IREF - Institute for Research in Economic and Fiscal issues
Fiscal competition and economic freedom
"A nation with a small but strong government which gives people the space they need": this what Dutch King Wilhem-Alexander wants for his people. And it has become a domestic policy on September 17th, 2013. The King has a life-time in front of him to consider the social, economic and political evolutions of society. Unlike an elected President, he does not have only a handful of years poisoned by the lurking idea of reelection for another handful of years to propose or back policies. That is why, in this view, the King can speak freely and without pressure of any kind. Thus the Dutch King declared in front of the Parliament that the welfare state was gone, over, finished. This 20th century concept is no longer relevant in our mordern society. John Galt on the throne of the Netherlands? Not yet, but that is a good step forward.
In his first speech given to the Dutch Parliament on September 17th, 2013, the King described, without any attempts at softening the economic situation nor the ordeal the Netherlands is going through : "For five years now, the Netherlands has been dealing with the economic crisis. The effects are being felt more and more. Unemployment is rising, the number of bankruptcies is increasing, house prices are falling, pensions are under pressure and purchasing power has diminished." That is why, owing to this dire context, he is asking to the Dutch people’s representatives to implement that what can be considered as a Small Government.
Responsibility is the core value of what the King is asking to his people. "It is an undeniable reality that in today’s network and information society people are both more assertive and more independent than in the past. This, combined with the need to reduce the budget deficit, means that the classical welfare state is slowly but surely evolving into a participation society. Everyone who is able will be asked to take responsibility for their own lives and immediate surroundings. When people shape their own futures, they add value not only to their own lives but to society as a whole."
The Welfare State used to decide for people, now people will decide for themselves. That is the trend of History as the King declared : "The shift towards a participation society is especially visible in our systems of social security and long-term care. In these areas in particular, the classical post-war welfare state produced schemes that are unsustainable in their present form and which no longer meet people’s expectations. In today’s world, people want to be able to make their own choices, manage their own lives and take care of one another. It is in keeping with this development that care and social services be organised close to people and in a coherent manner."
To achieve Small Government, the government will decentralise public services in three areas.
First, a new system of youth care will be proposed by 2015 on the following bases : "under the new system youth care services will be provided via municipalities, in close proximity to the children who need them. Municipalities are ideally placed to assess the specific situation of the child concerned and provide customised care in consultation with professionals in other areas like housing, education, safety and security, and sport."
Second, in 2014, far-reaching reforms to long-term care will be dealt by the government. The King want the following principles to be implemented : "less intensive forms of long-term care will soon be provided by municipalities, who are better placed to assess whether a stair lift or taxi allowance is necessary. Home help allowances will still be available for people who genuinely need such services and are unable to pay for them. Medical care such as nursing will soon fall within the system of regular healthcare insurance."
Third, starting in 2013, people on welfare must work as people who have an occupational disability. Again, the King relies on "municipalities and the social partners." He stated that they "will together establish public employment services to help those who are receiving social assistance benefits or who have an occupational disability find work. Together, the government and the business community have undertaken to create 125,000 additional jobs for this category of people by 2026. If that target is not achieved, businesses will nevertheless be required to ensure that people with an occupational disability make up a percentage of their staff."
Are the Netherlands marching toward a Small Government? It definitley looks like it. It seems the only way out for beating the crisis and meeting growth and prosperity again. And for the Dutch King, a Small Government the pre-requisite so that « the Dutch people can continue building a strong nation of confident citizens. »
Sylvain Charat, Ph.D