The Netherlands needs to cut 29 billion euros of government spending by 2015 or we are dooomed, according to the Centraal Plan Bureau, the Dutch economic measurement agency. That’s roughly 1750 euros for each and every one of us that the government needs to save on us. It’s a big challenge as the news media have been busy telling us, with tough choices needing to be made, to make sure that the effects of the economic crisis as well as the continued aging of the Dutch population won’t make government debt unmanageable in the coming decades. The idea is that by saving this money now, we can bring current government debt down enough to put it roughly in balance with future budgetary surpluses, if I understand everything correctly. Simply put, it’s just like I need to make sure my credit card debts can be covered by my future earnings, so if I earn less I need to spent less, even if I never quite get out of debt.

This idea that countries like consumers need to be careful with their “credit cards” is deeply embedded in our political and economical consensus, a sign of good government. Within limits this is indeed true — history is littered with countries brought to ruin by bad financial management and uncontrollable debts. But in the last three decades, with the triumph of neo-liberal economics the ideas about what is an unacceptable level of debt have become increasingly stringent. Within the EU this level is now defined as an annual budget deficit of more than 3% of the GDP, ever since the Maastrict Treaty. With the economic crisis this idea had to be temporarily abandoned to combat recession, but already the EU is demanding its member countries start reducing their deficits again. This is part of the background assumptions that went into the CPB’s report and why we need to save 29 billion so quickly, despite the hardships this will bring. The Netherlands isn’t allowed by the EU to have longterm budget deficits of more than 3% GDP, we had to spent more than that to “fix” the economic crisis, hence we now need to cut spending drastically to get back on track.

But in the end this is still just an assumption, not a law of nature, but all our econo-political discussion is straightjacketed in it. We don’t argue about if and why we need to save 29 billion euros by 2015, but how we could do is and whether or not various political parties have the courage for it. In this context and while thinking and reading about this, I was struck by something Paul Cotterill said on Though Cowards Flinch, on “the stupidity at the heart of the European Union“:

The issue for here is that a process of technocratic economic management signed into law under the Maastricht treaty, under a particular set of economic conditions which the then policy makers assumed would last for ever, is now adding to an already considerable burden on people who did not make the crisis, and did not gain from the booms that caused it.

As a result there is a real possibility of major social unrest in many European countries, including explosions of racial hatred as workers take it out on themselves; this is the antithesis of what the European Union is supposed to be about.

That, fundamentally, is the stupidity at the heart of the European Union, and reflects the key problem with it.

Much of the EU as it currently exists was designed to keep its member countries on the economic straight and narrow by mandating low inflation and low budget deficits. This automatically meant less room for spending on social welfare even during economic boom times; now that the crisis, caused by the rich has to be paid for, it is again the workers who feel the pinch. This is not a flaw in the EU, it works as designed.