play a role in social well-being, he wrote in the Magazine. “They all try to balance individual freedom and overall social security. Taxation might therefore be high; there are no problems like massive joblessness, homelessness and cruel poverty as in America.”
Shorto makes the same conclusion as was heard in Davos recently: “The social welfare system helped reduce the pain of the credit crisis and remain stable.” It is hoped that this will remain the same. No one knows what will happen if the crisis continues or deepens. Perhaps The Great Depression of 1929 is amongst us, perhaps not.
Another interesting debate is why the economy is based on the so-called Gross National Product (GNP). Isn’t it a lunatic way to measure growth when this GNP causes environmental, social and cultural loss? And beyond that, why is human kind trying so hardly to organise its economies to grow? What is the ultimate goal of this? It must be welfare and happiness. But according to critics of the GNP as model to measure economies, welfare and happiness have nothing to do with a GNP that grows.
The so called world database of happiness has recently ranked countries on the level of happiness and income. Its most remarkable outcome is the rich Denmark and the poor Colombia are on top with a figure of 8.1 on a 1-10 scale. It is clear from the list that the state of poverty or richness of nations hasn’t much to do with the amount of happiness of its people. And in spite of the growth of welfare and consumer power in The Netherlands since 1973, it has not changed the measured amount of happiness at all. Thirty-six years later, the Dutch have the same figure of 7.5
Perhaps the world can learn something from Bhutan. This small country is explicitly aiming for happiness. Instead of a GNP, Bhutan uses a Gross National Happiness index to set political and economic targets for its people. Perhaps the message these days should be: let the economy shrink and be happy!
(Marcel van Silfhout is an investigative reporter working for public Dutch Television) |
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