No Keynesians in the Netherlands?

Submitted by martin on 25 April, 2012 - 11:02

The Netherlands' right-wing, neo-liberal, fiercely pro-cuts coalition government collapsed over the weekend 21-22 April, unable to agree on measures to reduce the country's budget deficit to the EU's 3% target in 2013.

This collapse should, and must on some level, strengthen the hand of the labour movement in arguing against cuts.

The Financial Times (25 April) reports, however: "Anyone expecting the Netherlands to turn towards the anti-austerity prescriptions of neo-Keynesian economists in London and New York has another think coming...

"The idea that wealthy countries like the Netherlands, with its manageable national debt of 65.2 per cent of GDP, should be running a big budget deficit to generate demand that could lead to growth in weaker eurozone economies, such as Spain, is nowhere to be found in the Dutch political landscape...

"Left-wing parties such as Labour and the Socialists oppose demands by the European Commission to bring the 2013 budget deficit below the EU limit of 3 per cent of gross domestic product. They want to cut the budget deficit to some 3.8 per cent in 2013, and meet the 3 per cent target in 2015. Their proposals rely on tax hikes that would hit higher earners harder, measures that take longer to kick in..."

The FT seems to be right. The SP, a left social-democratic party of freakish Maoist origin, is possibly the strongest electoral party to the left of mainstream social democracy anywhere in Europe. In some recent opinion polls in the Netherlands, it has had more support than any other party, and in the latest polls it still scores as the second-strongest party, likely to win 30 seats in the proportional-representation parliament and only marginally behind the right-wing VVD on 33.

Yet SP leader Emile Roemer declares: "I realise very well that we should bring the budget in order, but we should not cut too hard and too fast because that is disastrous for the economy and society".

The roots of this stance must be partly, of course, the SP's turn to parliamentary and electoralist "realism".

Part of it also, probably, is a national narrowness of outlook which the SP shares with other left groups.

The SP has attitudes to Europe indicated by slogans like "Netherlands wants less Brussels". Thus, if the Netherlands can reduce its deficit without much pain, which maybe it can if it gives itself until 2015 to do it (and if no new international economic catastrophes intervene before that), why not?

The Euro-Keynesian argument is being rejected, not so much because it is limited and reformist and Keynesian, but because it is European, because it looks at the issues on an international scale.

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