Even the Netherlands is in trouble
For those inclined to view the economic crisis in Europe as a problem for the Mediterranean and “Catholic” countries like Greece, Italy, and Spain, it is worth noting that even the Netherlands, one of the strongest and most fiscally conservative economies of the EU, is facing budget deficits that violate European agreements. Indeed, the Dutch are in danger of violating the very rule they proposed and lobbied. This hits home for me, as the Netherlands was the home of my own grandparents in the not so distant past.
The government’s collapse after far-right politician Geert Wilders pulled out of budget talks threatens to move the political battle over austerity from Europe’s peripheral south to the heart of the eurozone.
Credit markets reacted with anxiety. The spread between Dutch and German bonds widened to 72 basis points – the highest since the eurozone crisis began.
Concern is focused on whether the Netherlands will now be able to cut its budget deficit to the 3 per cent of gross domestic product mandated in the new European fiscal pact. The European Commission yesterday wasted no time in pointing out that the Netherlands itself had pushed for the strict 3 per cent rule last autumn, and insisted that Amsterdam present a deficit reduction programme within seven days.
Developed countries from Japan, to the Europeans, to the United States, are facing the sort of financial problems that permanently change the global economy as well as our own society in more ways than we realize. Amid all the rhetoric that flies around about the implications of Christianity for politics, this is an area in which thoughtful Christians are as bewildered as good economists. Conservatives cry that cutting taxes increases revenue and liberals complain that financial austerity ruins the economy, while countries like Greece and Spain seem to be in trouble no matter what they do.
Who is to blame for America’s debt? The Republicans who cut taxes, launched two foreign wars, and failed in years of power to lower federal spending, or the Democrats, who refuse to countenance any substantive reform of the American welfare state despite all kinds of evidence that it is unsustainable in the long term in large part due to our aging population, technological progress, and international competition? Perhaps its our whole society, which wants just about everything without paying for much at all. Christians should take this as an opportunity to learn humility, hope that God gives our leaders wisdom (both economic and political!), and pray for the prosperity of our country. We will all suffer if the Western world does not figure these things out.