End of the Dutch “Polder Model”?

Is the renowned Dutch “polder model” now in danger? That’s the case made in a recent article by Werner A. Perger in the German commentary-paper Die Zeit: “The Netherlands was for a long time an exemplary country of reform. Now the much-praised model lies in ruins.”

The Netherlands was an economic wreck for much of the 1970s (after the big oil shock of 1973) and into the 1980s, with big government budget deficits and militant labor unions driving up production costs and lowering overall employment. But then there came the “Wassenaar Accord” of 1982 – named for the beach-front suburb of The Hague where it was negotiated, and whose signatory on the labor side was future prime minister Wim Kok – in which Dutch labor organizations agreed to temper their wage-hike demands to boost employment and the country’s international competitiveness.

BOOMING POLDER

This was the genesis of what came to be known as the “polder model” (a “polder” is simply a block of land reclaimed from the sea through dikes and drainage, something Holland has been famous for for centuries) of tight cooperation between the country’s main economic actors (government, labor, employers) to together find the economic policies that would be best for the Netherlands as a whole. And the result was “booming 90s” that the Dutch economy rode higher than most, while its freer labor markets, lower corporate taxes, and higher attraction for foreign investment presented a glaring contrast to bogged-down economy of next-door neighbor Germany. This “polder model” seemed to be alive and well even through last autumn, when Dutch national labor organizations agreed to forbear from demanding wage increases for their members for the following two years.

But now, mid-way into 2004, several indicators listed in Perger’s article make it clear that that “polder model” is not working anymore:

Economic growth for 2004, after a couple years fluctuating on either side of zero, is still supposed to be no greater than 0.9%.
A unique stain on the Netherlands’ economic performance is the AOW, which stands for arbeidsongeschiktheidswet, or “law over unfitness-for-work,” as in helping these people financially. That’s “unfitness” due to some sort of debilitating injury, but unfortunately the definition of “debilitating injury” has expanded considerably over time, so that literally those who feel debilitated through too much “stress” at work can simply retire to the AOW rolls and have the government pay them to do nothing. It should be no surprise, then, to hear Perger’s report that some 9% of the Dutch working population is on the AOW, i.e. not working at all but drawing this state money, funded by their fellow taxpayers.
There is increasing dissatisfaction with what in the past has been the government’s rather liberal asylum policy. That is starting to be tightened up now – the government is preparing to actually send back to their land of origin thousands who have had their asylum requests denied – but nonetheless Perger quotes an expert about the rising “Islamophobia” in the country.
And there is widespread dissatisfaction with public services, from the police (who are said to do nothing about marauding gangs of Moroccan youths) to the national railways (never on time).

What is probably the clearest sign of all that the consensus-driven “polder model” is a thing of the past, however, is the attitude of the current Christian Conservative-Liberal coalition, personified respectively in CDA leader Jan-Peter Balkenende (prime minister) and VVD Leader Gerrit Zalm (deputy prime minister and finance minister). They have reneged on the terms of last year’s agreements that moved labor to promise not to demand wage increases (but which required the government not to touch the AOW or early-retirement provisions). Perger reports that they have declared themselves as preferring to govern without consensus, rather than not govern with consensus – i.e. allow a constant search for compromise to impede them in doing what they feel needs to be done. Naturally, labor is not pleased; Perger begins his article with a vignette of labor protesters crowding 1813 Square in The Hague in a very un-Dutch loud, boisterous demonstration, with accusations flung via loudspeaker at the near-by parliamentary offices: consensus-breakers! And he ends it with the words of Lodewijk de Waal, chairman of the big labor union organization, the FNV, promising the government a “hot autumn” of labor unrest (although “labor unrest” in its Dutch form can take curious forms, like train conductors refusing to check passengers’ tickets).

THE FORTUYN PHENOMENON

One theme from Perger’s article is that the Dutch “polder model” was bound not to last for long after September 11 brought the new world-wide (mainly Islamic) terrorist threat onto the political scene. This was what led to the rise of outside-the-Establishment politicians, most notably Pim Fortuyn, who upset the consensus-driven Dutch political scene with new demands. And while the political party that Fortuyn left behind after his assassination in May, 2002, now barely exists anymore and has little-to-no remaining political influence, a new political threat in the same mold menaces from across the Belgian border, namely the right-wing, anti-foreigner Vlaams Blok, the Flemish political party that has gone from strength to greater strength on the Belgian (or at least the Flemish) political scene. Could those sparks cross that border – which is no sort of linguistic border, after all – to re-ignite Dutch politics too?

All is not well here in the Lowlands. And it’s so kind of our neighbors to be willing to point that out.