The eurozone gospel of austerity by all – including those in decent shape fiscally – ends up bringing shared pain to both core and periphery.
The Netherlands, with its triple A rating and lower debt burden than Germany, is a committed member of the eurozone’s austerity phalanx. The bitter taste left by taking its own harsh medicine is a lesson for those prone to see Europe’s debt crisis as a morality play...
The Dutch struggle to bring deficits within the rules they insist on for others is also a reminder that public austerity comes at the cost of weaker demand. Deficit-cutting is best kept to good times or when public finances are so threadbare as to leave no other choice...
It is therefore in the country’s interest to use its moral and formal authority – finance minister Jeroen Dijsselbloem presides over the Eurogroup – to herd eurozone partners in a more constructive direction. Progress on banking union is essential to lift the cold hand of private debt overhangs. A more intelligent policy on budgets is also needed. Only some states must cut hard to fix hugely imbalanced finances. Those in the core do not. Keeping core demand buoyant would be enlightened self-interest in the best Dutch tradition.
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