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Possible Importance of Results of Wednesday, September 12 Netherland’s General Election Result

Why read: Because last week the Netherlands held its fifth general election in ten years, and the outcome may weight on what happens in the end in the Eurozone.

Commentary: In 2011 the Netherlands was the fifth largest economy in the 17 country Eurozone, and (by coincidence) the seventeenth largest economy in the world (source Wikipedia). This makes it a Eurozone country with an important voice.

Last Wednesday (September 12) Dutch voters elected the incumbent (what is described as 'conservative liberal') VVD party headed by Mark Rutte. In summary:

  • Rutte's party did not gain a majority in the Netherlands 'lower' House of Parliament, having won only 41 of the 150 available seats. Hence a another Dutch coalition government will have to be agreed in order for the Dutch Parliament to go forward;

  • as noted, Dutch coalition governments have had a recent history of being short-lived;

  • the Dutch populace in the end rejected what is referred to as 'euroskeptic parties', leading to the suggestion that the Dutch are broadly in favour of austerity measures as the Netherlands faces weak economic growth, increasing health care costs, and what may prove to be a housing bubble; and,

  • there is a suggestion that going forward a new coalition government might favour the 'less austerity' policies of France' over the 'more austerity policies' of Germany, and therein lies what strikes me as a possible important developing issue.

My current views:

  • it is unfortunate, for three reasons, that the Netherlands is faced with a further minority government in these difficult economic times:

    • first, in any Parliamentary system of government, I believe minority governments are inherently less efficient and cumbersome than are majority governments. Less things get done in equivalent time frames, and what does get done is almost always subject to more compromise than is the case where a majority government prevails;

    • second, minority governments continue at the behest of the coalition partners that form them, and they can be ended quickly - with the continuing threat of another general election; and,

    • third, and I think importantly, minority governments work better in good economic times than bad economic times, because the decisions required by governments in good economic times - while often critically important in long-term retrospect - can be better procrastinated over than they can be in bad economic times, when crisp decisions without lengthy debate and compromise ought to be the 'order of the day'.

  • because minority government election results inherently mean procrastination in decision making, and because introduction of what I think are immediate and necessary austerity measures are difficult at best (as evidenced by events in Greece, Spain, etc.) the Netherlands election result:

    • while not as negative as it might have been had the 'euroskeptic parties' gained a significant say in the Dutch Parliament;

    • is nonetheless not an election result that is likely to result in a more constructive Eurozone outcome than existed before the Dutch election.

Topical Reference: Dutch Voters Choose Pro-European parties, from Spiegel Online, September 13, 2012 - reading time 3 minutes.


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