Cuts could be a blessing in disguise

The cuts facing the next government could be a good thing, but only if the politicians are willing to make tough choices, writes Pieter Hilhorst in the Volkskrant


The proposed cuts are a blessing in disguise. Or rather, that is what they should be. Cuts are a good way of finding out what kind of society we want to live in.
Mantra
The mantra of the last two decades is that too much government intervention is bad for the economy, stifles initiative and increases inequality. If any of that is true at all it should be possible to use cuts to improve the quality of life in our society. Less is more should be the politicians’ new slogan when on a cutting back expedition.
The focus should not be exclusively on how much money any given cut generates but what it means for society. Does it stimulate the economy? Does it strengthen society? Will it help create equal opportunity, not just where income is concerned but true participation on every level? If you are cutting back it is well to have a clear understanding of where you want society to go and what the effect will be on citizens, businesses and institutions.
Risk

The tax break on mortgages for instance, encourages people to take a big financial risk at the expense of others. Over the last few years many put their money in stocks instead of paying off their mortgages only because the taxman made it attractive to do so. Not only did they find investing does not always equal financial security, the tax break also failed do what is was set up to do: making home ownership affordable.
In other words, a gradual abolishment of this tax break will make for a more just and robust society. The rich will receive less subsidies and people in general will be less at the mercy of conjunctural changes in the economy.
Benefits
The number of people on Wajong (benefits for disabled young people) is exploding. If this continues quite soon 400,000 people will be receiving this state benefit. City councils reluctant to foot the bill themselves push people into the Wajong category even though chances of finding work drop dramatically compared to people on unemployment benefit.
Combining unemployment benefits, Wajong and subsidised work programmes would therefore be a cut back that would help the people in all these category. Long periods of unemployment makes finding a job very difficult. Mobilising all available help to find people find new jobs during the first few months of unemployment would be a good idea.
The idea is to make employers pay for the first six months of unemployment benefits. This will provide a financial stimulus to help find their former employee a new job. If this happens within six months, employer and ex-employee divvy up the profits.

Student loans

According to economic theory demand rises when prices fall. If you want to increase the number of college and university students it would be sensible to keep fees down and give students a grant. But psychology tells us that people value expensive things over something they can get cheap. A student loan system instead of grants and a hike in university fees could only have a positive behavioural effect.
Students wouldn’t just apply in order to get grants. They would work hard and demand good quality courses. Loans would also increase equality- why would a plasterer have to pay to educate a future lawyer?
Cuts can be a blessing in disguise but only if politicians are willing to make tough choices. They won’t get anywhere by giving in to loudmouthed pressure groups. It sounds nice to let house owners, the unemployed and students off the hook but it would be an implicit choice to go for just the kind of soulless cuts that make society an unpleasant place.
This is an unofficial translation

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