Dutch elections for the Second Chamber of Parliament: Ernst’s ‘voting advice’ for everybody that has the right to vote for a new Dutch parliament

Dear Dutch and other readers,

Tomorrow, elections will be held in The Netherlands. These elections are extremely important, as The Netherlands is a country in crisis and a country that needs a stable, fair,  intelligent and vigorous government.

• A government that doesn’t kick the can down the road concerning the big issues that have to be solved in The Netherlands in the coming years. 
• A government that doesn’t scare away from tough and impopular decisions, just because they are tough and impopular and thus might cost votes during the next elections.
• A government that is a government for every citizen of The Netherlands and not for a small group.
• A government that sees the paramount importance of the European Union for the Dutch economy and gives Europe and the Euro the attention it deserves.
• A government that endorses cooperation, good neighborship and friendship in Europe, instead of looking at Europe as a jackpot machine that should return more money than invested.
• A government that doesn’t throw money in financial black holes, but doesn’t use the PIIGS-countries as an odious example to be tough on economics and the budget deficit.

That is the kind of government that we need in The Netherlands

Everybody, please vote wisely with your brain, but also with your heart. I cannot advice you in this, except for the following guidelines. Please remember:  

• Which party opted for cooperation with the PVV of Geert Wilders, in spite of its blunt communication, its dictatorial party structure and blind obedience of its MP’s and the way that whole groups of Dutch citizens are exposed ‘as second rate’ people with less rights than other Dutch citizens;
  
• Which party didn’t offer any kind of excuses after the PVV experiment had crashed and burned this spring and, to put it stronger, even seemed willing to start the same experiment all over again when that’s politically opportune;
  
• Which party delivered the Prime Minister that damaged the Dutch reputation in and outside Europe and the European Union, due to his blunt and counter-productive approach of international issues;
  
• Which party seems to think that pampering rich homeowners with an excess mortgage is more important than good education and healthcare;
  
• Which party keeps therefore endorsing the failed system of Mortgage Interest Deductability until eternity, in spite of The Netherlands having one of the highest mortgage debt rates in the world and a housing bubble of epic proportions;
  
• Which party had as only visible success from their stint in the government the increase of the maximum speed by 10 kph;
  
• Which party still seems clueless about rising unemployment, especially among youngsters and crashing consumer confidence in The Netherlands;
  
• Which party promises all working people in The Netherlands a ridiculous tax reduction, while at the same time being forced to take about €20 bln in additional austerity measures in order to meet the 3% budget deficit threshold from the Stability and Growth;
  
• Which party uses massive billboards, just to produce empty slogans and platitudes, instead of telling a fair story;

If you know the answer to these questions and agree with my opinion, you know exactly what party you should ignore in the elections. But don’t take my word for it, please think for yourself with your own mind and conscience

Crisis leads to more and more low wage workers in Germany: every one in five workers earns less than €10.36 ($13.15) per hour.

Sometimes you read small news articles in the newspapers that can have a very big impact eventually.

Today, the German daily newspaper Die Zeit wrote on the rising amount of people in Germany that is working for a very low wage: to 20.6% in 2010 from 18.7% in 2006. In the article a very low wage is defined as: ‘a wage of less than two/third of an average wage’. The threshold amount for a very low wage is €10.36 or $13.15. Here are the most important snips of the article in German, translated to English by me.

Every fifth worker works for a very low wage

Part-time jobs, temporary contracts, mini jobs (i.e. jobs that earn about €400 per month): the share of the very low wage workers has risen again. This is the continuation of a long-term trend, according to experts.

In Germany one in every five workers is working in the low wage zone. According to the German statistical bureau Destatis, the number of low wage workers has risen lightly: in 2010 20.6% of all workers in companies with 10+ workers worked for a very low wage, in 2006 this number was still 18.7%. Smaller companies were left out of the equasion: when these would have been included, the amount would be even higher.

A very low wage is defined as a wage of less than two/third of the average wage of all workers. According to the statistical bureau, the threshold lies at €10.36 in 2010.

A reason for this development, according to the statistical bureau,  is the long-term rise of ‘a-typical jobs’: most are part-time workers with less than 20 working hours per week, workers with a temporary contract and people with a so-called ‘mini job’. Of these mini job workers almost 50% earned less than the €10.36 threshold amount. Among the part-time workers the share of very low wage workers was even 84%. From the temporary workers with more than 20 contract hours per week, the number is 11%.

Especially among the following jobs the percentage of low wage workers was very high: taxi drivers (87%), hairdressers (86%) and professional cleaners (82%). Also in hotels and cinemas, the amount of very low wage workers was high: respectively 77% and 74%.

The statisticians investigated also whether workers with a very low wage invested part of their income in a personal pension plan: only 6% did so, against 22% of the workers with an average wage and 36% of the workers with a high wage.

This increase in low wage-jobs in Germany is the logical result of liberation and ‘marketisation” of the labor market, in combination with open borders in times of economic crisis. When there are no minimal wages and there are plenty of people applying for a job, the wages go down.

When there are ample workers available from countries like Bulgaria and Romania where even the German very low wages are much higher than the domestic wages, the wages go even further down: eventually to a level that even the poorest worker considers unacceptable.

Concerning the very low wages, this kind of development can lead to poor, working people that need more than one job per day to live their lives at a minimum standard.  Children that have mothers and fathers in such jobs are deprived of their parents, as these have to work extra hours every day to make ends meet. These children often don’t receive basic needs, like food, clothing and shoes, school materials and a little bit of pocket money. Especially German people without a proper education could become victims of this development.

Everybody that saw the situation in cities like Flint, Michigan and Detroit in the famous Michael Moore documentary ‘Bowling for Columbine’ will know what I’m talking about.

The situation for the foreign workers in Germany that come from the European low-wage countries can be just as desperate: while the German, very low wages still could mean ‘a fortune’ at home for the Bulgarian and Romanian workers, they also have to pay the German prices for  food products and daily consumption articles when they live in Germany. Their wages are often too low for proper housing and good nutrition, especially as some employers abuse the awkward situation of these workers far away from home and in a vulnerable position.

This is the reason that these people are often victims of slum landlords and sometimes even modern slavery, of which we had some grim examples in The Netherlands.

The only way to stop this development in times of economic crisis is to set a minimum wage for all jobs, that is applicable for people from all countries within Europe and beyond.

Everybody that thinks of this as being the first step towards communism, should consider that minimum wages are of paramount importance to maintain the social cohesion in a country. Loss of social cohesion could eventually mean social unrest and violence in the streets. And that’s the last thing we need in these trying times.

Letter from Alec Niedenthal of Minyanville about the Dutch elections

Yesterday, I received a letter from Alec Niedenthal of Minyanville with some questions about the Dutch elections and the consequences for the Euro and the Euro-zone.

As these were very good questions and they give me a chance to tell something more about the Dutch political system of coalition-forming, I want to share these questions and my answers to them with my readers:

Hi Ernst,

Just a few questions via email.

So first I'd like to ask: what do you make of the closeness between Roemer's anti-Brussels position and Wilders? Why do their positions seem to mirror each other? Also, I couldn't find info on this anywhere, but is Roemer supporting a return to the gilder?

Good question: the strange fact is that although the SP of Emile Roemer is considered to be a socialist, (extreme-) leftwing party and the PVV of Geert Wilders an extreme rightwing party, both parties share a strong social-conservative AND a strong anti-Europe agenda.

Both parties want to keep social security and benefits at a very high level with high unemployment benefits, affordable healthcare for everybody (in spite of the aging process) and high welfare subsidies. Of course, the PVV aims specially at the ‘real’ Dutch, older people and not at the immigrants of the last 50 years.

The SP has traditionally been an anti-European party (Europe is like the four-headed dragon for this party, a ‘bureaucratic monstrosity that takes decisions on people without democratic control by the Dutch parliament’). Geert Wilders has proved himself an opportunist on many occasions. Until the recent past he has been banging the anti-Islam drum, but in these worrisome times he is banging the anti-EU drum more successfully.

Both parties are – in reality – politically much closer than they appear at first sight and share a certain xenophobia, although the SP is expressing it not so clearly.

I wouldn’t say that Roemer is supporting a return to the Dutch guilder (Gulden). Although the SP is quite anti-European Union, he doesn’t want to jump in the adventure to leave the Euro. The SP is not so opportunistic as the PVV and not so sensitive for the ‘vox populis’. Roemer understands that leaving the Euro would be one bridge too far, although deep in his heart he likes the idea.

How exactly does coalition-forming work in The Netherlands? If the centrists win, will the radical parties be de facto excluded from any possible coalition?

The process of coalition-forming is very complex and opaque, but a necessary ingredient of Dutch politics: no party has ever had the absolute majority in parliament. It is tradition that the biggest party in the elections has the right to start the coalition-forming process, as it is plausible that this party delivers the Prime Minister.

Usually the (would-be) PM starts to negotiate with the largest parties, as these can deliver a majority in parliament. Without a majority in parliament, it is very hard to form a viable government (see the last 1,5 years). This is the reason that negotiations are almost always started between CDA (Christian-Democrat), VVD (Liberal-Conservative) and PvdA (Labour) as these have been traditionally the largest parties. In some cases the PVDA, VVD and CDA have formed a government together, but these are rare exceptions. Most coalitions have existed from the combinations [CDA + PVDA], [ CDA + VVD] and (twice) [PVDA + VVD].

If such a combination doesn’t have a viable majority yet, or if these parties are very different in their opinions, often one or two smaller parties (often D66 (liberal-progressive)) are added to the coalition to get the majority and to act like a ‘lubricant’ between the parties.

What made the last 12 years different from the earlier past is that new, more radical parties came up (LPF, PVV, SP) and collected enormous amounts of votes, making those parties de facto influential.

The reason that these radical parties are often ‘negotiated away’ in coalition-forming is their presumed instability (often these parties suffer from dictatorial leaders, bad candidates (sometimes with a doubtful past)  and large internal arguments), one-issue history and their radical opinions that scare away other parties. Still, at the beginning of this century and during the last 1.5 years , respectively the LPF (Pim Fortuyn) and PVV have been part of short-lived cabinets. Both experiences could better not be repeated.

If the Labour party wins, how do you think the markets will react, and why? Do you think Labour's party line is irreconcilable with the Liberals'?

The PVDA is not a classic ‘Neil Kinnock-ish’ Labour Party. Some of the most successful cabinets of the last 40 years had a PVDA PM (Cabinet Den Uyl, Purple cabinet with Wim Kok) and especially the Cabinet Kok was not very left-ish.

Diederik Samsom, the current leader of Labour and originally a nuclear physicist  has a radical left-wing past, but has grown into a sensible and intelligent leader that will sail a moderate course. He is more left-wing than the earlier mentioned Wim Kok, but he will certainly not scare the markets away.

Funny enough, it is the liberal-conservative VVD that has turned more radically right-wing during the last years in an attempt to bind the voters that have fled to the PVV of Geert Wilders. It has been Mark Rutte’s plan to attack the PVDA on being ‘too socialistic in the spirit of Joop den Uyl’. The VVD is scared  that its radically conservative grassroots will all move to the PVV if Rutte negotiates with the PVDA. This will make it very hard for the VVD to really negotiate with the PVDA. The PVDA itself doesn’t have much problems to negotiate with Rutte’s VVD and both parties have a successful history of cooperating. Still, this is not a very plausible option at this moment.

Do you think there's an issue that all of the candidates are avoiding in debates, rhetoric, etc.?

Hard to say: the real elephant in the room is what it will really cost to keep the Euro-zone together and what it will cost to let it implode. None of the parties has told a fair story on Europe: most parties stick with throwing out their fixed clichés of being pro or contra Europe: “not a penny for the Greeks”,” abolishing the Euro will open the Box of Pandora”. You know the drill… What I really miss in Dutch politics, is a SWOT analysis and what if-analysis on Europe that tells the whole financial story of the European Union and the Euro. The national debate has been of poor quality, as also the leading economists rarely exceed the fixed clichés on the EU and the Euro-zone.

What party do you think is best for investors in the Euro, Dutch bonds, etc.? Why?

You don’t need a party. You need a coalition! One party cannot decide on the future of the Euro in The Netherlands, as one party will never get an absolute majority. At this moment I would opt for a coalition of PVDA and CDA, in combination with the VVD, but WITHOUT Mark Rutte and their current generation of leaders. A combination of D66, CDA + PVDA would also deliver a viable coalition; arguably the most viable coalition of this moment. These coalitions would deliver a moderate economic politics, in combination with a pro-Europe approach that would really help the Euro-zone and the EU. If Mark Rutte stays as leader within the VVD after the election, I would opt for the second option as this would bring more stability.

Update September 11, 2012:

Here is the link to the article that Alec Niedenthal wrote on Minyanville today.