Lessons from the Dutch

Here's an interesting article in the NY Times by Russelll Shorto, an American journalist on assignment in Europe. He discovers "values" that he thinks might be relevant to the US:

For 18 months now I’ve been playing the part of the American in Holland, alternately settling into or bristling against the European way of life. ...

Then there are the features of European life that grate on an American sensibility, like the three-inch leeway that drivers deign to grant you on the highway, or the cling film you get from the supermarket, which clings only to itself. But such annoyances pale in comparison to one other. For the first few months I was haunted by a number: 52. It reverberated in my head; I felt myself a prisoner trying to escape its bars. For it represents the rate at which the income I earn, as a writer and as the director of an institute, is to be taxed. To be plain: more than half of my modest haul, I learned on arrival, was to be swallowed by the Dutch welfare state. Nothing in my time here has made me feel so much like an American as my reaction to this number. I am politically left of center in most ways, but from the time 52 entered my brain, I felt a chorus of voices rise up within my soul, none of which I knew I had internalized, each a ghostly simulacrum of a right-wing, supply-side icon: Ronald Reagan, Jack Kemp, Rush Limbaugh. ...

And yet as the months rolled along, I found the defiant anger softening by intervals, thanks to a succession of little events and awarenesses. One came not long ago. Logging into my bank account, I noted with fleeting but pleasant confusion the arrival of two mysterious payments of 316 euros (about $410) each. The remarks line said “accommodation schoolbooks.” My confusion was not total. On looking at the payor — the Sociale Verzekeringsbank, or Social Insurance Bank — I nodded with sage if partial understanding. Our paths had crossed several times before. I have two daughters, you see. Every quarter, the SVB quietly drops $665 into my account with the one-word explanation kinderbijslag, or child benefit. As the SVB’s Web site cheerily informed me when I went there in bewilderment after the first deposit: “Babies are expensive. Nappies, clothes, the pram . . . all these things cost money. The Dutch government provides for child benefit to help you with the costs of bringing up your child.” Any parents living in the country receive quarterly payments until their children turn 18. And thanks to a recently passed law, the state now gives parents a hand in paying for school materials.

Payments arrive from other sources too. Friends who have small children report that the government can reimburse as much as 70 percent of the cost of day care, which totals around $14,000 per child per year. In late May of last year an unexpected $4,265 arrived in my account: vakantiegeld. Vacation money. ...

First, as in the United States, income tax in the Netherlands is a bendy concept: with a good accountant, you can rack up deductions and exploit loopholes. And while the top income-tax rate in the United States is 35 percent, the numbers are a bit misleading. “People coming from the U.S. to the Netherlands focus on that difference, and on that 52 percent,” said Constanze Woelfle, an American accountant based in the Netherlands whose clients are mostly American expats. “But consider that the Dutch rate includes social security, which in the U.S. is an additional 6.2 percent. Then in the U.S. you have state and local taxes, and much higher real estate taxes. If you were to add all those up, you would get close to the 52 percent.” ...

I spent my initial months in Amsterdam under the impression that I was living in a quasi-socialistic system, built upon ideas that originated in the brains of Marx and Engels. This was one of the puzzling features of the Netherlands. It is and has long been a highly capitalistic country — the Dutch pioneered the multinational corporation and advanced the concept of shares of stock, and last year the country was the third-largest investor in U.S. businesses — and yet it has what I had been led to believe was a vast, socialistic welfare state. How can these polar-opposite value systems coexist? ...

The Low Countries never developed a fully feudal system of aristocratic landowners and serfs. Rather, sailors, merchants and farmers bought shares in trading ships and in cooperatives to protect the land from the sea, a development that led to the creation of one of the world’s first stock markets and helped fuel the Dutch golden age. Today the country remains among the most free-market-oriented in Europe.

At the same time, water also played a part in the development of the welfare system. To get an authoritative primer on the Dutch social-welfare state, I sat down with Geert Mak, perhaps the country’s pre-eminent author, to whose books the Dutch themselves turn to understand their history. The Dutch call their collectivist mentality and way of politics-by-consensus the “polder model,” after the areas of low land systematically reclaimed from the sea. “People think of the polder model as a romantic idea” and assume its origins are more myth than fact, Mak told me. “But if you look at records of the Middle Ages, you see it was a real thing. Everyone had to deal with water. With a polder, the big problem is pumping the water. But in most cases your land lies in the middle of the country, so where are you going to pump it? To someone else’s land. And then they have to do the same thing, and their neighbor does, too. So what you see in the records are these extraordinarily complicated deals. All of this had to be done together.” ...

There is another historical base to the Dutch social-welfare system, which curiously has been overlooked by American conservatives in their insistence on seeing such a system as a threat to their values. It is rooted in religion. “These were deeply religious people, who had a real commitment to looking after the poor,” Mak said of his ancestors. “They built orphanages and hospitals. The churches had a system of relief, which eventually was taken over by the state. So Americans should get over ‘socialism.’ This system developed not after Karl Marx, but after Martin Luther and Francis of Assisi.” ...

The Dutch are free-marketers, but they also have a keen sense of fairness. As Hoogervorst noted, “The average Dutch person finds it completely unacceptable that people with more money would get better health care.” The solution to balancing these opposing tendencies was to have one guaranteed base level of coverage in the new health scheme, to which people can add supplemental coverage that they pay extra for. Each insurance company offers its own packages of supplements. ...

This points up something that seems to be overlooked when Americans dismiss European-style social-welfare systems: they are not necessarily state-run or state-financed. Rather, these societies have chosen to combine the various entities that play a role in social well-being — individuals, corporations, government, nongovernmental entities like unions and churches — in different ways, in an effort to balance individual freedom and overall social security.

So here is a little epiphany I had through the experience of living in Europe. Maybe we Americans have set up a false dichotomy. Over the course of the 20th century, American politics became entrenched in two positions, which remain fixed in many minds: the old left-wing idea of vast and direct government control of social welfare, and the right-wing determination to dismantle any advances toward it, privatize the system and leave people to their own devices. In Europe, meanwhile, the postwar cradle-to-grave idea of a welfare state gave way in the past few decades to some quite sophisticated mixing of public and private. And whether in health care, housing or the pension system (there actually is still a thriving pension system in the Netherlands, which covers about 80 percent of workers), the Dutch have proved to be particularly skilled at finding mixes that work. ...

And while I certainly wouldn’t wish the whole Dutch system on the United States, I think it’s worth pondering how the best bits might fit. One pretty good reason is this: The Dutch seem to be happier than we are. A 2007 Unicef study of the well-being of children in 21 developed countries ranked Dutch children at the top and American children second from the bottom. And children’s happiness is surely dependent on adult contentment. I used to think the commodious, built-in, paid vacations that Europeans enjoy translated into societies where nobody wants to work and everyone is waiting for the next holiday. That is not the case here. I’ve found that Dutch people take both their work and their time off seriously. Indeed, the two go together. I almost never get a work-related e-mail message from a Dutch person on the weekend, while e-mail from American editors, publicists and the like trickle in at any time. The fact that the Dutch work only during work hours does not seem to make them less productive, but more. I’m constantly struck by how calm and fresh the people I work with regularly seem to be. ...

Geert Mak, the Dutch author, insisted that happiness is tied directly to the social system. ... “One problem with the American system,” he said, “is that if you lose your job and are without an income, that’s not just bad for you but for the economy. Our system has more security. And I think it makes our quality of life better. My American friends say they live in the best country in the world, and in a lot of ways they are right. But they always have to worry: ‘What happens to my family if I have a heart attack? What happens when I turn 65 or 70?’ America is the land of the free. But I think we are freer.”