Going Dutch: Should America follow the model of the Netherlands on taxation and regulation? Absolutely. - Michael Moynihan
Like its neighbors to the north, the Netherlands has "succeeded" by greatly reducing state intervention into the economy and, in bargaining with the powerful Dutch labor unions, scaling back generous sick leave and unemployment benefits. The Economist recommends the Dutch model, too—as a model for liberalization of markets and shrinking of the welfare state: "A welfare state that is too generous, and a labour market that is too rigid? Follow the Dutch example of chipping away at the first and quietly introducing flexibility into the second. Taxes that are too high and public spending that defies cutting? Look at the Dutch tax reforms that sharply lowered the burden of direct taxes, and at the finance ministry's tough spending controls." As the Dutch economist Ruud A. de Mooij points out, public expenditure as a percentage of GDP decreased from 62 percent in 1982 to 44 percent in 2007, helping spur much of the growth in the previous two decades. But with shifting demographics and generous benefits for those who opt out of the job market, the system, he notes, is still in a perilous state.
There are indeed lessons to be learned from countries like the Netherlands. Which means that supporters of the "European model" must acknowledge that most of these successes—as is the case in many other European countries—are the result of a significant overhaul of base social democratic assumptions about government control of labor markets and health care systems. In other words, as the U.S. moves towards them, they continue to move towards us.
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