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Netherlands Is In Top 5 Most Competitive World Economies

by Frank Thomas                    September 7, 2012

The World Economic Forum´s 2012-2013 report is out with its annual ranking of 144 nations … The Global Competitiveness Index. For the EU 17, there’s a large difference between best-and-worst-performing countries due to four depressed southern countries. Still, six European countries were ranked in the top ten most competitive world economies … the Netherlands in the top 5!  The results are: 

 

TABLE 1:                                  

2012-13                                            2011-2012                   

(1)          Switzerland                             (1)

(2)          Singapore                                (2)

(3)          Finland                                    (4)

(4)          Sweden                                   (3)

(5)          The Netherlands                    (7)

(6)          Germany                                 (6)

(7)          U.S.                                         (5)

(8)          UK                                           (10)

(9)          Hong Kong                              (11)                  

(10)        Japan                                       (9)                     ____________________________________________________

Briefly, the 2012-2013 report says: “The Netherlands continues to progress in rankings moving up to 5^th place this year from 8^th place in 2010-2011. The improvement reflects continued strengthening of its innovative capacity as well as the heightened efficiency and stability of its financial markets. The Dutch businesses are highly sophisticated (4^th) and innovative (9^th), and the country is rapidly harnessing new technologies for productivity improvements (9^th).

Its excellent education system, ranked 5^th for health and primary education and 6^th for its higher education and training, and efficient markets – especially its goods marketing (6^th) – are highly supportive of business activity. And although the country has registered fiscal deficits in recent years (-5% of GDP in 2012 vs. -9.6% U.S. but a general national debt at a healthy 66% of GDP vs. 103% U.S.), its macroeconomic environment is more stable than that of a number of other advanced economies. Last but not least, the quality of its infrastructure is among the best in the world, reflecting excellent facilities for maritime, air, and railroad transport, ranked 1^st, 4^th, and 9^th, respectively.”

The Netherlands can still do better in its investment in R&D  and stimulation of startup firms. More investment is needed in basic and applied research knowhow and in the joint cooperation between universities and business firms. But the relatively highly educated Dutch population is a powerful plus factor along with a country rank of 12 (vs. 47 for U.S.) in the quality of math and science education.

The overall competitive index for each country reflects a ranking based on 12 Pillars … and each Pillar in turn reflects a number of social-economic factors also ranked (see pg. 288 for Netherlands). ________________________________________________________   

TABLE 2: Rank Based On 144 Countries         

A.  BASIC REQUIREMENTS                      NETH.                 U.S. 
       (PILLARS 20%)

1. Institutions                                               7                       41

2. Infrastructure                                            7                      14

3. Macroeconomic Environment                    41                     111

4. Health and Primary Education                    5                      34

B.  EFFICIENCY ENHANCERS 
        (PILLARS 50%)

5. Higher Education and Training                  6                         8

6. Goods Marketing Efficiency                        6                        23

7. Labor Market Efficiency                             17                        6

8. Financial Market Development                  20                       16            

9. Technological Readiness                             9                       11          

10. Market Size                                             20                        1 

C. INNOVATION AND SOPHISTICATION 
            (PILLARS 30%)

11. Technological Innovation                           4                       10

12. Business Sophistication                             9                         6  ________________________________________________________

 

As noted, the World Economic Forum’s report gives a detailed weighted country ranking and scores (1 to 7)  for specific social-economic factors affecting each of the 12 pillars. The cumulative weighted results in TABLES 1 and 2 confirm that European countries in mid and northern Europe (including UK) and Switzerland in the south do extremely well in the competitiveness test… the same European countries U.S. conservative politicians (Romney and Ryan leading the band) demagogically blanket-label as examples of  “Economically Unstable, Spendthrift Socialism.”

In contrast, the report highlights many escalating, unaddressed weaknesses that have lowered the U.S. overall ranking in recent years. The U.S. has one of the worst rankings for macroeconomic instability at 111^th, down from an equally weak 90^th ranking last year! Numerous business complaints include: political disputes and polarization, government’s inability to maintain arms-length relationships with the private sector, automatic spending cuts  prolonging the deep recession, wasteful government spending. On the positive side, U.S. firms receive excellent ranks for being highly sophisticated and innovative. This reflects an excellent university system that collaborates well with the business sector.

One BIG difference in the Goods Marketing Efficiency pillar is that  the Netherlands’ net exports as a percentage of GDP were 93.9% vs. 85.1% for imports, a net positive of 8.8% (and Germany’s net positive of 5.3% ) compared to U.S.’s negative net exports of -4.0%. This relatively huge disparity in net exports has long existed between the U.S. and mature EU countries. As noted in my previous writings, (e.g., “Our Fiscal-Economic Quagmire: Some Solutions”) we are steadily returning to exorbitant U.S. monthly trade deficits of $60 billion. This has long been causing a systemic, unstable imbalance in our economic model for growth where GDP = Consumption + Private Investment + Public Investment + Net Exports.

We are trapped in a self-destructing viscious circle of extreme GDP growth dependence on Consumption at 70% of  GDP  growth (vs. 58-60% of GDP in Europe plus far higher gross national Savings) combined with stagnant wage growth for the past three decades … all requiring more consumption to compensate for the negative GDP growth effects of rising trade deficits and poor public and private investments. This and outsourcing our manufacturing base knowhow has been driving mainstream America to buy ever cheaper products from China and India. Result? Constant gigantic trade deficits … an economic Catch-22 also forcing up consumer credit card debt to irresponsible levels, helping to feed the next financial crisis. Then add to the financially destabilizing mixture our grossly unaffordable Defense Spending in excess of 5.5% of GDP vs. 1.9% for the rest of the world including Europe.                              

The conclusion is that these inherently out-of-balance factors in our economic model are undermining our national financial liquidity and flexibility to invest in infrastructure and education … pressuring our very high current national debt at 103% of GDP to go ever higher. It's clear the U.S. paradigm of high consumption/ consumer credit debt and huge net export trade debt -- incited and worsened by a middle-class wage and a manufacturing-knowhow race to the bottom -- are contributing to our run-down infrastructure and weakening economic competitiveness, as noted in the World Economic Forum report. Sadly, partisan, power-hungry, winner-takes-all political gridlock makes impossible any audacious, balanced, CAN DO, best-idea initiatives … cooperative actions giving real hope of sustainably resolving serious societal problems and the self-destructive imbalances in our economic model in the interest of ALL Americans.                                                   

FALL OF THE CONSERVATIVE DUTCH GOVERNMENT - A POSTSCRIPT

POSTSCRIPT: TO MY WRITING ON April 22

by Frank Thomas

You are not going to believe this, but in 2 days, five Dutch parties including the fallen coalition parties VVD (conservative party) and CDA (centrist party) – but excluding coalition partner PVV (far right party) – have agreed April 26^th to a more balanced budget accord that meets the EU rule (recently agreed to by the EU 27 countries) of NOT exceeding a 3% deficit level as percentage of GDP in 2013. Thus, a group of five parties that are generally more left of center did something in TWO DAYS that the existing predominantly right coalition government couldn’t achieve in SEVEN WEEKS !!

The five parties achieved the new budget agreement in a creative, pragmatic, equitable, humanistic BUT still very responsible manner. The conservative governing coalition failed in this task, including the coalition partner PVV - the far right party of Geert Wilders. The five parties STUCK to the 3% deficit rule for 2013 rather than spreading this austerity rule over 2-3 years, for example, ±4% in 2013 dropping to 3% or lower by 2015. As stated in my memo above, I favored the latter approach. But I’m glad the five party “quasi” interim coalition has not walked away from standing behind a deficit rule the Dutch government and especially its Finance Minister, Jan Kees de Jager, has been demanding that all EU countries follow.

The new five party group includes: VVD, CDA, as the former ruling coalition parties, plus D66 (centrist to left party), the Christian party (centrist to left party), and Green party (left) as the new parties joining the fallen VVD and CDA parties . The PvdA labor party, SP (socialist party), and PVV far right party have not joined the “quasi” interim coalition of five parties as these three parties fundamentally disagree with the timing  of implementing the 3% deficit rule and want to wait and see what the voters say in September.

Pragmatism, setting aside egos, and making hard concessions in the interests of ALL Dutch citizens and their well-being ruled the day! This kind of courageous cooperation in politics to merge the best and brightest ideas for the benefit of the nation as a whole is tragically IMPOSSIBLE in the broken-down, money-corrupted, ideologically pure, polarized government system America is afflicted with today.

So, the Dutch “quasi” interim coalition government of five parties has turned decidedly to left of center in recognition of the public impatience with indecisive leadership and the extremely serious economic times Holland and Western countries are in. At the same time, the five parties are not walking  away from the country’s high household debt level and social net costs. For example, the five parties have agreed to: reform the housing mortgage market by reducing the interest deduction while also reducing the taxes on the purchase price of homes, to undertake necessary reforms in retirement pensions, to raise the VAT tax on certain goods and to initiate a temporary tax increase on the higher income class.                                                                                       

These and other actions have been agreed to in order to reach the 3% deficit target WITHOUT damaging the purchasing power of retirees and the lower income classes … and WITHOUT making serious cuts in EDUCATION, INFRASTRUCTURE, and R&D Investments. While all citizens will feel some pain for 1 or 2 years, the ultimate cost of the new budget agreement is estimated to reduce GDP growth from ±1.4% in 2013 to ±0.75% … a not insignificant but also a not overly costly change. The lower GDP growth rate is a sacrifice the Dutch people, with their culture of ±10-12% savings rates, generally consider bearable and worthwhile to maintain their remarkable triple AAA financial rating as well as to achieve intermediate-term financial stability and GDP growth rates in the 2-3% range.

For the future, the Dutch are now talking seriously of putting into policy motion the practice to set aside a portion of healthy tax revenue receipts that come in good cyclical times as a reserve to be used in cyclical downturns. This will greatly help reduce the wild volatility and risk exposure to cyclical and/or irresponsible financial management-induced macro-micro economic downturns.

All this only reconfirms my lasting respect, trust and pride in the Dutch parliamentary coalition system of government. It does result in fallen governments, loss of continuity of leadership, and added costs. But, from my over 30 years experience living and working here, these drawbacks have not been serious obstacles to Holland’s development and ranking as one of the best performing economic and social societies in the world.

It still mystifies me why the PvdA and SP parties did not join in accepting the new budget plan agreed upon in just two days. But many things could change should these two parties capture a major share of the general public’s votes in the September elections. One often heard criticism of the socialist SP party – now enjoying a widespread popularity under the impressively open, down-to-earth, genuine Emile Roemer – is that the party’s leadership falls short on putting forth a vision and concrete set of ideas for solving the systemic problems the SP party sees under conservative economic model-type thinking and governance. The PvdA labor party also receives much of the same criticism.

So, stay tuned. Holland’s broadly representative coalition governing democracy is alive and well … and the nation is determined to stay true to a unique European principle,  “We are all in this life together.” 

Frank Thomas
The Netherlands
April 26, 2012

DUTCH CONSERVATIVE GOVERNMENT FALLS OVER BUDGET CUTS: NEW ELECTIONS WILL TAKE PLACE IN SEPTEMBER

by Frank Thomas

Mr Rutte (R) and Maxime Verhagen have been in coalition since October 2010

(also see related New York Times article)

Seven weeks of Government talks have broken down on the issue of more spending cuts – above €18 billion already agreed upon giving a 4.6% budget deficit in 2013 – to reach 3% EU deficit limit. This brings Holland’s credibility at risk as it has been the fiercest promoter of the 3% deficit rule and the severe austerity plan for Greece. Result? The coalition government of the conservative VVD party and centrist CDA party has fallen Saturday. This minority government has depended on an agreement with the ultra right PVV party, the Freedom Party, to achieve a required parliamentary majority (by the slim margin of one vote).

This development illustrates what I’ve been saying for quite some time about the built-in balancing, self-correcting , countervailing features of European coalition governments … a governance system that moderates and can prevent excessive ideological swings left or right. Not even a Paul Krugman or Joseph Stiglitz fully comprehend this European coalition governance dynamic, let alone the U.S. media or average American.  When a coalition government can’t agree on fundamental issues, it can fall. New elections are then held where the people decide. It’s called democracy.

So, the Dutch government fell yesterday, necessitating new elections in September or October. After 7 weeks of negotiations, the ultra-conservative PVV party, led by the anti-Islam, anti-immigration, anti-Brussels Geert Wilders, concluded that added budget cuts to reach the 3% deficit level in 2013 fall disproportionately on pensioners and low-income people.  Wilder’s party and other leftist-leaning Dutch parties are of the opinion the budget cuts to bring deficits to 3% of GDP should be taken in measured concrete steps over 3 years and  that there should be more incentive and investment emphasis on encouraging job growth. Where in America today would you hear of a Republican conservative promoting a combination of right and left policy actions as Wilders does? This can happen under coalition government systems which put more pressure on balanced, effective compromise than our U.S. “winner-take-all, pay and play” autocratic government decision-making in the hands of the ultra-rich and “corporate citizens” who are simultaneously bleeding the federal government by paying little or no taxes.                                                                             

I’m not a fan of Geert Wilders although I agree with his position about the 3% deficit timing. He’s too much of a soloist, populist politician for my likes who has the “my way or the highway egocentric syndrome,”so diametrically unDutch in character. He’s a control freak who wants to micro-manage everything from A to Z, including the activities of his own party members. His wild one-liner remarks have potential of doing real damage to Holland’s commercial export potential (with Turkey, for example) and ageless reputation for being a tolerant nation for those who integrate well, learn the language, and follow the rules.

New elections will likely result in a more balanced, hopefully stable, coalition scenario along some variation of the following lines:

• VVD :conservative party led by Mark Rutte with ±1/3 of votes in new elections
• SP : left party led by Emile Roemer with ±1/5 of votes in new elections
• PVDA  : labor party led by Diederik Samson or possibly a coalition of 2 parties with ±1/5 of votes in new elections

This brings me to another example of the self-correcting dynamic of coalition governance systems. Over the past two years, the SP left-leaning party led by Emile Roemer has zoomed in popularity. The ultra right PVV party of Wilders has peaked and is now almost disintegrating. The PVDA labor party has lost much ground but shows promise of new life with a clever, just nominated young leader (also educated in the sciences). Of course, I know the typical Republican demagogic remark would be that, “Holland is thus going more socialistic in the direction of bigger government and higher  taxes for the rich.”

Nothing could be further from the truth. The SP party and other parties such as PVDA labor party, D66 centrist party, the Green leftist party and the the  SPG centrist party fully recognize the utter necessity of getting the country’s fiscal house in order for future generations and to retain its excellent financial rating. Holland has been a leading example of entrepreneurship, financial soundness and societal equity for generations. BUT, the above-mentioned parties, including especially the SP, correctly want this financial austerity executed in a better-timed,  wisely balanced humanistic manner that does not take the mass of citizens down the “race to the bottom” … a societal devastating disease systemically paralyzing and polarizing America so completely for so long now.

The extremely important $64,000 dollar question is:  Can the current interim coalition of VVD and CDA join with others parties and act responsibly to pass an intelligent budget plan of pain and gain fairly shared that sets transparent goals of where the country needs to go?

This should be done NOW and NOT postponed until the new coalition is formed in the September or October elections. Will the usually sound Dutch values of political sensibility, fairness, and pragmatism come forward in reaching a budget compromise in the interests of all Dutch citizens? Having lived and worked over 30 years in Holland, I’m eternally hopeful this will happen!

P.S.                                                                 

Following is a more detailed release April 22^nd , “Dutch Government Falls Over Budget Talks” by Matt Steinglass of the Financial Times in Amsterdam.                                                                                              

There are some inherently democratic lessons and processes here our U.S. leaders might learn from. 

The Dutch governing coalition collapsed on Saturday when far-right politician Geert Wilders pulled out of budget cut talks, saying it was not in the Netherlands’ interest to meet the deficit of three per cent imposed by the new European fiscal pact.

EU-imposed austerity measures have cost leaders in southern European countries, including Greece, Italy, and Spain, their jobs. With the fall of the conservative Dutch government, and the possibility that Nicolas Sarkozy may lose the French presidential election that begins on Sunday, the damage seems to have spread to Europe’s prosperous north.

Highlighting widespread voter anger over EU-imposed budget cuts, Mr. Wilders said he could not allow Dutch citizens to “pay out of their pockets for the senseless demands of Brussels.”

“We don’t want to follow Brussels’ orders. We don’t want to make our retirees bleed for Brussels’ diktats,” Mr. Wilders said.

The loss of Mr. Wilder’s support left the conservative government of Mark Rutte, Prime Minister, with just over a third of the seats in parliament. Mr. Rutte and other party leaders said that made new elections inevitable. He is expected to offer his cabinet’s resignation to the Dutch Queen on Monday, but leave the cabinet in place as a caretaker government until elections are held, probably in September.

The fall of Mr. Rutte’s government is ironic because the Dutch were among the most vociferous supporters of strict budget limits during negotiations over Europe-wide fiscal reforms at Brussels summits last year.

After the slowing Dutch economy led the Netherlands’ own 2013 deficit estimates to jump to 4.6% of GDP, Mr. Rutte was forced in early March to launch negotiations with his coalition partners – the Christian Democrats (CDA) and Mr. Wilder’s PPV party, the Party of Freedom – over new cuts.

While awaiting elections, the conservative caretaker government will be forced to seek agreement on a budget with leftwing opposition parties. The leaders of the opposition Labor and left-conservative D66 parties said they might back some cuts with a view to long term deficit reductions below 3%. But they said they were not interested in ensuring that the deficit met the 3% limit in 2013.

D66 leader Alexander Pechtold said the government would need to go “hat in hand” to Brussels to see whether a smaller package of cuts would be acceptable. But a person with knowledge of the government negotiations said that the Conservatives and Christian Democrats were both determined to reach the 3% goal, and that it might be possible to create shifting coalitions to pass different measures to reach that goal.

The fall of the government has unpredictable ramifications for the future of Mr. Wilders. On Saturday, Mr. Rutte and Christian Democrat leader Maxime Verhagen rushed to paint him as irresponsible for having triggered the collapse of talks.

Mr. Rutte said the negotiators were “completely done.”He said an agreement on budget cuts had already been reached when Mr. Wilders abruptly said Saturday he was no longer willing to approve them. Exiting the government at this stage will allow Mr. Wilders to disclaim any responsibility for unpopular budget cuts. But the biggest winner in elections could be the far-left eurosceptic Socialist Party (SP), which has seen its support rise to as much as 20% (if not 30%) of the electorate over the past year.

Meanwhile, Dutch analysts said the inability of even the prosperous, deficit-averse Netherlands to generate voter support for Europe-directed budget cuts called the sustainability of the EU fiscal pact into question.

“Enforcing the pact would always be difficult. Punishing countries is a naïve concept,” said Arnold Boot, a professor of finance at the University of Amsterdam. Mr. Boot said fiscal harmonization would be impossible once the European economy returns to normal growth, but that trying to execute it in times of crisis causes “undue pain, which would lead to too much opposition to EU enforcement.”  

Frank Thomas
April 22, 2012

PS see Frank's post postscript here.

Dutch Government to Ban Tourists from Cannabis Shops

From Reuters, May 27, 2011

AMSTERDAM (Reuters) – The Dutch government on Friday said it would start banning tourists from buying cannabis from "coffee shops" and impose restrictions on Dutch customers by the end of the year.

The Netherlands is well known for having one of Europe's most liberal soft drug policies that has made its cannabis shops a popular tourist attraction, particularly in Amsterdam.

Backed by the far-right party of anti-immigrant politician Geert Wilders, the coalition government that came into power last year announced plans to curb drug tourism as part of a nationwide program to promote health and fight crime.

"In order to tackle the nuisance and criminality associated with coffee shops and drug trafficking, the open-door policy of coffee shops will end," the Dutch health and justice ministers wrote in a letter to the country's parliament on Friday.

Under the new rules, only Dutch residents will be able to sign up as members of cannabis shops.

Dutch customers will have to sign up for at least a year's membership and each shop would be expected to have only up to 1,500 members, a justice ministry spokesman said.

The policy will roll out in the southern provinces of Limburg, Noord Brabant and Zeeland by the end of the year and the rest of the country next year, the spokesman said.

Amsterdam, home to about 220 coffee shops, is already in the process of closing some in its red light district. Some officials have resisted the measures, saying they will push the soft drug trade underground.

Some Dutch border towns including Maastricht and Terneuzen have already restricted the sale of marijuana to foreigners.

(Reporting by Greg Roumeliotis and Gilbert Kreijger; Editing by Andrew Heavens)

 

GUN & NON-GUN HOMICIDES IN U.S. AND EUROPE

by Frank Thomas
 

John,

The Arizona tragedy raises your point of the differences in firearm levels, gun-related and non-gun related homicides in Europe vs. the U.S. First, a historical note: as far back as the 18th century, the Swiss had a significant influence on the passage of the 2nd Amendment to our Constitution on rights of citizens to firearms. Since its founding in 1291, Switzerland has allowed and even required its citizens to arm as a defense against Europe’s despots. Thus, for centuries,  a well-armed Swiss populace has been successful in keeping their independence by defeating the mighty armies of European monarchs.
 
In 1791, U.S. Representative Andrew Jackson acknowledged the Swiss influence on the right to arms when he said: “The inhabitants of Switzerland emancipated themselves by the establishment of a militia which finally delivered them from the tyranny of the lords.” General George Wingate, the founder of the NRA, later heaped praise on the Swiss militia model as being the ideal model for securing the country’s security. It certainly effectively dissuaded the Germans from invading Switzerland, thus saving armed Jewish Swiss citizens from the Holocaust. The Swiss were among the very first to learn that tyrannical governments kill more people than do criminals or the deranged.
 
Although virtually all Swiss households have firearms, these have become a peaceful, sport-shooting family occupation at contest-festivals where eating, drinking and socializing abound. This culture contributes to gun sanity and is partly why  the Swiss gun homicide rate is far below already very low European rates. Guns have become a recognized shooting-sport. Rules cover permits, safety training, discipline. Males aged 20 to 42 must keep their rifles and pistols at home. In Switzerland, a gun culture of shooting-range festivals has come to represent a wholesome community activity. These social-attitudes have no doubt over time helped to practically eliminate Swiss violence with guns.                                                                                                                             
 
England has had a much stricter gun control culture where there are relatively few guns in households. In sharp contrast to both countries, America has had loose gun controls for decades. Like Switzerland, America has as many firearms as there are people … with one major difference. While the original motivations for an armed populace were similar, i.e., to defend against tyrants and invaders and for hunting, America’s motivations have become more focused on defending themselves against outrageous and multiple crime subcultures.
 
The following data, taken largely from a 1994 UN International Study later updated, summarizes total homicides, gun-homicides, non-gun homicides, and robberies per 100,000 people. The data tell a remarkable contrasting story about fundamentally different gun cultural and social attitudes, resort to violence and how these relate to gun availability and controls.
 

---

 TABLE  1:    Total Homicide Rate, Gun Homicide Rate, Robberies Per 100,000
        People in the U.S. and Selected European Countries:  1994-99

---

 
                              Total                   Gun                        
                      Homicide Rate   Homicide Rate  Robberies
 
United States       5.70               3.72              232
 
Canada                2.16               0.76              101   
 
England               1.41               0.11              116
 
Switzerland          1.32              0.58               36(a)
 
Average:               1.38              0.47               48
Selected EU Countries (b)
 

a) The Swiss state that half of their robberies are by non-resident foreigners.

b) Finland, Sweden, Denmark, Norway, Netherlands, Germany, France Austria, Italy, Spain, Ireland

 

---

Above data and recent trends reveal how the U.S.  has by far the highest total murder rate, gun-murder rate, and robberies per 100,000 people. The U.S. non-gun murder rate (total murder rate minus gun-murder rate) is higher than many European country’s total murder rates. WHY?

England with its strict gun controls has almost no gun-murders and one of the lowest total murder rates. The influence and correlation of gun availability and violence is an unending and confusing chicken and egg debate, i.e., is the U.S. dilemma of extreme violence due primarily to gun availabilty/ownership or to other societal factors?
For example, the UK had achieved a low gun-murder rate prior to having any strict gun controls. There are a number of confounding societal factors such as poverty, physical abuse, alcohol/drug abuse, racism, uncensored violence , etc. that play an equal if not greater role in homicide rates.
 
Switzerland’s homicide figures, like those also of Norway, are exceptionally low which seems a questionable contradiction upon first glance. Here’s a country with the highest gun ownership rate in the world while having a very low murder rate and an extremely low gun-murder rate! The Swiss (and Norwegian) firearms experience refutes the belief that very low total murder rates and gun-murder rates are always due to strict gun controls … while England’s and the EU’s experience confirms the belief. WHY?
 
I shall offer some answers to the WHYS. But first I should forewarn readers I may be a little prejudiced in my views on guns for hunting. I’m a deer and pheasant hunter starting way back as a 12 year-old young boy under the firm guidance of my State Police father. We hunted each season in the northern wooded wilds of Aroostook County, Maine, a region in which I was born. It wasn’t the phony, bravado hunting for cameras and votes done by Sarah Palin … who took 4-5 shots with a high-powered rifle and scope to kill a simple-minded, kindly Moose. The general public doesn’t know – what the Palins and real hunters know – that a Moose is the one of the easiest wild animals to find and kill. And one can do it with a simple 30-30 lever action rifle without a scope. Of course Sarah’s visually metaphorical gun-play with the cross-hairs scope aimed at Ms. Giffords house and at the watching, accommodating Moose was just “hard politics, Sarah exercising her American “foundation freedoms”as she explained recently.
 

SOME WHY ANSWERS
 

WHY does America’s relatively weakly regulated gun culture correlate to out-of-sight gun-homicide rates compared to Europe? One answer is the many levels of U.S. criminality compared to the UKs, the Switzerlands, and other EU countries. Note the number of robberies per 100,000 people, the number of people in prison per 100,000 people -- ± 700 in U.S. vs. 87 in the EU!. Our disgraceful violent and less violent crime rates justify for many Americans the constitutional argument of self-defense in allowing firearms of all sorts to roll off the producers’ production lines … including semi-automatic pistols and automatic rifles. We are at a crossroads where it’s not the gun ownership level that determines homicide rates but rather it’s the high crime and homicide rates that motivate people to acquire guns for self-defense. What this all comes down to is that we are by nature a violent nation … and have always been so.
 
Research I’ve examined makes a strong case that homicides are tied to the willingness to resort to violence, not just to the mere existence of firearms. The tragic study facts show that our already horrendously high U.S. total homicide and gun-homicide rates  would be even higher it weren’t for the right-to-carry state laws allowing individuals to carry firearms for protection against crime. In the right-to-carry states, studies reveal that violent crime rates compared to other states are +-25% lower, murder rates 50% lower, and robbery rates 50% lower. Control of the tools, i.e. guns, to express our tendency to violence is critical of course, but complex social problems (poverty, alcohol /drug abuse, violent TV and movies, unstable upbringings, etc.) cannot be brushed aside as they are also a powerful cause of violence. Why does Switzerland or Norway, for example, have such low violent crime and gun-homicide rates despite the fact they are among the most armed household nations in the world?  Solving our violence dilemma lies in the social, cultural, psychological determinents of violence as much as it does in the widespread ownership of guns. The enemy is US and the battlefield is mostly in the urban areas. The hunter world is not where the gun problem and violence is.
 
Another WHY answer is that America has gone nuts selling semi-automatic pistols and automatic rifles that release dozens of bullets in seconds … military-style assault weapons are really great for our soldiers in Afghanistan but insane as everyday sold products to the general public. Here’s where guns are indeed the major precipitator of a culture of violence. I can’t believe that General Wingate, founder of the NRA, had in mind a population armed with such deadly automatic big-cartridge weaponry that can be purchased  almost at will by the teenager, the novice, the mentally unbalanced, the disabled. 
 
Another WHY answer explaining Switzerland’s and England’s as well as Europe’s very low homicide, gun homicide, and robbery rates is that guns are generally viewed here as anathema after so many centuries of human killing. This is why European countries do not see ownership of firearms as a constitutional right. Controls are in place and strictly enforced to limit the availability of firearms manufactured or obtained illegally. Strict sellling, permit, and safety training regulations are constantly being improved. England and Switzerland are two of the safest places to be with entirely different approaches to gun control. Switzerland is awash in guns, but its overall murder and robbery rates are even below England’s very low rates where most guns are banned.

One researcher of Europe’s very low gun homicides and violence summed it all up pretty well:

“The bottom line is one of social attitude. Populations with training in civic virtue though armed heavily like Switzerland or lightly like England and other European countries generally do not experience massacres or high crime rates. Switzerland and Norway fit the mold. The U.S. does not.”

As H. Rap Brown declared in the 1960s, “Violence is as American as apple pie.”

TABLE 1 also shows huge homicide and violence differences between U.S. and its neighbor, Canada. U.S. firearm homicide rates are 5-6 times higher than Canada and non-gun homicides rates are 2-3 times higher. The U.S.has +-250 million working firearms in private household hands compared to 7.2 million in Canada (1 million of which are very tightly restricted). This equates to 5 guns per 6 Americans vs. 1 gun per 6 Canadians. It’s clear that European style social and cultural factors also play a significant role in discouraging crime and violence in Canada.

All this means the Palins of America should be extremely sensitive and called to task for public actions that are  “reprehensibly” self-enriching “hard politics” even remotely suggesting visual and verbal “elimination” when attacking the opposition.Regards,
Frank Thomas

 

The Netherlands

How Holland Maintains Consistently Low Unemployment Rates

by Frank Thomas

Over the years I’ve watched with respect how Holland constantly fine tunes its labor force management policies to achieve rather stable, high employment levels. HOW does it go about doing this? And HOW does the US manage to do the opposite?

TABLE 1 highlights recent years’ relatively low unemployment before and during the severe recession for selected EU countries compared to the US for years 2007 to July 2010.

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Table 1:  Average Annual Unemployment Rates – Adjusted by BLS to US Concept and Seasonally Adjusted for Selected EU Countries and the US

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Country            2006        2007       2008       2009      July 2010

United States       4.6          4.6          5.8          9.3          9.6

Netherlands         3.8          3.2          2.8          3.4          4.4

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Norway                3.4          2.5          2.5          3.2          3.5

Austria                 5.2          4.4          3.8          4.8          3.8

Denmark              3.9           3.8         3.3          6.0          6.9

Germany              9.8           8.4         7.5          7.8          7.9

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SOURCE: US Bureau of Labor Statistics

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The reasons for Holland’s stable and relatively low unemployment rates are many. One major fortunate factor was the very tight job market when the crisis struck. In such times, firms are reluctant to release workers who were so hard to recruit … workers greatly needed when the baby boomers start to retire in large numbers. In a weak economy, studies confirm that US firms tend to take the shortsighted view and release large numbers of the “less essential” workers – often far more than necessary – to protect their “more essential” workers. The latter are then forced to take up the workload of their fired colleagues. 

This is how the US economy works today: both productivity and corporate profits increase over the backs of middle class workers. Are managers in coming years going to hire back those hoards of dismissed workers noted in Table 2? I wouldn't bet on it. Such is NOT the labor management culture in most of Europe today where I’ve lived and worked for over 30 years.

This shows up in the fact that there are 3 Dutch job seekers for each private sector vacancy (seasonally adjusted) versus 5 in America … and the US ratio is based on a much lower officially reported unemployment level of 15 million. But the Center for Labor Market Studies comes up with an added 15 million underutilized workers (see Table 2).  The U.S. job-seeker to job-vacancy ratio then skyrockets to 10.

Other key factors behind Holland’s relatively low unemployment levels are:  

(1)  In the 70s and 80s, drastic reforms in the Dutch unemployment compensation system expanded the workforce.                      

Unemployment compensation benefits were reduced and qualifying for them became more difficult. Today, unemployment benefits are still generous by US standards – comprising a daily payment of 70% of one’s last daily wage up to a maximum daily wage of €180.00 ($240.00) or a maximum daily benefit of $168.00 (70% x $240.00) totaling $43,700 annually. The benefit’s duration depends on age and the number of months employed with a maximum of 38 months. As I’ve said before, this fair benefit acts as an economic stabilizer during cyclical changes.

Proposed social net cutbacks will reduce the maximum benefit period to 24 months, perhaps lower. The maximum daily payment may also be reduced over time … to create more dynamic job search incentives. If the unemployed do not actively seek jobs or if work offered is refused, there is a penalty and less money is paid out. Other countries generally have less effective stimuli or none at all.

(2) A firmly entrenched Dutch part-time job culture also explains why unemployment rates are so low.                                                                      

Nowhere is part time employment so popular as it is in the Netherlands. As one expert noted: “This has a huge effect on employment simply because we need more people for the same amount of work.” The relatively high number of temporary workers also makes for a very flexible job market.

The large number of part time workers under contract (and exploding number of sole proprietorship firms) is a carry-over from the 80s when unemployment was accelerating – so politicians called for a better division of the few jobs that were available. Unions initially oppose part time jobs as second rate employment. When unemployment rates got out of hand (as they are now in the U.S.) in the 80s, the Unions changed their position on this issue. Since the 90s and to this day part time work has rapidly gained in popularity.

In other countries, however, part time work is still opposed by unions, mostly because of poor pay. In such countries, part time jobs consist predominately of poorly skilled labor. In contrast, Holland has refined a system (including subsidized worker retraining) that has advanced to full-fledged part time employment at decent wages (also subject to minimum wage laws) for all levels from low to medium and high skilled workers. People can perform rewarding, high value added, administrative or more routine work for 3 or 4 days a week. In a number of nations this is difficult if not impossible.

(3) Partly because of (1) and (2) factors above, the Dutch do not suffer the extraordinary unemployed and underemployed rates the US does, especially in deep recession times and especially for the bottom 50% household income group. Holland’s flexible labor system, positive trade balances, fair unemployment payments, progressive tax rates, high 12% savings and low consumption (at 57-60% of GDP) all reinforce job stability.

 

TABLE 2 quantifies the shocking scale of US worker underutilization (unemployment and underemployment ) at lower tier income levels. This disastrous development is certainly NOT taking place in Holland or in other mature European countries. It clearly demonstrates America’s dangerously intensifying structural long term unemployment problem, further swelling a permanent underclass.

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TABLE 2:  Unutilized & Underutilized No. of Workers in US & Total
Under-Utilization Rates by Ranges of Household Income Distribution in 4th Qtr. 2009

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(Labor Data In Millions) 

Income Ranges

Unutilized

Under- Utilized

Labor Force Reserve

Under- Utilized Pool

Adjusted Labor Force

Total Under Utiliz- ation Rate

Lowest 10%   2.5              1.2          0.9           4.6             9.1         50.2%

(Below 
$12,500)

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2nd 10            1.4             1.0           0.5           2.9            7.7          37.6%

($12,500-
$20,000)

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3rd 10%          1.9             1.3           0.6          3.8            13.0         29.8%

($20,000-
$30,000)

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4th 10%          1.7             1.0           0.5          3.2            14.3        22.5%

($30,000-
$40,000)

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5th 10%          1.0             0.6           0.4          2.0            11.7       17.1%

($40,000-
$50,000)

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8th 10%          0.9             0.6           0.3          1.8            17.9      10.0%

($75,000-
$100,000)

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9th 10%          0.7             0.4            0.2          1.3           16.7        7.8%

($100,000-

$150,000)

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TOP 10%         0.3             0.2            0.2          0.7           11.3        6.1%

($150,000
or More)

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“ALL”(a)         14.7           8.9          5.6         29.2       158.8      18.5%

(a)   The “ALL” totals for the 10 income groups do not add up because they include persons with missing household incomes on the Oct.-Nov. Files of 4th Qtr. 2009. 

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CENTER FOR LABOR MARKET STUDIES: JOB UNEMPLOYMENT RESEARCH

Definition of Terms:

1)    Utilized   =   those officially reported unemployed.

2)    Underutilized    =   those underemployed or with very minimally-paid part-time jobs who would rather have full-time jobs.

3)    Labor Force Reserve    =   those who were not actively participating in the labor force (including seasonal workers) who expressed a desire for immediate full-time employment. This term reflects a kind of “hidden unemployment,” including those unqualified for benefits,  those ‘discouraged’  who have given up looking for more permanent work, those taking early retirement to avoid being laid-off but who would prefer working full-time.

4)    Underutilized Pool   =  unutilized workers plus underutilized workers and the labor force reserve.

5)    Adjusted Labor Force =  the reported official civilian labor force plus the labor force reserve.

6)    Underutilization Rate =  the underutilized pool divided by the adjusted labor force.          

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SOURCE: Research Report Organized by: Center for Labor Market Studies,

Northeastern University, Boston, MA, Feb 2010: “Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession”, Prepared by Andrew Sum, Ishwar Khatiwada, Assistance by Sheila Palma.

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As report researchers say, a U.S. labor market depression has faced those in the bottom 3 income ranges with total worker underutilization rates of over 50%, 38% and 30%, respectively. In the  researcher's words, “This would have to be classsified as symbiotic of a True Great Depression.” A deep labor market recession has hit in the middle of the income distribution with underutilization varying from 23% to 17%. This compares to almost full employment for the most wealthy at the Top income range. America’s affluent have eluded the worst labor market recession since the Great Depression!

As stated, this total worker underutilization picture comprises detailed research on the employed, underemployed, and labor force reserve. The labor force reserve (a kind of hidden unemployment) are people not actively participating in the labor force but who desire immediate full time employment. As TABLE 2 “ALL” figures show, a total of 29.2 million or 18.5% of the labor force were underutilized in 4th Qtr. 2009 which prevails today! This is unique to America and is truly SHOCKING!

It comes from an ugly corporate 30-year practice – that is persistently picking up steam – of eliminating lower-middle class jobs by outsourcing jobs and production facilities, automating, roboticizing, downsizing, creating redundancies by mergers and acquisitions, eliminating millions of manufacturing jobs in just the last decade alone (Table 2 of my report, “US Pattern of Structural & Long-Term Joblessness”) – entrenching our HAVE and HAVE NOT societal polarization.  We have sunk into a survival-of-the-fittest culture where shareholders come first and workers last in the race to maximize the global profits and wealth of the few.

TABLE 2A specifies unemployment and underemployment rates by income range for 4th quarter 2009. For example, the Center for Labor Market Studies report showed that workers in the lowest income households experienced an underemployment rate of almost 21% -- averaging 22-23 hours of work versus a mean of nearly 43 hours for full time workers.                                                       

TABLE 2A: Unutilized & Underutilized Rates of Unemployment in the US for Workers by Ranges of Household Income Distribution in 4th Qtr. 2009                                                                              

Income Range           Unemployment            Underemployment
                                       Rate                                  Rate

LOWEST  10%         

$12,500 or less               30.7%                                  20.7%

2nd  10%                 

$12,500-20,000              19.1%                                  17.2%

3rd  10%                  

$20,000-30,000              15.3%                                  12.7%

4th  10%                  

$30,000-40,000              12.2%                                  8.3%

5th  10%                   

$40,000-50,000               9.0%                                   6.1%

8th  10%                  

$75,000-100,000             5.0%                                   3.6%

9th  10%                

$100,000-150,000           4.0%                                   2.5%

TOP  10%                       3.2%                                   1.6%                                                                           

NOTE: One can’t add the percentages In TABLES 2/2A because the denominator of the ratios is different for each measure: (1) the unutilized rate is the number of unutilized workers divided by the official labor force minus the labor force reserve; (2) the underutilized rate is the number of underutilized workers divided by the number of employed (= adjusted labor force minus labor force reserve and minus unutilized workers ; (3) the total underutilization rate in TABLE 2 is the underutilized pool of workers divided by the adjusted labor force.

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CONCLUSIONS: In the 4th quarter of 2009, workers especially in the bottom 4 income ranges with an income of $40,000 or less encountered (and are still encountering) astoundingly different and staggering labor market problems versus those in the TOP income range. Workers employed in lowest income range group suffered a 31% unemployment rate plus 1 in 5 workers (21%) in this group had underemployed poverty-paying part time jobs. This compares to unemployment rates of 4% and 3.2%, respectively, for the top two income groups comprising the top 20% income range in Holland. These dramatically painful, shameful developments where lower middle classes took and are still taking the brunt of Wall Street’s induced Financial Crisis have certainly not occurred in Holland nor in other mature European countries

(4) Low unemployment rates in Holland reflect the slow response to economic swings due to legal protections.

Traditional factors such as employment protection legislation for permanent workers also explain the higher degree of labor hoarding in good and bad times. Dutch law makes it harder to lay off people. This protection requires a delicate balance so as not to make the labor market too inflexible. Companies generally keep people on board longer in a recession before laying them off. The increased tempo of laid off workers comes later and can last longer after the recovery. However, at this time the Dutch unemployment rate is showing clear signs of already stabilizing, reflecting effects of a strong fiscal stimulus in 2008-09.

(5) The Dutch government has suppported labor hoarding by introducing work time programs. 

These progams subsidize firms with falling activity levels to maintain their employment levels. The program is well-designed to improve efficiency, including provisions that only firms with large falls in business activity can apply. If workers are fired after enrollment in program, the employer must repay financial support provided by the government.                                              

(6) Government policy emphasizes providing more and better targeted services to job seekers.

Job activation policies are aimed to be counter-cyclical by making resources devoted to activation proportional to the number of unemployed.

(7) Holland’s small industrial base is another reason for the relatively low unemployment rates.

The manufacturing industry is always affected worse in a recession. Holland is a broad service economy with many jobs in information technology, software and high-tech equipment design, education, health care, technical services, drug research, banking, government sectors, etc. The Dutch economy is thus less prone to cyclical movements.                                                                             

SUMMARY:

Steven Hill in his book “Europe’s Promise”, mentions how Europe’s new capitalism has infused two essential values into its economies: “First, a degree of real economic democracy from boardroom to the work floor; and second, comprehensive worker training, skill development, and job placement.”   

Holland and other European countries do not see social justice and market dynamics as mutually exclusive goals. The constant struggle is one of achieving a good balance in sustainable growth and quality of life patterns that keep most citizens reasonably content and productively working in a fair playing field. Renewal and adjustments to new market realities are a continuing challenge, guided  by the belief “we are all in this life together.”                          

In contrast, the U.S. with 18.5% of its labor force unemployed and underemployed seems to be going in the opposite direction of everyone for himself or herself.  As Tables 2 and 2A show, we have far to go to restore the American standard-of-living progress and sustainable job creation for ALL our citizens. Until we do so, our nation’s long-term social-economic plight remains very precarious. 

 

By:  Frank Thomas
      The Netherlands
      October 2, 2010