Wed Mar 14th, 2012 at 07:31:07 AM EST
We've been on and on lately about the economic orthodoxy emanating from Germany, and supported by its allies the Netherlands, Austria, Luxembourg and Finland, the jist of which is that there is no macro-economic problem in the Eurozone which cannot be solved by austerity. Eurozone-wide budget rules pushed forward by the German Bundesbank as the price of Germany's entry into the single currency, and first enshrined in what Romano Prodi rightfully described as the Growth and Stupidity Act, were meant to be respected! And never mind that the two largest Eurozone economies, Germany and France, have already breached those rules in pre-crisis times, now that we have a proper economic crisis, with huge balance of payments imbalances provoking severe fiscal strain on the Eurozone's periphery, it is time for the "garlic belt" in the south + Ireland to "tighten their belt" in ever-deeper waves of cuts to salaries, public services, pensions and other government participation in the economy so that
bank shareholders in the Eurozone core can be protected from the logical losses they would otherwise suffer due to systemic risk inherent in their investments in Europe's periphery budgets can be balanced and European citizens can get the government they deserve.
Mark Rutte's "pro-business" government in the Netherlands has been out front, if this were possible, of Germany in efforts to force the laggards in the south and in Ireland to heel, being behind a sovereinty-stripping proposal (without, this being Europe, any institutionalised democratic underpinning for it) to create a Eurozone czar to control member-state fiscal policy. After previously contributing the Bolkestein Directive ostensibly meant to liberalise service provision in the EU, ,the Netherlands is again leading the way to providing anti-democratic neo-liberal regression solutions to the rest of our lot. After all, the 3% of GDP public deficit rule enshrined in the Growth and Stupidity Act must be obeyed, and a friendly and newly-empowered bureaucrat from Brussels is here to "help" you do it.
So it is with no small amount of schadenfreude that we see the Netherlands struggling with its own budget issues:
Promoted by Colman
A hush has descended on a handsome 17th century villa in The Hague where the leaders of the Netherlands' rightwing minority government are huddled over spending ledgers, debt projections, budget balances, housing market analyses and deteriorating pension fund figures.
Mark Rutte, prime minister and leader of the liberal-conservative VVD party, has imposed a vow of omerta on his colleagues locked away in his official residence until they chart a path out of a worsening public finances debacle.
Europe's two-year debt and deficit crisis has pitted preachy northern creditors against "feckless" Mediterranean spendthrifts - countries the Dutch are wont to dub the "garlic belt".
But suddenly the air in Brussels and elsewhere is thick with tales of pots and kettles, glass houses and stonethrowing as the triple-A rated Netherlands comes unstuck...
The CPB, accustomed to delivering inarguable verdicts on fiscal and budgetary policy, said the Netherlands was in flagrant breach of the new eurozone rulebook and fiscal pact it has been highly instrumental in drafting.
"The government has the intention of living up to the rules, but it's embarrassed that it can't meet the targets now," says Coen Teulings, director of the CPB.
On current policy, a mild recession would leave the country nursing a budget deficit of 4.5% of gross domestic product next year, 2 points higher than previously projected and 50% above the eurozone ceiling of 3%, - risking the wrath of Brussels and the imposition of automatic penalties the Dutch had been keen to devise for others.
What is good for the goose is, apparently, good for the gander as well, never mind that the Netherlands are in relatively good shape econmically, crisis excepted, and that austerity is as counterproductive for the Dutch as it is for everyone else in Europe, periphery or no...
What's more, without a new round of austerity, the Dutch would still be above the eurozone deficit limit by 2015. National debt levels are also running in the wrong direction, from 65.4% of GDP last year to 75.8% in 2015, well above the 60% eurozone threshold.
Most analysts agree the Dutch economy is fundamentally sound and a dogmatic application of the new eurozone rules next year will do much more damage than good.
As elsewhere in Europe, of course, though surely the moralising Dutch government with be loath to abmit that.
But as one of the most vocal cheerleaders for the rigid new rules the Rutte government has put its own credibility on the line. The Dutch are the authors of a radical proposal for establishing a new eurozone budget tsar to enforce fiscal rectitude across the 17 countries.
"The government's in a fix," says Paul Nieuwenburg, a political scientist at Leiden University. "It's a problem of image. Having such a big mouth on Greece and seizing the moral high ground, they are now morally obliged to stick by the rules. Things have become very complicated. That's why Rutte has withdrawn into splendid isolation and they won't talk to the media."
Seizing the moral highground? wtf? Austerity is moral high ground? Ah, the joys of european economic conventional wisdom...
The good news for us is that this budget crisis in the Netherlands has the potential to unravel the current conservative Dutch government. The minority Rutte administration governs on sufference of the far-right and xenophobic PVV, led by Geert Wilders, who has already put the Rutte government on notice that it will not support further fiscal measures by Rutte's cabinet. And one party stands to gain in any snap elections, Netherland's Socialist Party:
The Socialist Party of Emile Roemer is once again the country's biggest party, overtaking the pro-business VVD party of Prime Minister Mark Rutte, according to a weekly opinion poll.
In the weekly survey conducted by Maurice de Hond, the SP now would have 32 seats in parliament, whereas the VVD would to drop to 30. In January the SP also emerged as the biggest party in the survey. Socialist Party leader Emile Roemer was rated 6.8, a record figure his predecessor Jan Marijnissen had obtained ten years ago.
Freedom Party leader Geert Wilders is the only politician to see his popularity drop since December, the last time the survey gauged politicians' popularity ratings. Mr Wilders' rating now stands at 4.4, down from 4.7.
The Socialist Party in the Netherlands are implacable opponents of today's anti-democratic EU, and are just as implacable in their opposition to economically counter-intuitive and counter-evidentiary austerity programmes. Their success in Nederland general elections would be just the sort of news those of us looking for a Europe we can support rather than simply suffer could use. Alas, look for the Rutte government to find support, as conservative governments elsewhere on the continent have, from the Netherland's social democrats in the Labor party.