Dijsselbloem on Dutch exports

Eurogroup president Jeroen Dijsselbloem is not a macro-economist. By training he is an agricultural economist (Wikipedia). He will rely on macro-economists and judge their advice by economic common sense. That common sense may however also be influenced by traditional mercantilist ideas that exports will earn us gold and make us rich. There is also the success of Dutch agricultural exports that may cloud his judgement.

His recent letter of June 19 to Dutch Parliament about the budget deliberations for 2014 contains this key statement (p3):

“Holland is in a so-called debt-recession. (…) The usual pattern of economic recovery in Holland (rising exports, rising investments, rising consumption) is slowed down by the type of crisis.”  (In Dutch gibberish: “Nederland bevindt zich in een zogenoemde balansrecessie. (…) Het gebruikelijke patroon van economisch herstel in Nederland (export trekt aan, investeringen groeien en particuliere consumptie neemt toe) komt door de aard van de crisis langzamer tot stand.”)

But the export surplus in 2013 is about 10% of GDP, see the CPB Central Economic Plan.

The Dutch surplus contributes to the deficits of Soutern Europe. The huge Dutch surplus is part of the European problem. Christine Lagarde of IMF shouldn’t send a team only to Greece but also to Holland, to sternly explain that the situation is intolerable and that Holland should work towards a balance (notably by importing more).

Yes, there is a debt crisis. If you insist on recovery via exports then recovery will be slow. But the debt crisis does not prevent you from tackling the export surplus. Full employment can be restored at home, by proper internal measures.

Dijsselbloem gets his advice from macro-economists who have been emphasizing exports since 1970. The Dutch system of social security creates a huge unemployment on the home market. The Dutch solve this by lower wages and relying on exports. The Dutch have been exporting their unemployment since 1970.

See my 1996 paper on the exposed and sheltered sectors, at EconPapers or a local file with graphs. It is also a chapter in DRGTPE and an update is in CSBH.

The Eurozone group has a president who is one of the key creators of the problems that they discuss, though sadly enough they aren’t aware of this. (That is, they may think that he causes other problems.)


Eurogroup March 15 2013, Schauble, Lagarde, Dijsselbloem (Source: EU Council)

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