Search This Blog

Thursday, 5 December 2013

Economic growth in The Netherlands and the ‘economic windchill factor’: the difference between what seemingly is and how it feels for Jan Modaal (aka Joe the Plumber)

A few weeks ago in The Netherlands, we received the fantastic news that the Dutch economy had been growing by no less than 0.1% in 2013Q3. People cheerfully marched through the streets or hooted their car horns in sheer celebration.

Can you see the picture of this before your very eyes? I can’t either; probably because it isn’t so.

Today, I have been talking with one of my Twitter friends about the difference between the official data upon the Dutch economy and how this particular economy feels to the general public.

I called this phenomena the ‘economic windchill factor’, as it is akin to the natural phenomena, in which a temperature of -2 centigrade can feel like -20C, when humidity is high and the wind is very strong.

Currently, the economic windchill factor is extremely high: although the official economic data speaks of slow growth, Jan Modaal (the Dutch Joe-the-Plumber) feels in reality that the economy is in a state of depression.

To show you what I mean, I present just a few news items from roughly the last month. This list is not complete yet:
I want to put especially this last news item, which was published earlier today, in the spotlight; it is a tell-tale story about the depression-like atmosphere in The Netherlands, since 2008

People, living from public welfare, commit more often suicide than people with a job. Suicide is five to eight times more common among men and women with public welfare or disability payments.

Civil servants at the municipal social service departments must be trained to recognize people with suicidal tendencies. This is concluded by GGD (municipal mental health service) The Hague, the Central Bureau of Statistics and the Leiden University Medical Centre in a study that has been presented to the public today. These institutes analyzed the social-economic and demographic characteristics of all people, that passed away between 2002 and 2011, as a consequence of suicide. In these ten years, it concerned 15,178 people; four per day in average.

“We had anticipated upon a few peaks among the people living from welfare, but these differences are indeed remarkably big”, according to investigator Renske Gilissen of GGD The Hague. “The general picture is that single men are more often suicidal, but receiving welfare is also a very important factor. Suicides happens 4.5 times more often among men who receive welfare payments and more than 6 times more often among women on welfare.

The cause is not fully clear to us: people who receive unemployment benefit are already vulnerable, but people receiving welfare or disability payments are even more vulnerable. Having no job can lead to suicidal feelings, but depression and suicidal feelings can also lead to people losing their jobs. Unfortunately, cause and effect cannot be retrieved anymore. However, for measures of prevention it does not matter so much”, according to Gillissen.
To gather the statistical data belonging to this article, I checked out the wonderful Statline database of the Central Bureau of Statistics.

Although it was not possible to retrieve the reason for committing suicide from this database, it nevertheless supplied me with some useful information.
Please check out the following charts:

Average number of suicides per age group in the period 2002 - 2012
Data courtesy of:
Charts created by:
Click to enlarge

Annual number of suicides in the period 1950 - 2012
Data courtesy of:
Charts created by:
Click to enlarge
There are at least three easy conclusions that can be drawn from these charts:
  • The amount of men committing suicide, is more than double the amount of women, in general;
  • In 2012, the numbers of men committing suicide were at an all time high; I suspect that these data will even be higher in 2013;
  • Most suicides take place roughly between the ages of 35 and 60: not coincidentally (in my humble opinion) the period in which most people have growing up children.
    • Consequently, it is the period in which unemployment and dependency on welfare and disability payments hurt most (especially for men as main wage-earners in most families)
    • Especially the feelings of shame, that they let their families down, could be an extra motivation for men to commit suicide.
    • For women, this motivation might not count so much, as women can often fall back on their generally accepted role as ‘housewife’.

What also could have influenced the soaring numbers of suicides since the seventies, is the growing feeling that ‘living at the state’s expenses’ is like sponging on society: something to be ashamed of. However, this cannot be deducted from the data in these charts and is therefore pure speculation on my behalf.

The news in this article was shocking for me, but not particularly surprising, as it seem to fit in these depression-like times, with their merely relentless, neoliberal governments.

At the moment, there are roughly three groups of people in society:
  • People that do have well-paid steady jobs and/or steady sources of (high) income, without having worries of defaulting or being fired;
  • People, who have a poorly paid job, which hardly supplies them with enough income to nurture their families, or whose (flexible) job is currently on the line and whose outlook for a new, better paid job is only moderate;
  • People, who are currently unemployed and / or who are living from welfare and disability payments or people that have massive excess debt and don’t know how to get out of this situation with their current and future income.

Category 1:

These people have more than enough money to live from today and in the near future, when nothing out of the ordinary happens to them. If the people in this category didn’t squander their money on oversized houses or on bad investments, excessive consumption or private loans, they probably don’t have any worries and don’t feel the economic windchill factor at all.

These people could continue consuming like in the years before the crisis, although they might have adjusted their consumption patterns to these much more austere times (exuberance is ‘not done’ anymore, in most circles).

Although these people generally complain about the increased taxes and social security premiums, it does not stop them from maintaining their current lifestyle.These people can be found in the upper classes and higher middle classes.

Category 2

For the people in the second category, the economic windchill factor is much stronger currently. Due to their awkward future, when it comes to income and job-security, and their vulnerability for the austerity measures and increased taxes coming from the central and local governments, the crisis feels like a real crisis to them.

Most of these people hang on yet, especially when there debt is not too high, but a few unfavourable events could push these people firmly into group three. But for now, they don’t feel the political pressure and when everything stays alright with their job, these people will come through the crisis without major problems.

These are people, who diminished their general consumption, especially when it comes to durable consumption goods, cars and (expensive) vacations abroad. When it comes to food and daily consumption goods, their consumption patterns stayed roughly the same.

These people can be found in the lower middle classes; especially among youngsters and people under 30, often with intermediate vocational education.

Category 3

This is the group where the economic windchill factor is the strongest.

The unemployed people (especially the ones, who receive welfare or disability payments) feel the political pressure coming from the conservatives and neoliberals, who see these groups as ‘spongers on society’ and ‘losers’: people, who can’t catch up in the ‘participation society’ of Mark Rutte, as they can’t take care of themselves financially.

They also feel the financial pressure, coming from soaring expenses and diminishing purchase power, due to the various austerity measures and tax increases from the central and local governments and the soaring energy costs.

Besides that, these people are under increasing scrutiny from government checks and controls, as their right to receive their welfare payments is mistrusted (in advance) by the local and central governments. More and more often these people are forced to accept ANY (underpaid) job, or else…

The penalties for doing something wrong in the process, concerning their welfare payments, are soaring and sometimes these people could even lose their only source of  income for one month or more. This threat, together with the diminished welfare payments and higher taxes, can often lead to a near-poverty state for these people, which they can’t get out anymore.

Also the indebted people feel victimized by the crisis: they thought to do the right thing in the past until 2008 (“everybody did it, so we did it too”), but it blew up in their face.

These people are now stuck with excess private debt and / or with a large mortgage on a house that is structurally underwater.

Although the interest payments on their debt are still relatively low, their (probably) diminished income makes it very hard to do these payments after all; especially in this time of deflation (!), in which their debt is increasing in value while their income (aka purchase power), might become (much) lower.

These people belong to the soaring group of people that is on the brink of defaulting. Poverty is looming for them.

The people in this category belong mostly to the lower (middle) classes, although it also happens to older workers from the higher middle classes, who became involuntarily unemployed and afterwards couldn’t find a job anymore.

Summarizing, there are are currently lots of people for whom the crisis has turned into a real depression, with a very high economic windchill factor. Their immediate future looks grim and the chances that this economic depression will end very soon, are extremely dim. 

These are the people, who need an understanding, empathic and decisive government. A government, which helps them to get through the crisis, by supplying financial aid and taking all kinds of reforming measures that help the economy improve in the short and mid-long term.

Unfortunately, these people got Cabinet Mark Rutte II, of which BNR’s Kees de Kort said today, that ‘it can be accused of anything, except of being too vigourous in their reforms’.

No comments:

Post a Comment